Home
Back
Asset Depletion Equation:
| From: | To: |
The Asset Depletion Calculator Mortgage Amortization estimates monthly income for mortgage qualification by spreading qualified assets over a 360-month (30-year) amortization period, subtracting down payment and required reserves.
The calculator uses the asset depletion equation:
Where:
Explanation: This method calculates monthly income by distributing available assets (after down payment and reserves) over a standard mortgage term.
Details: Asset depletion is crucial for mortgage qualification, particularly for self-employed individuals or retirees who may have substantial assets but lower documented income.
Tips: Enter total qualified assets in dollars, down payment amount in dollars, and required reserves in dollars. All values must be non-negative.
Q1: What qualifies as "qualified assets" for this calculation?
A: Qualified assets typically include liquid assets like cash, stocks, bonds, and retirement accounts that can be readily converted to cash.
Q2: Why is the amortization period 360 months?
A: 360 months represents a standard 30-year mortgage term, which is commonly used for mortgage qualification calculations.
Q3: How are reserves determined?
A: Reserves are typically calculated based on lender requirements, often ranging from 2-6 months of proposed mortgage payments including taxes and insurance.
Q4: Can this method be used for all mortgage types?
A: Asset depletion is primarily used for conventional mortgages and may have specific lender requirements and limitations.
Q5: How does asset depletion compare to other income calculation methods?
A: Asset depletion provides an alternative income calculation method for borrowers with substantial assets but may have different qualification standards than traditional income verification methods.