The Quick Read: It depends on where the money sits on the day of underwriting. Cash in a bank account usually counts in full, minus whatever was withheld. A rollover into a retirement account counts at that account’s percentage, which is 70% on the asset depletion path, subject to underwriting. A pension benefit you haven’t elected to take as a lump sum counts for nothing yet.
- Asset depletion path: usable assets are divided by 60 months to create qualifying income. Cash counts at 100%, and retirement accounts count at 70% at any age.
- Asset qualifier path: the assets must cover the entire loan. Retirement accounts count at 90% under age 59½ and 100% at 59½ or older.
- Tax withholding shrinks cash: a lump sum paid to you generally arrives about 20% lighter than the headline number.
- On a DSCR rental loan, a pension lump sum is not income. It shows up as reserves and source-of-funds proof.
Everything below is how Lendmire, a mortgage broker working with select lenders in its wholesale network, sees these files. Terms are subject to underwriting, and each lender’s own calculation governs.
Why Doesn’t One Percentage Exist?
No single percentage exists because no universal rule sets one. Each program publishes its own asset percentages and divisor. A lump sum is simply an asset, and the program treats it by the account type on the statement.
Bank regulators describe the general idea but leave the numbers to lenders. The OCC’s bulletin on asset dissipation underwriting describes the method as using an applicant’s assets to calculate a hypothetical cash annuity stream. It says documentation should confirm ownership, current value, location and how long the assets have existed. It leaves haircuts and payout periods to each bank’s policy. A Mondaq legal analysis says the bulletin offers no safe harbors or specific guidance.
That bulletin speaks to banks. Non-QM lenders (lenders outside the standard agency rulebook) write their own matrices. Across a wholesale network, the percentages are consistent within a program but differ between programs.
Key Terms Defined
Pension lump sum: a one-time payout of the value of a pension, taken instead of monthly checks. It exists only if the plan offers it and you elect it.
Asset depletion: a calculation, not a sale. The lender counts a share of your assets as imputed monthly income, and nothing is liquidated.
Haircut: the discount a lender applies to an asset. A 70% retirement credit means 30% of the balance is ignored.
Asset qualifier path: the version where eligible assets must equal or exceed the entire loan. No employment or income is documented.
Direct rollover: the plan sends the money straight to your IRA. You never receive a check.
What Does Each Path Do With a Lump Sum?
You qualify on one path at a time, and the percentages differ. Never blend the two columns below.
| Where the money sits | Asset depletion path | Asset qualifier path |
|---|---|---|
| Cash or CDs in a bank | 100% | 100% |
| Brokerage account | 80% (securities) | 100% |
| IRA from direct rollover | 70% at any age | 90% under 59½; 100% at 59½+ |
| Still inside the plan | Nothing to count | Nothing to count |
These are figures from select programs, subject to underwriting. Both paths document the assets. “No income documentation” never means “no documentation.”
The two paths also differ in how they use the number. On the depletion path, the countable balance is divided by 60 months into monthly qualifying income. That income must carry the housing payment and other debts through the debt-to-income test. On the qualifier path, the countable balance simply has to cover the whole loan.
Here is the program’s illustrative depletion arithmetic. Securities of $1,500,000 at 80% give $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 usable, divided by 60 months, or $25,000 of monthly qualifying income. The lender’s own calculation governs.
How Much of a Pension Lump Sum Counts? The Four-Step Path
The answer is a sequence. The headline number shrinks at each step, and you can see most of the shrinkage in advance.
1. Identify the form of the money. A defined-benefit pension is a promise of monthly checks. A lump sum exists only after the plan offers it and you elect it. After election, the money is either rolled over directly or paid to you.
2. Apply the tax withholding. A taxable lump sum paid to you from an employer plan generally carries mandatory 20% withholding, per IRS Topic 413. That applies even if you plan to roll it over later. A direct rollover avoids that withholding. So an 80% check deposited in a bank account is a smaller asset than the headline lump sum.
3. Apply the program’s percentage. Cash counts at 100%. A rolled-over retirement account counts at the retirement percentage shown above.
4. Divide or compare. On the depletion path, the lender divides by 60 months. On the qualifier path, the lender compares the total to the loan amount.
Funds you use for the down payment and closing costs can’t also sit in the income pool. Keep that in mind, because the same dollars can’t do two jobs.
Cash or Rollover: Which Counts More?
Neither wins everywhere. It depends on the path.
Run the numbers per $100 of headline lump sum. Take the check, and about $80 reaches your account after withholding. On the depletion path that $80 counts at 100%, so $80 counts. Roll it directly into an IRA, and all $100 lands in the retirement account. On the depletion path that counts at 70%, so $70 counts.
Cash looks better on that path. Look at the qualifier path instead, and the picture flips. The rolled-over $100 counts at 90% under age 59½, so $90 counts. At 59½ or older it counts at 100%, so $100 counts. The cash route still counts only $80.
The tradeoff is simple. Cash gives a higher depletion-path credit but costs you the withheld money and leaves a full tax bill. Rolling over keeps your full balance. It counts at a lower percentage on the depletion path and a higher one on the qualifier path.
Tax treatment varies; consult a qualified professional before choosing between taking cash and rolling over.
Honestly, this is a genuine toss-up on the depletion path. The extra counted dollars from cash rarely justify a rollover decision on their own. Choose the route on your finances first, then see which path fits.
Where Is Your Lump Sum Right Now?
Different starting points create different problems.
| Where it is | How a lender treats it | Common problem |
|---|---|---|
| Cash in checking or savings | Liquid asset | Needs a paper trail to the plan |
| Rolled into an IRA | Retirement asset at that account’s percentage | Percentage depends on the path |
| Partly spent | Only the remaining balance counts | Large withdrawals draw questions |
| Not yet elected | No balance exists | Nothing to document |
The “not yet elected” row trips up the most borrowers. A pension you have not taken as a lump sum is a plan benefit, not a balance. If you receive monthly checks, that is documented income, a separate input. Whether a program lets you stack it with depleted assets is decided program by program. Lendmire’s piece How to Combine Pension Income With Asset Depletion on a Mortgage covers that stacking question.
A lump sum from a nonqualified deferred compensation arrangement is a different animal. Deferred compensation is not eligible on the depletion path.
What Paperwork Proves the Money?
Lenders want to see where the dollars came from and where they are now. Expect to produce the following:
- The plan’s distribution or rollover paperwork.
- The tax form the plan issues for the distribution.
- Statements for the receiving IRA or bank account showing the deposit.
- Statements for each qualifying account.
Seasoning rules matter here, and they differ by path. On the qualifier path, programs typically want 60 days of seasoning and two months of statements for each account. On the depletion path, they want statements at least 120 days old at application plus the most recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that depletion seasoning. A pension lump sum is not on that short list.
Practical consequence: a lump sum deposited last month may not meet the depletion path’s statement-age rule. Whether the lender accepts it is up to underwriting. Roll early, keep the money where it lands, and don’t shuffle it between accounts. Every move adds paper to explain.
The Messy Version
Picture two borrowers with the same headline lump sum.
The first rolled it directly into an IRA, kept it there, and holds clean statements from the plan through the account. Everything traces. The countable amount is simple to compute.
The second took the check, deposited 80% in a bank account, moved part of it to a brokerage account, and spent some on a vehicle. Now the lender sees three accounts and a hole. Only the documented remaining balance counts, and each transfer needs an explanation. Same lump sum, very different file.
Why Files Get Reduced or Rejected
- Balance too low for the minimums. On the depletion path, qualified assets must reach the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, liquid assets can never fall below $250,000.
- Credit. The qualifier path has a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on the depletion path needs 700.
- Ineligible asset types. Cryptocurrency, precious metals and pledged or borrowed funds 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.
- Double-counting. The same dollars can’t be both reserves and depletion income. They also can’t be both the pension lump sum and a pension still paying monthly.
- A broken paper trail. A deposit that can’t be tied to the plan is just a balance.
Leverage and Loan Size
The figures below are ceilings, never offers, and subject to underwriting.
Asset qualifier path: up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home. Loans reach $4,000,000. No reserves are required at or below 75% loan-to-value.
Asset depletion path: up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance, for a principal residence or second home. For an investment property, the limits are 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Loans run from $125,000 to $3,500,000. Cash-out proceeds never count as qualifying assets.
Asset-derived income can also supplement documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. That matters for a borrower who still has some earnings.
What About Buying a Rental?
For a rental, the lump sum is usually not income at all.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Pension income doesn’t enter that ratio.
Your lump sum matters in two other ways. It is reserve money, and it is proof of where your down payment came from. A pension lump sum is a good source for both when it is seasoned and documented.
The asset depletion path with investment property does exist, but at tighter leverage. It fits when rent is thin against the price, as with some luxury rentals. For the wider picture, the complete DSCR loans guide covers how the rental side works.
A thin sequence helps whichever route you take:
1. Decide whether you are buying a home to live in or a rental.
2. Roll or deposit the lump sum early so statements season.
3. Don’t spend it before reserves and down payment are verified.
4. Then compare paths on your statements.
Monthly Pension vs. Lump Sum: The Qualifying View
If you haven’t chosen yet, know the underwriting tradeoff. A monthly pension is documented recurring income. A lump sum is an asset that can become imputed income only through a program like depletion. Taking the lump sum gives up the documented monthly check.
Neither choice is automatically better for a mortgage. Some borrowers elect a partial lump sum with a reduced monthly benefit. The monthly part counts as income, and the lump sum counts as an asset. The same dollars never count twice.
Frequently Asked Questions
Does a monthly pension check count as asset depletion income?
No. A monthly pension is documented income, and asset depletion is an asset calculation. They are different inputs. Some programs let you combine them, and others don’t, so ask before you assume.
Do I have to cash out my retirement account to use it?
No. Asset depletion is a calculation, and nothing is sold. The lender counts a percentage of the balance as imputed income. On the depletion path, a retirement account counts at 70% of its balance.
Can I use a pension lump sum to buy a rental on a DSCR loan?
Yes, as down payment and reserves, but not as income. The loan is reviewed primarily on the property’s rent covering the payment, subject to lender guidelines. The lump sum needs seasoning and a clear source.
What if I already spent part of the lump sum?
Only the documented remaining balance counts. The lender reviews statements, so large withdrawals and transfers need explanations. Funds used for the down payment and closing costs can’t also feed the income pool.
Does the lump sum count if my plan hasn’t paid it out yet?
Not in any program Lendmire places files with. A benefit still inside the plan is not a balance, so there is nothing to count. Once you elect it and it lands in an account, it becomes an asset. After that, the account type decides the percentage.
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.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. OCC bulletin on asset dissipation underwriting
2. Mondaq analysis of the OCC bulletin
3. IRS Topic 413, Rollovers from retirement plans
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 Estimate Income on Bank Statement or Asset Depletion Loans · Dividend Income vs Asset Depletion for a Second Home Jumbo Loan · How Asset Depletion Income Is Calculated From Your Portfolio
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.