The Quick Read: No, a lender can count your IRA balance as it sits, either as proof that your assets cover the whole loan or as a monthly income figure the lender calculates, and neither route requires you to withdraw a dollar or start a payment schedule through select programs, subject to underwriting.
- Asset qualifier path: eligible assets must equal or exceed the entire loan, and no employment or income is documented.
- Asset depletion path: usable assets divided by 60 months become a qualifying monthly income, which then runs through the debt-to-income test.
- Retirement credit differs by path: 90% under age 59½ and 100% at 59½ or older on the qualifier path, 70% at any age on the depletion path.
- Distributions can hurt: taking money out only to check a box creates taxable income and, before 59½, often an extra penalty.
- Rentals are different: a rental purchase usually is reviewed on the property’s rent instead, and your IRA mostly shows up as down payment and reserves.
Why Do People Think They Need Distributions?
The belief comes from how conventional files treat retirement money. A conventional lender wants income it can see arriving. If you are retired and your pay stub is a statement, the loan officer may ask whether you draw from the account.
That question is reasonable on a conventional file. It makes no sense on an asset-based file, because the lender is not looking for a paycheck at all. It is looking at what you own.
Lendmire is a mortgage broker. It places asset-based mortgages through select lenders in its wholesale network, and across that network the same pattern shows up. Borrowers with large balances and small documented incomes assume they must manufacture income. They don’t. They must show seasoned, accessible assets.
This page is written for the cash-heavy, income-light borrower: a retiree, someone who sold a business, an early-retired professional, a household living off a portfolio. If that is you, the first decision is which path fits, not whether to start withdrawing.
How Does the Asset Qualifier Path Treat an IRA?
On the asset qualifier path, your IRA counts as part of the total, not as income. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. A borrower is qualified on one path at a time, so this is a standalone test.
Here is what counts, through select programs and subject to underwriting:
- Brokerage accounts, certificates of deposit, money market and savings count at 100%.
- 401(k) and IRA balances count at 90% if you are under 59½, and 100% at 59½ or older.
- Accounts combine, so several balances can add up to the loan amount.
Take an illustrative file. The loan is $800,000. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). Usable assets total $800,000, which matches the loan, so the file is reviewed on assets alone. The lender’s own calculation governs, and this is not a promise of approval.
Nothing in that example involves a distribution. The 401(k) never pays you a cent. The 90% credit simply acknowledges that early withdrawals would cost you something.
Other terms on this path, all subject to underwriting:
- Leverage: up to 80% on a purchase and 75% on a refinance of a principal residence or second home.
- Loan size: up to $4,000,000.
- Credit: a 600 minimum score.
- Seasoning: 60 days, with two months of statements for each qualifying account.
- Reserves: none required at or below 75% loan-to-value. Above that, the lender sets them.
Whether cash-out proceeds are allowed on this path is set by the lender and is not published, so don’t plan around it.
How Does the Asset Depletion Path Turn an IRA Into Income?
On the asset depletion path, the lender converts your usable assets into a monthly income number. It adds up eligible assets after haircuts, divides by 60 months, and treats the result as income. That figure must carry the full housing payment and your other debts through the debt-to-income test.
The haircuts here differ from the qualifier path, and the two tables never blend:
- Cash accounts and certificates of deposit count at 100%.
- Securities count at 80%.
- Private stock counts at 75%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
Consider an illustrative file. You hold $1,500,000 in securities (80% counts, so $1,200,000) and $300,000 in cash (100%, so $300,000). Usable assets are $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to cover the housing payment and other debts through the debt-to-income test.
Again, no distribution schedule exists anywhere in that math. The lender creates the income on paper. You never receive a payment from the account.
The depletion path also has its own guardrails:
- Minimum assets: qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. If depletion is your only income source, you also need at least $250,000 in liquid assets.
- Supplementing income: asset-derived income can top up documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
- Loan size: $125,000 to $3,500,000.
- Credit: the lender’s score and loan-amount matrix applies. A first-time investor on this path needs a 700.
- Statements: at least 120 days old at application, plus the most recent statement within 45 days.
A few asset types do not work on this path at all: custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies. If your wealth sits in crypto, precious metals or collectibles, neither path publishes them as eligible. The documented route is converting them to a seasoned cash balance in a regulated account, with the lender reviewing the source.
Which Path Fits You?
Pick the path by what your balance sheet looks like and what you are buying. The qualifier path suits borrowers whose assets cover the loan outright. The depletion path suits borrowers who need the assets to become income.
| Factor | Asset qualifier | Asset depletion |
|---|---|---|
| Core test | Assets cover the whole loan | Assets ÷ 60 = income, then DTI |
| IRA credit | 90% under 59½, 100% after | 70% at any age |
| Income documented | None | Derived from assets |
| Purchase leverage | Up to 80% | Up to 80% (65% investment) |
| Investment property | Not available | Available |
| Distributions needed | No | No |
Leverage on the depletion path is 80% on a purchase or rate-and-term refinance for a principal residence or second home, and 60% on a cash-out refinance. For an investment property it is 65% on a purchase or rate-and-term and 60% on a cash-out. Cash-out proceeds never count as qualifying assets.
Honestly, it is a close call for many retirees with a large IRA and a moderate loan. The qualifier path gives more credit to a retirement balance, but it demands that assets match the full loan. The depletion path asks for less in total assets relative to the loan, but it discounts the IRA more and leans on a debt-to-income test.
Mixed portfolios often favor one path clearly. A borrower with a big IRA and a small purchase loan usually fits the qualifier path. A borrower with a large portfolio and a larger loan is a depletion candidate.
When Do Distributions Actually Matter?
Distributions matter in three situations: you already take them, the law forces you to take them, or you are on a conventional file that wants to see them. None of the three means you must create a new payment stream for an asset-based loan.
If you already take required distributions. A required minimum distribution (RMD) is the amount the IRS makes you withdraw each year once you reach a set age. Taxpayers.net reports that the start age is 73 for people born 1951 through 1958 and 75 for those born in 1960 or later, with the 1959 group still open under proposed guidance. Check your own birth year with a tax adviser. If RMDs are already hitting your checking account, they are real money. Whether a lender gives them any weight on an asset-based file depends on the program and the lender, so ask your broker before assuming either way.
If you are on a conventional file. Agency-style loans can treat retirement balances as income streams. The Fannie Mae Selling Guide covers employment-related assets as qualifying income, and it limits that treatment to principal residences and second homes. That is a conventional rule set. It is not how Lendmire’s asset-based programs work, and it is not how rental financing works.
If you want a head start anyway. Some borrowers start regular withdrawals months before applying, hoping a payment history helps. On the asset paths described here, it doesn’t add anything the balance doesn’t already provide. It can add a tax bill.
What Does Taking Distributions Cost You?
Early distributions are generally the ones you take before age 59½. IRS Topic 557 says they carry a 10% additional tax unless an exception applies, on top of regular income tax on the amount. The listed exceptions include disability, death, and substantially equal periodic payments.
There is also a first-time homebuyer exception, capped at $10,000. It is built for a first home, so do not assume it stretches to a rental purchase.
Treat the extra tax as the cost of a withdrawal you did not need. Counting a balance toward qualification is documentation. Pulling money out for cash to close is a separate act with its own consequences. Tax treatment varies, so consult a qualified tax professional before moving any retirement money.
The 70% and 90% credits already reflect this reality. Lenders discount retirement accounts because getting cash out of them can be expensive.
What About Buying a Rental?
For a rental purchase, your IRA is mostly a funding source, not an income source. 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.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your retirement income isn’t the test. The property’s rent against its payment is. Lendmire’s complete DSCR loans guide walks through how that coverage ratio works and what documents a rental file needs.
Where the IRA matters on a DSCR file:
- It can show you have the down payment and closing funds.
- It can support post-closing reserves.
- It does not rescue a property whose rent fails to cover the payment.
Select lenders in the network will look at coverage below 1.00 as well, though leverage and terms adjust when they do. The more your balance has to carry, the more the lender looks at how much of it is liquid and seasoned.
There is also a different route for investors who prefer to qualify on assets rather than on the property. On the depletion path, an investment property is eligible at 65% on a purchase and 60% on a cash-out. That is tighter leverage than a primary home gets, and it means more cash in. For many investors who want the rent to do the qualifying, DSCR remains the cleaner fit. For an investor with a big portfolio and thin rental income, depletion is a real alternative.
One more distinction: buying a property inside a self-directed IRA is a different structure entirely, with its own rules on recourse and prohibited transactions. It does not answer the question of whether you need distributions to qualify. Treat it as a separate conversation with a specialist.
How Do You Document an IRA Without Withdrawing From It?
Documentation is simple but strict. You need statements that show the account is yours, the balance is vested, and the money is accessible. Seasoning matters more than most borrowers expect.
A workable checklist for retirement balances, subject to underwriting:
- Ownership: the account is titled to you. Check titling on every statement.
- Vesting: the balance is vested and available without a third party’s approval. Employer plans can lock funds while you are still employed.
- Statement history: two months of statements per account on the qualifier path. On the depletion path, statements at least 120 days old plus one dated within 45 days.
- Seasoning: 60 days on the qualifier path.
- Source of any large deposit: a recent big transfer invites questions. Funds that have sat in place are far easier to document.
Both paths document your assets. “No income documentation” never means “no documentation.” The assets are reviewed in detail.
Lendmire’s piece How to Set Up Your Accounts Before Applying for a Bank Statement Mortgage covers how to keep deposits clean and statements consistent. The same habits help an asset-based file.
Mistakes That Cost Borrowers Money
Most problems come from solving the wrong problem. Here are the ones that show up repeatedly.
Starting distributions to look like income. On asset paths, it adds nothing the balance doesn’t already show, and it can add tax and penalty.
Assuming the IRA counts at full value. On the qualifier path it counts at 90% under 59½ and 100% after. On the depletion path it counts at 70%. Model the discounted number, not the statement number.
Blending the two paths. You are qualified on one path at a time. A 100% credit from one table does not carry into the other.
Moving money right before applying. A fresh transfer between accounts can break seasoning. Lenders want to see where balances came from and how long they have been there.
Treating a retirement balance as cash for closing without checking the cost. Withdrawing for cash to close is a taxable event for most account types. Ask a tax professional first.
Expecting a rental to qualify on your IRA. For rentals, the property’s rent decides coverage. The IRA supports reserves and cash to close.
Key Terms Defined
Asset qualifier: a path where eligible assets, after credit percentages, must equal or exceed the whole loan. No employment or income is documented.
Asset depletion: a path that divides usable assets by 60 months to create a monthly qualifying income. That income then runs through the debt-to-income test.
Required minimum distribution (RMD): the yearly amount the IRS makes you withdraw from most retirement accounts once you reach a set age.
Seasoning: how long funds have sat in an account. Longer-held balances are easier to document than recent deposits.
Haircut: the share of a balance a lender does not count. A 70% credit means a 30% haircut.
Early distribution: a withdrawal before age 59½, which generally triggers an extra 10% tax unless an exception applies.
Frequently Asked Questions
Can I stop distributions after closing if I started them?
Starting a distribution schedule doesn’t lock you into it on an asset-based file. The lender qualified you on the balance, not on a promise to keep drawing. Stopping may still change your tax picture, so speak with your tax adviser first. If you take RMDs, those are required by law regardless of your mortgage.
Does a Roth IRA count the same as a traditional IRA?
On the programs described here, retirement accounts are valued by the credit percentages for the path you are on, not by tax type. The tax result of any withdrawal does differ between account types, which is a question for your tax professional. Roth accounts also generally have no lifetime RMDs for the original owner, so confirm your own situation.
Can I use a spouse’s IRA?
Ownership and access drive this. The account generally has to belong to a borrower on the loan, and the funds must be accessible. Whether a spouse’s account counts depends on the program, titling and the lender’s review, so raise it at the start of the file.
Does my age matter?
Yes, on the qualifier path. Retirement balances count at 90% under 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% regardless of age. Age also sets when RMDs begin, but that is a tax-law question, not a qualification test.
Will I have to sell my investments?
Not to qualify. Both paths count eligible assets as they sit, with the credit percentages applied. Selling is a separate decision with its own tax effects. If you want to fund a down payment from the account, that withdrawal is a taxable act for most account types.
Next Steps
If you are qualifying on assets rather than on 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. Lendmire’s consumer mortgage lending is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. Loans are placed through select programs, every file is underwritten individually, and nothing here is a commitment to lend.
The person with a large IRA and a modest income is rarely short of qualifying capacity, and the real decision is which path counts that balance most generously.
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. Taxpayers.net: Required Minimum Distributions
2. Fannie Mae Selling Guide B3-3.4-06
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 Big Can an Assets-Only Mortgage Be? · How to Document an Asset Qualifier Mortgage · How to Qualify for an Assets-Only Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.