The Quick Read: Yes, a California buyer can qualify on IRA assets without taking a withdrawal, because select programs in Lendmire’s wholesale network count a discounted share of the IRA balance as qualifying assets or as notional monthly income, while the account stays untouched, unpledged, and in the owner’s name, subject to underwriting and the program’s statement rules. The lender reads the IRA statement. It does not draw on the account.
- On the asset qualifier path, eligible assets must cover the entire loan amount, and no employment or income is documented.
- On the asset depletion path, usable assets divided by 60 months become qualifying income that runs through the debt-to-income test.
- An IRA counts at 90% under age 59½ and 100% at 59½ or older on the qualifier path, and at 70% at any age on the depletion path.
- Nothing about California changes the program figures. The state is a borrower label here, not a separate rule set.
Counting an IRA Is Not the Same as Pledging One
The line that matters is between showing an IRA and securing a loan with it. A lender may look at your statement to verify assets. You cannot pledge the account as collateral. IRS Publication 590-B lists using a traditional IRA as security for a loan as a prohibited transaction. It also says that the pledged part is treated as a distribution included in gross income.
The consequences can run past the pledged dollars. If an owner engages in a prohibited transaction such as borrowing from the account, the IRA stops being an IRA as of the first day of that year, and its assets are treated as distributed at fair market value, according to the IRS Publication 590-B PDF. Each IRA is treated separately, so only the offending account is affected. The education site IRA Help makes the same point about a pledged amount being treated as distributed.
The rule reaches every common IRA type. The custodian Horizon Trust says the no-borrowing, no-pledging rule covers Traditional, Roth, SEP, SIMPLE, and self-directed IRAs. It also notes that employer plans may allow plan loans, while IRAs have no such provision. A 401(k) loan and an IRA are two different tools.
Here is how the asset-based programs fit. In the programs Lendmire places, the IRA is documented by statements. It is not pledged, and the lender takes no lien on it. If a lender ever asks you to encumber the account, stop and get the structure reviewed before you sign anything.
Two Paths: Assets Alone or Assets as Income
Asset-based mortgages come in two forms, and a borrower is reviewed on one path at a time. The asset qualifier path covers the whole loan with eligible assets and documents no income. The asset depletion path converts assets into income and tests it against debts.
The asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. This path fits a buyer whose balances are large and who has little documented income. Examples are a retiree, someone who recently sold a business, or a household living on a portfolio. Leverage runs up to 80% on a purchase and up to 75% on a refinance, on a principal residence or second home. Loan amounts run up to $4,000,000. The credit score floor is 600. Reserves are not required at or below 75% loan-to-value. Above that, the lender sets them.
The asset depletion path. Usable assets, after haircuts, are divided by 60 months. The result is monthly qualifying income, and it must carry the full housing payment and your other debts. Leverage runs 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 figures are 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Loan amounts run from $125,000 to $3,500,000. The lender’s score matrix sets the credit requirement, and a first-time investor on this path needs a 700 score.
Both paths are documented. No income documentation never means no documentation. Your assets are verified line by line.
How Much of an IRA Balance Actually Counts
On most files across the network, the IRA does not count at full face value. The share that counts depends on the path and, on one of them, on your age. The table shows the credit each path gives, through select programs and subject to underwriting.
| Asset type | Qualifier path | Depletion path |
|---|---|---|
| Brokerage or securities | 100% | 80% |
| Cash, savings, money market | 100% | Cash accounts 100% |
| Certificates of deposit | 100% | 100% |
| IRA or 401(k), under 59½ | 90% | 70% |
| IRA or 401(k), 59½ or older | 100% | 70% |
| Real-estate equity | Not listed | 60% |
Never blend these two columns. A buyer who reads the 100% figure from one path and applies it to the other will overstate what counts.
Accounts combine on the qualifier path. Your IRA, brokerage account, and savings can all add toward the total, as long as each meets the statement rules. On the depletion path, some asset types do not count at all. These include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units.
Cryptocurrency, precious metals, and collectibles are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account. The lender then reviews the source of those funds. Borrowed or pledged funds do not qualify, and cash-out proceeds never count as qualifying assets.
A Worked Example With Illustrative Numbers
Here is the arithmetic on each path. These figures are illustrative, and the lender’s own calculation governs.
Qualifier path. Picture a buyer seeking an $800,000 loan. The buyer holds $330,000 in brokerage accounts, which count at 100%, or $330,000. A 401(k) under age 59½ holds $300,000, which counts at 90%, or $270,000. Savings of $200,000 count at 100%. The usable total is $800,000, which equals the loan, so the buyer is reviewed on assets alone, subject to underwriting. An IRA under 59½ would be treated the same way as that 401(k).
Depletion path. Now take a household with $1,500,000 in securities and $300,000 in cash. Securities count at 80%, or $1,200,000. Cash counts at 100%, or $300,000. Usable assets are $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test.
The first example does no income math at all. The second one does. If you want the property’s payment covered by income, the depletion path is the one doing the work. If you want to skip the income conversion entirely, the qualifier path asks only that your assets cover the loan.
Does Age 59½ Change the Answer?
It changes one number on one path. On the qualifier path, an IRA counts at 90% before 59½ and 100% after. On the depletion path, retirement accounts count at 70% at any age.
The reason is access. Money taken from an IRA before 59½ can carry an early-distribution penalty, so one path trims the credit for younger borrowers. The depletion path applies a flat haircut to every retirement balance instead.
The answer differs by program. Some lenders treat age as irrelevant, while others restrict retirement income for younger borrowers. Which applies depends on the specific program and on whether the balance counts as income or as assets. This is why a buyer in the early fifties should ask how a program treats the account before assuming anything.
Using Retirement Assets on a Larger California Purchase
California loan sizes often run large, and these programs reach them. The qualifier path goes to $4,000,000 and the depletion path to $3,500,000. Lendmire’s piece How to Use Retirement Assets to Qualify for a Jumbo Mortgage covers the jumbo case in depth.
Lendmire’s consumer mortgage lending covers 16 states, and California is one of them. The program figures here do not change by state. Local prices, insurance, and taxes are context for your budget. They are not program parameters.
Buying a Rental With IRA Money in the Picture
An investor buying a rental has a different question than a retiree buying a home. The loan type matters, and so does what the IRA is being asked to do.
Investment property can run on the depletion path, at 65% on a purchase and 60% on a cash-out. The qualifier path is for principal residences and second homes, not investment property. If the property will be a pure rental, many investors choose a DSCR loan instead. Lendmire’s complete DSCR loans guide walks through that product.
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. Federal rulemaking treats investment-purpose loans as business-purpose loans, outside the consumer provisions.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal income is not the test, so a retiree’s IRA does not need to be converted into income. The IRA enters the file as verified liquidity. It supports the down payment, closing costs, and reserves. How much of a retirement balance counts toward reserves varies by program, and lenders set their own treatment. Confirm it against the specific file before relying on it.
Coverage is still a hard test. Select lenders in the network will review below-1.00 coverage, but leverage and terms adjust when they do. A thin deal does not become a good one because the IRA looks large.
Withdrawing from an IRA to fund the purchase is the alternative. Keeping the IRA intact and only showing it avoids a distribution. Tax treatment varies, so consult a qualified professional before choosing between the two.
Is a Self-Directed IRA Buying the Rental the Same Thing?
No. That is a separate structure, and it should not be mixed with the strategy above. In a self-directed arrangement, the IRA itself buys the property. IRS rules on prohibited transactions apply to that deal, including the ban on buying property for personal use with IRA funds, per IRS Publication 590-B.
Using an IRA to qualify is different. The account is not buying, borrowing, or pledging anything. It is evidence of net worth on a statement. If an adviser pitches a structure where the account takes on a role in the deal, treat that as a flag.
Statements, Seasoning, and Paperwork
The paperwork is where files stall, so prepare it early. The rules differ by path.
- Qualifier path: The assets need 60 days of seasoning. Provide two months of statements for each qualifying account.
- Depletion path: Statements must be at least 120 days old at application. You also need the most recent statement, dated within 45 days. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that seasoning.
You should also expect to document ownership and access. For an IRA, the custodian statement shows the balance, the registration, and the account type. Large recent deposits will draw questions. If a balance recently arrived through a rollover or a transfer, keep the paperwork that traces it.
Credit still matters on both paths. Housing history is reviewed at 0x30x12, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. On the depletion path, a housing event needs 4 years of seasoning.
When This Route Is the Wrong Tool
Asset-based qualifying is not for everyone. Here are the situations where another route may serve better.
- You have strong documented income. A standard mortgage may fit, and it avoids the extra steps. The depletion path can supplement documented income up to a 45% debt-to-income ratio, and then the minimum-assets rule is waived. That is a middle path worth asking about.
- Your assets are mostly in accounts that do not count. Crypto, collectibles, business accounts beyond your ownership share, and borrowed funds are not published as eligible. Converting them takes time and documentation.
- Your retirement balance is the whole story. On the depletion path, assets must meet the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, liquid assets must also be at least $250,000. A modest IRA will not clear that bar.
- A drawdown would hurt your plan. Assets used to qualify must stay in place. If the loan leaves you thin on liquidity, a market drop can reduce what the lender counts.
If your goal is a pure rental purchase and you hold large balances, consider both a DSCR loan and the depletion path. They answer different questions. One tests the property, and the other tests your net worth.
Key Terms Defined
Asset qualifier: A path where eligible assets, after credit percentages, must cover the entire loan amount, with no income documented.
Asset depletion: A path where usable assets divided by 60 months become monthly qualifying income, tested against your debts.
Haircut: The share of an asset’s value that a program does not count, so a 70% credit means a 30% haircut.
Seasoning: The period an asset has sat in your account, which shows the funds are yours and not a recent borrowed deposit.
Prohibited transaction: An IRA action the tax rules bar, such as using the account as security for a loan.
Frequently Asked Questions
Do I have to take a distribution from my IRA to use it for a mortgage?
No. In the programs described here, the lender documents the balance with statements and applies a credit percentage. The account is not drawn on and stays in your name. What you must avoid is pledging the account as collateral, because the IRS treats that as a distribution.
Does a Roth IRA count the same as a traditional IRA?
Programs treat retirement accounts as a group, and the percentages here apply to retirement balances broadly. How a specific lender handles each account type can vary, so confirm it against your statements. The no-pledging rule applies to both, per Horizon Trust.
Can I use a spouse’s IRA if my spouse is not on the loan?
That depends on the program and on ownership rules. Assets generally need to belong to a borrower on the loan, and a lender will want to see that the borrower has access to the funds. Ask before you build a plan around an account in someone else’s name.
Can an IRA balance carry the down payment on a rental?
It can support liquidity on a rental file, such as the down payment, closing costs, and reserves. How a lender counts the balance varies by program. Rental-property loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines, so the IRA does not need to become income.
Is there a California-specific rule for IRA-based qualifying?
No. The program figures are the same across the states where Lendmire’s consumer lending is licensed, and California is one of those. State differences show up in prices, insurance, and taxes, not in how the IRA is counted.
Next Step
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. Every file is underwritten individually, and this article is not a commitment to lend.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in California page presents the program for California borrowers.
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
2. IRS Publication 590-B (PDF)
3. IRA Help: don’t pledge your IRA for any loans
4. Horizon Trust: borrowing against an IRA
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 Much Does a Retiring Physician Need in Assets to Qualify for a Mortgage? · Can a New Mexico Widow Qualify for a Mortgage on Life Insurance and Retirement Assets? · Can a Georgia Buyer Qualify for a Mortgage on IRA Assets Without Withdrawals?
Guides: Asset-Based Mortgage in California
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.