Asset Dissipation Loan
Asset Dissipation Loan
Asset Depletion, also known as Asset Dissipation, is a mortgage qualification method that allows you to use your liquid assets to prove income—even if you have little to no traditional employment earnings.
Instead of relying solely on a paycheck, lenders apply a specific formula to calculate how much monthly income your assets could generate, adding that amount to any other income sources you may have. This approach makes it easier to qualify for a mortgage, especially if you have substantial assets but limited steady income.
An Asset Depletion Loan can be a great solution if:
- Your assets are based in the United States.
- You plan to use trust assets and have 100% unrestricted access with the required proof.
- You have minimal employment income but a high net worth.
- You are self-employed and don’t have a traditional W-2 income.
- You are retired or nearing retirement and need an alternative way to qualify for a mortgage.
Lenders offering Asset Depletion Loan Programs recognize that financial stability isn’t just about paychecks—it’s about the value of your assets. Whether you’re a business owner, investor, or someone living off savings, this type of loan helps turn your wealth into a pathway to homeownership.
However, loan terms and calculations vary by lender, so it’s important to explore options that best suit your financial situation. For instance, a retiree with $500,000 in investments but $2000 in employment income can get a mortgage with an asset dissipation loan.
FAQs
What are the four types of asset-backed loans?
Asset-backed loans are secured loans that use valuable assets as collateral. The four main types include:
- Real Estate-Backed Loans
- Securities-Backed Loans
- Equipment-Backed Loans
- Accounts Receivable Financing
Can I take a loan out on my assets?
Yes, you can borrow against your assets through asset-backed lending. Lenders assess the value of your assets—such as real estate, stocks, retirement accounts, or high-value personal items, and offer a loan based on a percentage of their worth.
This is common in home equity loans, margin loans on investment accounts, or asset depletion loans, where financial stability is demonstrated through assets rather than income.
What are depleted assets?
Depleted assets refer to assets that have been used up, diminished in value, or exhausted over time. This is most common in:
- Natural resources (such as oil, gas, or minerals) that get extracted.
- Investment funds or savings accounts that are drawn down over time.
- Fixed assets (such as machinery or vehicles) that lose value due to wear and tear.
Which asset depletion is applicable?
Asset depletion is typically applicable when qualifying for a mortgage without a steady income. It is most useful for:
- Retirees who have substantial savings but no W-2 income.
- Self-employed individuals with fluctuating or minimal reported income.
- High-net-worth individuals who prefer leveraging their wealth rather than proving employment income.
What is an asset utilization loan?
An asset utilization loan (similar to an asset depletion loan) allows borrowers to use their assets instead of traditional income to qualify for a mortgage or other financing.
Lenders assess bank balances, retirement funds, investments, or trust assets and calculate a monthly income equivalent. This loan type is ideal for wealthy individuals, retirees, or business owners who have significant assets but may not show high taxable income.
