ASSET DEPLETION
Loan Limits

An Asset Depletion Purchase Loan is a specialized loan option designed for borrowers who may not have traditional income but possess significant liquid assets. This type of loan allows lenders to assess the borrower’s ability to repay by calculating “income” based on the depletion or liquidation of their assets over a set period, rather than relying on monthly employment or self-employment income.

What is Asset Depletion?
Asset depletion is a lending method in which lenders calculate an applicant’s income by dividing their liquid assets over a specified number of months (usually the term of the loan). This strategy is beneficial for individuals like retirees, investors, or those living off savings who may not have a traditional income but have considerable savings, investments, or other liquid assets.

Loan Limits for Asset Depletion Loans
The loan limits for Asset Depletion Purchase Loans can vary depending on several factors, including the lender’s policies, the value of the assets, and the borrower’s credit profile. However, most lenders follow certain common guidelines when determining the maximum loan amount that can be approved.

Loan Amount and Limits
Lenders will typically use a percentage of the borrower’s liquid assets to determine the maximum loan they can qualify for. The loan amount can vary greatly depending on the overall value of the borrower’s assets, but lenders generally set guidelines:

Conforming Loans
For loans that meet the requirements of government-sponsored entities like Fannie Mae or Freddie Mac, the loan limits for asset depletion loans generally follow the conforming loan limits. As of 2025, conforming loan limits range up to $806,500 in most areas and higher in high-cost areas up to $1,209,750

Jumbo Loans
For loans exceeding conforming limits, borrowers may qualify for jumbo loans under the asset depletion method. Jumbo loan limits can go well beyond $1 million, depending on the lender’s guidelines and the borrower’s asset profile. Some lenders may cap these loans at $2–3 million, while others may offer even higher limits based on the borrower’s financial strength.

Loan-to-Value (LTV) Ratio
The LTV ratio is a critical factor in determining loan limits. Typically, borrowers are required to make a larger down payment with an LTV ratio of 70%–80% or lower. The higher the down payment, the higher the loan limit that can be approved.

Debt-to-Asset Ratio
Lenders also look at the debt-to-asset ratio, ensuring that borrowers have enough liquid assets to not only cover the down payment and closing costs but also to meet any reserve requirements. This is especially important when calculating loan limits for high-value loans.

Reserves Requirements
Borrowers may be required to have a set amount of reserves (i.e., additional assets or savings) after closing. These reserves ensure that the borrower has enough liquidity to cover mortgage payments in the event of financial hardship. The reserve requirement often ranges from 6 to 24 months’ worth of mortgage payments, depending on the size of the loan.

Lender-Specific Limits
Since asset depletion loans are non-standardized and considered “niche” products, the actual loan limits can vary significantly from one lender to another. Each lender has its own risk tolerance and criteria for assessing liquid assets, which may affect both the loan amount and the eligibility requirements. It’s essential for borrowers to shop around and compare different lenders to find the best fit for their financial situation.

Asset Depletion Purchase Loans offer a flexible option for borrowers with substantial liquid assets but limited income, allowing them to qualify for home loans based on their asset portfolio. While loan limits can vary based on conforming or jumbo loan standards, the lender’s criteria, and the value of the borrower’s assets, having a large reserve of liquid assets is crucial to securing a loan under this method. Borrowers should carefully evaluate the lender’s loan limits, down payment requirements, and asset calculations to ensure they meet all necessary criteria.