The Quick Read: On the asset qualifier path, a 401(k) counts at 90% of its balance while you are under 59½ and at 100% once you reach 59½, subject to underwriting. Your eligible assets, after those percentages, must equal or exceed the entire loan amount. No employment or income is documented, but the assets are documented in full. The figures are the same for a Virginia borrower as anywhere else.
- Under 59½: a 401(k) or IRA counts at 90% on the asset qualifier path. At 59½ or older it counts at 100%.
- Cash and brokerage: savings, money market, CDs and brokerage accounts all count at 100% on that path, and accounts combine.
- Seasoning: 60 days of seasoning and two months of statements for each qualifying account.
- No liquidation: the account stays invested. The lender counts the balance. It does not make you sell.
- The other path: the asset depletion path treats retirement money at 70% at any age, then turns the total into income.
Consider a retiree in Richmond, a federal contractor in Northern Virginia, or a business owner in Hampton Roads who just sold a company. Balances are large. Documented income is thin. That reader is who this loan was built for. Lendmire is a mortgage broker that arranges these loans through select lenders in its network, and every figure below is subject to underwriting.
Which Path Fits You: Assets Cover the Loan, or Assets Become Income?
Two different loans hide behind the phrase “asset-based mortgage.” The asset qualifier path covers the whole loan with eligible assets and documents no income. The asset depletion path turns assets into a monthly income figure, then tests it against your debts. You qualify on one path at a time. Never both.
Here is how they compare for a 401(k) holder.
| Factor | Asset Qualifier Path | Asset Depletion Path |
|---|---|---|
| What is tested | Usable assets vs. the whole loan | Derived income vs. debts |
| 401(k) or IRA credit | 90% under 59½; 100% at 59½+ | 70% at any age |
| Income documented | None | Derived from assets |
| Statements | Two months per account | 120 days old plus one within 45 days |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
The 401(k) treatment is the whole story of this article. On the qualifier path, age 59½ moves the credit from 90% to 100%. On the depletion path, age does not change it. Retirement money stays at 70% either way.
If your balances are big enough to cover the entire loan, the qualifier path usually treats retirement money more kindly. If they are not, the depletion path lets assets stand in as income. That route has stricter minimums, covered below.
How a 401(k) Counts on the Asset Qualifier Path, Step by Step
A haircut is the percentage of a balance the lender will not count. The lender discounts retirement money because pulling it out early costs real money in taxes. The IRS says withdrawals before 59½ are early distributions that carry an additional 10% tax unless an exception applies. Ordinary income tax can come on top for pre-tax money. The 90% credit under 59½ reflects that drag.
Here is how underwriting treats the account.
1. Confirm the account qualifies. A 401(k) or IRA in your own name, vested and documented. Unvested employer match does not count.
2. Pull two months of statements. Each qualifying account needs two months of statements and 60 days of seasoning.
3. Apply the credit percentage. Multiply the vested balance by 90% if you are under 59½, or 100% at 59½ or older.
4. Add every other eligible account. Brokerage, CDs, money market and savings count at 100%.
5. Compare the total to the loan amount. Usable assets must equal or exceed the whole loan.
6. Check leverage and credit. The qualifier path allows up to 80% loan-to-value on a purchase and 75% on a refinance, with a 600 minimum credit score, through select programs.
Nothing in that sequence forces you to sell. The account stays invested and keeps working. The math is a measuring stick, not a withdrawal.
A Worked Example Under 59½
Run the numbers on a borrower seeking an $800,000 loan. The balances below are illustrative, and the lender’s own calculation governs.
- Brokerage accounts: $330,000 at 100% counts $330,000.
- 401(k), borrower under 59½: $300,000 at 90% counts $270,000.
- Savings: $200,000 at 100% counts $200,000.
Usable assets total $800,000. That equals the loan amount, so this file is reviewed on assets alone, subject to underwriting. The same $300,000 401(k) at 59½ or older would count at $300,000, adding $30,000 of cushion.
Notice what the example shows. A statement balance of $830,000 shrank to $800,000 of usable assets. The 401(k) is the only account that took a haircut. If the 401(k) were the only asset, you would need a far larger balance to cover the same loan.
What If You Are a Few Months From 59½?
If you turn 59½ soon, waiting can help. The credit on the qualifier path moves from 90% to 100% of the balance. On a $300,000 account, that is a difference of 10 percentage points on one line of the file. Whether it matters depends on how tight the total is.
If your total clears the loan amount with room to spare, waiting buys you nothing. If you are a few thousand dollars short, waiting may close the gap. If you need to buy now, other accounts can fill it. Cash, savings and brokerage all count at full value, so moving the shortfall there is often simpler than waiting. Seasoned funds are the key word. New deposits need their own 60 days of history.
Do not roll over an account hoping to speed things up. A rollover creates a new account with a new paper trail, and that can restart the statement clock for that account.
When the Asset Depletion Path Is the Better Fit
If your assets cannot cover the whole loan, the depletion path converts them into income. This path is stricter and treats most accounts less generously. The credits are: cash and CDs at 100%, securities at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%.
The lender divides usable assets by 60 months. Here is an illustration: $1,500,000 in securities counts at 80%, which is $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 usable, and divided by 60 months it produces $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the debt-to-income test.
The depletion path comes with its own floors:
- Qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance.
- Never below $250,000 liquid when assets are your only income source.
- Statements at least 120 days old at application, plus the most recent one within 45 days.
- A credit score that follows the lender’s matrix, and 700 for a first-time investor.
Leverage is lower here. Principal residences and second homes go up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out. Investment property goes up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets.
Across the wholesale network, most borrowers with a large 401(k) and no paycheck find the qualifier path cleaner, as long as the balances cover the loan. The depletion path earns its place when assets are meaningful but not enough to cover the whole loan.
Where the General Rule Breaks
The 90% and 100% figures are program ceilings. Several edge cases change how a file reads.
You are still employed. Many 401(k) plans restrict in-service withdrawals, so the funds may not be accessible. Underwriters can ask for documentation of access. Plan terms differ, so ask your plan administrator what you can reach.
Double counting. The same dollars cannot be both qualifying assets and a separate source of reserves. On the qualifier path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them, and those funds need to be left over after qualifying.
401(k) loans and borrowed funds. Money you borrowed against the account lowers the vested balance. Pledged or borrowed funds are not published as eligible on either path.
Roth accounts. Roth contributions can generally be withdrawn without the early-distribution tax. Earnings face it. The network credit percentages do not split Roth from traditional, so expect the retirement credit to apply to the whole balance. Your underwriter confirms.
Spouse’s account. An account titled only to your spouse does not count unless the spouse is on the loan.
Other asset types. Cryptocurrency, precious metals and collectibles are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Not ideal if you are in a hurry. It works.
Early-distribution exceptions. The IRS lists exceptions to the 10% tax, such as separating from service at 55 or later from your current employer’s plan. Underwriters rarely build a file around those. The standard credit percentage is a blunt tool. Do not assume an exception improves your number.
Business-purpose and rental loans. These are a different animal. Loans for non-owner-occupied rentals run on the property’s rent, not on your assets as income. Asset-based loans here are consumer mortgages for principal residences and second homes, plus investment property on the depletion path only. A 401(k) on a DSCR rental loan shows up as reserves or closing funds.
Why the Lender Cares About Assets, Not Just Income
The reason this loan exists is simple. Federal rules for consumer mortgages require a lender to consider repayment ability using eligible factors. The CFPB’s compliance guide lists eight factors, including current or reasonably expected income or assets. A lender can rely on assets it verifies. That is why the file rests on your statements and not your paycheck.
It also explains the paperwork. No income documentation never means no documentation. Your assets are verified in detail on both paths. Because this is a consumer mortgage, standard consumer disclosures apply to it.
Common Mistakes With a 401(k)
- Withdrawing the money. An early withdrawal before 59½ can trigger ordinary tax plus the additional 10%. Counting the balance costs nothing. Withdrawing it can cost a lot.
- Moving funds mid-file. Transfers between accounts can disrupt the 60-day seasoning and the statement trail. Keep balances where they are.
- Counting unvested money. Only the vested balance counts.
- Mixing up the paths. The 90% figure belongs to the qualifier path. The 70% figure belongs to the depletion path. Do not blend them.
- Assuming a number is an offer. These percentages are ceilings and floors through select programs. Every file is underwritten individually.
Key Terms Defined
Asset qualifier path: a way to qualify where eligible assets, after credit percentages, must equal or exceed the entire loan amount, with no income documented.
Asset depletion path: a way to qualify where usable assets divided by 60 months become monthly income for the debt-to-income test.
Haircut: the share of an account’s balance the lender does not count, reflecting taxes, penalties or market risk.
Seasoning: how long funds have sat in an account, shown by statements, so the lender knows they are yours and stable.
Vested balance: the part of a retirement account you fully own, excluding employer money you have not yet earned.
Debt-to-income (DTI): your monthly debts divided by your monthly income, used on the depletion path.
Virginia Borrowers: What Changes and What Does Not
Program figures do not change by state. Lendmire’s consumer mortgage lending includes Virginia, and the same percentages apply. Virginia’s large population of federal, defense and contractor retirees often holds big retirement balances and modest taxable income, so the fit is natural. Relocators moving into the state with proceeds from a home or business sale are another common profile. Tax treatment varies; consult a qualified professional.
Frequently Asked Questions
Do I have to cash out my 401(k) to qualify?
No. The lender counts the balance as a measuring stick and does not require you to sell or withdraw. The account stays invested. Statements document the balance, and the lender confirms the vested amount.
Do I have to be 59½ to use a 401(k)?
No. There is no minimum age. Under 59½, a 401(k) counts at 90% on the asset qualifier path. At 59½ or older, it counts at 100%. On the depletion path it counts at 70% at any age.
Can I combine my 401(k) with cash and brokerage accounts?
Yes. On the asset qualifier path, accounts combine, and the total of usable balances must equal or exceed the whole loan amount. The worked example above shows brokerage, a 401(k) and savings adding to an $800,000 loan.
Can my 401(k) also count as reserves?
Not twice. Dollars used to qualify cannot also serve as separate reserves. On the qualifier path, reserves are not required at or below 75% loan-to-value, and above that the lender sets them.
What is the difference between an asset qualifier and asset depletion?
Asset qualifier covers the entire loan with assets and documents no income. Asset depletion divides usable assets by 60 months to create income that runs through the debt-to-income test.
If you are qualifying on assets rather than income and want to see how the numbers work, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage, and your goals. Reach the team at 828-256-2183 or request a quote.
Lendmire’s asset-based mortgage in Virginia page presents the program for Virginia borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. IRS – Exceptions to tax on early distributions
2. CFPB – ATR/QM Small Entity Compliance Guide
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Buy Before You Sell in Alabama Using an Asset Qualifier Mortgage · How Much of a Brokerage Account Counts Toward a Washington Asset Qualifier Mortgage? · Can Pledged or Margined Securities Count Toward an Asset Qualifier Mortgage?
Guides: Asset-Based Mortgage in Virginia
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.