Maine Asset Depletion Mortgages for Coastal Second Homes: Liquidity-Based Qualifying

A practitioner’s guide for mortgage brokers structuring asset-based second-home loans on Maine’s coast

Search intent and audience

This piece is built for mortgage loan officers and brokers who advise affluent clients purchasing coastal second homes in Maine—think ocean-view cottages in York and Ogunquit, classic shingled houses in Kennebunkport and Cape Elizabeth, harbor-facing condos in Portland, and retreats near Camden, Rockport, or Bar Harbor. Your borrower’s tax returns often understate capacity due to low AGI, capital losses, or conservative distributions. Asset depletion (also called asset-qualifier or asset-based income) reframes qualifying around verifiable liquid wealth. This guide shows you how to evaluate eligibility, calculate imputed income, prepare documentation, and anticipate coastal property overlays—so you can quote with confidence and close without drama.

What asset depletion is—and why it fits Maine second homes

Asset depletion turns balances into income. Rather than leaning on W-2s or K-1s, underwriting imputes a monthly income stream from eligible assets held in checking, savings, brokerage, and retirement accounts. For Maine’s second-home buyers—retirees with sizable investments, business owners between liquidity events, tech executives with vested equity, physicians or partners who deliberately manage AGI—this removes friction. It’s especially useful on the coast, where homes demand larger down payments and insurance budgets and where borrowers prefer to preserve investment strategies rather than distort distributions just to qualify.

The second-home use case matters. Occupancy in a true second home allows periodic owner use without tenant obligations, and it typically commands more favorable LTVs and pricing than pure investment properties. But many coastal buyers explore occasional short-term rental to offset carrying costs. That shift, even if seasonal, can nudge a file toward investment treatment. Asset depletion still applies, but underwriting and pricing logic change. Clarifying intended use up front is the difference between an elegant approval and a late-stage surprise.

When to choose asset depletion vs. alternatives

Asset depletion shines when liquid wealth is the story and taxable income is intentionally modest. If your client holds large brokerage balances, money markets, treasuries, or retirement assets with accessible draw-down plans, the asset-qualifier path usually beats bank statements or full documentation in clarity and speed. Bank statement qualification may still be best for self-employed borrowers whose deposits clearly reflect ongoing business performance; pair your discussion with the Bank statement mortgage resource if the deposit ledger tells a stronger story.

For buyers who intend meaningful short-term rental activity or who prefer the loan decision to hinge on property cash flow rather than personal wealth, consider whether a Investor DSCR loan is more appropriate. And when non-U.S. buyers enter the picture—common in Portland and along Midcoast harbor towns—loop in Foreign National mortgage options early to align KYC and asset documentation before the appraisal order.

Eligible asset types and the seasoning conversation

Underwriting cares about verifiable, reasonably liquid assets. Checking, savings, and money market funds are straightforward. Brokerage accounts with marketable securities—mutual funds, ETFs, blue-chip stocks, investment-grade bonds—are typically eligible at face value or with modest haircuts. Retirement accounts count with access-based adjustments: funds available without penalty may receive higher credit, while pre-59½ balances or accounts with restrictive plan rules are haircut more conservatively. Vested equity compensation (RSUs/ESPP) can be included with vesting schedules and brokerage statements; unvested equity and stock options are generally excluded. Privately held shares without an active market, thinly traded positions, and crypto assets face steep scrutiny and, in many programs, ineligibility or steep discounts.

Seasoning and sourcing remain non-negotiable. Expect to provide two to three months of statements for liquid accounts and, for large recent deposits, a paper trail that explains origin—maturity of a CD, sale of securities, a bonus, trust distribution, or proceeds from a separate refinance. The cleaner the trail, the faster the imputed-income worksheet survives credit review.

How imputed income is calculated in practice

Asset depletion programs translate eligible balances into qualifying income using one of two common methods. The first divides total eligible assets by a program factor—often 60, 84, or 120 months—to arrive at a monthly income figure. The second applies a conservative draw rate—say 2–3% annually—then divides by 12. Haircuts precede the math: retirement accounts may be reduced by 30–40% to reflect access and tax friction; concentrated single-stock positions can trigger additional discounts; margin balances and pledged accounts may be ineligible or adjusted.

Here’s a simplified framework you can mirror in pre-approval:

1. Tally eligible assets by account type and apply program haircuts (e.g., 100% to cash, 90–100% to marketable securities, 60–70% to retirement depending on age and access).
   
   
2. Sum the adjusted balances to an “Eligible Asset Base.”
   
   
3. Choose the program’s factor (example: divide by 84). The quotient is monthly imputed income.
   
   
4. Compare that figure to proposed PITIA plus consumer debt to ensure ratios land inside product limits, then layer in reserve requirements.
   
   

Brokers earn trust by sharing a worksheet that reflects the actual method your lender uses. When the borrower sees how haircuts and factors work, they can decide, for example, whether to move part of a concentrated equity position into a diversified fund or to hold extra post-close reserves to improve pricing.

Program terms brokers care about

Second-home purchases and rate/term refinances are common; cash-out is available, subject to LTV and asset-composition overlays. Maximum LTVs for second homes typically exceed those for investment properties; pricing scales with LTV, credit depth, reserve coverage, and the quality of the asset base. Some programs permit co-borrowers who contribute assets but not income in the traditional sense; others allow blended structures where one borrower provides asset-based income while another provides employment income. Regardless, anticipate meaningful reserves—often expressed as a multiple of PITIA and independent of the assets used to calculate income. That means you can’t spend down all eligible assets to close and still satisfy post-close reserve tests; plan the funds-to-close and reserve story at the same time.

Credit profiles still matter. Clean housing histories, low delinquency, and sensible revolving balances make pricing friendlier. Thin W-2 income is acceptable, but liabilities and payment performance are still evaluated. Borrowers used to private-banking conventions will appreciate a polished, “here’s how we treat your liquidity” narrative rather than a generic mortgage script.

Documentation and packaging that keeps conditions light

Start with statements for all accounts in the Eligible Asset Base—complete PDFs, not screenshots. Provide brokerage statements that show positions and cost basis; include the most recent monthly or quarterly report plus a current balance snapshot close to application date. For retirement, add plan summaries that confirm distribution rights and penalties. For equity comp, attach vesting schedules and evidence of shares deposited into a brokerage account. If a recent liquidity event underpins the purchase (sale of securities, maturing treasuries), include the trade confirms.

Identity/KYC is routine but precise on coastal files where gift funds and family trusts are common. Prepare a concise source-of-funds narrative, highlight any trusts or LLCs that will appear on statements, and provide organizational documents if an entity is part of title or asset custody. Maine settlements often involve out-of-state banks; warn clients that wires from brokerage custodians can take extra days and that wire instructions must be verified by phone with the title company to prevent fraud.

Pre-underwriting playbook for brokers

Open with a five-minute balance audit and haircut map. Build a simple table that lists each account, the haircut applied, and the resulting eligible balance. Then run PITIA estimates using realistic coastal insurance and tax figures. In Maine, insurance can swing materially with flood and wind coverage; guessing low will crater your ratios later. Align the lock period with the condo or coastal home’s appraisal and insurance timelines; coastal files benefit from slightly longer locks to absorb scheduling noise.

Finally, verify reserve logic: if the program requires, say, 12 months of PITIA in reserves after closing, circle the specific account(s) that will carry those reserves. Labeling this up front avoids the “we spent all the eligible assets on down payment” moment during final review.

Property eligibility for Maine coastal second homes

Maine’s coast delivers diverse collateral: oceanfront cottages, shingled colonials along rocky coves, harbor-view condos, and private-road estates tucked behind treelines. Second-home occupancy means the property is available for your client’s exclusive use and is not subject to a year-long lease. Homes with attached accessory units (ADUs) or separate guest cottages require clarity—if they’re rented, underwriting may move the file toward investment treatment. HOA and condo-doc reviews probe nightly-rental rules, pet and renovation policies, and insurance master coverage, all of which affect pricing and reserves.

Septic and well documentation frequently enters the picture on larger lots outside town centers; septic capacity must support intended occupancy. Private road maintenance agreements, shared driveways, and dock or shoreland permits surface during title and appraisal. Get ahead of them by asking for any recorded agreements and recent permits when you open the file.

Appraisal and valuation nuances on the coast

Coastal valuation is view-driven and hyperlocal. A cottage two roads back from the water can appraise very differently from a similar square footage on the shoreline with deeded access. Appraisers will stretch back in time or expand geography to assemble a comp set, then adjust for ocean frontage, tidal access, mooring and dock rights, elevation, shoreline stabilization, and premium materials suited to marine weather. Renovations that harden a home—storm-rated windows, roof tie-downs, generator systems, dehumidification—often carry contributory value in markets exposed to wind and salt.

Help the appraiser succeed. Provide a neat packet that includes flood determinations, elevation certificates if available, recent permits, HOA/condo rules if applicable, and any evidence of private-road agreements. If the property captures income from occasional rentals, be transparent; the appraiser may cite it as marketability context even if underwriting treats the file as second-home occupancy.

Insurance, flood, and coastal risk considerations

Along the Maine coast, flood zones (AE/VE) and windstorm deductibles matter. Buyers who fall in love with a home at low tide may not notice how storm surge changes the risk picture; insurance carriers will. Encourage clients to secure binder quotes early so PITIA estimates are realistic for the imputed-income test. Where elevation certificates exist, include them—they can materially alter flood premiums. If the home relies on a private road or bridge that a small group of owners maintains, underwriters want to see a maintenance agreement that clarifies responsibility and cost sharing. Older housing stock—the romantic stuff with cedar shingles and fieldstone chimneys—can hide electrical (knob-and-tube), heating, and septic systems that need upgrades. A pre-appraisal home inspection can surface these issues before the appraiser does, preserving timelines and leverage.

Maine location intelligence for local SEO and scenario realism

Southern Maine (Kittery, York, Ogunquit, Wells) offers sandy beaches, robust summer demand, and quick Boston access. In Kennebunk and Kennebunkport, classic village amenities, marinas, and scenic drives justify premiums, while nearby Arundel and Cape Porpoise deliver quieter coves. Greater Portland and Cape Elizabeth add walkable neighborhoods, restaurants, and the convenience of Portland International Jetport (PWM); a harbor-view condo here can function as a true second home with occasional guest stays. Northward, the Midcoast arc—Biddeford Pool to Scarborough, then up through Boothbay, Damariscotta, and into Camden/Rockport—mixes yachting culture with postcard harbors and hillside vistas. Down East, Bar Harbor, Southwest Harbor, and the gateway towns to Acadia National Park bring intense summer visitation and shoulder-season calm. Town-by-town short-term rental ordinances vary; even second-home owners sometimes list weeks for friends or charity auctions. Advise clients to verify each town’s rules before assuming any rental offset model.

These geographic nuances guide both qualifying and pricing. A York oceanfront will carry different insurance and maintenance realities than a wooded cove near St. George. Your imputed-income worksheet should use the correct property tax mill rate and realistic insurance quotes for the specific town. That discipline prevents reworks after the appraisal and insurance binders arrive.

Risk and compliance guardrails that keep your file sturdy

Asset depletion is Non-QM, but ability-to-repay still governs. The imputed stream must be credible; reserves must be additive, not theoretical. AML and source-of-funds procedures apply to large transfers from brokerage or trusts—capture trade confirms and trustee letters. For co-owners who are non-U.S. persons, ensure passports and KYC are complete and check OFAC lists; when relevant, steer them to Foreign National mortgage options for formal guidance. Occupancy statements should reflect real intent; if the client plans to experiment with short-term rental, document it and place the file in the right channel rather than forcing a second-home box that pricing later contradicts.

Market volatility is a real-world factor in asset-based files. A ten percent drawdown between application and closing can move the imputed-income math or reserve coverage. Brokers can preempt this by building a buffer—qualify on slightly reduced balances or encourage the borrower to shift part of a concentrated position into cash equivalents ahead of underwriting. The objective is not market timing but approval stability.

Broker talk-track and objection handling

Lead with clarity: “We’re qualifying you based on liquidity. We’ll map your accounts, apply program haircuts to reflect access and volatility, and impute a monthly income that must comfortably cover the new home’s expenses and your current obligations. We’ll also show the post-close reserves we need to see.” When a client asks, “Why not use my tax returns?” explain that asset depletion respects their tax-efficient planning without forcing artificial distributions. When they ask, “Will I have to liquidate my portfolio?” clarify that liquidation is only required if funds-to-close or reserves demand it—imputed income itself doesn’t require selling holdings. If they worry about concentrated holdings, translate haircuts into plain language: “A diversified fund counts more fully than a single stock because price swings can’t crater your qualifying math.”

Packaging checklist you can copy into your LOS tasks

— Statements: 2–3 months for checking/savings/MM; latest monthly and quarterly brokerage statements; retirement statements with plan terms.
— Equity comp: vesting schedules, grant notices, and statements showing share delivery into a brokerage.
— Liquidity events: trade confirms for recent sales, 1099 or trustee letters for distributions.
— Property: flood determination, insurance quotes (including windstorm/flood), septic/well docs if applicable, HOA/condo declarations and insurance master.
— Narrative: a one-pager summarizing eligible assets, haircuts, imputed-income factor used, PITIA estimate with coastal insurance, and reserve account(s) designated post-close.
— Logistics: note whether closing will be in-person in Maine or remote, and which bank/custodian will send the wire.

Pre-approval and process timeline tuned to coastal realities

Scenario intake should begin with a Get a Non-QM quick quote submission and a secure upload of asset statements. Within your first day, return a haircut map and a preliminary imputed-income figure, flagged as “subject to credit and property.” Order binder quotes immediately if flood or wind exposure is likely; this step protects your ratios. When you open appraisal, send the coastal packet (permits, flood docs, HOA rules, private road agreements) so the appraiser’s comps and adjustments track your story. While valuation is in flight, finalize funds-to-close and reserves, and confirm wire logistics with the custodian—brokerage wires can take longer than bank wires. On final conditions, be ready with updated statements to bridge any market movement between initial submission and clear-to-close.

Frequently asked questions for scenario triage

Do assets have to be liquidated to count? Not for imputed income. Liquidation is only needed if cash is required for down payment, closing costs, or reserves and the current cash position is short.
How are retirement accounts treated? Access rules govern the haircut. Pre-59½ assets often receive deeper discounts; after 59½, draw rights can support more generous credit.
Can vested RSUs count? Yes, once deposited into a brokerage account and subject to standard marketable-securities treatment. Unvested grants do not count.
What happens if the market drops mid-process? The file can still close, but the lender may request updated statements. Building a buffer by qualifying on slightly reduced balances helps preserve eligibility.
Can occasional short-term rental coexist with second-home treatment? Possibly, but it depends on program definitions and HOA/town rules. When rental use is planned, underwrite as investment or present a DSCR comparison to avoid misalignment.
How much in reserves should clients expect? Program-dependent, but plan for meaningful months of PITIA post-close—separate from the assets counted toward imputed income.

Broker positioning with NQM Funding and next steps

Position NQM Funding as a Non QM Lender that respects liquidity-based qualifying and understands coastal overlays. Use contextual links during your consult so the client always has a next action: route them to Get a Non-QM quick quote to open the file, to Bank statement mortgage if deposits might be the better path, to Investor DSCR loan when rental use leads, and to Foreign National mortgage options if international ownership intersects with a Maine coastal purchase. The combination of an honest haircut map, realistic coastal insurance, and early property docs is what turns a pre-approval into keys in hand on the waterfront.