Key takeaways
- An asset depletion mortgage lets you use eligible savings and investments as qualifying income, even without a regular paycheck. You generally don’t need to withdraw the money.
- Lenders divide eligible assets by a set number of months to calculate monthly income. Fannie Mae uses your loan term; Freddie Mac currently uses 240 months.
- Fannie Mae primarily counts eligible employment-related assets, including retirement accounts. Freddie Mac can also count certain savings and brokerage accounts.
- Freddie Mac’s updated rules use a 180-month calculation and expand eligibility. They become mandatory for loans settling on or after February 3, 2027, though lenders can adopt them earlier.
What is an asset depletion mortgage?
An asset depletion mortgage lets you qualify for a home loan using savings, retirement accounts or investments instead of relying entirely on employment income. It can be useful if you’re retired, recently sold a business or have significant investments but relatively little traditional income.
Despite the name, you don’t necessarily have to spend your savings. Instead, the lender calculates how much monthly income your eligible assets could theoretically support.
For example: Someone with substantial retirement savings but no employment income might still qualify for a mortgage. Whether they do depends on which assets count, their existing debts and the loan program’s requirements.
Some conventional mortgages allow asset depletion under Fannie Mae or Freddie Mac guidelines. Other lenders offer specialized non-qualified mortgage (non-QM) programs.
How does an asset depletion mortgage work?
The lender follows three basic steps:
- Identify eligible assets. These might include retirement savings, bank accounts or investments, depending on the program.
- Subtract required amounts. Funds needed for closing, required reserves or applicable withdrawal penalties may be excluded.
- Calculate monthly income. The remaining eligible assets are divided by the program’s required number of months.
The formula is: Monthly qualifying income = Net eligible assets ÷ Program’s divisor
The result can be combined with other qualifying income when the lender reviews your debt-to-income ratio.
Example: How much income could $800,000 produce?
Suppose you have $800,000 in eligible assets after the deductions required by each program.
| Program | Calculation | Monthly qualifying income |
| Fannie Mae | $800,000 ÷ months in your loan term | Depends on loan term |
| Freddie Mac, current rules | $800,000 ÷ 240 | $3,333 |
| Freddie Mac, updated 2027 rules | $800,000 ÷ 180 | $4,444 |
The example holds the net eligible balance constant to show how the calculation differs. Actual deductions and qualifying assets may vary.
Sources: Fannie Mae Selling Guide and Freddie Mac Guide.
Important: This is qualifying income, not money the lender pays you each month. It doesn’t guarantee mortgage approval.
Which assets qualify for an asset depletion mortgage?
The biggest difference between programs is which assets lenders can count.
| Asset type | Fannie Mae | Freddie Mac |
| 401(k), IRA and similar retirement accounts | Eligible if you have unrestricted access to the full balance, subject to other requirements | Eligible if fully vested, solely owned and accessible without penalty |
| Checking and savings accounts | Generally excluded, with exceptions for eligible employment-related proceeds | May qualify; current rules generally require an account owner to be 62 or older |
| Stocks, bonds and mutual funds | May count when held in an eligible retirement account; taxable brokerage accounts generally don’t qualify | May qualify; current rules generally require an account owner to be 62 or older |
Fannie Mae focuses on employment-related assets. For example, investments held inside an eligible IRA may count even when the same investments in an ordinary brokerage account wouldn’t.
Freddie Mac allows a broader range of assets under certain conditions. Its upcoming rule changes expand these options further.
For complete eligibility requirements, see Fannie Mae’s asset-income guidelines and Freddie Mac’s accumulated-assets guidelines.
What if withdrawing your retirement funds would trigger a penalty?
Withdrawal penalties can affect how much income your retirement savings produce.
Fannie Mae may count an eligible retirement account even if withdrawing the funds would trigger a penalty. However, that penalty is subtracted when calculating qualifying income.
Freddie Mac generally requires retirement assets to be accessible without penalty.
According to the IRS, most taxable retirement withdrawals before age 59½ incur an additional 10% federal tax, although exceptions exist.
For example, certain employer retirement plan distributions may qualify for an exception when an employee separates from service during or after the year they turn 55. This exception generally doesn’t apply to IRAs. Check your plan’s withdrawal terms before assuming your retirement savings qualify.
What are the requirements for an asset depletion mortgage?
Having substantial assets is only part of qualifying. Lenders also review your credit, existing debts, property and ability to access the funds.
For conventional mortgages, the main requirements include:
- Loan-to-value ratio (LTV): Fannie Mae generally limits loans using employment-related assets as income to 70% LTV, increasing to 80% when its age-62 and ownership conditions are met. Freddie Mac’s current asset-income rules generally impose an 80% maximum LTV.
- Loan purpose: Both agencies allow home purchases and certain refinances that don’t take cash out. Their asset-income rules don’t cover cash-out refinances.
- Property type: Fannie Mae allows primary residences and second homes. Freddie Mac’s updated rules also permit investment properties.
- Credit and debt: Your qualifying income must support your existing debt obligations and proposed mortgage payment. Other underwriting requirements still apply.
Individual lenders may impose stricter requirements or choose not to offer asset depletion at all.
Fannie Mae vs. Freddie Mac vs. non-QM: Which is better?
The right option depends largely on where your assets are held and the type of mortgage you need.
Fannie Mae may be a fit if most of your savings are in eligible retirement accounts and you meet its other lending requirements.
Freddie Mac may be a fit if you have qualifying retirement savings, cash or brokerage investments. Its asset eligibility rules differ from Fannie Mae’s.
Non-QM mortgages may be worth exploring if your assets don’t qualify under agency guidelines, you need a loan above conforming limits or you want a transaction the agency rules don’t permit.
Non-QM lenders establish their own asset requirements and income calculations. That means eligibility and costs can vary significantly between programs.
When comparing offers, review both the interest rate and the annual percentage rate (APR), which incorporates certain borrowing costs. The CFPB’s Loan Estimate comparison guide explains what to look for.
What changes under Freddie Mac’s 2027 rules?
Freddie Mac announced updated asset qualification requirements in August 2026. Lenders may implement them early, but they become mandatory for loans settling on or after February 3, 2027.
The main changes include:
- Dividing net eligible assets by 180 months instead of 240.
- Removing the age-62 restriction on qualifying bank and brokerage accounts.
- Allowing investment properties and removing the special 80% LTV restriction.
- Requiring a minimum of $30,000 in net eligible assets and an acceptable automated underwriting result.
Bank and brokerage accounts also face new documentation requirements, including a general 12-month account-history requirement and restrictions concerning significant balance changes. The updated calculation deducts borrower-required reserves when determining net eligible assets.
How to apply for an asset depletion mortgage
Start by asking whether your lender offers asset-based qualification and which programs it uses. A loan officer can review your accounts, identify eligible assets and calculate how much monthly qualifying income they produce.
Documents you’ll need
Expect to provide:
- Account statements: Recent statements for retirement, savings and investment accounts.
- Withdrawal terms: Documents showing whether retirement funds are vested and accessible.
- Transfer records: Documentation explaining significant deposits or account transfers.
- Other financial information: Details about your existing debts, other income and funds needed for closing.
Documentation requirements vary by program. See what documents you need for a mortgage application for a broader checklist.
Three questions to ask your lender
Before applying, ask:
- Do you offer asset depletion under Fannie Mae, Freddie Mac or a non-QM program?
- Which accounts would qualify, and how much monthly income could they produce?
- What additional funds would I need for closing or reserves?
If you’re still comparing borrowing options, understanding the difference between prequalification and preapproval can help you decide your next step.
What if asset depletion doesn’t work for you?
You may have other ways to qualify using income connected to your savings or investments:
- Retirement distributions: Regular IRA, 401(k) or pension payments may qualify under separate retirement-income rules.
- Interest and dividends: Eligible investment income may count separately if it meets the lender’s requirements.
- Self-employment income: If you have business or contract income, a lender may be able to use it instead. Learn how lenders calculate 1099 income or explore self-employed mortgage qualification.
You may also qualify using a combination of income sources rather than relying entirely on assets.
Tomo Mortgage, NMLS ID 2059741. Equal Housing Lender.
Frequently asked questions
Can I get an asset depletion mortgage without a job?
Yes. Some programs let you qualify using eligible savings or investments instead of employment income. You must still satisfy the lender’s other requirements.
How does Fannie Mae calculate asset depletion income?
Fannie Mae subtracts applicable withdrawal penalties, closing funds and required reserves from eligible employment-related assets. It then divides the remaining balance by the number of months in the loan term.
What does Freddie Mac require for asset depletion?
Freddie Mac requires eligible, documented assets that meet its ownership and accessibility rules. Its current calculation divides net eligible assets by 240 months. Updated rules use 180 months and expand asset eligibility.
Do I have to withdraw my investments to qualify?
Generally, no. Asset depletion calculates theoretical qualifying income rather than requiring scheduled withdrawals. Funds used for closing are a separate consideration.
Can I combine asset depletion with Social Security or pension income?
Yes, if those income sources meet the lender’s requirements. However, restrictions may prevent the same retirement assets from being counted twice.
Can I use asset depletion for a cash-out refinance?
Not under the Fannie Mae or Freddie Mac asset-income rules discussed here. Certain non-QM lenders may offer alternatives, subject to their own requirements.