The Quick Read: On the asset qualifier path, a 401(k) balance counts at 90% of its value when you are under age 59½, and at 100% once you reach 59½, subject to underwriting. Nothing gets withdrawn or sold to qualify. The lender simply credits a share of the balance toward the loan amount.
- Under 59½, a 401(k) or IRA counts at 90% on the asset qualifier path, through select programs.
- Brokerage, CDs, money market and savings count at 100%, and all accounts combine.
- The qualifier path documents no employment or income, but the assets are fully documented with statements.
- The asset depletion path treats retirement money differently: 70% at any age.
- Qualifying does not mean withdrawing, so no distribution happens at qualification.
If you live in Colorado and hold a large 401(k) but report little income, this article is for you. The program figures below do not change by state. Colorado is simply where you would be buying or refinancing, and Lendmire’s consumer lending is licensed there.
What Is an Asset Qualifier Mortgage?
An asset qualifier mortgage is reviewed around what you own, not what you earn. Your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
It is one of two asset-based paths we place files on. The other is asset depletion, which divides your usable assets by 60 months to create a monthly qualifying income. That income then runs through the debt-to-income test, which compares your monthly debts to your income.
You are qualified on one path at a time. Never blend the two tables in your head. A 401(k) earns a different percentage on each path, and the rest of this article keeps them apart.
This product is built for cash-heavy, income-light households: retirees, people who sold a business, heirs, early-retired professionals, and families living off a portfolio. Colorado has plenty of all five. The loan is a consumer mortgage for a principal residence or second home. Investment property is available only on the depletion path. Lendmire’s asset-based mortgage program page lays out both paths.
Why Age 59½ Changes the Number
Age 59½ is the line because early access to a 401(k) costs real money. The IRS says the law imposes a 10% additional tax on certain early distributions from qualified plans, generally those taken before 59½ (IRS Topic 558). That tax sits on top of ordinary income tax.
Underwriters discount a balance that would cost you a penalty to reach. So on the qualifier path, the haircut is 10% under 59½ and disappears at 59½ or older. The haircut is lender and investor policy, not a government formula. Across our wholesale network, programs differ widely on how they treat retirement money.
Penalty exceptions do not move you into the better tier. Even if you could personally qualify for an exception to the early-withdrawal tax, underwriters treat 59½ as a flat line. Age is the test, not your tax situation.
How a 401(k) Counts by Account Type and Path
Here is how each asset counts, path by path, through select programs and subject to underwriting.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage / securities | 100% | 80% |
| CDs | 100% | 100% |
| Money market / savings | 100% | 100% |
| 401(k) / IRA under 59½ | 90% | 70% |
| 401(k) / IRA at 59½+ | 100% | 70% |
| Real-estate equity | Not listed | 60% |
Read the table by column, never by row. The qualifier path rewards patience. Wait until 59½ and your retirement balance counts in full. The depletion path is flatter but harsher: 70% at any age, and the qualifying income comes after a 60-month division.
A Worked Example With Mixed Accounts
Here is the qualifier-path math, illustrative only. The lender’s own calculation governs.
Picture a borrower under 59½ seeking an $800,000 loan. Their statements show:
- Brokerage accounts: $330,000 at 100% counts $330,000.
- 401(k): $300,000 at 90% counts $270,000.
- Savings: $200,000 at 100% counts $200,000.
Total usable assets: $800,000. That equals the loan amount, so the borrower is reviewed on assets alone, subject to underwriting. The 401(k) haircut cost $30,000 of credit. At 59½ or older, the same 401(k) counts $300,000 and the borrower clears the loan with room to spare.
Now the depletion version. Take $1,500,000 in securities (80% counts $1,200,000) plus $300,000 in cash (100% counts $300,000). Usable assets are $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income must then carry the housing payment and your other debts through the debt-to-income test.
Notice what happened in neither example. Nobody sold a share or touched the 401(k). The percentages are a qualifying convention, not a transaction.
What Trims the Balance Before the Percentage Applies
The percentage applies to a cleaned-up number, not your headline balance. Four things shrink it first.
- Vesting. Only the vested balance counts. Unvested employer match does not.
- Outstanding plan loans. A loan against the 401(k) comes off the vested balance.
- Borrowed or pledged funds. These are not published as eligible on either path.
- Money already committed. Funds you plan to use for the down payment or closing costs are spent. They cannot also qualify you.
That last point catches borrowers. Pulling 401(k) money for the down payment shrinks your asset base twice: once from the withdrawal, and again from the tax cost. Counting a 401(k) is free. Withdrawing from it is not. NerdWallet notes that early withdrawals carry a 10% penalty and 20% automatic federal withholding. The practical order is simple: use cash and taxable accounts first, and leave retirement money in place where the program lets it count.
Documentation and Seasoning
You document the assets even though you do not document income. Never confuse the two. On the qualifier path, expect 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, the lender wants statements that are at least 120 days old at application, plus the most recent statement dated within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
Large recent deposits draw questions. Funds that moved into a retirement account can also get discounted, so avoid shuffling money between accounts right before you apply. Seasoned balances are the cleanest.
Credit still matters. The qualifier path has a 600 minimum score. The depletion path follows the lender’s matrix, and a first-time investor on that path needs 700. Housing history is typically 0x30x12, and one late in the last twelve months is considered case by case.
Leverage and Loan Size
On the qualifier path, leverage reaches 80% loan-to-value (the loan as a share of the property’s value) on a purchase and 75% on a refinance, for a principal residence or second home. Loans go up to $4,000,000. Reserves are not required at or below 75% loan-to-value; above that, the lender sets them. Cash-out terms on this path are set by the lender and are not published.
On the depletion path, a principal residence or second home reaches 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Loans run from $125,000 to $3,500,000. Cash-out proceeds never count as qualifying assets.
Depletion also has minimums. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. If assets are your only income, you need at least $250,000 liquid. When asset income only supplements documented income, up to a 45% debt-to-income ratio, that minimum-assets rule is waived.
Where the General Rule Breaks
A few cases do not follow the 90% and 100% pattern.
- Roth 401(k). A qualified Roth distribution is tax-free, but an early withdrawal from a Roth 401(k) is generally split pro rata between contributions and earnings, so the earnings share can be taxable plus 10%. Lender treatment of Roth money varies by program, so ask before assuming.
- Plans that lock funds. Some plans block withdrawals while you are still employed. Some programs exclude money that needs a third party’s approval to reach.
- Account retitling or rollovers mid-process. A rollover during the file can reset seasoning and delay review. Leave accounts alone.
- Market drops. If your balance falls between statement and underwriting, the lower number controls.
- Deferred compensation and stock options. These are not eligible on the depletion path.
- Crypto, precious metals, collectibles. They 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.
Agency-style programs follow their own rules and typically stretch retirement balances over much longer depletion periods. Those are those programs’ rules, not this one’s.
If You Are Just Under 59½
Waiting can be the strongest move. At 59½ the same 401(k) counts at 100% on the qualifier path, which may lift a borderline file over the line. If waiting is not realistic, you have three levers:
1. Add non-retirement assets. Brokerage and savings count at 100% and fill the gap.
2. Lower the loan amount or raise the down payment. A smaller loan needs fewer eligible assets.
3. Compare paths. The depletion path is built for borrowers who want assets converted into income, or who need investment-property financing. It credits securities at 80% and retirement at 70%, so for most balances the qualifier path counts more. Run both before choosing.
Ask a broker which program fits before you pull credit. Haircuts differ across lenders, and the same balance can count very differently from one program to the next.
Key Terms Defined
- Asset qualifier path: qualifying a loan on eligible assets alone, with no income documented.
- Asset depletion path: converting usable assets into monthly income by dividing by 60 months.
- Haircut: the share of an account’s balance a lender does not count.
- Vested balance: the part of your 401(k) you fully own and can take.
- Seasoning: how long funds must sit in an account before they count.
- Debt-to-income (DTI): your monthly debts divided by your monthly income.
Frequently Asked Questions
Do I need to be retired to use a 401(k)?
No. You do not need to be retired or taking distributions. The balance counts as an asset whether you are working or not. The percentage that counts depends on your age and the path, through select programs and subject to underwriting.
Do I have to withdraw anything to qualify?
No. Nothing is sold, withdrawn or taxed at qualification. The lender credits a share of the balance on paper. Withdrawing is a separate decision with its own tax cost, and it would also lower the assets that count.
Can I mix a 401(k), brokerage and savings?
Yes. Accounts combine on the qualifier path, as in the $800,000 example above. Each account is credited at its own percentage, and each needs its own seasoned statements.
Do I need traditional personal-income documentation or a job?
Not on the qualifier path, which documents no employment or income. You do document your assets. On the depletion path, asset-derived income runs through the debt-to-income test instead. Tax treatment varies; consult a qualified professional.
What if my balance drops before closing?
The lower balance controls. Underwriters work from your documented statements, so a market drop reduces usable assets. If your file is close to the loan amount, build a cushion with extra cash or brokerage funds.
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.
Lendmire’s asset-based mortgage in Colorado page presents the program for Colorado 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
1. IRS Topic 558: Additional Tax on Early Distributions 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 Much of a Brokerage Account Counts Toward an Indiana Asset Qualifier Mortgage? · How to Document a Georgia Asset Qualifier Mortgage Without an Employer · Can You Get an Asset-Based Mortgage on a Pennsylvania Condo?
Guides: Asset-Based Mortgage in Colorado
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.