Asset Depletion Loans in California

What Are Asset Depletion Loans in California 2026?

You retired last year. Sold your business. $2.3 million in investments. Social Security doesn’t start for two years. Apply for a mortgage. Denied. “Insufficient income.”

You have enough cash to buy the house outright twice. Doesn’t matter. Traditional lenders only see monthly income. No paycheck? No loan. Ridiculous but that’s the system.

Asset depletion loans fix this. They look at your wealth, not your paycheck. Calculate qualifying income from your portfolio. Finally makes sense.

Been doing these since the early 2000s. Helped hundreds of retirees and high-net-worth clients who traditional lenders rejected. $1M+ in the bank. Denied by conventional. Approved by asset depletion. Happens constantly.

Need more borrowing power than the standard 84-360 month divisor allows? See aggressive asset depletion for the 60-month divisor and no-ratio asset qualifier paths designed for high-net-worth borrowers.

How Do Asset Depletion Loans Work in California?

How Are Assets Calculated for Asset Depletion Loans in California?

Simple math. Take your liquid assets. Divide by number of months. That’s your qualifying income.

Example: $1.2 million in assets ÷ 240 months = $5,000 monthly income

Lender uses that $5,000 to qualify you. Same debt-to-income ratios as regular loans. Same underwriting standards. Just different income calculation method.

Common division periods:

• 84 months (7 years) – Higher income, aggressive
• 240 months (20 years) – Moderate income, balanced
• 360 months (30 years) – Lower income, conservative

Shorter period = higher monthly income but you need massive assets. Longer period works better for most people. Need a 60-month divisor or no-DTI qualifying path? See aggressive asset depletion for high-net-worth alternatives.

Had a client last year. Retired at 58. $1.8M in investment accounts. No W-2 income. Traditional lenders? No way. Used 240-month depletion. That’s $7,500 monthly qualifying income. Got approved for $850k loan. Bought a beautiful house in Carmel. 720 credit. 20% down. For high-value properties above conforming limits, jumbo asset depletion loans provide similar qualification methods at higher loan amounts.

Another client. Sold tech startup. $4.2M in various accounts. Only 55 years old. Wanted $1.2M house in Palo Alto. Asset depletion qualified him at $17,500 monthly income using 240 months. Approved. 740 credit. 25% down. Perfect solution.

What Assets Count for Asset Depletion Loans in California?

What Are the Requirements?

100% credit:

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

70% credit:

• Stocks
• Bonds
• Mutual funds
• Brokerage accounts

Retirement accounts: Depends on age. Under 59.5? Limited credit. Over 59.5? Better treatment. Over 65? Full consideration usually.

What doesn’t count:

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

Lenders want assets they can verify easily. Liquid stuff. Not your rental property equity or vintage car collection.

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

Yes. Trust account assets qualify for asset depletion when the trust documentation supports it. This is a real differentiator. Most lenders default to “we don’t touch trust assets.” With the right wholesale partner, both revocable and irrevocable trust assets count toward qualification.

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 documentation as personal accounts: two to three months of statements, source-of-funds explanations for large recent deposits.
• Confirmation 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. The borrower typically has full control as both grantor and trustee. The trust assets get treated almost identically to personal assets.

Irrevocable trusts get more scrutiny. Some trust documents prohibit using trust assets for personal mortgage qualification. Others allow it. The underwriter reads the trust language to determine eligibility.

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

Retirement accounts qualify for asset depletion, but with a discount if the borrower is below retirement age. The reason: early withdrawals trigger penalties. The lender adjusts for that exposure.

What Discount Applies at Each Age?

• Below retirement age (under 59.5): 60-70% of the account balance counts toward qualification, depending on the investor
• Near retirement age (59.5 to 65): Often 80-90% counts
• At retirement age (65+): Full balance typically counts

Example: borrower age 52 has $1M in a 401(k). An investor that allows 70% credits $700K toward qualifying assets. That $700K then divides by the chosen divisor (84-360 months) to calculate qualifying income.

Important: the borrower doesn’t have to actually withdraw or liquidate anything. The discount accounts for the theoretical penalty, but the funds stay where they are. Compound returns continue on the full $1M.

We shop the available investors to find the most favorable retirement discount for each scenario. Some investors do 60%, others 70%, a few go higher with strong compensating factors.

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. 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 centralized exchange like Coinbase or Kraken, the underwriting framework for digital assets isn’t standardized.
2. Valuation volatility. Asset depletion treats account balances as durable. A 30% intraday swing on a $500K crypto holding doesn’t fit the asset depletion model.
3. No regulatory consensus. Mortgage investors stay conservative on funds without clear oversight. Until the IRS, FinCEN, and OCC align on crypto custody and reporting standards, this stays a gap.

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

Three options that work today:

• Move some to a brokerage account. Liquidating a portion to a traditional brokerage (cash, ETFs, bonds, stocks) makes those assets eligible. Tax-triggering event, so coordinate with your CPA before doing this.
• Stack with other income types. Use whatever traditional income you have (W-2, 1099, bank statement, P&L) and supplement with non-crypto liquid assets.
• Wait for the framework to evolve. Crypto-aware non-QM products are slowly emerging. We’re tracking it.

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

What Documentation Do You Need?

Can’t just move money around last minute. Lenders require 2 to 3 months of statements showing stable assets.

Transferred $500k from one account to another last week? Fine. Just need paper trail showing it’s your money. Not borrowed. Not gift from someone expecting it back.

Got a sudden $200k deposit? Need explanation. Inheritance? Document it. Business sale? Show the paperwork. Stock sale? Show the 1099.

What Are the Requirements for Asset Depletion Loans in California?

• Credit: 700 minimum usually. 740+ gets better rates. Every 20 points matters.
  • 700-739: Possible but tougher. Need strong compensating factors. Higher down payment helps.
  • 740-779: Good position. Standard approval path. Reasonable rates.
  • 780+: Excellent. Best rates. Smoothest process.
• Minimum assets: $500k to $1M depending on lender. Higher is better. $2M+ opens up premium programs with better rates.
• Down payment: Usually 20% minimum. 25% is common. 30%+ gets best pricing. This isn’t an FHA program. It’s high-net-worth lending.
• Debt ratios: Under 43%. Preferably under 35%. Conservative lending.

Had a 710 credit client with $1.5M in assets but wanted 10% down. Denied. Found a lender who did 15% down with same assets. Approved. Down payment matters more on these programs than conventional.

Another client. 780 credit. $3.8M in assets. 30% down. Debt ratio at 28%. Approved in 10 days with excellent pricing. Perfect borrower profile.

What Are Asset Depletion Loan Rates and Costs in California?

Rates: Typically 0.5% to 2% above conventional rates. The premium reflects the specialized underwriting and non-traditional income qualification.

On a $700k loan, expect to pay a few hundred dollars more monthly compared to conventional. But if conventional won’t approve you? Doesn’t matter what their rate is. Can’t use it.

Closing costs: Slightly higher. Manual underwriting. Asset verification. Extended processing. Expect $8k to $15k total depending on loan amount.

How Does Stacking Income Types Help Asset Depletion Borrowers Qualify?

Borrower close but not quite hitting the qualifying number? Some programs allow combining income types in the same loan file without changing pricing. Common pairings:

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

Stacking helps in three common scenarios:

• Self-employed borrower with strong assets but uneven income. Asset depletion smooths the income variation.
• Wage earner reaching for a higher loan amount. W-2 alone qualifies for a $700K loan. Stacking with asset depletion pushes the qualification to $900K or more.
• Borrower with one strong year and one weak year. Use whichever income source is most favorable, plus asset depletion as the second leg.

Reach out and we’ll model what your scenario qualifies for.

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

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

• Retirees: Perfect fit. Saved all your life. Living off investments. No W-2 income. Asset depletion was made for you.
• Early retirees: 50s or early 60s. Left corporate world. Portfolio sustains lifestyle. Traditional income? Zero. Asset depletion? Works perfectly.
• Business sale proceeds: Just sold your company. $2M sitting in accounts. No ongoing income yet. Asset depletion bridges the gap. Real estate investors should explore DSCR loans for rental properties.
• Trust fund beneficiaries: Family money. Substantial assets. Limited earned income. Asset depletion gets you qualified.
• Divorce settlements: Received substantial settlement. Assets are there. Income isn’t. Asset depletion makes sense.

Entity owners with LLC holdings and substantial liquid assets can combine asset depletion with specialized entity financing for complex ownership structures.

Had a client who sold her medical practice at 54. $3.1M from the sale. Planning to consult part-time eventually but taking a year off. Traditional lenders rejected her. Asset depletion qualified her at $12,917 monthly income using 240 months. Bought $950k house in Santa Barbara. 740 credit. 25% down. Closed in 40 days.

Another client. Inherited $2.2M at 48 years old. Working part-time by choice making $35k yearly. Traditional lenders wouldn’t approve anything meaningful. Asset depletion used his assets. Qualified him for $650k loan. Got a great house in Sacramento. 710 credit. 20% down. Changed his life.

You Don’t Actually Deplete Assets

Despite the name, you keep your money. The calculation is just for qualifying income. Your $1.5M stays invested. Grows. Compounds. You make mortgage payments from wherever you want.

Some people think asset depletion means you draw down accounts to pay the mortgage. Wrong. It’s just math for qualification. Once approved, your assets stay untouched.

How Do Asset Depletion Loans Fit the California Market?

How Do Asset Requirements Vary Across California Regions?

California homes are expensive. Median price around $785k. Need serious assets to qualify through depletion.

• San Francisco Bay Area: $500k minimum usually works for $650k loans. $1M+ is better.
• Los Angeles: Similar. Expensive market needs substantial assets.
• San Diego: Slightly lower but still pricey. $750k minimum assets recommended.
• Sacramento: More affordable. $500k in assets can work well here.
• Coastal areas: Premium markets need premium assets. $1M+ is common requirement.

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

• Pre-approval: 3 to 5 days once we have asset statements. Calculate income. Run credit. Done.
• Full approval: 30 to 45 days typical. Manual underwriting takes time. Asset verification. Account reviews. Not fast but thorough.
• Communication matters: Underwriters ask questions about accounts. Source of funds. Investment strategy. Respond quickly. Keeps process moving.

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

How Does This Compare?

Asset depletion advantages:

• No income documentation needed
• Use wealth not wages
• Keep assets invested
• Clean qualification path

Bank statement comparison: Asset depletion usually better for retirees. Bank statements better for self-employed with business income. Active business owners with substantial cash flow should start with bank statement programs.

CPA P&L comparison: P&L better if you have business showing profit. Asset depletion better if retired or not working. Tech employees with equity compensation should explore stock award loans for RSU income qualification.

Traditional conforming loan comparison: Conventional better if you have W-2 income. Asset depletion better if income-light but asset-rich.

Had a client who qualified three different ways. W-2 income from consulting: $650k loan. Bank statements from side business: $725k loan. Asset depletion from $2.1M portfolio: $900k loan. Went with asset depletion. Highest qualification. Best for his needs.

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

Asset depletion isn’t temporary. It’s permanent financing. Your assets stay invested. Mortgage gets paid from whatever income sources you choose. No requirement to liquidate.

Market drops 20%? Doesn’t matter. Loan already closed. Your assets could go to zero and loan doesn’t change. They qualified you at closing. Done deal.

Assets grow 30%? Great. More wealth. Loan balance drops over time. You’re building equity while assets compound.

Many clients keep asset depletion loans long-term. No reason to refinance if rate is reasonable and payment works. Simple. Clean. Done.

Should You Get an Asset Depletion Loan in California?

Asset depletion loans were designed for exactly this situation – substantial wealth, limited traditional income. California’s expensive market makes them particularly valuable.

$500k minimum gets you started. $1M+ opens up better programs. Excellent credit helps. Conservative down payments work best.

Been helping high-net-worth and retired clients for decades. Traditional lenders don’t understand this market. We do. Call (510) 589-4096 to discuss your specific situation or view all special income documentation programs.

Explore More Income Documentation Options

Not sure if asset depletion fits your situation? Compare our other special income documentation programs including bank statement loans, CPA profit-loss statements, and stock award income options to find the right qualification path.

View All California Loan Programs →