Asset Depletion Loans in California

What Are Asset Depletion Loans in California 2026?

Asset depletion loans in California qualify you on liquid assets instead of a paycheck. The lender totals the accounts that count, divides by a set number of months, and treats the result as monthly income for the loan. No W-2s, no 1040s, no employer on the phone.

The program exists because standard underwriting has a blind spot: a retiree with a big brokerage account and no W-2 fails the income test, even when the account could buy the house twice over. Underwriting was built around paychecks, so wealth without a wage reads as risk. Asset depletion flips that and reads the balance sheet, which is where these borrowers keep their strength.

Most of these programs are non-QM, so each lender writes its own rules on divisors, haircuts, and minimums. One agency version also exists: a Fannie Mae guideline that turns retirement assets into income under much stricter terms. This page covers both paths and flags where they differ. Mix up their rules and you end up planning around a loan you cannot get. Wealthy borrowers who want more monthly income from the same portfolio should also see aggressive asset depletion, a separate page on the 60-month divisor and no-ratio asset qualifier paths.

How Do Asset Depletion Loans Work in California?

How Are Assets Calculated for Asset Depletion Loans in California?

The math is simple: the lender adds up your eligible assets, applies any required discounts, and divides by the program’s divisor. The result is your monthly qualifying income, and it runs through the same debt-to-income test as any other loan.

Example: $1.2 million in eligible assets divided by 240 months produces $5,000 in monthly qualifying income.

One detail the marketing pages skip: lenders divide your net eligible assets, not your gross balance. Money set aside for the down payment, closing costs, and required reserves comes off the top first. A borrower with $1 million who needs $250,000 to close is really qualifying on $750,000. Plan the math around what remains after closing.

Divisors vary by program: common non-QM divisors run from 84 to 120 months, while the agency version divides over the full loan term, often 360 months. A shorter divisor squeezes more monthly income from the same portfolio but usually comes with tighter rules. Borrowers who want the 60-month divisor or a no-ratio path will find both covered in depth on the aggressive asset depletion page linked above. For properties above conforming limits, jumbo loans can pair with asset depletion at higher loan amounts.

Is There a Conventional Version of Asset Depletion in California?

Yes, and it runs on very different rules than the non-QM programs. Fannie Mae guideline B3-3.4-06, called “Employment-Related Assets as Qualifying Income,” lets a conventional lender turn certain retirement assets into income. The eligible list is narrow: 401(k), IRA, SEP, and Keogh accounts, plus lump-sum retirement or severance money from a job. The lender divides net documented assets by the loan term, so a 30-year loan uses 360 months.

The limits are real. Fannie caps the loan at 70 percent of the home’s value, or 80 percent when the asset owner is at least 62 at closing. It allows purchase and limited cash-out refinance only, on a principal residence or second home. Money that never came from employment does not count, which rules out inheritance, lawsuit proceeds, and the sale of real estate. Any early withdrawal penalty comes off the asset value first.

The trade is worth understanding. The Fannie path prices like a conventional loan but yields a small income figure and demands a big down payment; the non-QM path costs more but counts a wider asset menu with shorter divisors. Which path wins turns on your age, your asset mix, and how much house the income figure must carry. We run the math both ways before recommending either.

What Assets Count for Asset Depletion Loans in California?

What Are the Requirements?

Non-QM lenders sort assets into tiers and credit each tier differently. The typical structure looks like this:

Usually counted at 100%:

• Checking accounts
• Savings accounts
• Money market accounts
• CDs

Usually counted at 70 to 80 percent:

• Stocks
• Bonds
• Mutual funds
• Brokerage accounts

Retirement accounts: treatment depends on age. Below 59 and a half, most programs discount the balance for potential penalties. Past that threshold the credit improves, and borrowers at full retirement age often get the whole balance counted.

What doesn’t count:

• Real estate holdings
• Business interests
• Collectibles
• Illiquid investments

The pattern behind the tiers is easy to see. An underwriter can confirm a savings balance in minutes and trust it will stay put. A stock portfolio is easy to verify but can swing, so it takes a haircut. Rental equity and a vintage car collection are neither quick to verify nor quick to sell, so they stay out.

Private, pre-IPO company stock usually lands in the illiquid bucket too. The exception is when those shares have a regular path to sell, like a twice-a-year company buyback. See using pre-IPO stock as income if your wealth is tied up in private equity.

Can You Use Trust Account Assets for California Asset Depletion Loans?

Yes. Trust account assets qualify for asset depletion when the trust paperwork supports it. That matters, because most lenders decline trust assets outright. A few wholesale partners will count both revocable and irrevocable trust assets toward the loan.

What Documentation Does the Lender Need for Trust Assets?

• The full trust document. Not just the certificate. Underwriters read the trust to confirm the trustee has access to and authority over the listed assets.
• Recent statements for the trust accounts. Same paperwork as personal accounts: two to three months of statements, plus source-of-funds letters for large recent deposits.
• Proof the borrower is the trustee or beneficiary with authority to use the funds. A contingent beneficiary with no current access doesn’t qualify.

Revocable trusts are simpler, since the borrower usually holds full control as both grantor and trustee. Those assets get treated much like personal accounts. Irrevocable trusts draw more scrutiny because some trust documents forbid using the assets for personal mortgage qualifying. The underwriter reads the trust language and makes the call.

How Do Retirement Accounts Get Discounted in California Asset Depletion Loans?

Retirement accounts qualify for asset depletion, but with a discount when the borrower is below retirement age. The logic is simple: early withdrawals trigger penalties, so the lender trims the balance for that exposure before running the income math.

What Discount Applies at Each Age?

• Below retirement age (under 59.5): most programs credit 60 to 70 percent of the balance
• Near retirement age (59.5 to 65): the credit often rises to 80 or 90 percent
• At retirement age (65+): the full balance usually counts

Example: a borrower at age 52 holds $1 million in a 401(k). A program crediting 70 percent counts $700,000 toward qualifying assets. That $700,000 then divides by the program’s divisor to produce qualifying income.

The discount is theoretical, not actual. Nobody withdraws anything, and no penalty is ever paid. The funds stay invested and keep growing on the full balance while the loan qualifies on the trimmed one. We shop the available programs for the most favorable retirement treatment on each file, because the spread between programs is real money on a large account.

Why Doesn’t Crypto Count for California Asset Depletion Loans?

Short answer: lenders aren’t there yet. Crypto holdings don’t currently qualify for asset depletion at any of our wholesale partners, and Fannie Mae’s guideline excludes virtual currency outright. Three reasons drive this:

1. Custody issues. A cold-wallet private key is hard for an underwriter to verify the way they verify a Schwab statement. Even with statements from a big exchange, there is no settled playbook for reviewing digital assets.
2. Price swings. Asset depletion treats balances as durable. A sharp move on a large crypto holding breaks that model.
3. No settled rules. Mortgage investors stay cautious with funds that lack clear oversight, and the rules for digital assets are still being written.

What Should You Do If Most of Your Wealth Is in Crypto?

Three options work today:

• Move some to a brokerage account. Shifting a slice into cash, ETFs, bonds, or stocks makes those assets count once seasoned, though the move can trigger taxes, so talk with your CPA first.
• Stack with other income types. Use whatever ordinary income you have (W-2, 1099, bank statement, P&L) and add non-crypto liquid assets on the side.
• Wait for the rules to evolve. Crypto-aware non-QM products are slowly emerging, and we’re tracking them.

What Are Asset Seasoning Requirements for Asset Depletion Loans in California?

What Documentation Do You Need?

You can’t move money around at the last minute and call it qualifying assets. Most programs want two to six months of statements showing the balances are stable and genuinely yours.

Transfers between your own accounts are fine. The paper trail just has to show the money was already yours, not borrowed and not a gift someone expects back. Large recent deposits need a letter with paperwork behind it. An inheritance needs the estate documents, a business sale needs the closing papers, and a stock sale needs the 1099. Underwriters read these statements closely, because the assets are the whole loan, and a clean file up front saves weeks of back-and-forth later.

What Are the Requirements for Asset Depletion Loans in California?

Because most of these are non-QM programs, requirements vary lender to lender. The ranges below are typical, not promises.

• Credit: floors are program-specific and run wider than most borrowers expect, from the low 600s on some depletion programs to 700 or higher on asset-qualifier files. Stronger scores unlock better pricing and more program choices.
• Minimum assets: $500,000 is the common published floor, and some programs measure it post-closing, meaning after your down payment and costs come out. Larger portfolios open more programs.
• Down payment: 20% is the usual entry point and 25% is common. This is lending for wealthy borrowers, not a low-down-payment program, and more equity steadily improves the terms.
• Debt ratios: caps mostly run from 43% to 50% depending on the program, calculated using your asset-based income.
• Reserves: several months of payments beyond the qualifying assets, commonly three to six depending on the program.

What Are Asset Depletion Loan Rates and Costs in California?

Non-QM asset depletion pricing sits above conventional pricing. The size of the gap tracks your credit tier, your down payment, and the program. The honest comparison is not against a conventional rate you cannot access. If standard underwriting declines the file, the conventional sticker price is beside the point, and the useful question becomes which asset-based program prices your scenario best.

Costs run somewhat higher than a standard file, because a human works the file, with deeper asset review and more underwriter time. The Fannie Mae version above prices like a conventional loan, so we check it first when a borrower’s assets fit its narrow rules.

How Does Stacking Income Types Help Asset Depletion Borrowers Qualify?

Close but not quite hitting the qualifying number? Some programs allow combining income types on one loan file without changing pricing. Common pairings:

• W-2 wages + asset depletion. A wage earner with a strong portfolio reaching for more home.
• 1099 income + asset depletion. A self-employed contractor with liquid assets.
• Bank statement income + asset depletion. A self-employed business owner with retirement savings.
• CPA-prepared P&L + asset depletion. Licensed-attested business income plus an asset cushion.

Stacking helps in three common cases. A self-employed borrower with strong assets but uneven income can let the assets smooth the variation. A wage earner reaching for a bigger loan can stack asset income alongside the paycheck. A borrower with one strong year and one weak year can lead with whichever income source reads best and let asset depletion carry the second leg. Reach out and we’ll map your scenario against the programs that allow it.

Who Are the Best Candidates for Asset Depletion Loans in California?

What Are the Best Asset Depletion Strategies for High Net Worth Borrowers?

• Retirees: the natural fit. A lifetime of saving, no W-2 income, and a portfolio that standard underwriting refuses to read is exactly the profile this program was built for.
• Early retirees: people in their 50s or early 60s living off investments. The portfolio sustains the lifestyle, and asset depletion turns it into qualifying income.
• Business sale proceeds: the sale closed, the money is in accounts, and ongoing income hasn’t restarted yet. Asset depletion bridges that gap. Real estate investors should also look at DSCR loans for rentals, which qualify on the property’s income instead.
• Trust beneficiaries: large family assets with little earned income, qualified through the trust paperwork rules covered above.
• Divorce settlements: the assets arrived, the income didn’t, and the math works just as well.

Entity owners with LLC holdings and large liquid assets can pair asset depletion with entity financing built for complex ownership structures.

You Don’t Actually Deplete Assets

Despite the name, you keep your money. The math creates a qualifying income figure on paper, nothing else happens to the accounts, and your portfolio stays invested and growing while you pay the mortgage from whatever source you like.

Some borrowers hear the name and picture a forced drawdown, with the lender making them spend the accounts on the mortgage. That is not how any of these programs work. The division is arithmetic for qualifying, done once at underwriting, and once the loan closes your assets are yours to manage exactly as before.

How Do Asset Depletion Loans Fit the California Market?

How Do Asset Requirements Vary Across California Regions?

California prices make this program matter more here than almost anywhere else. The asset requirement scales with the loan, because the divided income has to carry the payment on the house you actually want.

Coastal markets from San Francisco to San Diego push loan amounts up, so the portfolios behind them must be bigger, and a long divisor on a big loan takes serious assets to produce the income. Inland markets like Sacramento work the other way: lower prices mean smaller loans, so a portfolio near the program minimum can carry a comfortable home. The useful exercise is always the same: work backward from the target payment to the asset base that supports it. We run that math before you start shopping.

What Is the Asset Depletion Loan Process and Timeline in California?

• Pre-approval: quick once we have your account statements. We calculate the qualifying income, run credit, and tell you what the file supports.
• Full approval: a human underwriter works these files, so plan on a normal purchase timeline rather than a rush close. Asset review takes underwriter time that automated files skip.
• Answer fast: underwriters ask questions on these loans, about account sources, large deposits, and investment structure. Fast, documented answers keep the file moving, and slow answers are the most common reason these loans drag.

How Do Asset Depletion Loans Compare to Other Programs in California?

How Does This Compare?

Asset depletion advantages: no income paperwork, qualifying built on wealth instead of wages, assets stay invested, and a clean path for borrowers standard underwriting rejects.

Bank statement comparison: bank statement programs rebuild income from business deposits, so they fit active business owners with real cash flow. Asset depletion usually wins for retirees and anyone whose money already sits in accounts rather than flowing through one.

CPA-prepared P&L comparison: the P&L route fits an operating business showing profit on an accountant-prepared statement. Asset depletion fits the borrower who is retired, between ventures, or simply not working. Tech workers paid heavily in stock should also look at stock award loans, which qualify on RSU income.

Traditional conforming loan comparison: borrowers with solid W-2 income should stay conventional, since that remains the cheapest path. Asset depletion exists for the income-light, asset-rich profile that conventional underwriting cannot read.

What Is the Long-Term Strategy for Asset Depletion Loan Borrowers in California?

Asset depletion is permanent financing, not a bridge product. Your assets stay invested and the mortgage gets paid from whatever income sources you choose, and nothing forces you to sell at any point.

The qualifying is also a one-time event. If the market drops after closing, the loan does not change, because you were qualified on the balances at underwriting and that decision is done. If the portfolio grows, you build equity while the assets grow too, which is the spot most of these borrowers wanted all along. Many clients keep these loans for the long haul, since there is no reason to refinance while the payment works and the money stays productive.

Should You Get an Asset Depletion Loan in California?

Asset depletion loans were designed for one situation: substantial wealth, limited ordinary income. California’s costly market makes them worth the most here. The buyers this state produces, retirees with grown portfolios, founders after an exit, heirs of family trusts, are exactly who the program serves.

A portfolio of $500,000 or more gets you into the conversation. Larger asset bases open more programs. Rod has spent decades placing wealthy and retired borrowers that traditional lenders turned away. Call (510) 589-4096 to talk through your situation, or start with our special income documentation programs overview.

Explore More Income Documentation Options

Asset depletion is one of several ways to document what tax returns and pay stubs miss. When business deposits tell your story better than your balance sheet, bank statement loans qualify you on cash flow. When an accountant can attest to your business income, CPA profit-loss loans put that statement to work. When equity compensation is the income, stock award programs count it. Our special income documentation programs page walks through the tradeoffs of each.

View All California Loan Programs →