How to Qualify for a Conventional Loan on Assets Instead of a Salary

The Quick Read: A conventional loan can be underwritten on assets instead of a paycheck, but only inside a narrow box. The lender takes eligible assets, subtracts what you need for the purchase, and converts the remainder into notional monthly income. That income goes into your debt-to-income ratio. It is a qualifying device, not cash you receive.

What “Qualifying on Assets” Actually Means

Neither Fannie Mae nor Freddie Mac uses the phrase “asset depletion.” That is a market term for two separately written agency policies, and each one works differently. Fannie Mae calls its version employment-related assets as qualifying income. Freddie Mac calls its version assets as a basis for repayment of obligations.

The idea underneath is simple. You may have a large retirement balance or a lump-sum payout but little reportable income. A standard income-based file would call that borrower weak. An asset-based file treats the balance as a source of repayment.

Federal law allows this. The CFPB’s Ability-to-Repay commentary says a lender may base repayment ability on income, on assets other than the home being financed, or on both. Retirement-account funds and savings are on its list of assets a lender may consider. So the paycheck requirement is not federal. The practical limits come from the agency guides.

One timing note. Both agencies rewrote these sections in 2026, and the rules are still moving. Many lender web pages still show old section numbers. Treat any divisor or cap you read online as something to confirm against the current guide.

How the Loan Is Underwritten, Step by Step

Across the wholesale programs this brokerage places files with, the same sequence shows up on nearly every asset-qualified file. Here it is in order.

1. Pick the path. If you already take steady retirement distributions, that income may qualify under the retirement-distribution rules. If you have a two-year history of interest or dividends, there is a separate route for that. The asset method is for converting a balance into notional income.

2. Check the loan box. Purpose, occupancy and leverage must all fit. More on that below.

3. Check the assets. The account type, ownership and your access to the funds all matter.

4. Subtract. Money for your down payment, closing costs and reserves comes out first. So does any penalty that would apply on a full withdrawal.

5. Divide. The net figure is spread over a set number of months. The result is monthly qualifying income.

6. Run automated underwriting. The loan still needs an acceptable automated finding. Wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%.

7. Document. Expect recent statements, proof of ownership and distribution-rule documents for retirement accounts.

8. Appraise. No special appraisal rule applies. The home still has to appraise at or above the price to hold your leverage.

The divisor is where the two agencies differ most, and it has changed. This article stays qualitative on it. Fannie Mae’s guide spreads the figure over the loan’s amortization term. Confirm the current divisor for either agency in the guide itself, not on a secondary web page.

Fannie Mae’s Version: Employment-Related Assets

Fannie Mae Selling Guide B3-3.4-06 is the narrower of the two. It was renumbered from the older B3-3.1-09 under Announcement SEL-2026-02, which is why older lender pages cite a different section.

Here is what the guide sets.

• Loan purpose: purchase or limited cash-out refinance only.
• Occupancy: principal residence or second home. Investment property is out.
• Leverage: a 70% cap on LTV, CLTV and HCLTV. The cap rises to 80% when the owner of the assets is at least 62 at closing.
• Ownership: you must own the assets individually. If they are jointly owned, every owner must be a borrower.
• Access: you need unrestricted access to a 401(k), IRA, SEP or Keogh. That means an unqualified right to request a distribution of all funds. A possible withholding or penalty does not defeat access.
• Existing distributions: the account works only if no distribution is already set up, or the current one is not enough to qualify.

The guide’s worked example runs in a clear line. Start with eligible assets. Subtract the penalty that would apply on a full distribution. Subtract funds for down payment, closing costs and reserves. What remains is “Net Documented Assets,” divided by the amortization term in months.

What counts is the key limit here. The eligible pool is employment-related: retirement accounts you can fully access, plus severance or lump-sum retirement packages for borrowers who are not self-employed. Those need a distribution letter or Form 1099-R and a deposit into a verified account. Ordinary checking and savings are generally not eligible unless the balance came from one of those payouts. Crypto, stock options, lottery or lawsuit proceeds, inheritance and real-estate sale proceeds are also outside the method.

Not eligible here does not mean not useful. The same money may still support the loan another way, such as under the interest-and-dividend or annuity, pension and retirement income rules.

Freddie Mac’s Version: Assets as a Basis for Repayment

Freddie Mac Guide Section 5307.1 covers a 1- or 2-unit primary residence or second home. Purpose is a purchase, a “no cash-out” refinance or an Enhanced Relief Refinance.

Retirement assets must sit in an IRS-recognized account. You must be the sole owner, and the asset must not already be producing income. One detail surprises people: the loan application should still show your employment and income information, even if you qualify on assets alone. “No salary” does not mean a blank application.

Freddie Mac then changes the rules. Bulletin 2026-10 rewrites the section as “Accumulated assets as income.” Sellers may adopt it immediately. It becomes mandatory for mortgages with settlement dates on or after February 3, 2027. Under the newer version:

• Depository accounts and securities generally need 12 months of seasoning before the note date, unless funded from eligible sources.
• The loan must receive an “Accept” finding and be a purchase or “no cash-out” refinance.
• Net eligible assets must be at least $30,000.

Which version applies depends on the settlement date and what the lender has implemented. That is a question for your loan officer early, not at the end.

Where the General Rule Breaks

Every program rule has edges. These are the ones that move real files.

Age 62. On the Fannie Mae method, 62 is the line between the 70% and 80% leverage tiers. Freddie Mac’s age treatment differs by account type and by version, so no flat rule is safe. Ask which version governs your file. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.

Joint accounts. Fannie Mae requires every joint owner to be a borrower. A spouse who is not on the loan can disqualify an account that is otherwise fine. Freddie Mac’s retirement path requires you to be the sole owner.

Under 59½. On Fannie Mae, an early-withdrawal penalty does not disqualify the account. It gets subtracted from the pool, so you qualify on less. Freddie Mac’s retirement-distribution rules require penalty-free access.

Already drawing from the account. If steady distributions are in place, they may qualify as retirement income instead. Freddie Mac Section 5305.1 sets the history of receipt, which ranges from zero to 24 months depending on circumstances.

Living trusts. Freddie Mac Bulletin 2026-4 addresses accounts held in a living trust. They are treated as the borrower’s when the borrower is the settlor.

Dividends and interest. Fannie Mae B3-3.4-08 uses a two-year history, shown by traditional personal-income documentation or 24 months of statements. Assets spent on your down payment or closing costs are removed before projecting future income.

Rentals. Investment property is not eligible under either asset method. Occupancy decides the leverage, so a second home and a rental land in different places under the program parameters.

Your Down Payment Competes With Your Income

This is the tradeoff most borrowers miss. Every dollar that goes to your down payment, closing costs or reserves comes out of the pool that becomes qualifying income. A larger down payment helps your leverage but shrinks the income the lender can count.

Think of a borrower with a sizable retirement balance, no wages, and a purchase of a principal residence. A bigger down payment lowers the loan and the payment. It also cuts the notional income. The right balance depends on the numbers, so a loan officer runs it both ways before you commit to a contract price.

Timing matters too. With Freddie Mac’s newer 12-month seasoning, moving large balances right before applying can hurt. Ask before you shift money.

Then there is the reality check. Notional income is not a payment plan. The lender does not require you to withdraw anything, but if you do draw from retirement accounts later, taxes can apply. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.

Leverage, Mortgage Insurance and the Rest of the File

The asset method sits on top of normal conventional rules. Standard conventional leverage on a principal residence runs to 95%, or 97% for a first-time buyer on a fixed rate. The asset methods are stricter than that, as Fannie Mae’s 70% and 80% caps show. A qualifying-on-assets purchase therefore usually means a meaningful down payment.

Where leverage goes above 80% under the standard program, mortgage insurance is required. You can request cancellation at 80% of original value with good payment history, and the servicer must end it automatically at 78%. Published typical annual premiums run 0.58% to 1.86% of the balance. That is a range, not a quote, and your file decides where you land.

Credit still counts. Wholesale conventional programs start at a 620 decision score. Waiting periods after credit events follow agency rules: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances. All of this is subject to lender guidelines and full file review.

The CFPB rule also means the lender must verify the assets it relies on with third-party records. Expect statements and source-of-funds questions. You will see them whether the loan is asset-based or not.

Key Terms Defined

Notional income: a calculated monthly figure derived from your assets, used only for qualifying. You do not receive it as cash.

Net Documented Assets: Fannie Mae’s term for eligible assets after penalties, cash to close and reserves are subtracted.

Unrestricted access: an unqualified, unlimited right to request a distribution of all funds in a retirement account, even if a penalty applies.

Seasoning: the length of time funds have sat in an account before you apply.

Debt-to-income ratio (DTI): your monthly debts, including the new payment, divided by your monthly income. Notional income goes in the bottom of this ratio.

Accept finding: a favorable automated underwriting result from Freddie Mac’s system.

How the Decision Looks in Practice

If you are choosing a path, a few questions settle most of it.

A few misconceptions are worth clearing up.

• “You need two years of withdrawals.” Not for the asset method. The distribution route has history rules; the notional method does not.
• “Any savings count at Fannie Mae.” They generally do not, unless they came from an eligible employment-related payout.
• “No salary means no paperwork.” The assets must be verified, and the application is still completed.
• “You must liquidate the account.” The method uses the balance on paper.

If the numbers do not fit the agency box, other loan types treat assets differently. Lendmire’s piece on qualifying with assets for a jumbo loan covers that lane. For the program side, the brokerage’s conventional loan programs page sets out the standard conventional options.

Where to Go From Here

If you are buying a home and want to see whether a conventional loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. CFPB Regulation Z § 1026.43

2. Fannie Mae Selling Guide B3-3.4-06

3. Fannie Mae Announcement SEL-2026-02

4. Freddie Mac Guide Section 5307.1

5. Freddie Mac Bulletin 2026-10

6. Freddie Mac Guide Section 5305.1

7. Freddie Mac Bulletin 2026-4

8. Fannie Mae Selling Guide B3-3.4-08