Are you struggling to pay off high-interest credit card debt or medical bills?

Have you been denied a traditional loan due to low income? An asset depletion loan may be the solution you’ve been searching for.

This type of loan allows individuals with little or no income to borrow against their assets, such as savings and investments, to pay off debt and cover expenses.

In this blog, we’ll take a deep dive into what asset depletion loans are, how they work, and the pros and cons to help you decide if this is the right option for you.

Let’s dive right in!


First Things First: What Is an Asset Depletion Loan?

To put it simply, asset depletion is a method of qualifying for a loan by using considerable assets rather than employment income.

That is, you do not need to earn a big salary to apply for this type of loan. Let’s say you’re a freelancer or have a part-time job. Perhaps you, too, are a stay-at-home husband or wife. You can still acquire a good mortgage with this sort of deal if you have alternative assets.

However, you must keep in mind that not every asset will be accepted. The assets you apply, which is the case with most of the lenders that offer this type of loan, must be liquid. This includes savings accounts, retirement accounts, investment accounts (like stocks and bonds), and checking accounts.

How Does It Work?

lender accepts your application

What happens once the lender accepts your application? Here, you can find out how an Asset depletion loan works and what you’ll need in more detail.

In the short term, you must have all the details of your assets in your application. This also includes the types of accounts you have and their relative worth.

To calculate a hypothetical cash annuity stream, lenders multiply the total worth of a borrower’s eligible assets by several months (usually 240 or 360). This sum is included on a borrower’s loan application as “other income.” This allows the lender to determine how much of a mortgage an applicant can afford.

Who Can Benefit from This Type of Loan?

Asset Depletion Loan benefits

If you have access to some sort of liquid assets (maybe because of your retirement wages), or you’ve simply saved up a lot of money during your life – this is the type of mortgage for you!

Sadly, many owners of small businesses have a problem when it comes to their creditworthiness. So, if you are self-employed, you’re probably familiar with the struggle of meeting the requirements using a conventional way, such as providing tax returns or simply not having a variable income.

Asset depletion house loans are an excellent choice for people who don’t work a usual 9-to-5 type of job but own a significant amount of assets.  This kind of loan is also the perfect solution for senior borrowers who no longer plan to have regular jobs and would rather rely on their retirement savings.

It’s also important to note that only a portion of an asset’s entire worth may be used by lenders to determine how much you can pay, which can be a calming factor when it comes to applying for an asset depletion loan. 

Pros And Cons of Asset Depletion Loan

Pros And Cons of Asset Depletion Loan

Like with any other type of loan, an asset depletion loan has its advantages and disadvantages, too.


  • As stated above, if you don’t have a steady source of income from a job or simply have a large number of liquid assets, asset depletion loans are an excellent alternative.
  • Various sorts of assets can be considered. This includes retirement accounts for senior borrowers, savings accounts, checking accounts, or even certificates of deposit (CDs).
  • Lenders usually count one hundred percent of the funds for liquid assets.


  • If you want to use your retirement savings fully as your liquid asset, you must be already retired.
  • This type of mortgage requires a larger down payment. This usually goes from 20% to 40% compared to qualified mortgages.
  • Requirements for minimum credit scores are higher. Since this isn’t a conventional type of credit, it is understandable that stronger credit scores are expected (a score of 680 to 700 on the credit report).

What Can I Expect?

variable income

Let’s take a look at an example. Let’s say you’re a retired citizen with no variable income.
You have retirement savings of $800,000. You also have some kind of liquid asset of $1,000,000 worth. What can you expect?

Since you’re already retired, you can get 100% of the money from your retirement account.

Your liquid assets can also give you 100% of their worth.  So, an equation could look something like this:
Your retirement account + your liquid assets account / month(s) = your monthly income.

In this case: ($8,000 + $1,000,000) / 360 months = $5,000

Of course, this is just a simple example. In reality, all of this can vary based on the percentage of your assets’ worth and the length of the contract.

Asset Depletion Loan Requirements

Here are all of the requirements you must meet in order to successfully apply for an asset depletion loan: 

  • You must have a strong credit score.
  • You must be of acquired age to use your retirement savings as your asset.
  • You must have at least twice the amount that you request to loan in your assets.
  • You make minimal income.
  • You make no income.
  • A primary residence, second residence, or investment property must be the subject property. This includes co-ops, condos, and family homes.

Let’s Sum Things Up

It’s important to remember that different lenders offer different types of mortgages. Additionally, not every lander has the same criteria.  Because of that, it’s crucial that you do your research beforehand.

Now that you are familiar with the basics of asset depletion loans, you can continue to search for banks and businesses that will work in your favor. It’s a good idea to compare the offers before making your final decision.

Also, you should consider your long-term financial status before applying for a loan. These are major issues that require serious thought.  As much as you trust the company you’re working with, you should be confident in your own circumstances.

Fortunately, access to information has never been easier. Many loan providers make all of their requirements and offer available online, which will help you save a ton of time. Some of them even provide online counseling to assist you! This way, you can ask for any additional information you need.

Once you’ve “shopped around,” compared all the offers, and selected the one that best suits your needs, you can be certain that you’ve made the best possible decision. Good luck!

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Arnab Das is a passionate blogger who loves to write on different niches like technologies, dating, finance, fashion, travel, and much more.

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