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What an asset depletion loan is
An asset depletion loan, sometimes called an asset-based mortgage or asset qualifier mortgage, may let a borrower qualify using liquid assets instead of employment income. Depending on the program, the lender discounts investment or retirement balances, subtracts transaction funds and required reserves, then divides the eligible balance by a set number of months. The exact deductions vary by program. The result is treated as monthly income for the debt-to-income (DTI) calculation.
This structure fits borrowers who have money but not a regular paycheck: retirees drawing from a 401(k) and brokerage account, early retirees living off investments, someone who recently sold a business, or a high-net-worth borrower with lumpy consulting or carried-interest income. An asset depletion loan may be worth exploring when employment income does not support the requested mortgage.
Two paths exist. The first is a conventional loan under Fannie Mae or Freddie Mac rules that let eligible assets be counted as qualifying income. The second is a non-QM asset depletion program offered by lenders that specialize in alternative documentation. Non-QM terms vary by lender, and rates may be higher than conventional rates.
Who an asset depletion mortgage fits
An asset depletion mortgage may fit:
- A retiree with a 401(k), IRA, or taxable brokerage account who does not want to show large monthly distributions on paper.
- An investor who lives off portfolio returns and reports modest or irregular 1099 income.
- A recent business seller sitting on sale proceeds, often before a new income stream is established.
- A high-net-worth borrower whose tax returns understate cash flow because of depreciation, write-offs, or deferred compensation.
If documented income already supports the mortgage, request a standard loan quote as well. Compare the actual terms before choosing an asset depletion loan.
If retirement planning is driving the question, see Mortgage in retirement for the broader picture. Self-employed borrowers can also review calculating self-employed income for a mortgage.
The conventional route: Fannie Mae and Freddie Mac
Before choosing a non-QM asset depletion loan, check whether a conventional loan works. Both agencies allow certain assets to be converted into qualifying income.
Fannie Mae: employment-related assets as qualifying income
Fannie Mae Selling Guide B3-3.4-06 sets these rules:
- Divisor: net documented assets divided by the amortization term in months. A 30-year loan uses 360 months.
- Deductions: applicable distribution penalties, down payment, closing costs, and required reserves.
- Eligible sources: accessible 401(k), IRA, SEP, or Keogh accounts; documented non-self-employed severance or lump-sum retirement distributions. Ordinary checking and savings balances generally do not qualify unless derived from eligible sources.
- Access: retirement funds must be unrestricted. Distributions must not already be set up, or must be insufficient to qualify. Joint asset owners must be co-borrowers.
- Maximum LTV, CLTV, HCLTV: 70%, or 80% when the qualifying asset owner is at least 62 at closing, subject to joint-owner rules. These ratios compare the loan and any additional secured financing with the property value.
- Purpose and occupancy: purchase or limited cash-out refinance; principal residence or second home.
There is no blanket 10% retirement-account haircut. Fannie’s hypothetical example assumes a distribution penalty: ($500,000 IRA − $50,000 penalty − $100,000 closing funds and reserves) ÷ 360 = $972.22 monthly qualifying income. That is an income calculation, not a payment quote.
Freddie Mac: assets as a basis for repayment
Freddie Mac Guide 5307.1 uses a 240-month divisor under its existing rules, regardless of loan term. It deducts transaction funds, gifts, borrowed funds, and pledged or encumbered assets. It does not list required reserves as a separate deduction in that version.
That version permits purchases and no-cash-out refinances on 1–2 unit primary residences or second homes, with maximum LTV, TLTV, and HTLTV of 80%. Eligible retirement assets must be fully vested, solely owned, accessible without an early-distribution penalty or tax, and not currently used as income. Depository accounts and securities have separate ownership and access rules, including an account owner who is at least 62. Business-sale proceeds can also qualify with documentation and restrictions. There is no blanket retirement or securities percentage haircut in that version.
An announced change matters when comparing quotes. Freddie Mac Bulletin 2026-10 permits immediate adoption of revised rules that become mandatory for settlement dates on or after February 3, 2027. These use a 180-month divisor, require at least $30,000 in net eligible assets, and require an Accept result from Freddie Mac’s automated underwriting system. They subtract required reserves, remove the special 80% LTV cap and account-owner age restriction, and permit investment properties. Depository accounts and securities generally require 12 months of seasoning, with specified exceptions and account-value tests.
Ask which version the lender uses. A conventional asset calculation may work, but eligibility alone does not establish which quote costs less.
The non-QM asset depletion loan
Non-QM asset depletion programs sit outside Fannie Mae and Freddie Mac rules. Lenders set their own terms, so numbers vary across programs. The examples below are published consumer terms checked October 26, 2026, not industry-wide minimums or endorsements.
Divisor options
- 60 or 120 months: LendSure Home Loans describes its Asset Qualifier calculation using 60 months and its standard Asset Depletion calculation using 120 months. Confirm which option applies to your quote.
- 84 months: NASB publishes this divisor for its asset depletion mortgage.
- 360 months: this is Fannie Mae’s divisor for a 30-year loan. Do not assume it is a universal non-QM option.
A shorter divisor produces more calculated income from the same eligible balance. It does not by itself establish approval or a larger available loan.
Eligible assets and lender-specific haircuts
A haircut is the portion of an account the lender excludes from qualifying assets. LendSure’s consumer page counts:
- Cash and equivalents: 100%.
- Stocks and bonds: 80%.
- Retirement assets: 70%.
NASB lists checking, savings, money market accounts, CDs, investment accounts, and eligible retirement accounts. Ask for the written percentage and access rules for each account. An account’s face value is not necessarily its qualifying value.
Do not assume business accounts, cryptocurrency, restricted shares, or jointly owned accounts qualify. Give the lender the ownership and withdrawal terms before relying on those balances.
Published non-QM program requirements
Consumer pages show how much terms can differ:
- Credit and down payment: LendSure advertises scores as low as 660 and purchase financing up to 80% LTV, equivalent to 20% down. NASB publishes a general minimum score of 700 and at least 20% down, subject to underwriting.
- Minimum assets and reserves: C&F Mortgage’s Asset Qualifier requires at least $500,000 in post-closing assets. Its asset requirement also includes the loan amount, recurring monthly debt multiplied by 60, funds to close, and six months of reserves. It uses an asset-coverage test rather than the same DTI formula described above.
- Loan size and occupancy: NASB advertises loans up to $1 million, generally with a $200,000 minimum and geographic exceptions to that minimum. C&F publishes up to $3 million, a 700 minimum score, and maximum 75% LTV for a primary residence, equivalent to 25% down.
- Seasoning: Glacier Funding describes usually needing 60–90 days of statements. Statement history and time the assets must have been owned are separate questions. Ask your lender about both, especially for a recent business sale or transfer.
These examples show published credit floors of 660–700 and purchase down payments of 20%–25%. They do not establish a market-wide range or mean the lowest score and down payment can be combined. Get a written checklist for your property and asset mix.
For the broader non-QM category and how these programs fit alongside bank statement and DSCR loans, see our guide to non-QM loans.
A worked example
Say a 67-year-old retiree wants to buy a $650,000 home with 25% down. Assume a 30-year fixed non-QM asset depletion loan at an illustrative 9% interest rate, not a current offer. The haircuts, deductions, reserve amount, and 43% DTI ceiling below are hypothetical program assumptions, not one lender’s complete guidelines.
Inputs:
- Purchase price: $650,000
- Down payment: $162,500 (25%)
- Loan amount: $487,500
- Estimated closing costs: $20,000
- Required reserves: an assumed $27,500 retained after closing and excluded from qualifying assets
- Checking account: $50,000, counted at 100% = $50,000
- Taxable brokerage: $400,000, counted at 70% = $280,000
- IRA (assumed eligible and accessible): $900,000, counted at 70% = $630,000
Payment assumptions: $500 monthly property taxes, $150 monthly homeowners insurance, no mortgage insurance, no HOA dues, and no other monthly debt. Closing costs of $20,000 are assumed paid upfront, not financed.
Calculation:
- Total eligible assets after haircut: $50,000 + $280,000 + $630,000 = $960,000
- Subtract down payment, closing costs, and reserves: $960,000 − ($162,500 + $20,000 + $27,500) = $960,000 − $210,000 = $750,000
- Net eligible assets: $750,000
Qualifying income by divisor:
- 60 months: $750,000 ÷ 60 = $12,500 per month
- 84 months: $750,000 ÷ 84 = $8,929 per month
- 120 months: $750,000 ÷ 120 = $6,250 per month
- 360 months: $750,000 ÷ 360 = $2,083 per month
At the assumed 9% rate over 360 payments, principal and interest on $487,500 are $3,922.54 monthly. Adding the assumed taxes and insurance gives $4,572.54 monthly.
At the assumed 43% DTI ceiling, $6,250 in qualifying income permits only $2,687.50 of total monthly debt. The 120-month calculation therefore does not support this payment. The 60-month calculation permits $5,375 of total monthly debt; the assumed payment is about 36.6% of its $12,500 qualifying income. Other program requirements still apply.
The 360-month line illustrates divisor sensitivity only. It is not a Fannie Mae qualification result: ordinary checking and taxable brokerage funds generally fail that program’s employment-related asset rules. Freddie Mac also needs its own eligibility and deduction calculation. Do not carry the same net balance across programs without checking it.
For closing cost planning, see how much are closing costs.
Costs and catches
Rate premium. NASB’s consumer FAQ says its asset depletion rates are typically higher than conventional rates. It does not establish a fixed spread. Request quotes for the same loan amount, term, lock period, and points before comparing costs.
Documentation of seasoning. Get the statement and source-of-funds requirements before moving money. Ask what records the lender needs for a business sale, inheritance, or transfer. A statement balance alone may not establish eligibility.
Market drops between application and closing. NASB confirms that market fluctuations affect qualifying assets. A lower eligible balance produces less calculated income. Ask when balances will be rechecked and how a decline would affect your application.
Reserves on top of qualifying assets. Where the program deducts required reserves, that money remains available after closing but cannot also generate qualifying income. Fannie Mae requires this deduction, as do Freddie Mac’s revised rules. Confirm the treatment for the specific program.
Prepayment penalties. Ask whether your proposed loan has one and review its terms. NASB states that its loans have no prepayment penalties. Confirm the policy for each loan you compare.
Occupancy limits. Fannie Mae’s asset-income rules permit principal residences and second homes. Freddie Mac’s revised rules also permit investment properties. Non-QM occupancy rules vary by program.
Agency or non-QM: how to choose
Use these questions to compare the paths:
- Which assets are eligible? Ask the lender to separate retirement, taxable investments, cash, and business-sale proceeds before calculating income.
- Which agency rules apply? Fannie Mae has its own LTV and age conditions. Freddie Mac’s existing and revised rules differ. Ask which version the lender can use for your closing date.
- How much income does each calculation produce? Request the deductions and divisor in writing, then compare that income with the full housing payment and other monthly debts.
- What does each available loan cost? Compare actual quotes, including points, fees, and any prepayment terms. A shorter divisor can help the qualifying math without making the loan affordable for your retirement budget.
The next step
Gather recent statements for every account that might count, and note each account’s owner, type, balance, and access restrictions. Keep older statements available if seasoning rules require them. Ask a lender that offers both conventional and non-QM asset depletion loans to run separate calculations and provide written terms for any options you may qualify for.
