The Quick Read: Scheduled IRA withdrawals count as income only when real, documented payments leave the account on a set schedule. Asset depletion works differently, because the lender divides usable assets by 60 months to create qualifying income, and you never have to withdraw a dollar.
- Scheduled withdrawals fit borrowers who already take steady distributions, such as required minimums.
- Asset depletion fits borrowers with large balances who take little or nothing out.
- Across the wholesale network Lendmire works with, retirement accounts count at 70% on the depletion path, at any age, subject to underwriting.
- A separate asset qualifier path skips income entirely when eligible assets cover the whole loan.
- Both options here are consumer mortgages on a home you live in, or a second home. Investment property is a different conversation.
Here is the honest answer. If your IRA already pays you a steady monthly amount and you can show it, that income can carry a file under programs that accept it. If your IRA sits untouched, asset depletion is usually the cleaner route. Forcing withdrawals just to qualify can cost you more than it helps.
Side-by-Side
The table below compares the two approaches. The scheduled-withdrawal column reflects published industry norms. The asset depletion column reflects the path as Lendmire’s network places it, subject to underwriting and lender guidelines.
| Factor | Scheduled IRA Withdrawals | Asset Depletion |
|---|---|---|
| What the lender counts | Documented payments leaving the account | Usable assets ÷ 60 months |
| Do withdrawals have to start? | Yes, and be documented | No |
| Documentation | Custodian statements: amount, frequency, receipt | Account statements, seasoned balances |
| Continuance test | Common: payments must be likely to last | Built into the divisor and minimum assets |
| Property types | Varies by program | Primary, second home (depletion path) |
| Entity vesting | Usually individual on consumer loans | Individual on a consumer-purpose loan |
| Reserves | Set by each program | No published reserve months on the depletion path |
| Timeline | Depends on building a payment history | Depends on statement age and seasoning |
| Effect on your portfolio | Real withdrawals, real taxable income | None. It is a calculation only |
How Scheduled IRA Withdrawals Count as Income
A scheduled withdrawal counts when the lender can see a payment of a known amount, on a known schedule, that is likely to continue. The lender wants custodian paperwork showing the amount, how often it is paid, and that you actually received it.
The schedule usually comes from one of three places. The first is a required minimum distribution. The IRS says these generally start at age 73 for traditional IRAs, even if you are retired. The Congressional Research Service notes the age rises to 75 for people who turn 73 after 2032.
The second is a voluntary systematic withdrawal you set up with your custodian. The third is a series of substantially equal periodic payments, often called a 72(t) schedule, which lets someone under 59½ withdraw without the 10% additional tax. The IRS recognizes three methods for it in Notice 2022-6. Changing that series before the required period ends can break the exception. That rigidity makes it a poor tool to improvise around a mortgage application.
Agencies show how this logic usually runs. Agency guidelines generally treat a retirement distribution as income only if the lender documents that it is expected to continue for at least three years, and the borrower has penalty-free access. They also separate fixed distributions from variable ones, which get averaged over a history. That is the agency approach, not ours. Non-QM programs set their own tests, and they vary from lender to lender.
Fixed payments are simpler. Variable or irregular payments are harder to count, and brand-new withdrawals have no track record to show.
How Asset Depletion Income Is Built
Asset depletion is a lender-side calculation. The lender takes your eligible assets, applies a credit percentage to each account type, and divides the usable total by 60 months. The result is monthly qualifying income, which then runs through the debt-to-income test. Nothing leaves your account.
On the depletion path, the network’s published credit percentages look like this, subject to underwriting:
- Cash accounts and certificates of deposit: 100%
- Securities: 80%
- Private stock: 75%
- Retirement accounts: 70% at any age
- Real-estate equity: 60%
Here is an illustration. Say you hold $1,500,000 in usable assets after the lender applies its percentages, with securities counted at 80% and cash at 100%. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts. The lender’s own calculation governs, and this is only a sketch.
Some assets do not count on this path. Non-vested restricted stock units, stock options, deferred compensation, custodial accounts, escrow accounts, foreign funds and cash on hand are all out. Crypto, precious metals and collectibles are not published as eligible. The documented route is converting them to a seasoned cash balance in a regulated account.
There are minimums too. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when assets are your only income source. Statements must be at least 120 days old, plus one within 45 days. Loans run from $125,000 to $3,500,000 through select programs.
The Third Option: Qualifying on Assets Alone
There is a sibling path worth knowing. On the asset qualifier path, there is no income calculation at all. Your eligible assets must equal or exceed the entire loan.
Retirement balances count more generously here: 90% under age 59½ and 100% at 59½ or older. Brokerage, CDs, money market and savings count at 100%. Say you want an $800,000 loan and hold $330,000 in brokerage accounts, $300,000 in a 401(k) under 59½, and $200,000 in savings. That is $330,000 plus $270,000 plus $200,000, or $800,000 of usable assets. The file is reviewed on assets alone, subject to underwriting.
Leverage reaches 80% on a purchase and 75% on a refinance on a primary residence or second home, with loans up to $4,000,000. Seasoning is 60 days with two months of statements per account. The credit floor is 600. Reserves are not required at or below 75% loan-to-value. You are on one path at a time, so you pick the depletion math or the qualifier math, never a blend.
When Scheduled IRA Withdrawals Are the Better Fit
Scheduled withdrawals win when you already take steady distributions and want them recognized. The income is real, and the paper trail already exists.
- You are past required-distribution age. Your minimum distributions are already flowing, so the documentation costs you nothing extra.
- Your balance is too small for depletion. The depletion path has minimum asset thresholds. A modest IRA paying a steady amount may clear a distribution-income test when it would miss the asset minimums.
- You stack income. Pension and Social Security often combine with documented distributions. Asset depletion can also supplement documented income up to a 45% debt-to-income ratio.
- A program near you accepts it. Not every lender counts IRA distributions the same way, so ask before you assume.
The catch is that the withdrawal is taxable income in the year you take it. Tax treatment varies; consult a qualified professional before changing your distributions.
When Asset Depletion Is the Better Fit
Asset depletion wins when your balances are big and your documented income is small. Think of a retiree who lives on Social Security and leaves the IRA alone, or someone who just sold a business.
- You do not want to touch the account. Depletion is a calculation, so you avoid pulling taxable money out just to qualify.
- You hold a mix of assets. Securities, cash, retirement and real-estate equity can all count at different percentages.
- You have a Roth IRA. Original Roth owners face no lifetime required distributions, per Fidelity, so there is no schedule to document. Depletion may be your only route.
- You are under 59½. A 72(t) schedule locks you in. Depletion avoids the lock, though retirement accounts count at 70%.
The tradeoff is real. At 70%, retirement money counts for less than cash. If your wealth is mostly in an IRA, the divide-by-60 math produces less income than you might expect.
Can You Use Both on the Same Account?
Usually not for the same dollars. Counting an account as a distribution stream and again as a depletion asset is double-counting, and most programs block it. Some will let asset-derived income supplement documented income, so a pension plus depletion on a different account can work. Whether the same account can serve both depends on the lender, so get that answer in writing before you apply.
Key Terms Defined
Asset depletion: a calculation that turns usable assets into monthly qualifying income by dividing them over a set number of months.
Haircut: the share of an account’s value the lender does not count, which is why retirement money counts at 70% on the depletion path.
Required minimum distribution (RMD): the amount the IRS requires you to take from a traditional IRA each year once you reach the required age.
72(t) series: a fixed schedule of withdrawals that lets someone under 59½ avoid the 10% additional tax.
Continuance: proof that a payment is likely to keep coming for a set number of years.
Seasoning: how long money has sat in an account before the lender will count it.
Which One Should You Pick?
Run through these in order:
1. If assets alone cover the whole loan, look at the asset qualifier path first. No income math is needed.
2. If you already take steady, documented distributions, ask whether a program will count them.
3. If you take little or nothing from the account, use asset depletion.
4. If you would have to raise withdrawals only to qualify, stop and weigh the tax cost.
Lendmire’s article How an STR Investor Qualifies on Asset Depletion vs Rental Income covers the investment-property angle in more depth. For the wider picture, see the complete DSCR loans guide. Rental property financed as a business-purpose investor loan typically qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so your IRA matters there mostly for down payment and reserves.
A Balanced Verdict
Neither option is better in the abstract. Scheduled withdrawals reward people who already live on their IRA, and they carry real tax and paperwork consequences. Asset depletion rewards people whose wealth sits still, and it costs you a haircut. For most income-light, asset-heavy borrowers who have not started drawing down, depletion is the less disruptive path. For anyone with years of steady distributions, documenting them may be simpler.
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. Consumer mortgage lending is licensed in 16 states, and all figures here are ceilings and floors, subject to underwriting, not offers or commitments to lend.
Frequently Asked Questions
Do I have to start IRA withdrawals before I can use asset depletion?
No. Asset depletion works on balances you have not touched. The lender calculates income from your usable assets, so the account can stay exactly as it is.
Does my IRA count at full value?
Not on the depletion path. Retirement accounts count at 70% at any age, while cash counts at 100% and securities at 80%. On the asset qualifier path, retirement balances count at 90% under 59½ and 100% at 59½ or older. All of this is subject to underwriting.
What happens if my balance is too small for either path?
Depletion needs qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid as the only income source. A smaller balance might still support a distribution-income file, or supplement documented income. A different loan structure may fit better.
Do Roth IRAs work?
Yes, as assets. A Roth has no lifetime required distributions for its original owner, so there is usually no payment stream to document. Depletion or the asset qualifier path is the natural fit.
Can I use my IRA for a rental purchase?
Your IRA does not have to supply income for a business-purpose rental loan, because that loan is reviewed primarily on the property’s rent. The balance can still help with the down payment and reserves, depending on program guidelines.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. IRS: Retirement Plan and IRA Required Minimum Distributions FAQs
2. Congressional Research Service: IF12750
3. Fidelity: Required Minimum Distributions
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 Asset Depletion Income Is Calculated From Your Portfolio · Retirement Account Withdrawals vs Asset Depletion for a Jumbo Loan · How Asset Depletion Counts Income for a Rental Portfolio Buyer
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.