Asset depletion loans: how lenders turn savings into income
Asset depletion (asset-based) mortgages qualify you on savings and retirement accounts. Fannie Mae's 2026 rule vs. non-QM lenders, the formula, and examples.
The short answer
An asset depletion loan converts your savings into monthly income for qualifying: the lender takes eligible assets, subtracts what you need for the down payment, closing costs and reserves, and divides the rest by a number of months. Fannie Mae divides by the loan term (360 months on a 30-year loan) and caps LTV at 70%, or 80% if the asset owner is 62 or older. Non-QM lenders often divide by fewer months, such as 60, which produces much higher income.
Key numbers
- Formula
- (Eligible assets - funds to close - reserves) / months
- Fannie Mae divisor
- Loan term in months (360 on a 30-year)
- Fannie Mae max LTV
- 70%, or 80% if 62+
- Non-QM example divisor
- 60 months (Defy Mortgage)
More non-QM options: compare every program in non-QM loans explained.
The asset depletion formula
Qualifying monthly income = (eligible assets − down payment − closing costs − required reserves) ÷ number of months. Retirement accounts are usually reduced first for taxes or early-withdrawal penalties.
Fannie Mae vs. non-QM asset depletion
| Fannie Mae (Selling Guide B3-3.4-06, Mar. 2026) | Non-QM example (Defy Mortgage, 2026) | |
|---|---|---|
| Divisor | Loan amortization term in months | 60 months |
| Eligible assets | Employment-related assets: 401(k), IRA, SEP, Keogh, lump-sum retirement or severance | Savings, investment and retirement accounts, discounted by type |
| Max loan-to-value | 70%, or 80% if the asset owner is 62+ | 80% on a primary home purchase |
| Loan purpose | Purchase and limited cash-out refinance; primary or second home | Varies by lender |
| Credit score | Standard Fannie Mae rules | 640+ |
Worked examples
Fannie Mae: a $500,000 IRA, minus a 10% penalty ($50,000) and $100,000 needed for closing and reserves, leaves $350,000. Divided by 360 months, that is about $972 a month of qualifying income. This example comes from Fannie Mae's own guide.
Non-QM with a 60-month divisor: the same $350,000 divided by 60 gives about $5,833 a month, six times as much. That difference is why retirees and high-net-worth borrowers with little W-2 income often use non-QM asset programs, which also price higher.
Who asset depletion fits
- Retirees with large retirement or brokerage balances but modest Social Security or pension income.
- Borrowers between jobs, or who sold a business, with substantial liquid assets.
- Self-employed borrowers who prefer to qualify on assets rather than tax returns.
Assets used for depletion still need to be documented with recent statements, and most lenders want them liquid. Real estate equity, inheritances not yet received, and lawsuit or lottery proceeds don't count under Fannie Mae's rule. Compare with bank statement loans if your income is self-employment.
Frequently asked questions
How do asset depletion loans work?
The lender divides your eligible assets, after funds to close and reserves, by a set number of months and treats the result as monthly income for the debt-to-income ratio.
How does Fannie Mae calculate asset depletion income?
Net documented employment-related assets divided by the loan's amortization term in months, so 360 on a 30-year loan. Maximum LTV is 70%, or 80% if the asset owner is at least 62.
How much in assets do I need for an asset depletion loan?
It depends on the payment. Under a 60-month divisor, $300,000 of net assets produces $5,000 a month of income; under a 360-month divisor it produces about $833.
Can I use my 401(k) to qualify for a mortgage?
Yes. Fannie Mae counts 401(k), IRA, SEP and Keogh assets you can fully access, after subtracting the penalty for a full distribution.
Are asset depletion loans only for retirees?
No. Fannie Mae's rule has no retirement requirement (age only affects the 80% LTV tier), and non-QM programs are open to any borrower with enough liquid assets.