An asset depletion loan is a type of mortgage designed for borrowers who may not have significant income but have substantial liquid or near-liquid assets. It allows lenders to qualify borrowers based on the value of their assets, which are “depleted” over time to simulate income. This is an ideal option for retirees, investors, or high-net-worth individuals with limited cash flow but significant savings, investments, or other financial resources.
Who Can Benefit from Asset Depletion Loans?
- Retirees: Individuals living off retirement savings rather than employment income.
- Investors: Those with substantial holdings in stocks, bonds, or other investments but low taxable income.
- Self-Employed Individuals: Business owners with assets but limited or variable income.
- High-Net-Worth Individuals: Borrowers who have significant assets but choose not to take income or who minimize taxable income for strategic reasons.
Advantages of Asset Depletion Loans
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