Many high-net-worth individuals in California face a paradox: they possess substantial liquid assets but report minimal taxable income, making traditional mortgage qualification difficult. Asset depletion loans provide a logical solution by allowing borrowers to qualify based on their accumulated wealth.
The Asset Depletion Calculation
In an asset depletion program, the lender calculates a monthly income figure by dividing the borrower’s eligible liquid assets (such as savings, investment accounts, and retirement funds) by a set period, typically 60 to 84 months. This calculated “income” is then used to determine the borrower’s debt-to-income ratio.
Ideal Candidates
This program is particularly beneficial for retirees, individuals living off investments, or entrepreneurs who have recently sold a business and have significant capital but lack current employment income. It ensures that substantial wealth is properly recognized in the underwriting process.
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