A 42-year-old client sold a company stake three years ago and now lives largely off a $6 million investment portfolio, drawing modest distributions while the bulk of it stays invested and compounding. Their W-2 income from a part-time advisory role is $65,000 a year. When they apply for a mortgage, a conventional lender looks at that $65,000 and treats them like an entry-level earner — never mind the eight-figure balance sheet sitting one click away in their brokerage statements. Asset depletion underwriting exists precisely for this mismatch, and advisors often assume it’s a retiree-only tool when it’s just as relevant for younger, portfolio-rich clients who structured their finances around investment income rather than a paycheck.
The Problem: Conventional Underwriting Assumes a Paycheck
Standard mortgage underwriting is built to measure a monthly paycheck against a monthly housing payment. It has no native way to credit a client for $6 million sitting in a brokerage account unless that client is actually drawing a documented, regular distribution from it — and even then, many lenders will only count a fraction of that distribution. A client who has deliberately minimized withdrawals to let a portfolio keep growing, which is often exactly the right financial planning move, ends up penalized by a lending system that only sees the withdrawal, not the balance sheet behind it.
The Solution: Convert the Balance Sheet Into Qualifying Income
Asset depletion — sometimes called asset dissipation — underwriting takes a borrower’s eligible liquid and semi-liquid assets (typically investment and retirement accounts, after applying discounts to volatile asset classes) and divides that total by a set number of months, often 240 or 360, to produce a monthly qualifying income figure. Unlike a retiree drawing down a portfolio to live on, a younger client using this method is simply having their existing assets converted into income for underwriting purposes — the portfolio itself doesn’t need to change, and nothing needs to be liquidated to close the loan.
Programs vary in which accounts qualify and what discount applies to each: retirement accounts are often counted at a reduced percentage to reflect early-withdrawal considerations, while taxable brokerage accounts may be counted more fully. Some lenders also allow combining asset depletion income with actual W-2 or business income, which matters for a younger client who still has meaningful earned income alongside a large portfolio.
What This Looks Like in Practice
On a $6 million liquid portfolio with a 90% eligibility factor applied (accounting for a mix of retirement and taxable accounts), $5.4 million becomes the base for depletion. Divided over 360 months, that produces $15,000 in monthly qualifying income from assets alone — combined with the $65,000 in annual W-2 income, the file supports a loan amount that a straight paycheck-based review would have missed by a wide margin. For a client purchasing a $2.5 million home in Manhattan Beach, that’s the difference between qualifying comfortably and being told to liquidate a meaningful chunk of a portfolio that’s still working exactly as planned.
Why This Matters for the Financial Plan, Not Just the Mortgage
The real value of asset depletion for advisors isn’t just getting a client approved — it’s getting them approved without disrupting a portfolio built around a long-term withdrawal strategy, tax planning, or estate goals. A client who sells assets to fund a larger down payment or lower their loan amount may trigger capital gains and pull money out of positions an advisor placed deliberately. Asset depletion financing avoids that entirely.
If you have a client with significant liquid assets and modest reportable income — whether they’re retired, semi-retired, or simply built their finances around investment income at a younger age — it’s worth a conversation about whether their balance sheet, not their tax return, should be doing the qualifying. I’m happy to run the numbers on a specific client scenario.
Jeff Singleton | Advisor Aligned Mortgage | NMLS# 215354 | CA BRE# 01510260 | (949) 344-1717 | advisoralignedmortgage.com