1. What Is The Asset Depletion Calculator?

The Asset Depletion Calculator for Fannie Mae Rental Property calculates monthly income based on assets and reserves. This method is used to qualify borrowers for mortgages when traditional income documentation is limited.

2. How Does The Calculator Work?

The calculator uses the asset depletion formula:

Where:

• \( Assets \) — Total assets in dollars
• \( Reserves \) — Required reserves in dollars
• \( 360 \) — Standard divisor representing 360 months (30 years)

Explanation: This formula calculates a monthly income stream by dividing the net assets (after subtracting required reserves) over a 30-year period.

3. Importance Of Asset Depletion Calculation

Details: Asset depletion income calculation is important for mortgage qualification, particularly for self-employed borrowers, retirees, or those with significant assets but irregular income patterns.

4. Using The Calculator

Tips: Enter total assets and required reserves in dollars. Both values must be non-negative numbers. The calculator will compute the monthly qualifying income.

5. Frequently Asked Questions (FAQ)

Q1: What types of assets can be included?
A: Typically includes liquid assets such as cash, stocks, bonds, and retirement accounts. Real estate equity may also be considered in some cases.

Q2: How are reserves determined?
A: Reserves typically include required cash reserves for the property plus additional months of PITI payments as required by the lender.

Q3: Why is 360 used as the divisor?
A: 360 represents 30 years (360 months), which is the standard timeframe used for asset depletion calculations in mortgage qualifying.

Q4: Can this method be used for all loan types?
A: Asset depletion is primarily used for conventional loans and must meet specific lender and Fannie Mae guidelines.

Q5: How does this differ from rental income calculation?
A: This calculates qualifying income from assets, while rental income calculations are based on actual or projected rental income from investment properties.