Qualifying with Assets Instead of Income
Asset Depletion Mortgage: How to Qualify Using Retirement Savings Instead of Income
Fannie Mae Selling Guide
CFPB — Owning a Home
OCC — Asset Dissipation Underwriting Standards
Asset depletion converts your liquid assets into qualifying income by dividing the total by 360 months. A borrower with $800,000 in qualifying assets produces $2,222 per month in qualifying income — enough to support a mortgage without employment income.
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How It Works
- Formula: Total qualifying assets minus down payment and closing costs, divided by 360 months = monthly qualifying income
- Purpose: Allows retirees, self-employed individuals, and high-net-worth borrowers to qualify based on wealth instead of employment income
- Two paths: Fannie Mae offers agency-compliant asset depletion; non-QM lenders offer alternative programs with different rules
- Action: Calculate your qualifying income before applying: total liquid assets minus down payment and closing costs, divided by 360
Fannie Mae Rules
- Eligible assets: Checking, savings, money market, CDs, stocks, bonds, and mutual funds at 100% of value
- Retirement accounts: 401(k), IRA, and similar accounts counted at 70% if borrower is 59.5+ or has unrestricted access; lower percentage or excluded if under 59.5
- Subtraction: Down payment, closing costs, and required reserves must be subtracted before dividing by 360
- Action: Gather statements for all financial accounts — the lender needs two months of complete statements showing balances and transaction history
Non-QM Asset Depletion
- More flexible: Non-QM lenders may accept a wider range of assets and apply different discount rates than Fannie Mae guidelines
- Trade-off: Higher interest rates (typically 0.5-1.5% above conventional) and larger down payment requirements (often 20-30%)
- Documentation: 12-24 months of asset statements required, depending on the lender and asset types
- Action: Compare agency asset depletion (lower rate, stricter rules) vs non-QM (more flexible, higher rate) to determine which path produces a better outcome
The Age Factor
- Under 59.5: Retirement accounts may be counted at only 50-60% of value or excluded entirely because early withdrawal penalties reduce accessible funds
- 59.5 to 62: Retirement accounts typically counted at 70% of value — no early withdrawal penalty applies, but income tax on distributions is factored in
- 62+: Fannie Mae has a special provision for borrowers 62+ that may allow more favorable treatment of retirement assets under certain conditions
- Action: If you are close to 59.5 or 62, timing your application after crossing the age threshold can significantly increase your qualifying income from the same assets
Frequently Asked Questions
Do I actually have to spend down my assets?
Can I combine asset depletion income with employment income?
What interest rate should I expect on an asset depletion loan?
The Bottom Line Up Front
Asset depletion lets you qualify for a mortgage using your liquid and retirement assets instead of employment income. The formula divides your qualifying assets by 360 months to produce a monthly income figure. A borrower with $800,000 in qualifying assets generates $2,222 per month in qualifying income — enough to support a $250,000-$350,000 mortgage depending on other factors.
This program exists because traditional income verification does not work for everyone. Retirees living off savings, early retirees with no W-2 income, self-employed individuals with high assets but low taxable income, and trust fund beneficiaries all face the same problem: they can afford the mortgage, but their tax returns do not show it. Asset depletion bridges that gap by converting wealth into a qualifying income stream that lenders can underwrite.
- Fannie Mae’s agency asset depletion program offers conventional rates with no premium — the borrower qualifies at the same rate as a W-2 employee with equivalent income
- Liquid assets (checking, savings, brokerage) are counted at 100% of value; retirement accounts are discounted to 50-70% depending on borrower age and access restrictions
- Down payment, closing costs, and required reserves must be subtracted from total assets before dividing by 360 — only the remaining net assets generate qualifying income
- Non-QM asset depletion programs offer more flexibility (wider asset types, less documentation) but at higher rates and with larger down payment requirements
What Is an Asset Depletion Mortgage?
Asset depletion is an underwriting method that converts a borrower’s liquid assets into a monthly income figure for mortgage qualification. Instead of verifying employment income through pay stubs and W-2s, the lender calculates how much monthly income the borrower’s assets would produce if drawn down evenly over 30 years.
The name “depletion” is somewhat misleading — the borrower is not required to actually deplete the assets. The calculation is hypothetical: it establishes what the borrower could afford to pay each month if they systematically converted their assets to income. This income figure is then used in the standard DTI calculation alongside any other income sources.
- Asset depletion is also called “asset dissipation” or “asset-based income” depending on the lender and program — the concept and calculation are the same
- The method is recognized by Fannie Mae, Freddie Mac, and numerous non-QM lenders, making it available through a wide range of mortgage originators
- Asset depletion can be combined with other income types: Social Security, pension, rental income, part-time employment, or any other qualifying income stream
- The borrower must document the assets with two months of complete statements showing account balances, transaction history, and account ownership
How Is Asset Depletion Income Calculated?
The core formula is straightforward: eligible assets minus down payment, closing costs, and required reserves, divided by 360 months. The result is monthly qualifying income.
Example: a borrower has $900,000 in total qualifying assets. The down payment on a $500,000 home at 20% is $100,000. Closing costs are estimated at $15,000. Required reserves (six months PITI) are approximately $18,000. Net qualifying assets: $900,000 – $100,000 – $15,000 – $18,000 = $767,000. Monthly qualifying income: $767,000 / 360 = $2,131.
| Component | Amount | Notes |
|---|---|---|
| Total liquid assets | $600,000 | Checking, savings, brokerage at 100% |
| Retirement accounts (age 62, 70%) | $300,000 × 70% = $210,000 | IRA + 401(k) after discount |
| Gross qualifying assets | $810,000 | Liquid + discounted retirement |
| Minus: down payment | -$100,000 | 20% on $500K purchase |
| Minus: closing costs | -$15,000 | Estimated 3% of loan |
| Minus: reserves | -$18,000 | 6 months PITI |
| Net qualifying assets | $677,000 | |
| Monthly qualifying income | $1,881 | $677,000 / 360 |
At $1,881 per month in asset depletion income, plus any Social Security or pension income, this borrower can support a mortgage with a total PITI of approximately $1,800-$2,400 depending on DTI limits and other income sources.
Which Assets Count and Which Do Not?
Not all assets are eligible for the depletion calculation. The general rule is that the asset must be liquid — meaning it can be converted to cash without significant loss of value or lengthy processing.
- 100% eligible: Checking accounts, savings accounts, money market accounts, certificates of deposit (matured or with minor penalty), individual brokerage accounts, stocks, bonds, mutual funds, and ETFs
- Discounted (50-70%): 401(k), traditional IRA, Roth IRA, SEP IRA, SIMPLE IRA, Keogh plans, and other tax-advantaged retirement accounts — discount rate depends on borrower age and withdrawal access
- Generally excluded: Business assets, restricted stock (unvested), stock options (unexercised), life insurance cash value (varies by lender), real estate equity, personal property, cryptocurrency (varies by lender), and annuities with surrender charges exceeding 10%
- Lender-specific: Non-QM lenders may accept some assets that Fannie Mae excludes — cryptocurrency, annuities, and trust assets may be eligible on non-QM programs with appropriate documentation
File Guidance
Before applying, consolidate your asset documentation. The lender needs two months of complete statements for every account you want included in the depletion calculation. Accounts with large recent deposits will require source documentation (gift letter, sale proceeds, transfer records). Minimize large unexplained deposits in the 60 days before applying to avoid documentation complications.
The Age Factor: How Your Age Changes What Counts
Your age determines how much of your retirement accounts are included in the asset depletion calculation. The age thresholds are tied to IRS rules for penalty-free retirement account withdrawals.
Under 59.5, early withdrawal from most retirement accounts triggers a 10% IRS penalty plus income tax. This means a significant portion of the account balance is not truly accessible, so lenders discount it heavily or exclude it. At 59.5+, the penalty disappears and the full balance (minus estimated taxes) becomes accessible. At 62+, Fannie Mae may apply additional favorable provisions.
- Under 59.5: Most lenders count retirement accounts at 50-60% of value or exclude them entirely — the 10% early withdrawal penalty plus income tax erodes the accessible amount significantly
- 59.5 to 61: Retirement accounts are typically counted at 70% of value — no early withdrawal penalty, but income tax on traditional account distributions is factored as a 30% reduction
- 62+: Fannie Mae guidelines may allow enhanced treatment of retirement assets for borrowers 62 and older, potentially increasing the percentage counted beyond the standard 70%
- Roth IRA exception: Roth IRA contributions (not earnings) can be withdrawn penalty-free at any age, so the contribution basis may be counted at a higher rate than traditional retirement accounts for borrowers under 59.5
Fannie Mae Asset Depletion Rules (Agency Conforming Path)
The agency path through Fannie Mae offers the best rates because the loan conforms to standard conventional guidelines. The borrower gets the same rate as any W-2 employee — no premium for the asset-based qualification method.
Fannie Mae requires the assets to be verified with two months of complete statements, the borrower to have a qualifying credit score and acceptable credit history, and the property to meet standard conventional requirements. The asset depletion income is entered into DU as part of the income calculation, and the file is underwritten through the standard conventional process.
- Minimum credit score requirements are the same as standard conventional loans (typically 620+), with better rates at 740+
- Maximum LTV follows standard conventional guidelines (up to 97% on primary residence, though most asset depletion borrowers put 20%+ down)
- The 360-month divisor is fixed — Fannie Mae does not adjust the divisor based on borrower age, remaining life expectancy, or loan term
- Asset depletion income from Fannie Mae’s calculation can be combined with any other qualifying income type: Social Security, pension, rental, or part-time employment
Non-QM Asset Depletion Programs
Non-QM lenders offer asset depletion programs with different rules, different asset types, and more flexible qualification criteria — at the cost of higher rates and larger down payments.
These programs are designed for borrowers who do not fit the Fannie Mae mold: those with significant assets in non-traditional forms (cryptocurrency, closely held business interests, complex trust structures), borrowers who prefer not to provide tax returns, or those whose credit scores fall below conventional minimums.
- Non-QM asset depletion rates in 2026 run approximately 0.5-1.5% above conventional rates, with the premium varying by lender, LTV, and borrower risk profile
- Down payment requirements are typically 20-30% on non-QM asset depletion programs, compared to as low as 3-5% on the Fannie Mae agency path
- Some non-QM lenders accept cryptocurrency (Bitcoin, Ethereum) as qualifying assets, though they typically apply a 50% discount for volatility
- Trust assets may be eligible on non-QM programs if the borrower is a beneficiary with documented distribution rights — Fannie Mae’s treatment of trust assets is more restrictive
Real Calculation: From Assets to Qualifying Income
Here is how the calculation works for three different borrower profiles, showing how age and asset mix affect the qualifying income produced by the same total net worth.
| Profile | Liquid Assets | Retirement (raw) | Retirement (counted) | Net After DP/CC/Reserves | Monthly Income |
|---|---|---|---|---|---|
| Retiree, age 65 | $300K | $500K | $350K (70%) | $517K | $1,436 |
| Early retiree, age 55 | $300K | $500K | $250K (50%) | $417K | $1,158 |
| High net worth, age 45 | $800K | $200K | $100K (50%) | $767K | $2,131 |
The 45-year-old with $800K in liquid assets produces more qualifying income than the 65-year-old with $800K total because liquid assets count at 100%. The asset mix — not just the total — determines the qualifying result. Borrowers planning ahead should consider the asset composition impact on future mortgage qualification.
The Bottom Line
Asset depletion turns wealth into qualifying income without requiring employment. The Fannie Mae agency path offers conventional rates with a straightforward 360-month formula. Non-QM programs offer more flexibility at higher rates. Your age, asset mix, and the net amount remaining after subtracting down payment and closing costs determine how much qualifying income your assets produce.
If you have substantial assets but limited traditional income, asset depletion is likely the path to mortgage qualification. Start by calculating your net qualifying assets (total eligible assets minus down payment, closing costs, and reserves), divide by 360, and compare that monthly figure against the PITI of the home you want. If the numbers work, contact a lender experienced in asset depletion — this is not a standard product that every originator handles well.
Frequently Asked Questions
Can I use asset depletion for an investment property?
Yes. Asset depletion can be used for primary residences, second homes, and investment properties on both Fannie Mae and non-QM programs. Investment properties typically require a larger down payment (20-25% on conventional) and the qualifying income must support the higher rate and potential vacancy risk associated with rental properties.
What documentation do I need for asset depletion?
Two months of complete statements for every account included in the calculation. The statements must show the account holder’s name, institution, account number, beginning and ending balance, and all transaction activity. For retirement accounts, the most recent quarterly statement is typically acceptable. Large deposits within the statement period require source documentation.
Is there a minimum asset amount for asset depletion?
There is no published minimum, but practically, the assets must produce enough monthly qualifying income to support the mortgage payment within DTI limits. For a $2,000 monthly PITI with no other income, you would need approximately $720,000 in net qualifying assets ($2,000 × 360) plus whatever is needed for down payment, closing costs, and reserves.
Does asset depletion work with FHA or VA loans?
FHA and VA do not have formal asset depletion programs comparable to Fannie Mae. However, FHA allows reserves to be considered as a compensating factor, and VA evaluates the borrower’s complete financial picture including assets. For dedicated asset-based qualification, Fannie Mae conventional or non-QM programs are the primary options.
Can I use inherited assets for asset depletion?
Yes, once the inherited assets are in your name and accessible. Recently inherited assets may require additional documentation such as the probate court order, inheritance letter, or trust distribution documentation. The lender needs to verify that the assets are legally yours, fully accessible, and not subject to liens or claims.
What happens if my assets decrease after closing?
Nothing changes with your mortgage. Asset depletion is a qualification method, not an ongoing requirement. Once the loan closes, your mortgage terms are fixed regardless of what happens to your asset balances. You are not required to maintain the qualifying asset level or report changes to your lender after closing.