Asset Depletion Loans in Connecticut: Smart Financing for Retired Professionals

Understanding the Financial Landscape for Retired Professionals

Connecticut is home to a large population of affluent retirees, particularly in Fairfield County, West Hartford, Avon, and shoreline communities like Guilford and Madison. These individuals often have substantial investment portfolios, but little or no verifiable monthly income. For many, the shift from a paycheck to portfolio-based income can complicate mortgage qualification—especially under traditional lending guidelines that rely on W-2s, tax returns, or employment verification.

Enter asset depletion loans: an ideal financing solution tailored for borrowers who are asset-rich and income-light. These loans allow retired professionals to leverage their liquid assets—such as cash reserves, investment accounts, or retirement funds—to qualify for a mortgage based on an imputed monthly income calculated from those assets.

What Are Asset Depletion Loans?

Asset depletion loans calculate a borrower’s qualifying income based on the value of their liquid assets, rather than traditional income documentation. The idea is simple: rather than requiring ongoing earnings, lenders divide a portion of a borrower’s assets over a fixed term (usually 84 months) to determine their monthly income.

This makes asset depletion loans perfect for:

• Recently retired professionals

• Investors living off their portfolios

• High-net-worth individuals without a regular paycheck

The qualifying formula typically looks like this: Net Qualifying Assets / 84 Months = Imputed Monthly Income

Assets must be seasoned for at least 90 days and located in a U.S. bank or financial institution. Acceptable assets include:

• Checking and savings accounts

• Money market accounts

• Mutual funds

• Stocks and bonds

• Retirement accounts (401(k), IRA—subject to access restrictions)

Ineligible assets include business accounts, unseasoned foreign accounts, restricted stock, and any asset already generating reportable income used in qualification.

Program Highlights with NQM Funding

NQM Funding’s Flex Supreme program supports asset depletion loans with competitive terms:

• Loan amounts up to $3M

• Minimum 680 credit score

• Maximum LTV reduced by 10% from standard LTVs

• Primary and second homes eligible

• Interest-only options available

• Full doc borrowers must meet all asset documentation guidelines

Asset depletion cannot be combined with other income sources. It is a stand-alone qualifying method.

Why Asset Depletion Loans Are Crucial in Connecticut

Connecticut consistently ranks among the wealthiest states in the U.S. According to recent census data, towns like New Canaan, Westport, and Greenwich have median household incomes far above the national average. The state is also home to a large population of retirees, many of whom have built wealth through corporate careers, business ownership, or strategic investing.

In Fairfield County, for example, retirees may have portfolios exceeding $1 million, but limited or no monthly income. This profile often prevents them from qualifying for traditional loans—even though they could purchase a home with cash if they chose. Asset depletion loans allow these clients to retain liquidity, potentially benefit from mortgage interest tax deductions, and increase their purchasing power.

Popular retirement destinations within Connecticut include:

• West Hartford: Proximity to Hartford and thriving suburban amenities

• Madison & Guilford: Coastal charm with access to Long Island Sound

• Farmington Valley: Upscale suburban living near Avon and Simsbury

• Stamford & Greenwich: Convenient access to New York City and a haven for portfolio-rich retirees

• New Canaan: Known for exclusivity and luxury housing, often attracting empty nesters and retirees downsizing from NYC

• Southport and Darien: Blend of historical charm, upscale retail, and water-access living perfect for retirement-aged buyers

Real estate prices in many of these markets exceed the conventional loan limits, making non-QM solutions like asset depletion especially relevant. In Westport, for instance, the median home value is over $1.5M, and many buyers rely on flexible financing options to avoid liquidating large portions of their investment portfolios.

Local Trends Driving the Need for Flexible Lending

Recent trends show an uptick in retirees migrating within the state rather than relocating out-of-state. Many choose to sell larger family homes and purchase smaller waterfront or luxury condos. Connecticut’s proximity to major metro hubs like New York and Boston makes it attractive for retirees who wish to stay near cultural, healthcare, and family amenities. Asset depletion loans allow borrowers to avoid cash-out liquidity events, especially when portfolios are sensitive to market fluctuations.

Further, the rise of boutique financial advisory firms across Connecticut presents partnership opportunities for brokers. These firms often manage high-net-worth clients approaching retirement, and they increasingly refer to mortgage brokers who understand asset-based lending. Establishing yourself as a local expert in asset depletion lending can secure ongoing referrals.

Another significant driver is Connecticut’s property tax structure. The state’s mill rate system varies by municipality, and for retirees, minimizing long-term out-of-pocket housing costs is vital. Asset depletion loans can be a solution to maintain a favorable DTI ratio even in high-tax towns. Local brokers who can help clients navigate these tax impacts while packaging strategic non-QM solutions are well-positioned to win lifelong clients.

How These Loans Compare to Other Non-QM Options

Asset depletion loans differ significantly from other non-QM loan types:

• Bank Statement Loans: Ideal for self-employed borrowers, but not typically retired ones. Learn more

• DSCR Loans: Tailored for investment properties, not personal residences. Investor DSCR

• ITIN/Foreign National Loans: Useful for borrowers without U.S. residency or SSN. Foreign National Loans

Asset depletion is singularly focused on borrowers who have high asset balances but don’t meet standard income verification requirements.

Ideal Borrower Profiles in Connecticut

Examples of borrowers who might benefit from asset depletion loans:

• A retired hedge fund manager in Greenwich purchasing a new home while maintaining investment liquidity

• A widowed homeowner in West Hartford looking to refinance and cash out equity for healthcare needs

• A former small business owner in Madison using savings and mutual funds for a second home

• A doctor who recently retired early and wants to relocate to the shoreline without pulling from retirement accounts

• A semi-retired consultant in Old Saybrook who receives only sporadic 1099 income but holds $1.2M in brokerage accounts

• A couple in Simsbury seeking to leverage $950K in cash and investments to relocate closer to family without triggering capital gains

• A recent corporate retiree in South Glastonbury who wants to build a custom home near their grandchildren without having to show traditional W-2 income

These clients often work with financial planners and CPAs who advise them against disrupting investment or retirement strategies. An asset depletion loan preserves financial flexibility.

Underwriting Standards and Asset Requirements

At NQM Funding, Flex Supreme asset depletion loans require:

• 680+ credit score

• 3 months seasoning of assets in U.S. banks

• No recent major credit events (7 years seasoning on foreclosures for FTHB)

• Ineligible for gift funds toward reserves

• Reserves required based on loan size and occupancy (refer to Matrix)

Qualified monthly income = (Eligible Assets – Down Payment – Closing Costs – Required Reserves) / 84

What Mortgage Brokers Need to Know

For mortgage brokers in Connecticut, understanding the needs of high-net-worth retirees is key. These clients often have complex financial profiles. Asset depletion loans allow brokers to:

• Offer tailored solutions for non-traditional income scenarios

• Collaborate effectively with financial advisors and wealth managers

• Compete in a high-value real estate market with flexible options

• Close deals faster using NQM Funding’s streamlined process

Brokers should also explore:

• Hosting seminars with estate planning attorneys or wealth managers in Fairfield and Litchfield counties

• Advertising in 55+ community newsletters and golf club publications

• Creating web content that includes town-specific landing pages tied to keywords like “retire in Greenwich” or “second homes in Madison”

• Networking through high-end real estate events, retirement expos, and targeted online campaigns for asset-heavy borrowers

• Offering continuing education presentations on non-QM products at local REALTOR® associations and chambers of commerce

Start by submitting your loan scenario through the Quick Quote form and connect with an experienced Non QM Loan specialist.

Frequently Asked Questions

Can retirement accounts be used? Yes, if they are accessible and not subject to early withdrawal penalties. Aged 59½+ or RMD-eligible borrowers may count these assets.

Can I mix asset depletion with part-time income or rental income? No. Under NQM’s Flex Supreme guidelines, asset depletion is not supplemental—it’s used as the sole source of income.

What if the borrower has only been retired a few months? As long as assets are seasoned for 90 days and sufficient in value, recent retirement is not a disqualifier.

Are Connecticut property taxes factored in? Yes. Property taxes, insurance, and HOA fees are included in PITIA and affect DTI calculations.

Conclusion: A Smarter Way to Lend in Connecticut

With its high concentration of wealthy retirees, Connecticut is an ideal market for asset depletion lending. By focusing on assets rather than income, brokers can serve an overlooked yet creditworthy borrower base. Whether it’s helping a retired executive purchase a home in Stamford or enabling a couple in Farmington to access home equity, asset depletion loans provide critical financial flexibility.

Brokers looking to stay competitive and serve sophisticated clients should embrace asset-based lending. Start leveraging these loans today through NQM Funding—your trusted Non QM Lender.