Asset depletion
California
You are not short of money.
You are short of a paycheque.
Conventional underwriting wants recurring monthly income it can prove will continue. A portfolio quietly doing its job does not look like that on paper. Asset depletion converts eligible holdings into a qualifying income figure under the lender’s own formula — with nothing sold, moved, or pledged.
The premise
Wealth and income are not the same document.
A mortgage file is built to answer one question: can this person make the payment every month for a long time? Conventional underwriting answers it with a payslip, because a payslip is easy to verify and easy to project forward. It is a reasonable default that happens to fail an entire category of borrower.
Someone who spent forty years accumulating rather than earning a salary can be turned down for a house they could pay cash for. Nothing about that borrower is risky. The document is simply the wrong shape, and asset depletion is the standard, fully-underwritten way of using the right one.
What changes
Four things read differently.
Point 01
What counts as income
The standard box asks for
Recurring monthly income you can prove will continue — a salary, a pension, a distribution with a history behind it.
What we read instead
Qualifying income calculated from eligible liquid and retirement holdings under the lender’s stated formula.
You are not borrowing against the portfolio. You are being allowed to have it counted.
Point 02
The portfolio itself
The standard box asks for
Treated as reserves — proof you could survive a few bad months, and nothing more than that.
What we read instead
Treated as the qualifying source, divided across a defined period to produce a monthly figure.
Same statements, same balances. A different question asked of them.
Point 03
Which accounts are eligible
The standard box asks for
Largely irrelevant, because the balance was never the qualifying number in the first place.
What we read instead
Highly relevant. Retirement accounts, taxable brokerage, and cash are weighted differently, and access age matters.
This is where the arithmetic is actually decided, and where getting advice early is worth the most.
Point 04
Whether you have to sell anything
The standard box asks for
Often the practical outcome — liquidate, season the funds, and show it as cash.
What we read instead
Nothing is required to be sold or moved. The formula reads the holdings where they sit.
Selling to qualify can trigger a tax event you did not need. Ask your CPA before anyone tells you to liquidate.
What the calculated income has to carry
A fixed qualifying figure meets a very unfixed California payment.
Asset depletion produces one number. That number then has to cover a payment whose taxes and insurance are set locally and vary enormously across the state. It is the reason two houses at the same price can produce two different answers.
Special taxes
A Mello-Roos or CFD special tax is not based on assessed value, so it does not shrink when you negotiate the price. It sits in the qualifying payment at full weight — and the newer master-planned tracts across Placer, Sacramento and El Dorado counties carry serious ones.
Fire-zone insurance
A home in a Very High Fire Hazard Severity Zone can insure at a multiple of an identical house a few miles downhill, and a FAIR Plan policy with a wrap is now ordinary in the foothills and the coastal ranges. For a fixed qualifying income, that premium is the difference-maker.
The supplemental bill
California reassesses at your purchase price, so a long-time owner is showing you a tax bill you will never pay. The supplemental arrives months after closing, and underwriting qualifies you on the reassessed figure, not theirs.
Utility territory
PG&E, SMUD, Roseville Electric, SCE and Liberty Utilities are nowhere near each other on cost, and nothing in a listing tells you which one you just bought. On a fixed drawdown it is a real line in the budget.
We built a separate tool that resolves a specific California address to its real parcel data — the actual special taxes, the fire-zone posture, the utility territory, the reassessment — and returns the complete cost of owning it. It is free and it is not a mortgage pitch.
Open HiddenHomeCostThe review
Four questions, then a real answer.
Three of them are about your situation and the fourth is how to reach you. No account numbers, no balances, no credit pull. Aaron reads these himself, and if a conventional loan serves you better that is what you will be told.
01
02
03
04
Step one
What are you financing?
Buying a home to live in
Buying a second home
Refinancing what I already own
Downsizing or relocating
Questions
The ones that come up first.
It is a loan that converts eligible liquid and retirement holdings into a monthly qualifying income figure using the lender’s published formula, for borrowers whose wealth does not arrive as a monthly paycheque. Nothing is pledged, nothing is liquidated, and the holdings stay where they are. It is a documentation method, not a loan against your portfolio.
No. The formula reads the holdings in place. If someone tells you the only path is to liquidate and season the cash, get a second opinion — selling to qualify can create a tax event you did not need, and that is a question for your CPA rather than your lender.
Eligibility and weighting differ by lender, and the differences are not small. Taxable brokerage, retirement accounts and cash are commonly treated differently from one another, and access age can matter. Because the formula varies, the same portfolio can produce noticeably different qualifying income at two lenders.
No, though retirees are the most common case. It also fits someone between roles, a borrower whose income is lumpy and mostly realised as gains, or an heir whose assets arrived faster than an income history could. What the profiles share is substantial holdings and thin reportable monthly income.
Usually yes — social security, a pension, part-time work or rental income can generally be combined with the calculated figure. It is common for asset depletion to be the piece that bridges a gap rather than the whole qualification.
Generally yes. Alternative documentation carries a cost. If your documented income supports a conventional approval, that is the better loan and you will be told so. For most borrowers on this page the honest comparison is not against a cheaper loan — it is against no loan.
Cali Mortgage · Serving all of California
Nothing needs to be sold to find out.
A short conversation is usually enough to know which accounts are eligible and roughly what they produce. If the number does not reach, you will hear that quickly and with a reason.
Self-employed rather than retired? A bank statement loan may fit better. Or see every specialty and non-QM program.