Asset Depletion Loans are a unique financing solution designed for individuals with substantial assets but lower traditional income. If you want to leverage your assets to qualify for a mortgage, understanding how these loans work is essential. At Newport Capital Funding, we provide comprehensive guidance and support for securing Affordable Asset Depletion Loans in Newport Beach, California.

What Are Asset Depletion Loans?

An asset depletion loan allows borrowers to use their savings, investments, or other liquid assets to qualify for a mortgage, rather than relying primarily on employment income. This type of loan is ideal for retirees, investors, or self-employed individuals who may not have consistent income streams but possess significant assets.

  • Assets considered: bank accounts, stocks, bonds, mutual funds, and retirement accounts
  • Loan purpose: primarily residential mortgages
  • Borrower profile: retirees, high-net-worth individuals, self-employed

Asset depletion loans calculate qualifying income based on the total available assets divided by a predetermined period, often using a 60-month or 120-month calculation. This approach enables borrowers to access larger loan amounts even if their traditional income is insufficient.

Benefits of Asset Depletion Loans

Unlock the Value of Your Assets

Instead of waiting for investment income or employment income, borrowers can leverage their assets to purchase or refinance a home.

Flexible Qualification Requirements

These loans are less reliant on traditional income documents such as W-2s or pay stubs. Borrowers can demonstrate financial stability through asset documentation.

Ideal for Retirees

Retirees with large portfolios can purchase a home without generating new income or liquidating investments prematurely.

Preserve Investment Portfolios

Asset depletion loans allow borrowers to retain their investment accounts while using them for loan qualification purposes.

How Asset Depletion Loans Work

The basic calculation uses your total eligible assets to determine qualifying income. Lenders typically apply a depletion factor, for example:

  • Total assets: $1,000,000
  • Depletion factor: 70%
  • Loan term: 10 years

Qualifying income calculation: Qualifying Income=Total Assets×Depletion FactorLoan Term in Months\text{Qualifying Income} = \frac{\text{Total Assets} \times \text{Depletion Factor}}{\text{Loan Term in Months}} Qualifying Income=Loan Term in MonthsTotal Assets×Depletion Factor​

In this example: $1,000,000×0.70/120=$5,833/month\$1,000,000 \times 0.70 / 120 = \$5,833/month $1,000,000×0.70/120=$5,833/month

This monthly income can be used to determine how much mortgage you can afford.

Asset Depletion Loans - Newport Capital Funding

Required Documentation

Borrowers must provide detailed asset statements including:

  • Bank and brokerage statements
  • Retirement account summaries
  • Trust documents (if applicable)
  • Documentation of additional assets

Lenders may also request verification of liabilities to ensure accurate debt-to-income calculations.

Quiz: Is an Asset Depletion Loan Right for You?

  1. Do you have substantial savings or investment accounts but limited traditional income?
    • A. Yes
    • B. No
  2. Are you planning to purchase a primary residence or refinance an existing mortgage?
    • A. Yes
    • B. No
  3. Are you a retiree or self-employed professional with irregular income?
    • A. Yes
    • B. No

Results:

  • Mostly A → Asset depletion loans may be ideal for you
  • Mostly B → Traditional mortgage programs may be better

Checklist: Preparing for an Asset Depletion Loan

  • Calculate your total eligible assets
  • Gather bank, brokerage, and retirement statements
  • Document liabilities including debts and monthly obligations
  • Decide on the loan amount you need
  • Consult with a mortgage specialist experienced in asset-based loans
  • Understand fees and terms associated with asset depletion programs

FAQ – Asset Depletion Loans

Q1: Who qualifies for an asset depletion loan?

A: Individuals with significant assets but lower or irregular income, such as retirees, investors, or self-employed borrowers.

Q2: What types of assets are considered?

A: Bank accounts, stocks, bonds, mutual funds, and retirement accounts, depending on lender requirements.

Q3: Can I use retirement accounts for qualification?

A: Yes, some lenders allow 401(k), IRA, or pension funds to be used, although penalties and withdrawal rules may apply.

Q4: How is the qualifying income calculated?

A: Lenders typically divide a percentage of your assets by a predetermined period, often 10 years, to determine monthly qualifying income.

Q5: What are the benefits compared to traditional loans?

A: Asset depletion loans allow borrowers to qualify without high employment income, preserve investment portfolios, and provide flexible documentation requirements.

Benefits of Working with Newport Capital Funding

  • Licensed, bonded, and insured mortgage specialists
  • Personalized guidance on asset-based mortgage strategies
  • Access to a network of lenders offering asset depletion loans
  • Transparent rates and fees
  • Dedicated support from application to closing

How to Apply for an Asset Depletion Loan

  1. Gather your asset documentation
  2. Schedule a consultation with our mortgage specialist
  3. Complete the application and submit financial statements
  4. Review loan terms and approval conditions
  5. Close on your property

Call to Action

Secure your dream home using your assets. Contact Newport Capital Funding today to learn how Affordable Asset Depletion Loans can help you purchase or refinance a home in Newport Beach, California. Call us at (949) 230-1613 or email info@newportcapitalfunding.com to schedule a free consultation.