Asset Depletion Loans in Colorado: How Retirees and High-Net-Worth Buyers Qualify Without W-2 Income

By Prerna Kapoor, CLHMS | REAL Brokerage | July 6, 2026

A recently retired couple looking in Cherry Creek this year had a strong investment portfolio and almost no reportable income on paper. A standard lender looked at their tax returns and saw very little to qualify against, even though they had more than enough net worth to comfortably afford the house. That’s exactly the situation an asset depletion loan is built for, and I’ve had more of these conversations lately as more of my clients retire early or sell a business and buy their next home on a portfolio instead of a paycheck.

Here’s how asset depletion actually works, what counts toward it, and who it makes sense for.

What an asset depletion loan actually is

An asset depletion loan, sometimes called an asset-based or asset-utilization loan, lets a lender calculate an imputed monthly income figure from your liquid assets instead of relying on W-2 wages or tax return income. The lender takes your eligible asset balance, divides it by a set number of months, often 240 or 360, and treats that result as if it were monthly income for debt-to-income purposes. You’re not selling or moving the money. It stays invested. The lender is simply using the balance as evidence you can support the payment.

This isn’t a conforming Fannie Mae or Freddie Mac product in most cases. It’s typically a non-QM or portfolio loan program, which means fewer lenders offer it, and the ones that do set their own rules for what counts and how it’s calculated.

What counts as a qualifying asset, and what doesn’t

Retirement accounts, brokerage and investment accounts, and often cash reserves are the core of what lenders will count. Retirement accounts usually get a discount applied first, commonly around 70% of the balance, since you’d owe taxes and possibly penalties to access that money before 59 and a half. Real estate equity, business equity, and most retirement income that’s already being distributed as a pension or annuity typically get evaluated differently, since they’re either illiquid or already counted as income elsewhere.

Lenders will usually want two to three months of statements at minimum, sometimes twelve, to verify the balance has been seasoned and isn’t a recent, unexplained deposit.

Why the math isn’t a 1-to-1 conversion of your balance to income

The discount factor and the division period both matter more than people expect. A $2 million portfolio divided by 360 months produces a very different qualifying income figure than the same amount divided by 240, and that difference can be the gap between approval and denial on a specific purchase price. Some lenders will let you choose a shorter divisor if you can show the loan will be paid off or refinanced well before you’d exhaust the assets, but that’s a negotiation, not a default.

I always tell clients to get the actual calculation in writing from the lender before we write an offer based on it. I’ve seen two lenders quote noticeably different qualifying amounts off the exact same asset statement.

Who this actually works for

This tends to fit retirees living off a portfolio rather than a paycheck, someone who recently sold a business or had a large liquidity event and hasn’t yet converted it into a steady income stream, and high-net-worth buyers whose reportable income looks thin next to their actual net worth. It works less well for someone whose only significant asset is retirement savings they genuinely need to preserve, since stretching to qualify this way can mean depleting a cushion that was meant to last for decades.

Quick answers

Do I have to actually spend down my assets to use this loan? No. The balance is used to calculate a qualifying income figure. You keep the money invested and continue managing it as you normally would.

Is the interest rate higher than a standard mortgage? Often slightly, since most asset depletion programs are non-QM. Shop more than one lender, since pricing varies more on these programs than on conforming loans.

Can I combine asset depletion with some W-2 or 1099 income? Yes, in many cases a lender will blend actual income with the imputed asset-based figure, which can improve your qualifying number.

If you’re weighing whether an asset depletion loan makes sense for your situation, I’m happy to connect you with lenders who actually specialize in this before you start touring homes. My Colorado buyer financing playbook covers the fuller range of ways to structure a purchase, and my look at reverse mortgages in Colorado covers another option some retirees weigh against this one.

Prerna Kapoor | REALTOR® | Luxury Home Specialist
REAL Brokerage | 720-949-5450 | info@prernakapoor.com
CLHMS • RENE • PSA • ABR | International Sterling Society Award Winner

Prerna specializes in residential real estate across Parker, Aurora, Lone Tree, Castle Pines,
Highlands Ranch, Cherry Creek, Greenwood Village, and Centennial. She speaks English, Japanese,
and Hindi.