1. What Is The Asset Depletion Calculator?

The Asset Depletion Calculator estimates monthly income based on qualified assets according to Fannie Mae guidelines. This method is used to calculate qualifying income for mortgage applicants who have substantial assets but may not have traditional income sources.

2. How Does The Calculator Work?

The calculator uses the asset depletion formula:

Where:

• \( Assets \) — Total qualified assets (dollars)
• \( Down\ Payment \) — Down payment amount (dollars)
• \( Reserves \) — Required reserves (dollars)
• \( 360 \) — Standard divisor representing 30 years of monthly payments

Explanation: This formula calculates the monthly income that can be derived from liquid assets after accounting for the down payment and required reserves, spread over a 30-year period.

3. Importance Of Asset Depletion Calculation

Details: Asset depletion income calculation is crucial for mortgage qualification, particularly for self-employed individuals, retirees, or those with significant assets but irregular income patterns. It helps lenders assess borrowing capacity based on liquid assets.

4. Using The Calculator

Tips: Enter all amounts in dollars. Ensure assets value represents qualified liquid assets. Down payment and reserves should reflect actual or planned amounts. All values must be non-negative.

5. Frequently Asked Questions (FAQ)

Q1: What qualifies as "assets" for this calculation?
A: Qualified assets typically include liquid assets such as cash, savings, investments, and retirement accounts. Real estate and other illiquid assets are generally excluded.

Q2: Why is the divisor 360?
A: The divisor 360 represents 30 years of monthly payments (30 years × 12 months), which is the standard timeframe used in mortgage calculations.

Q3: Are there minimum asset requirements?
A: Lenders may have specific minimum asset requirements. Generally, the remaining assets after down payment and reserves should be sufficient to generate meaningful monthly income.

Q4: How do reserves affect the calculation?
A: Reserves are subtracted from total assets because they represent funds that must be maintained and cannot be used for income generation.

Q5: Can this calculation be used for all loan types?
A: While based on Fannie Mae guidelines, specific loan programs may have variations. Always consult with your lender for program-specific requirements.