California Asset Depletion Mortgage: A Smart Solution for High-Net-Worth Borrowers

Why California Investors Use Asset Depletion Loans

California is home to a large population of high-net-worth individuals, retirees, and self-employed entrepreneurs—many of whom find it difficult to qualify for conventional loans due to low “on paper” income. Whether you’re buying a luxury home in Napa or expanding your investment portfolio in Los Angeles, an asset depletion mortgage lets you qualify based on your liquid assets instead of tax returns.

What Is a California Asset Depletion Mortgage?

A California asset depletion mortgage—also called an asset-based loan—allows you to qualify for a mortgage using investments, savings, or retirement funds instead of employment income.

Lenders calculate an “imputed income” by dividing your total liquid assets by 60–120 months, depending on program terms.

This is especially helpful for:

• Real estate investors who show minimal taxable income
• Retirees with no active income
• Entrepreneurs or business owners with fluctuating earnings
• Trust beneficiaries or newly liquid individuals

How Asset-Based Income Is Calculated

Most lenders use this basic formula:

Total Eligible Assets / 120 months = Monthly Qualifying Income

For example:

• $1.2 million in assets → $10,000/month of qualifying income
• Used to meet debt-to-income (DTI) requirements

The depletion period may vary (some use 60 months), and certain assets are discounted (e.g., retirement accounts).

Who Qualifies in California?

To qualify, most California lenders require:

• Minimum Credit Score: 680–700+
• Minimum Assets: Typically $500,000–$1 million
• Down Payment: 20–30% for most investment or high-value properties
• Residency Type: Can be used for primary, secondary, or investment properties
• Loan Sizes: Up to $3–5 million with luxury and jumbo options available

💡 Pro Tip: Use this strategy to finance properties in Beverly Hills, San Diego, or Silicon Valley—even if you’re not currently earning traditional income.

Key Benefits for California Real Estate Investors

• ✅ No W-2s or Tax Returns Required
• ✅ Ideal for LLC or Trust Structures
• ✅ Flexible Debt-to-Income Calculations
• ✅ Faster Approvals in Non-QM Lending Space
• ✅ Works with DSCR or Portfolio Lending for Larger Portfolios

This loan opens doors for high-value real estate purchases—without income stress or outdated underwriting models.

Eligible Asset Types (and What Doesn’t Count)

✅ Typically Counted

• Checking & savings accounts
• Brokerage/investment accounts (stocks, bonds, mutual funds)
• Retirement accounts (discounted, unless already drawing income)
• Trust accounts (if accessible and documented)
• CDs or annuities (with withdrawal access)

❌ Not Typically Counted

• Real estate equity (use HELOC or DSCR loan instead)
• Illiquid business assets
• Restricted stock (in some cases)
• Assets already pledged as loan collateral

California-Specific Guidelines and Considerations

• Higher Property Values: Most borrowers in CA use asset depletion to qualify for jumbo loans over $1M+.
• Investment Flexibility: Can be paired with DSCR loans for buy-and-hold rental properties.
• Lender Variety: Many California-based non-QM lenders, private banks, and credit unions offer this product.
• Escrow Requirements: California requires certain escrow and disclosure practices that may slightly extend closing time—but asset depletion loans still close faster than conventional alternatives.

Best Alternatives to Asset Depletion Loans

If asset-based lending isn’t quite the right fit, try:

🏦 Bank Statement Loans

Use 12–24 months of deposits to qualify. Ideal for self-employed borrowers with strong cash flow.

🧾 DSCR Loans

For income-producing investment properties. Based on rental income, not personal income.

💼 Portfolio Lending

Custom lending solutions from private banks. Often used by high-net-worth individuals with complex finances.

Final Thoughts: Should You Use Asset-Based Financing?

A California asset depletion mortgage is one of the most flexible, investor-friendly financing tools on the market. If you have significant assets but little verifiable income, this strategy lets you qualify for large, competitively priced mortgages without the hassle of tax documents or income audits.

Whether you’re buying a vacation home in Lake Tahoe or scaling your rental portfolio in Orange County, asset-based lending might be your best option in 2025.