Two programs, almost identical on the surface. Same divisor, same haircuts, same asset minimum. Everyone treats them as one product with two names.
They are not. They test different things, they fail for different reasons, and choosing the wrong one is how a borrower with substantial assets gets declined.
What they share
From CMG Financial's Non-QM Sharp Series guidelines (NMLS #1820, revised 09/21/2026), both programs share:
- A minimum of $450,000 in qualifying assets across both
- Assets seasoned 120 days unless pre-approved by the investor
- The same haircut schedule: 100% of checking, savings and money market, 100% of life insurance and annuity cash surrender value, 80% of stocks, bonds and mutual funds, 70% of vested retirement, 60% of cryptocurrency
- The same 84 month divisor
- Reserves are not required
- No other employment income may be used
- Maximum 85% loan-to-value, minimum 700 FICO, no cash-out, owner occupied only
- Not permitted: non-owner occupied or second homes, cash-out, gift funds, business assets, foreign assets, non-occupant co-borrowers
- Both qualified under the full documentation program matrix with program-specific restrictions
- Neither is eligible on the Sharp Standard tier
Everything above is identical. Here is where they separate.
Asset depletion: a debt-to-income test
Qualifying assets with a utilization draw schedule of seven years, qualified assets divided by 84, will be used as qualifying income.
That figure becomes your income. Then you are tested the ordinary way: a borrower must have a debt-to-income ratio that qualifies per the respective program, Sharp Expanded or Sharp Premium.
The asset requirement: the lesser of $1 million in qualifying assets, or qualifying assets greater than or equal to 125% of the original subject loan amount.
Read that carefully. It is the lesser of the two. So on a large loan the $1 million figure governs, and on a smaller loan the 125% test does. A $600,000 loan requires $750,000 in qualifying assets under the 125% test, which is less than $1 million, so $750,000 is the bar.
Asset qualifier: a residual income test
To determine residual income, qualifying assets will be divided by 84 months. From this number, subtract the borrower's total monthly debt obligation, total liabilities, to come up with the borrower's residual income. Do not impute tax deductions when determining residual income. Residual income must meet or exceed the residual income section.
No debt-to-income ratio. Instead, a subtraction, and the answer has to clear a floor:
- One person household: $1,500
- Two person household: $2,500
- Add $150 for each additional household member
The asset requirement is stated differently: total post-closing assets must be greater than or equal to 125% of the original subject loan amount.
Note "post-closing" and note "total assets" rather than "qualifying assets." That is a different measurement from the asset depletion test and worth confirming precisely on your file.
Why the tests produce different answers
A ratio and a subtraction behave differently as numbers grow.
A debt-to-income ratio is proportional. It asks what share of your income the debts consume. It does not care whether what is left is $900 or $9,000.
Residual income is absolute. It asks how many dollars remain after the debts. It does not care whether that is 20% of your income or 70%.
So consider two borrowers, each with $810,000 in qualifying assets, producing roughly $9,642 a month under the 84 month divisor.
Borrower A has $6,500 in total monthly obligations including the new housing payment. Debt-to-income is roughly 67%, which is well past any program ceiling. Asset depletion fails. Residual income is $3,142, which clears the $2,500 two person requirement comfortably. Asset qualifier works.
Borrower B has $2,900 in total monthly obligations. Debt-to-income is roughly 30%, which passes easily. Residual income is $6,742, which also passes. Both work, and the choice comes down to the asset test and pricing.
The pattern: asset qualifier rescues the borrower with heavy monthly obligations relative to their portfolio. Asset depletion is cleaner for the borrower whose obligations are modest.
A retiree with a paid-off house, a car payment and low expenses usually clears either. A borrower carrying real monthly commitments against a portfolio that is large but not enormous needs the residual test.
The "do not impute tax deductions" line
Small sentence, real consequence.
When calculating residual income, the guidelines say not to impute tax deductions. So the calculation runs on the gross monthly figure the 84 month divisor produces, rather than reducing it for an assumed tax burden on withdrawals.
In practice that is favourable to the borrower, and it is worth knowing so you can check that the calculation you are shown was run that way.
What to do before you apply
- List every account by type. The haircut differs by type and the spread between 100% and 60% is enormous.
- Subtract your closing funds first. Assets used for down payment or costs to close must be excluded from the balance before analyzing the portfolio for income qualification. Money cannot be both the down payment and the income.
- Apply the haircuts and total the qualifying assets.
- Divide by 84.
- Run both tests: the ratio with that income, and the subtraction against the residual floor for your household size.
- Check the asset requirement for whichever program you land in, since the two measure it differently.
- Confirm your tier. Neither program exists on Sharp Standard, so a late mortgage payment in the wrong window removes both.
Most borrowers with substantial assets are told a single number by a single lender who ran a single test. If that number did not work, ask which test they ran, and ask for the other one.
Common questions
What is the difference between asset depletion and asset qualifier? Asset depletion converts assets to income and then runs a debt-to-income ratio. Asset qualifier divides assets by 84 months, subtracts your total monthly debt, and tests whether the remaining residual income clears a floor.
Which one is better for me? Asset qualifier usually helps the borrower carrying heavy monthly obligations relative to their portfolio, because residual income is an absolute test rather than a proportional one. Asset depletion is cleaner where obligations are modest.
How much do I need in assets? A minimum of $450,000 in qualifying assets across both programs. Asset depletion additionally requires the lesser of $1 million in qualifying assets or 125% of the original loan amount. Asset qualifier requires total post-closing assets of at least 125% of the original loan amount.
What is the residual income requirement? $1,500 monthly for a one person household, $2,500 for two, plus $150 for each additional household member.
Are reserves required? No. Reserves are not required on either the asset depletion or asset qualifier program.
Can I use my job income too? No. A borrower using asset depletion or asset qualifier cannot use other sources of employment income. Non-employment income is considered case by case.
Related reading
- Asset based and no-income home loans, the full index for this topic
- Asset Based Home Loan FAQ: Qualifying With Assets Instead of Income
- Asset Depletion and Asset Qualifier Loans: Turning a Portfolio Into Qualifying Income
- The Double Count Problem: Why Money Used for Closing Cannot Also Be Income
Why bring this file to us
- We run both tests, not one. They fail for different reasons and a file that misses one frequently clears the other.
- We calculate the 125% requirement correctly, because the two programs measure it at different points.
- We check the tier before we start, since neither program exists on the lowest one.
- Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending and a Certified Mortgage Planner, NMLS #173141, originating mortgages since 1999. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
Send me your asset totals by account type and your monthly obligations, and I will run both tests and tell you which one your file clears.
Program figures in this post come from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. CMG Financial is the parent company of EPiQ Lending. These figures describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.
Find out which documentation option qualifies you for the most
Bank statements, a third-party P&L and full documentation routinely produce very different qualifying income from the same business. Tell me the shape of yours and I will run all three.
