The Quick Read: Often yes, but only for the part you can actually reach, and only if the program accepts annuities at all. An annuity balance is usually judged by what the contract would pay out after surrender charges, taxes and penalties, not by the headline value. On a DSCR rental loan, annuity income does not raise the coverage ratio.
- A deferred annuity can count as a liquid asset or reserve item when the contract can be cashed out and documented, subject to lender guidelines.
- An annuity that already pays out (an income annuity) has little or no lump sum to count.
- On a DSCR loan, the property’s rent against its payment drives qualification, so annuity income is not a qualifying input.
- On the asset-based consumer paths below, eligible assets and their percentages are set by the program, and annuities are not on the published lists.
- Pulling money out early can trigger surrender charges, a federal penalty and income tax, which shrinks what is usable.
The question comes up for retirees, business sellers and early-retired professionals who hold a lot of money inside an insurance contract and very little documented paycheck income. This article covers how annuities are treated, where they fit on a DSCR file, and what the asset-based mortgage paths do differently.
Asset, Income, or Both?
An annuity can be an asset (the accumulated balance) or an income stream (the payments), depending on its phase. A deferred annuity still growing holds a balance that can be surrendered. An annuity in payout holds a promise of payments and usually no cashable lump sum.
That split decides everything downstream. The balance is an asset question. The payments are an income question. Lenders treat the two differently, and a file that mixes them up gets kicked back.
Annuities are generally considered assets in the ordinary sense, as Annuity Expert Advice explains. But an underwriter does not care that it is an asset. The underwriter cares whether the money is accessible, documented and seasoned.
Key Terms Defined
Qualified annuity: an annuity funded with pre-tax retirement money, such as IRA or 401(k) dollars.
Non-qualified annuity: an annuity funded with after-tax money, where only the earnings are taxed on withdrawal.
Surrender charge: a fee the insurer takes if you pull money out during the contract’s surrender period.
Surrender value: what the contract would actually pay you after those charges.
Asset depletion: a method that turns a pool of assets into a monthly qualifying income by dividing it over a set number of months.
Seasoning: the period funds must sit in an account, shown on statements, before a lender counts them.
How a DSCR Loan Treats an Annuity
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Personal income, including annuity payments, does not enter the ratio. Across Lendmire’s wholesale network, that holds regardless of how large the annuity is.
So a big annuity does not fix a thin coverage ratio. Only rent, the debt on the property and the loan structure move that number. Programs below 1.00 coverage exist through select lenders in the network, but leverage and terms adjust, and an annuity is not what makes them work.
Where an annuity can help is on the cash side: proof of funds and reserves. Whether a given lender accepts it there varies. Some programs list annuities among eligible assets with documentation of ownership, terms, current value and restrictions. Others stick to bank, brokerage and sometimes retirement accounts. Lendmire’s complete DSCR loans guide covers how coverage, leverage and reserves fit together on investor files.
Asset-depletion is a different loan. It converts a portfolio into imputed income, while a DSCR file shows savings as reserves. Lendmire’s piece How Much Savings Matter on a Retiree’s Part-Time Airbnb DSCR Loan walks through that split.
What Is the Usable Value of an Annuity?
Usable value is the surrender value, not the statement balance, and then reduced further by taxes and penalties. Lenders generally look at the net amount after those hits. That is practice, not a published rule, so confirm it with the lender before you plan around the number.
Three things shrink the balance:
1. Surrender charges. One educational source says charges typically start around 7% to 10% and decline over a surrender period often running 5 to 10 years, per Annuity Expert Advice. Annuity.org gives similar figures: charges of about 7% and periods usually of six to eight years.
2. Free-withdrawal limits. Many contracts allow a free withdrawal of 10% of account value per year, according to Annuity Journal. Anything above that can trigger the charge.
3. Federal penalty and income tax. Withdrawals before age 59½ can carry a 10% federal penalty on the taxable portion, plus ordinary income tax, per the same Annuity Journal page. On a qualified annuity the whole withdrawal is taxable. On a non-qualified one, only the earnings are, as Annuity Expert Advice lays out. Tax treatment varies; consult a qualified professional.
Surrender charges are separate from the IRS penalty and stack on top of it, as Annuity Journal notes. An investor who needs cash to close can lose a real slice of the balance just reaching it.
Annuity Type and Likely Treatment
| Annuity type | Typical treatment | What to document |
|---|---|---|
| Deferred, fixed | Surrender value may count as an asset | Statement with surrender value |
| Deferred, variable | May be discounted further for market risk | Current value, restrictions |
| Qualified (IRA/401(k) funded) | May be handled like a retirement account | Owner, plan type, vested value |
| Non-qualified | Surrender value, net of tax drag | Owner, cost basis, terms |
| Immediate / income | Little or no lump sum to count | Payment schedule, contract terms |
Treat the table as a pattern, not a promise. Each lender sets its own rules, and many do not list annuities at all.
The Asset-Based Mortgage Paths
For a cash-heavy borrower with little documented income, there are two asset-based consumer mortgage paths, placed through select lenders in Lendmire’s network and subject to underwriting. A borrower is reviewed on one path at a time, and these are consumer mortgages, not DSCR loans. Lendmire’s consumer lending is licensed in 16 states.
Asset qualifier path. Eligible assets must cover the entire loan, and no employment or income is documented. Leverage runs up to 80% on a purchase and 75% on a refinance, on a principal residence or second home. Loans go up to $4,000,000. Credit minimum is 600. Counted at 100%: brokerage, CDs, money market and savings. A 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. Seasoning is 60 days with two months of statements per account.
As an illustration, an $800,000 loan backed by $330,000 in brokerage accounts (100%), $300,000 in a 401(k) under 59½ (90% counts, so $270,000) and $200,000 in savings (100%) counts $800,000 of usable assets, enough to qualify on assets alone. The lender’s own calculation governs.
Asset depletion path. Usable assets are divided by 60 months to create qualifying income, which then runs through the debt-to-income test. Cash and CDs count at 100%, securities at 80%, private stock at 75%, retirement accounts at 70% and real-estate equity at 60%. Leverage on a principal residence or second home is up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out. An investment property is up to 65% and 60%. Loans run $125,000 to $3,500,000. Minimum qualified assets are the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when depletion is the only income source. Statements must be at least 120 days old, plus one within 45 days. Credit follows the lender’s matrix.
As an illustration, $1,500,000 in securities (80% counts, $1,200,000) plus $300,000 in cash (100%) is $1,500,000 usable. Divided by 60 months, that is $25,000 of monthly qualifying income, which then carries the housing payment and other debts.
Here is the catch for annuity holders: neither published asset list names annuities. The documented route is converting the annuity to a seasoned cash balance in a regulated account, with the lender reviewing the source. That conversion is where surrender charges, tax and seasoning collide. Cryptocurrency, precious metals and similar holdings sit in the same position.
Which Path Fits Which Borrower?
| Path | Best for | Main limit |
|---|---|---|
| DSCR rental loan | Investor buying a rental with solid rent | Annuity does not help the ratio |
| Asset qualifier | Borrower whose assets cover the whole loan | Annuity must become seasoned cash |
| Asset depletion | Borrower with large assets, little income | Higher minimum assets; haircuts apply |
Picture an investor holding a deferred annuity and a rental with rent that covers the payment. DSCR is the fit, and the annuity is at most a reserve item. Now picture a retiree buying a primary residence with a large annuity and no paycheck. The asset paths are the fit, and the annuity first has to become cash. Same annuity, different answer.
Annuity Income Versus Annuity Balance
Annuity payments can count as income in conventional lending when documented to continue at least three years. That is a conventional-loan concept. It does not carry over to a DSCR file, which does not use personal income.
Do not count the same annuity twice. If the balance is used as an asset, the payments from it are not also income. Pick one use per file.
Agency rules show why “retirement account” and “annuity” are not the same thing to an underwriter. Fannie Mae’s Selling Guide names vested IRA and 401(k) funds for down payment, closing costs and reserves, and does not list annuities in that section. Agency rules do not govern DSCR loans. Use them only as a reminder that an underwriter reads the contract type.
Common Mistakes on Annuity Files
- Assuming the statement balance counts. The usable number is net of surrender charges, tax and penalties.
- Moving funds late. Cashing out right before application can trigger charges and leave the money unseasoned.
- Missing paperwork. Expect the latest statement showing owner, current value, surrender value and restrictions.
- Ownership gaps. Joint owners or entity ownership need to line up with who is borrowing.
- Expecting an annuity to rescue a weak ratio. On a DSCR file, only rent and structure fix it.
- Treating “no income documentation” as “no documentation.” Assets are documented on every path.
What to Ask Before You Move Money
1. Ask the insurer for the surrender value, the surrender schedule and any free-withdrawal allowance.
2. Ask whether the contract is qualified or non-qualified.
3. Ask a tax professional what a withdrawal would cost.
4. Ask the broker whether the target program accepts annuities, and at what treatment.
5. Get statements in order early so seasoning does not become the problem.
Program figures are typical ranges from select wholesale-network programs and change over time. They are not a commitment to lend, and every file is underwritten individually.
Frequently Asked Questions
Do annuities count as assets for a mortgage?
Sometimes. A deferred annuity may count at its surrender value if the program accepts it and the contract can be documented. Many programs do not list annuities at all, and the published asset lists on the asset-based paths above name brokerage, cash, CDs, securities and retirement accounts instead.
Does annuity income help me qualify for a DSCR loan?
No. Annuity payments are personal income and do not enter the ratio. The annuity’s role, if any, is proof of funds or reserves.
Is an annuity liquid enough for a down payment?
Only the accessible part. Surrender charges, a possible 10% federal penalty before 59½ and income tax can cut the usable amount. Funds moved into a regulated cash account also need to season before many lenders count them.
Do lenders discount annuity balances?
Usually, yes. Lenders tend to look at net surrender value, and variable annuities may be discounted further for market risk.
Can I combine annuity income with other income?
In conventional lending, documented annuity income with at least three years of continuance can be added to other income. On a DSCR loan it does not apply. On the asset-depletion path, asset-derived income can supplement documented income up to a 45% debt-to-income ratio.
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.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
4. Annuity Journal – Withdrawal Rules
6. Annuity Journal – Surrender Charges
7. Fannie Mae Selling Guide B3-4.3-03
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 Big Can an Assets-Only Mortgage Be? · How to Qualify for a Mortgage on Liquid Assets Alone · How Asset Depletion Mortgage Eligible Assets Work on a Jumbo Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.