The Quick Read: Fannie Mae’s version converts retirement and employment-related assets into income for a home you will live in or use as a second home, while a non-QM asset depletion loan places a much wider set of liquid assets behind a primary home, second home or investment property, subject to underwriting. The two products share a formula idea and little else. Alabama does not change either set of rules, so the choice comes down to occupancy, asset type, age and how much cash you want left over.
- Fannie Mae’s rule covers principal residences and second homes only, so a pure rental purchase falls outside it.
- Fannie Mae’s rule counts employment-related assets such as 401(k), IRA, SEP and Keogh accounts, severance and lump-sum retirement distributions.
- A non-QM asset depletion loan counts cash, certificates of deposit, securities, retirement accounts and real-estate equity, each at a set percentage.
- The non-QM side has two paths, and a borrower is reviewed on one path at a time.
- Every figure below is a typical ceiling or floor through select programs, never an offer.
The Honest Answer First
Choose Fannie Mae’s route if you are buying a home to live in, you hold a large 401(k) or IRA, and you can accept a lower leverage cap. Choose a non-QM asset-based mortgage program if your wealth sits in brokerage, savings or business-sale cash, or if the property is a rental. It also fits if you want a higher leverage ceiling than Fannie Mae allows a younger borrower.
Fannie Mae’s version is a narrow income-conversion rule. It is not a general loan for the asset-rich. The non-QM version is a family of products built for borrowers whose balances are large and whose documented income is not.
Lendmire is a mortgage broker. Its consumer mortgage lending is licensed in 16 states, Alabama among them. Lendmire places asset-based files through select lenders in its wholesale network, and those lenders make the credit decisions. The column labeled Fannie Mae below shows published agency norms for contrast.
Side-by-Side
The table separates the three qualification routes. Fannie Mae has one route. The non-QM side has two, and the paths never blend. All non-QM figures are typical, subject to underwriting.
| Factor | Fannie Mae (published norms) | Non-QM qualifier path | Non-QM depletion path |
|---|---|---|---|
| Review basis | Eligible assets become income | Assets cover the whole loan | Assets ÷ 60 months become income |
| Assets counted | 401(k), IRA, SEP, Keogh, severance | Brokerage, CDs, savings, retirement | Cash, CDs, securities, retirement, equity |
| Occupancy | Primary, second home | Primary, second home | Primary, second home, investment |
| Transactions | Purchase, limited cash-out | Purchase, refinance | Purchase, rate-and-term, cash-out |
| Income documented | Derived income, standard DTI | None | Derived income, DTI test |
| Statements | Proof of ownership and access | Two months per account | 120 days old, plus one within 45 days |
| Minimum assets | Not a separate test | Assets at least the loan | Lesser of $1,000,000 or 1.25x loan |
| Reserves | Set by agency underwriting | None at or below 75% LTV | No published months |
| Entity vesting | Individual home buyer | Lender-specific | Lender-specific |
Leverage differs enough to deserve its own paragraph, so the figures with their labels follow.
Fannie Mae allows a maximum of 70% LTV, CLTV and HCLTV on an eligible purchase or limited cash-out refinance of a principal residence or second home. That cap rises to 80% when the owner of the asset is at least 62 at closing, per the Fannie Mae Selling Guide section on employment-related assets. LTV is loan-to-value, the loan balance divided by the property value. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
On the non-QM qualifier path, leverage reaches 80% on a purchase and 75% on a refinance of a principal residence or second home. For investment property on the depletion path, the ceilings are 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets. Whether the qualifier path allows cash-out is up to the lender and is not published.
Key Terms Defined
Non-QM means a mortgage that falls outside the qualified-mortgage box agencies like Fannie Mae buy. It still gets underwritten. It does not mean weak credit or a small loan.
Asset depletion means treating a pile of assets as if you spent it down evenly over a set number of months. The result is a monthly qualifying income.
Haircut is the share of an account’s balance a lender subtracts because the asset can lose value or cost money to cash out. A 70% credit on retirement funds is a 30% haircut.
DTI is debt-to-income, your monthly debts, including the new housing payment, divided by your monthly income.
Seasoning is the time funds must sit in your account before a lender counts them.
Employment-related assets are Fannie Mae’s term for retirement accounts and lump sums that come from work.
How the Math Works on Each Side
The two non-QM paths use different arithmetic, and mixing them causes most of the confusion. The numbers below are illustrative, and the lender’s own calculation governs.
On the qualifier path, eligible assets after their credit percentages must equal or exceed the entire loan. Take an $800,000 loan. Say you hold $330,000 in brokerage accounts at 100%, $300,000 in a 401(k) while under 59½ at 90%, which counts $270,000, and $200,000 in savings at 100%. That totals $800,000 of usable assets, so the file is reviewed on assets alone. No employment or income is documented. The assets themselves are documented in full.
On the depletion path, assets turn into income. Say you hold $1,500,000 in securities, which count at 80% for $1,200,000, plus $300,000 in cash at 100%. That is $1,500,000 usable, and dividing by 60 months gives $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the DTI test.
Fannie Mae’s version works from a narrower pool. The lender takes the eligible retirement or lump-sum balance, subtracts any early-withdrawal penalty and transaction costs, and spreads the rest over the loan’s term. The penalty is subtracted rather than disqualifying. You also need unrestricted access to a full distribution, and a jointly owned asset requires every owner to be a borrower on the loan. The age-62 test applies to the owner of the asset being used.
When Fannie Mae Is the Better Fit
Fannie Mae’s route fits a narrow but real group. If you fit it, the underlying loan carries the agency’s standardization.
- You are buying a home you will occupy. It works for a principal residence or a second home on a purchase or limited cash-out refinance. It does not work for a pure rental.
- Your wealth is in retirement accounts. A large 401(k), IRA, SEP or Keogh is exactly what the rule was written for. So are severance and lump-sum retirement distributions.
- You are 62 or older and own the assets outright. The 80% LTV tier opens up only when the asset owner is at least 62 at closing.
- You want an agency-standard file. The agency rules are published in one guide rather than set lender by lender. Your own file still turns on property type, leverage, and credit profile. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The trade-offs are real. A borrower under 62 faces a 70% leverage cap, which means more cash down. Assets you use for the down payment also leave the pool you were counting on. Brokerage and bank balances generally do not count unless they trace to an eligible lump sum.
When a Non-QM Asset Depletion Loan Is the Better Fit
Non-QM fits when your assets, your property or your age fall outside Fannie Mae’s box. Across Lendmire’s wholesale network, most of the asset-based files that come up share that profile.
- Your money sits in brokerage, savings, CDs or money market. The qualifier path counts brokerage, CDs, money market and savings at 100%. Retirement balances count at 90% under age 59½ and 100% at 59½ or older.
- You want a rental or investment property. The depletion path allows investment property, at the 65% and 60% ceilings described earlier. Fannie Mae’s rule does not reach it.
- You want a larger loan. Loan amounts run up to $4,000,000 on the qualifier path and from $125,000 to $3,500,000 on the depletion path, subject to underwriting.
- You have recently sold a business or received an inheritance or settlement. Those funds are excused from the 120-day statement age on the depletion path. The qualifier path wants 60 days of seasoning.
- You want to avoid documenting income at all. The qualifier path documents assets and no employment or income.
The cost is selectivity and eligibility. The depletion path follows the lender’s credit and loan-amount matrix, and a first-time investor on that path needs a 700 score. The qualifier path publishes a 600 floor. Housing history is reviewed at 0x30x12, with one late in the last twelve months considered case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning on the depletion path. Some assets do not count on either path: cryptocurrency, precious metals, collectibles and pledged or borrowed funds. The documented route is to convert them into a seasoned cash balance in a regulated account, with the source reviewed by the lender.
A non-QM loan still involves a repayment-ability review. The federal ability-to-repay rule lets a lender base that determination on income, on assets other than the home securing the loan, or on both. The lender must verify the assets it relies on with reliable records. That is why statements and seasoning matter so much.
Three Alabama Scenarios
The rules are the same everywhere, but these pictures show how the choice plays out for an Alabama borrower.
The retiree buying a second home. Say you are 64, hold most of your wealth in an IRA, and want a second home in Alabama. Fannie Mae’s route may work, and the age-62 test could open the 80% LTV tier. If a large share of your balance is in a brokerage account instead, the qualifier path counts it at 100%. Retirement funds still count there too. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The business seller. Say you sold a company and the proceeds just landed in a savings account. Fannie Mae does not list sale proceeds among its eligible assets. A non-QM depletion path excuses sale-of-business funds from the 120-day statement age. Which one wins depends on whether you want those assets to cover the loan outright or become income.
The brokerage-heavy investor. Picture a borrower who owns mostly securities and wants a rental. Fannie Mae is out because the property is not a residence. The depletion path counts securities at 80% and allows investment property, with the leverage ceilings noted above. If the rent itself should carry the loan, DSCR financing may fit better, since that path qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Mistakes That Cost Borrowers
- Blending the two non-QM paths. Haircuts differ by path. A 401(k) counts at 90% or 100% on the qualifier path and at 70% on the depletion path.
- Counting the down payment twice. Money that goes into the purchase cannot also sit in the qualifying pool.
- Assuming a recent deposit counts. Statement age and seasoning rules apply, with specific exceptions for business sales, inheritances and legal settlements on the depletion path.
- Assuming no income documentation means no documentation. The assets are documented on both paths. Only the employment and income paperwork changes on the qualifier path.
- Counting crypto or collectibles. They do not count as published eligible assets on either path.
The Verdict
Neither option beats the other across the board. Fannie Mae’s route is the cleaner choice for an older borrower with large retirement accounts buying a home to live in. It is also the narrowest option, with a lower leverage cap for borrowers under 62.
A non-QM asset-based loan wins on flexibility. It counts more asset types, allows investment property on the depletion path, and offers a qualifier path that documents no income. It asks for more in return: documented assets, statement seasoning, minimum asset thresholds on the depletion path, and a credit profile the lender accepts. Many borrowers run both paths on the same statements before committing. A broker who sees several lenders’ guidelines can often show which path leaves the most cash untouched.
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. Call 828-256-2183 or request a quote.
Frequently Asked Questions
Can Fannie Mae asset depletion be used to buy a rental in Alabama?
No. Fannie Mae allows the rule only on principal residences and second homes. A rental purchase moves to a non-QM depletion path, which permits investment property at lower leverage, or to DSCR financing, where the property’s rent drives the decision. All figures are subject to underwriting.
Do brokerage accounts count under Fannie Mae’s rule?
Generally not, unless the funds trace to an eligible lump sum. The rule is built around employment-related assets such as retirement accounts and severance. A non-QM qualifier path counts brokerage balances at 100%, which is a major reason asset-rich borrowers look there.
Does a non-QM asset depletion loan skip underwriting?
No. The loan is underwritten on verified assets. Lenders review statements, ownership, seasoning and credit. The depletion path also runs derived income through a DTI test, and the qualifier path rests the repayment review on the assets themselves.
How do the two non-QM paths differ?
The qualifier path requires usable assets to equal or exceed the entire loan and documents no income. The depletion path divides usable assets by 60 months to create qualifying income. That income must carry the housing payment and other debts. A borrower is reviewed on one path at a time.
Does it matter that I live in Alabama?
The program figures do not change by state. Alabama is one of the 16 states where Lendmire’s consumer mortgage lending is licensed. Local prices, taxes and insurance affect your budget but not the qualifying rules.
Lendmire’s asset-based mortgage in Alabama page presents the program for Alabama 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. Fannie Mae Selling Guide: Employment Related Assets as Qualifying Income
2. CFPB Regulation Z, Section 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Pennsylvania Asset-Based Mortgage Require Tax Returns? · Can You Buy a Second Home in Alabama on Assets Instead of Income? · Can an Alabama Retiree Get a Mortgage on Savings and Investments Alone?
Guides: Asset-Based Mortgage in Alabama
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.