When Dr. Richard M. retired after 30 years of practicing medicine in San Diego, he had built a substantial net worth — over $4.2 million in investment accounts, a paid-off primary residence, and a pension that covered his everyday expenses comfortably. What he didn’t have was a W-2.
So when he and his wife fell in love with a $3.1 million property in La Jolla and wanted to put down roughly 20 percent, leaving a $2.5 million loan, conventional lenders kept hitting a wall. Without documented employment income, their automated underwriting systems simply couldn’t process the file.
That’s where asset depletion lending — a non-QM mortgage solution specifically designed for high-net-worth retirees — changed everything.
The Situation: Wealth Without a Paycheck
Dr. M.’s profile is more common than most people realize. A growing segment of high-net-worth borrowers — including early retirees, physicians, executives, and business owners who have sold their companies — arrive at the mortgage market with significant accumulated wealth but little to no traditional income documentation.
Conventional lenders and agency loan programs (Fannie Mae, Freddie Mac, FHA) are built around employment income. They want two years of W-2s, tax returns showing consistent wages, and debt-to-income ratios calculated against a monthly paycheck. When those don’t exist, even borrowers with millions in liquid assets get turned away.
Dr. M. had explored financing with his bank’s personal wealth division and received quotes that required significantly higher down payments and came with rates well above market. He had the assets to easily service this debt, but couldn’t get a lender to recognize it.
His financial advisor, who manages Dr. M.’s investment portfolio, made the introduction to our team.
What Is Asset Depletion Lending?
Asset depletion — sometimes called asset dissipation or asset amortization — is a non-QM lending methodology that converts a borrower’s liquid assets into a calculated monthly income figure for qualifying purposes.
Here’s how the mechanics work: a lender takes the borrower’s eligible liquid assets — typically investment accounts, savings, money market funds, and certain retirement accounts — and divides them over a defined period to arrive at a monthly income equivalent.
For example, if a borrower has $3 million in eligible liquid assets and the lender uses a 360-month divisor, that translates to $8,333 per month of qualifying income. The structure varies by lender, and not all assets qualify — illiquid holdings like real estate equity or business interests are typically excluded. Many lenders also apply a haircut to retirement accounts for borrowers under retirement age, to account for potential early withdrawal penalties.
In Dr. M.’s case, he had $3.4 million in eligible liquid assets after accounting for his down payment and closing costs — more than enough qualifying income to support the loan comfortably.
How We Structured the Solution
Once we identified asset depletion as the right framework, there were still important structuring decisions to work through.
Dr. M.’s portfolio was a mix of taxable brokerage accounts, a traditional IRA, and a Roth IRA. We worked closely with his financial advisor to determine which accounts to use for the asset depletion calculation — and equally important, which accounts to leave untouched to avoid triggering unnecessary tax consequences.
The final loan structure came together as follows:
- Loan amount: $2.475 million
- Product: 30-year fixed-rate jumbo non-QM
- Qualifying method: Asset depletion on $3.4 million in eligible assets
- Down payment: $625,000 (approximately 20%)
- Close of escrow: 38 days from application
That timeline required close coordination between the mortgage team and Dr. M.’s financial advisor to ensure the asset documentation was properly assembled. The property appraised at value, and Dr. M. and his wife were settled into their new La Jolla home before the holidays.
What This Means for Financial Advisors
If you’re a financial advisor working with clients approaching retirement — or already in it — this type of scenario is likely already in your book of business.
Here’s why a relationship with a non-QM specialist matters: traditional banks and general mortgage brokers often aren’t equipped for asset depletion files. They either don’t offer the product, or they lack the underwriting expertise to structure it correctly. A poorly assembled submission — wrong asset documentation, wrong account types, incorrect calculations — can cost weeks and derail a deal entirely.
More importantly, asset depletion structuring has real tax implications. The mortgage specialist and the financial advisor need to work in concert to ensure the assets used for qualification don’t create unnecessary distributions or unexpected tax drag on the client’s portfolio.
When structured well, asset depletion lending allows your client to buy or refinance the home they want — without liquidating a dollar of their investment portfolio beyond the down payment. That’s a win for the client’s financial plan, and a reflection of the quality of guidance they’re receiving.
Ready to Explore Your Options?
If you have clients approaching retirement, recently retired, or holding significant liquid assets who are struggling to qualify for a mortgage through conventional channels, I’d welcome a conversation. With 25 years of experience and more than $4 billion in loans funded, I work closely with financial advisors to find solutions that complement their clients’ broader financial strategies. Reach me at jeff@saxtonmortgage.com or call (949) 344-1717.