Asset Depletion Loans in South Carolina: A Smart Strategy for Pre-Retirees with Significant Portfolios

Why Pre-Retirees in South Carolina Need Alternative Lending Options

For many borrowers in South Carolina approaching retirement, qualifying for a mortgage through traditional lending channels can be surprisingly difficult. These individuals often have significant assets—retirement accounts, brokerage portfolios, and savings—but limited earned income. Traditional lenders rely heavily on W-2 wages, pay stubs, and tax returns to verify income. Pre-retirees who have left the workforce or reduced their hours find themselves at a disadvantage even though they have substantial wealth.

This disconnect leaves many South Carolina pre-retirees unable to secure the mortgage financing they need to purchase a retirement home, downsize into a more manageable property, or buy a second home near the coast. Asset depletion loans provide a smart solution. Instead of focusing on earned income, these programs consider a borrower’s assets as a source of repayment, offering greater flexibility for individuals with strong portfolios but limited traditional income.

What Are Asset Depletion Loans?

An asset depletion loan is a type of Non QM Loan that allows borrowers to qualify by converting their assets into income. Rather than looking solely at wages, the lender calculates how much income a borrower could reasonably generate by depleting their assets over a certain period, often 84 to 120 months. The total eligible assets are divided by that period, and the result is treated as monthly qualifying income.

For example, a borrower with $1.2 million in eligible assets may have $10,000 per month added as qualifying income if the lender uses a 120-month divisor. This calculation can dramatically increase borrowing power for pre-retirees who no longer receive steady paychecks but maintain strong investment and savings balances.

Asset depletion loans are ideal for individuals who have substantial liquid assets, retirement accounts, or investment portfolios, are pre-retirees transitioning out of the workforce, need flexibility to qualify without showing W-2 or self-employment income, or want to leverage wealth for home purchases or refinancing in South Carolina’s attractive housing market.

Key Benefits for South Carolina Pre-Retirees

The greatest benefit of asset depletion loans is that they recognize financial strength beyond income. Many pre-retirees have spent decades building portfolios designed to support them in retirement. Asset depletion programs give them credit for those efforts.

Flexibility is key. Borrowers can use a variety of asset types, including checking and savings accounts, stocks, bonds, mutual funds, retirement accounts, and in some cases vested stock options. Liquid assets are generally given more weight, while retirement funds may be discounted depending on age and accessibility. This means a borrower with a diversified portfolio can maximize qualifying income without needing to sell or liquidate holdings.

Loan-to-value ratios can be competitive, often allowing financing up to 80% of a property’s value. Debt-to-income allowances are also more forgiving than traditional lending, providing options for borrowers with complex financial profiles. For pre-retirees in South Carolina, this means the ability to purchase property in Charleston, Hilton Head, Greenville, or other desirable locations without unnecessary roadblocks.

South Carolina Market Snapshot for Pre-Retirees

South Carolina is one of the nation’s most attractive states for retirees and pre-retirees. Cities like Charleston and Hilton Head offer coastal charm, historic character, and resort-style living. Greenville has become a hub for arts, culture, and dining in the Upstate, attracting professionals transitioning into retirement. Columbia, the state capital, combines affordable living with access to major healthcare providers.

Population growth has been steady, with many retirees relocating from higher-cost states in the Northeast and Midwest. South Carolina’s tax policies, including relatively low property taxes and no state estate tax, further enhance its appeal. Housing ranges from luxury waterfront estates to affordable suburban homes, providing options for a wide range of pre-retiree buyers. Asset depletion loans empower these buyers to purchase property based on their true wealth rather than limiting them to narrow income definitions.

How Asset Depletion Loans Work for Pre-Retirees

Asset depletion loans translate portfolio value into qualifying income. Lenders apply specific formulas depending on the type of asset. Liquid assets like savings and checking accounts may be counted at 100% of value. Brokerage accounts may be counted at 70% or more, while retirement accounts are often weighted differently depending on age. If the borrower is under 59½, retirement funds may be discounted to account for potential penalties or restricted access.

Consider a couple in Charleston with $2 million in retirement and brokerage assets but limited earned income. Using an asset depletion loan, the lender may assign $14,000 per month as qualifying income. This calculation enables them to qualify for a mortgage they could not obtain with tax returns alone. The assets remain invested, and the borrowers are not required to liquidate them. Instead, the loan is structured on the assumption that the assets could support repayment if necessary.

This structure allows pre-retirees to purchase vacation homes along the South Carolina coast, refinance existing mortgages, or downsize into communities designed for aging in place. It provides flexibility without forcing premature withdrawals or asset sales.

Loan Terms and Guidelines for Asset Depletion Programs

While guidelines vary by lender, most asset depletion loans share common features. Loan amounts can be substantial, ranging from $100,000 to several million depending on borrower profile and property value. Loan-to-value ratios often reach up to 80%, providing strong purchasing power. Minimum credit scores generally start in the mid-600s, though higher scores may secure more favorable terms.

Reserves are typically required, ensuring borrowers maintain sufficient liquidity after closing. Property types eligible under asset depletion loans include primary residences, second homes, and in some cases investment properties. For South Carolina pre-retirees, this means financing flexibility whether they want a coastal condo in Myrtle Beach, a single-family home in Greenville, or a historic property in Charleston’s downtown.

Comparing Asset Depletion Loans to Other Non QM Products

Asset depletion loans are particularly valuable for pre-retirees, but brokers should understand how they compare to other Non QM options. Bank statement loans are designed for self-employed borrowers who can demonstrate income through deposits rather than tax returns. These are best suited for active business owners rather than retirees. DSCR loans, on the other hand, focus on property-level income and are ideal for investors acquiring rental properties. ITIN loan programs can help foreign nationals planning retirement in South Carolina who want to leverage international assets for property purchases.

By understanding the full range of Non QM products, brokers can better match clients to the right solution. A pre-retiree with significant assets and no employment income is best served by asset depletion. A semi-retired individual with ongoing consulting income may benefit from a bank statement loan. An investor purchasing a rental home in Columbia could qualify through DSCR financing. Each program has unique strengths that complement client profiles.

Local Considerations for South Carolina Borrowers

Real estate markets across South Carolina present unique opportunities for pre-retirees. Charleston’s historic neighborhoods and waterfront communities remain in high demand, offering lifestyle and investment value. Hilton Head and Myrtle Beach are vacation destinations where pre-retirees often purchase second homes that may later become primary residences. Greenville and Spartanburg attract retirees seeking affordability combined with cultural amenities. Columbia offers proximity to healthcare and government services with a more affordable cost of living.

These local dynamics make South Carolina an attractive state for asset depletion lending. Brokers who understand regional markets can guide clients toward properties that align with both financial goals and lifestyle preferences. For example, a borrower using an asset depletion loan to purchase in Charleston may want to consider insurance and flood-zone requirements, while one buying in Greenville may prioritize walkability and access to downtown amenities.

How Brokers Can Position Asset Depletion Loans

Mortgage brokers and loan officers play an important role in educating clients about asset depletion loans. Many pre-retirees assume they cannot qualify for financing without earned income, so it is essential to explain how portfolios can be converted into qualifying income. Reviewing eligible asset types, preparing account statements, and clarifying reserve requirements are all steps that brokers can take to prepare clients.

Transparency is key. Brokers should explain that while asset depletion loans provide flexibility, they still require careful documentation. Lenders will request recent account statements, verify asset ownership, and apply conservative calculations. By setting expectations early, brokers can build trust and streamline the approval process.

The Long-Term Value of Asset Depletion Loans

Asset depletion loans do more than provide immediate access to financing; they also help pre-retirees structure their financial lives during a major transition. By using these loans, borrowers can downsize without liquidating investments, relocate to retirement-friendly areas, or purchase vacation homes that later become retirement residences. They also preserve liquidity by allowing assets to remain invested rather than sold prematurely.

For many South Carolina pre-retirees, this strategy creates peace of mind. They can move into the homes and communities they prefer without worrying about whether tax returns reflect enough income. They maintain financial independence while building equity in real estate that can support long-term wealth.

Internal Resources for Brokers and Borrowers

Brokers working with pre-retiree clients should leverage the tools available through NQM Funding. Clients can begin the process with the Quick Quote tool to explore prequalification. Brokers can reference the DSCR loan program when assisting clients with investment properties. Bank Statement and P&L loan programs may be appropriate for semi-retired individuals with business income. For foreign nationals planning retirement in South Carolina, the ITIN Guidelines offer additional solutions. More general information about Non QM Loan Lenders can be found on the homepage.

FAQs for South Carolina Pre-Retiree Borrowers

What types of assets can be used to qualify?

Eligible assets typically include checking and savings accounts, CDs, stocks, bonds, mutual funds, and retirement accounts. Some lenders may also consider vested stock options or business assets under certain conditions.

Do I need to liquidate my assets to qualify?

No. Lenders calculate qualifying income based on account values without requiring liquidation. Borrowers retain full control of their portfolios.

What credit scores are generally required?

Most programs require at least a mid-600s credit score, though stronger credit may improve terms and rates.

Can I use retirement accounts before age 59½ for qualification?

Yes, but they may be discounted to account for penalties or restricted access. Lenders typically weight accessible funds more heavily than restricted ones.

Are second homes or investment properties eligible?

Many programs allow for second homes, and some extend to investment properties. Guidelines vary, so brokers should confirm eligibility with lenders.

By leveraging asset depletion loans, pre-retirees in South Carolina gain access to financing solutions that reflect their true financial strength. For brokers, these loans offer a practical way to serve an important client base while helping borrowers transition smoothly into retirement.