1. What is the Asset Depletion Calculator?

The Asset Depletion Calculator estimates monthly income for Fannie Mae loan qualification by calculating how much income can be generated from liquid assets after accounting for required reserves.

2. How Does the Calculator Work?

The calculator uses the asset depletion formula:

Where:

• \( Assets \) — Total liquid assets (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 assets after setting aside required reserves, spread over a 30-year period.

3. Importance of Asset Depletion Calculation

Details: Asset depletion income is crucial for loan qualification, especially for self-employed borrowers or those with significant assets but irregular income. It helps lenders assess a borrower's ability to make mortgage payments.

4. Using the Calculator

Tips: Enter total assets and required reserves in dollars. Both values must be valid (non-negative, assets ≥ reserves).

5. Frequently Asked Questions (FAQ)

Q1: What types of assets qualify for asset depletion?
A: Typically, liquid assets such as cash, savings, investments, and retirement accounts. Real estate and business assets usually don't qualify.

Q2: How are reserves determined?
A: Reserves typically include several months of mortgage payments, property taxes, insurance, and other housing expenses.

Q3: Why is 360 used as the divisor?
A: 360 represents 30 years of monthly payments (30 years × 12 months), which is the standard timeframe for mortgage loans.

Q4: Can asset depletion income be combined with other income?
A: Yes, lenders often allow combining asset depletion income with other verifiable income sources to qualify for a loan.

Q5: Are there limitations to asset depletion calculations?
A: Yes, lenders may apply haircuts to certain asset types, and the calculation may vary based on specific loan programs and lender requirements.