Asset Depletion Mortgages: A Real Estate Investor’s Guide to Non-Traditional Financing

Are you sitting on substantial assets but struggling to qualify for investment property loans through traditional means? Asset depletion mortgages might be your key to unlocking real estate investment opportunities. Let’s explore how your existing assets can help you secure the financing you need.

What is an Asset Depletion Mortgage?

Think of an asset depletion mortgage as a way to transform your accumulated wealth into qualifying income for a mortgage. Instead of looking at your monthly paycheck, lenders consider your total assets and calculate a theoretical monthly income based on these assets.

🤔 Ask yourself: Do you have substantial assets in retirement accounts, investment portfolios, or other liquid assets that could be working harder for you?

Key Features:

• Uses assets instead of traditional income for qualification
• Typically considers retirement accounts, investments, and liquid assets
• Perfect for real estate investors with significant assets but non-traditional income

How Asset Depletion Qualification Works

Understanding the qualification process is crucial for determining if this financing option suits your investment strategy. Here’s what you need to know:

The Basic Formula:

Lenders typically take your total eligible assets and divide them by a set number of months (usually 360 months or 30 years) to determine your monthly “income.” For example, if you have $1,000,000 in eligible assets:

$1,000,000 ÷ 360 = $2,777.78 monthly income equivalent

What Assets Count?

• ✅ Checking and savings accounts
• ✅ Investment accounts
• ✅ Retirement accounts (with specific calculations)
• ✅ Certificates of Deposit (CDs)
• ❌ Business assets
• ❌ Personal property

Benefits for Real Estate Investors

Why should real estate investors consider asset depletion mortgages? Let’s explore the unique advantages:

• Portfolio Expansion: Leverage your existing assets to grow your real estate portfolio without waiting for traditional income qualification
• Flexibility: Perfect for investors with irregular income or those between investments
• Speed: Often faster approval process compared to traditional income documentation

Ready to explore if an asset depletion mortgage is right for your investment strategy? REInvestor Guide can match you with lenders who specialize in asset depletion mortgages for real estate investors.

Asset Depletion vs. Other Investment Property Financing Options

As a savvy real estate investor, you need to understand how asset depletion mortgages compare to other financing options. Let’s break down the key differences:

Financing Options Comparison

Qualifying for an Asset Depletion Mortgage

Ready to take the next step? Here’s what lenders typically look for:

Minimum Requirements:

• Credit Score: Usually 680+ (though some lenders may accept lower)
• Assets: Typically need enough to cover:
  • The down payment (20-30% for investment properties)
  • Closing costs
  • 6-12 months of reserves
  • Sufficient assets to generate qualifying monthly income

💡 Pro Tip: Not all assets are weighted equally. Cash and marketable securities often count 100%, while retirement accounts might only be counted at 70% of their value. Consider this when calculating your qualifying assets.

How to Get Started with Asset Depletion Financing

Taking action on your investment goals starts with these steps:

1. Asset AssessmentTake inventory of your eligible assets and calculate your potential qualifying income.
2. Documentation PreparationGather these essential documents:
   • Last 2-3 months of asset statements
   • Proof of asset ownership
   • Tax returns (if required)
   • Property information for your target investment
3. Lender SelectionThis is where REInvestor Guide comes in. We’ll match you with lenders who:
   • Specialize in asset depletion mortgages
   • Understand investment property financing
   • Offer competitive rates and terms

Ready to Move Forward?

Don’t let traditional income requirements hold back your real estate investment goals. Let REInvestor Guide connect you with lenders who understand asset depletion mortgages and can help structure the right financing for your investment strategy.

Common Questions About Asset Depletion Mortgages

Can I Use Multiple Asset Types?

Yes! Most lenders allow you to combine different types of assets to reach your qualification goals. For example, you might use a combination of:

• Investment accounts
• Retirement savings
• Regular savings accounts
• Certificates of deposit

What Are the Interest Rates Like?

Interest rates for asset depletion mortgages typically run slightly higher than conventional mortgages, but they’re often more competitive than other non-QM loans. The exact rate will depend on:

• Your credit score
• The size of your down payment
• The total value of your qualifying assets
• The type of investment property

Tips for Success with Asset Depletion Financing

1. Maintain Asset Stability

Avoid major changes to your asset positions during the application process. Lenders will typically verify your assets multiple times before closing.

2. Consider Tax Implications

Consult with a tax professional about how using certain assets might affect your tax situation, especially when considering retirement accounts.

3. Plan for Reserves

Remember that you’ll need additional assets beyond what’s used for qualification to serve as reserves for your investment property.

Taking the Next Step

Asset depletion mortgages represent a powerful tool for real estate investors who have accumulated significant assets but may not have traditional income streams. Whether you’re expanding your portfolio or making your first investment property purchase, this financing option could be your path forward.

Ready to explore your asset depletion mortgage options? REInvestor Guide specializes in connecting investors like you with lenders who understand your unique situation and can offer competitive terms for investment properties.