The Quick Read: A conventional underwriter can turn savings and retirement money into a monthly “income” figure, even when you have no paycheck. The two agencies behind conventional loans, Fannie Mae and Freddie Mac, each use their own recipe. Both subtract the cash you need for the purchase before they count anything. The result goes into your debt-to-income ratio like any other income.
Key Takeaways
- There is no separate “asset depletion loan.” It is a way of calculating income inside a standard conventional loan, so credit, occupancy, and the automated underwriting finding all still apply.
- Fannie Mae and Freddie Mac use different formulas. They differ on which assets count, what gets subtracted, and what the divisor is.
- Money you use for the down payment, closing costs, and reserves comes out first. A bigger down payment means less counted income.
- “Qualifying income” is a calculation, not cash flow. You still pay the real monthly payment from real funds.
- The same borrower may fit one agency’s rules and miss the other’s. That is where comparing lenders helps.
What Does “Counting Assets as Income” Actually Mean?
An underwriter counts assets as income by converting a pool of money into an imaginary monthly paycheck. The lender then uses that figure to test whether you can handle the payment. It does not mean you must sell anything.
Conventional payment estimate
The starting figures are an example price at the first-time buyer’s minimum down payment. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a conventional loan quote.
Estimate seeded at the low end of Fannie Mae’s published range (0.58%–1.86% a year); the insurer prices the actual premium on the score and the leverage. Applies only above 80% loan-to-value.
Illustrative starting assumptions: a $350,000 price, the first-time buyer’s minimum down payment, a thirty-year term at the current Freddie Mac benchmark, mortgage insurance at the low end of Fannie Mae’s published range, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a conventional loan quote; your rate is set by the lender at lock. The mortgage insurance figure is an editable estimate seeded from Fannie Mae’s published typical range, not a premium quote; the insurer prices the actual premium, and the cancellation month assumes scheduled payments with no extra principal and no change in value. Taxes, insurance and dues are editable estimates; closing costs are not included. Conforming loan limits apply by county. Licensed in sixteen states for consumer mortgages.
Neither agency uses the phrase “asset depletion” in its guide. That is a market term. It covers two separate agency policies with two different names.
Fannie Mae calls its policy “Employment Related Assets as Qualifying Income.” Freddie Mac calls its policy “Accumulated assets as income.” Each has its own box of rules. The mortgage brokerage side of the business, including Lendmire, works with both through wholesale lenders in the states where Lendmire is licensed for consumer lending.
Picture a recently retired homeowner with a large retirement account and no wages. The underwriter does not ask for a pay stub. The underwriter asks how much of that account is eligible, how much is already spoken for, and what is left to divide.
Most conventional files never need this tool. The underwriter first looks for history-based income. Examples are interest and dividends, Social Security, and retirement distributions you already receive. Converting a balance into income is a fallback, used when those sources do not cover the payment.
How Does the Underwriter Work Through a No-Job File?
The underwriter follows a set order: pick the path, check the loan against the program box, identify eligible assets, document them, subtract what the purchase needs, divide, and test the result. Skipping or reordering steps is how files go wrong.
Step 1: Pick the path. The underwriter checks whether any standard income applies. If you already receive retirement or benefit income, it is documented under its own topic. Asset conversion comes after.
Step 2: Check the loan against the program box. Each agency limits purpose, occupancy, and leverage. Those limits are covered in the next section.
Step 3: Identify eligible assets. Fannie Mae’s policy is built on employment-related assets. These include retirement accounts, severance, and lump-sum retirement distributions. Freddie Mac counts retirement assets, depository accounts such as checking and savings, securities, and certain sale proceeds.
Step 4: Document. Statements must be recent enough to meet the agency’s age-of-document rules. The underwriter verifies ownership and asks about large deposits.
Step 5: Net the assets. Cash needed for the transaction comes out first. Penalties and certain other funds also come out, depending on the agency.
Step 6: Divide. The remaining figure is spread over a set number of months. The divisor depends on the agency.
Step 7: Add to the file. The monthly figure joins any other eligible income in the debt-to-income calculation. Debt-to-income, or DTI, is your monthly debts divided by your monthly income.
Step 8: Run automated underwriting. The loan still has to earn an acceptable automated finding. Across the wholesale conventional programs we place files with, the decision score starts at 620. The automated finding governs most files, with a total ratio ceiling of 50%. Individual lenders may add their own requirements on top, and all of this is subject to lender guidelines and full file review.
Step 9: Appraisal and leverage. The appraised value, or the price if lower, sets the loan-to-value ratio. Loan-to-value, or LTV, is the loan amount divided by the home’s value. The agencies do not add a special appraisal rule for this income type.
How Does Fannie Mae Count Assets?
Fannie Mae divides your net documented assets by the loan’s term in months. A 30-year loan uses 360. The loan must be a purchase or limited cash-out refinance on a principal residence or second home, and leverage is capped.
Fannie Mae’s Selling Guide, topic B3-3.4-06, sets the box. The maximum LTV is 70%. It rises to 80% if the owner of the asset used to qualify is at least 62 at closing. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
That cap has a direct budget effect. A 70% cap means putting down at least 30% on a purchase. An 80% cap means at least 20%. Compare that with the standard conventional purchase limits of 95% LTV, or 97% for a first-time buyer on a one-unit home. This income method is a trade: you get to qualify without a paycheck, but you bring more cash. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The ownership rule is strict. You must own the assets individually, or the co-owner must be a co-borrower. For jointly owned assets, every owner must be on the loan. For the 80% limit, the borrower using the income must be at least 62.
The guide also subtracts a penalty. If cashing out the whole account today would trigger a penalty, that penalty is removed before the income is calculated. Then the closing funds and reserves come out. What remains is divided by the loan term.
Notice what the loan term does. A shorter term makes the calculated income higher, but the real payment is larger too. A longer term does the opposite. The formula is not a free lunch.
One caution on asset types. Ordinary savings, checking, or brokerage balances generally do not qualify under this policy unless the money came from an eligible employment-related source. Confirm your specific accounts with your loan officer, because the details of the eligible list matter. If your file misses this method, the assets may still help through other standard topics, such as interest and dividend income or annuity, pension, and retirement income.
Fannie Mae also moved this policy to a new spot when it restructured its income chapter. The move was a restatement and did not alter the original intent. If you read older material that cites a different section number, the rule is the same.
How Does Freddie Mac Count Assets?
Freddie Mac totals your eligible assets, subtracts what the transaction needs, and divides by 180. It accepts a wider range of accounts than Fannie Mae and has removed its old age restriction. Newer rules apply to later settlements, and lenders may adopt them early.
Freddie Mac’s Guide Section 5307.1 lays out a three-step calculation:
1. Total the eligible documented assets from retirement accounts, depository accounts, and securities. 2. Subtract the funds you must pay to complete the transaction, required reserves, gift funds, borrowed funds, and any pledged or encumbered assets. 3. Divide the net eligible assets by 180.
Freddie Mac’s updated version adds several conditions. The loan must receive an Accept finding from its automated system. The net eligible asset amount must clear a stated minimum. The old 80% leverage cap is gone, and leverage follows Freddie Mac’s general limits for the property and occupancy. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Here is the practical meaning. A buyer using the standard 95% purchase leverage, or 97% as a first-time buyer, would still need mortgage insurance above 80%. That insurance can be requested off at 80% of the original value and ends automatically at 78%, subject to the usual conditions.
Freddie Mac also permits more occupancy types under the new version, including investment property. Since this article is about the home you live in, treat that as a note on how the two programs differ.
Timing matters. The updated rules are mandatory for loans settling on or after a set later date. Sellers may use them sooner. Not every lender has built them into its process yet, so ask which version your lender is using.
The age rule is the myth to retire. An older Freddie Mac version required an account-owning borrower to be 62 or older for depository accounts and securities. That restriction has been removed. Retirement assets still have to be accessible without penalty, which in practice often points to the mid-to-late fifties for many account types. A younger borrower with large savings may have a legitimate option that old advice rules out.
Fannie Mae vs. Freddie Mac: Side by Side
| Factor | Fannie Mae | Freddie Mac |
|---|---|---|
| Policy name | Employment related assets | Accumulated assets as income |
| Divisor | Loan term in months | 180 |
| Asset types | Employment-related assets | Retirement, depository, securities |
| Leverage | 70%, or 80% at age 62+ | Follows general limits |
| Purpose | Purchase, limited cash-out | Purchase, no cash-out refinance |
| Occupancy | Primary, second home | All occupancies |
Neither column is “better” in every case. A borrower whose money sits mostly in retirement accounts may fit Fannie Mae’s box. A borrower with large bank and brokerage balances may fit Freddie Mac’s. The choice depends on the file.
The Double-Counting Trap
One pool of money cannot do three jobs at once. The same dollars cannot be your down payment, your reserves, and your income base. Both agencies subtract transaction funds and reserves before they convert anything to income.
Run it as a story. Say you have a retirement account and a bank account, and you want to buy a home. Every dollar of the bank account that goes toward the down payment and closing costs is a dollar the underwriter removes from the income calculation. Put more down, and the counted income shrinks. Put less down, and your leverage rises, which may push you outside the program’s cap.
That is the central budgeting insight. You are balancing two goals that pull against each other. A larger down payment lowers the loan and the payment. It also lowers the income the underwriter can count.
A broker can help you test different down payment levels against the same asset pool. Often there is a sweet spot. Below it, the leverage cap blocks the loan. Above it, the counted income gets too thin.
What Documentation Will the Underwriter Ask For?
Expect a full paper trail. Asset-based income is documented income. It is not a no-documentation loan.
- Statements. Recent statements for every account used, covering the period the agency requires.
- Ownership proof. The accounts must be in your name, or in a co-borrower’s name where the rules allow.
- Large-deposit sourcing. A big deposit needs an explanation and paper to back it up. Unsourced money may be backed out of your usable assets.
- Penalty and access information. For retirement accounts, the underwriter needs to know whether you can withdraw without a penalty and what the penalty would be.
- Stability of balances. Freddie Mac cares how long money has been in an account and whether balances jumped or dropped sharply. Fannie Mae’s related interest and dividend path looks at a longer history.
Fannie Mae’s guide for interest and dividend income, B3-3.4-08, shows a different logic. It uses two years of traditional personal-income documentation or 24 months of statements. It counts income the assets actually pay, not a converted balance. Assets used for the down payment or closing costs are subtracted before expected future interest or dividends are estimated.
A practical warning: moving money around shortly before you apply can cause trouble. Shifting funds between accounts can trigger seasoning questions and balance-change tests. Do not assume there is a workaround. Talk to your loan officer before you move a large sum.
Retirement withdrawals and early-distribution penalties also have tax consequences. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Where the General Rule Breaks
The general rule is that assets can become income. The edge cases decide whether your file fits.
- Ordinary savings under Fannie Mae. Generally not eligible for the conversion method unless sourced from an employment-related asset. Interest and dividends may still count with a two-year history.
- Joint accounts. Co-owners generally must be borrowers on the loan. A spouse who is not on the loan is a problem.
- Second homes. Both agencies allow them in this method, but leverage limits and eligibility differ. Occupancy decides the leverage.
- A weak automated finding. A large balance does not override an unfavorable finding caused by credit or property issues. Freddie Mac explicitly requires an Accept.
- Terms and the divisor. Under Fannie Mae, a shorter loan term raises the calculated income and the real payment together.
- Government loans. FHA, VA, and USDA follow their own rules. This article covers conventional loans only.
- Lender overlays. Wholesale lenders may be stricter than the agency minimums. A file that fits the guide can still miss a lender’s overlay.
If you do not fit either box, other paths may exist, such as a co-borrower with income. Lendmire’s piece Can a Retiree With No Earned Income Get a Conventional Cash-Out? covers the refinance side of the same question. For very large loans, there is also a look at whether a founder can get a super jumbo loan on assets and no income.
Why Do Lenders Allow This at All?
Lenders may base repayment on assets because federal regulation lets them. The CFPB’s ability-to-repay rule says a lender must make a reasonable, good-faith determination that you can repay. It must consider and document factors such as income, assets, employment, credit history, and monthly expenses.
That language does not require a job. Employment status matters only when the lender relies on employment income. Assets can be the basis for repayment, either alone or alongside income. The agency guides then supply the exact recipe, which is why the formulas above exist.
What Should You Ask Your Lender?
Bring specific questions. They separate a lender that has done this before from one that has not.
- Which agency’s method fits my account types, Fannie Mae or Freddie Mac?
- Has this lender implemented the newest version of the rule?
- What decision score and DTI ceiling does the lender apply, beyond the agency minimum?
- How much of my pool is left after the down payment, closing costs, and reserves?
- How do different down payment levels change my counted income?
- Do I have recent deposits or transfers that need sourcing?
- What is the penalty on my retirement account, and does it get subtracted?
This is where a broker earns the title. Because Lendmire works with multiple wholesale lenders, it can compare how the same asset pool looks under different programs. Every program parameter remains subject to lender guidelines and full file review.
Key Terms Defined
Qualifying income: The monthly figure a lender uses to test whether you can afford the payment. It can come from wages, benefits, investments, or converted assets.
Net documented assets: The verified balance left after the underwriter subtracts transaction funds, reserves, penalties, and other excluded amounts.
Divisor: The number of months used to spread net assets into a monthly income figure.
Reserves: Money you keep available after closing, measured as months of housing payments.
Debt-to-income ratio (DTI): Your total monthly debts divided by your qualifying monthly income.
Automated underwriting finding: The result from the agency’s software. It rates the loan as acceptable or flags it for review or ineligibility.
Seasoning: The length of time money has been in an account before the lender relies on it.
Frequently Asked Questions
Can I get a conventional mortgage with no job at all?
Sometimes. The file needs another qualifying income source or a qualifying asset pool, plus acceptable credit and an acceptable automated finding. With no paycheck, the underwriter looks at history-based income first. Converted assets come next. Eligibility depends on your accounts, the agency’s rules, and the lender’s guidelines.
Do retirement accounts count at full value?
No. Fannie Mae subtracts the penalty that would apply on a full distribution. Freddie Mac requires that the funds be accessible without penalty. Both subtract transaction funds and reserves before converting anything to income. The full balance is rarely the number that gets divided.
Do I have to sell my investments or drain my accounts?
No. The conversion is a calculation, not a withdrawal. The underwriter treats the assets as repayment capacity. You still have to plan how you will pay the actual monthly payment, and selling may be part of that plan.
Is a 62-year-old age minimum still required?
Not under Freddie Mac’s updated version for depository accounts and securities. That age restriction was removed. Fannie Mae’s 80% leverage option does still depend on the asset owner being at least 62 at closing. Retirement assets also need penalty-free access. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Is this a special loan product?
No. It is a method of calculating income within a standard conventional loan. Credit, occupancy, property type, reserves, and the automated finding all apply. Different lenders may add their own requirements.
Next Steps
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. Start by listing your accounts and sorting them into three buckets: money for the purchase, money for reserves, and money left to count. Then explore Lendmire’s conventional loan programs with that list in hand.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B3-3.4-06, Employment Related Assets as Qualifying Income
2. Freddie Mac Guide Section 5307.1, Accumulated assets as income
3. Fannie Mae Selling Guide B3-3.4-08, Interest and Dividend Income
4. CFPB’s ability-to-repay rule
This article is part of Lendmire’s conventional loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is Refinancing Into a Conventional Loan Worth It? · Conventional Loan Pre-Approval Checks for Credit, Income and Assets · Does Renting a Room Count as Income on a Conventional Loan?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.