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A mortgage underwriter is using an asset depletion method to qualify a borrower who has significant liquid assets but limited traditional income. How is the qualifying income typically calculated using this method?

By requiring the borrower to purchase an annuity with the assets before closing. By calculating the average monthly capital gains from the asset portfolio. By dividing the total eligible assets by a specified number of months (e.g., 240 or 360) to create a monthly income stream. By multiplying the total asset value by the current 10-year Treasury yield.

Correct Answer:

By dividing the total eligible assets by a specified number of months (e.g., 240 or 360) to create a monthly income stream.

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