The Quick Read: Usually when the retiree holds a large, documented, liquid portfolio, reports modest taxable income, and does not want to sell investments or pull retirement money to prove they can pay. Conventional underwriting reads income that is already flowing. Asset-based programs read the balance sheet, either by letting assets cover the loan outright or by turning them into qualifying income.
- Asset qualifier path: eligible assets must equal or exceed the entire loan, and no employment or income is documented.
- Asset depletion path: usable assets divided by 60 months become monthly qualifying income that runs through the debt-to-income test.
- Conventional wins when pension, Social Security, and distributions already cover the payment on paper.
- Documentation is different, not absent: the assets are verified on both paths.
The rest of this piece covers the mechanics, the edge cases, and the points where the answer flips. Everything here is a ceiling or floor from select programs, subject to underwriting. It is not an offer, and not a commitment to lend.
What Is the Straight Answer for a Retiree With Big Balances and Small Income?
Asset depletion beats conventional when the problem is how income looks on paper, not whether the money exists. A retiree with seven figures in brokerage and savings accounts can still be declined for a standard income-based loan. Taxable income is low, and nothing is “earned.”
Across Lendmire’s wholesale network, the programs built for this borrower fall into two groups. Consumer lending at Lendmire is licensed in 16 states, Michigan among them. The program figures below do not change by state. Michigan matters only as context for the retiree’s own planning.
The first path is the asset qualifier path. Eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. The second is the asset depletion path. Eligible assets, after haircuts, are divided by 60 months. The result is a monthly qualifying income that must carry the housing payment and other debts.
A borrower is qualified on one path at a time. The two never blend.
How Does Conventional Underwriting Treat a Retiree?
Conventional underwriting wants established income. Social Security, pension, annuity, and distributions that are already being received all count. If those cover the payment with room to spare, the asset-based route may add nothing.
Agency rules do have a narrow asset-income option. Fannie Mae’s Selling Guide FAQ on retirement and employment-related assets says a retirement distribution that is not yet established can be used only if the employment-related-assets requirements are met. The same guidance expects unrestricted, penalty-free access to accounts such as a 401(k) or IRA.
A practitioner explainer on Fannie’s B3-3.1-09 rule adds two points that matter here. The method is limited to a principal residence or second home. And the divisor is the loan term, which is 360 months on a 30-year loan.
Those two facts explain most of the gap. A long divisor shrinks the income figure. An occupancy limit shuts out a rental purchase entirely.
How Does the Income Math Work on the Asset Depletion Path?
The asset depletion path applies haircuts by account type, adds up the usable balance, and divides by 60 months. The quotient is monthly qualifying income. That income then carries the full housing payment and other debts through the debt-to-income test.
Here is the sanctioned illustration. Say a retiree holds $1,500,000 in securities and $300,000 in cash. Securities count at 80%, so $1,200,000 is usable. Cash counts at 100%, so $300,000 is usable. That is $1,500,000 of usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income.
This is illustrative only. The lender’s own calculation governs.
Compare that with a long agency divisor. Practitioners often describe the same asset base producing a much larger income figure under a short divisor than under a 360-month one. That divisor gap is the whole engine behind the “beat conventional” result.
Asset-derived income can also supplement documented income, such as Social Security or a pension, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
What Counts, and How Much of It?
The two paths treat accounts differently, so each gets its own table. Never read across them.
Asset qualifier path (share of balance that counts):
| Account type | Share counted |
|---|---|
| Brokerage, CDs, money market, savings | 100% |
| 401(k) and IRA, under age 59½ | 90% |
| 401(k) and IRA, 59½ or older | 100% |
Asset depletion path (share of balance that counts):
| Account type | Share counted |
|---|---|
| Cash accounts and CDs | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts, any age | 70% |
| Real-estate equity | 60% |
The qualifier example works like this. An $800,000 loan, supported by $330,000 in brokerage accounts (100%), $300,000 in a 401(k) under 59½ (90%, or $270,000), and $200,000 in savings (100%), counts $800,000 of usable assets. It is reviewed on assets alone, subject to underwriting.
Not eligible on the depletion path: custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies. Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account. The lender reviews the source.
What Leverage, Loan Size, and Credit Apply?
Leverage and loan limits differ by path and by occupancy, so name the path every time.
- Qualifier path: up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home. Loans reach $4,000,000. Cash-out terms are set by the lender and are not published.
- Depletion path, principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- Depletion path, investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out. Loans run from $125,000 to $3,500,000.
Credit has a 600 minimum on the qualifier path. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, with one 30-day late in the last twelve months considered case by case. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
Depletion-path minimums also apply. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never fall below $250,000 in liquid assets when asset depletion is the only income source.
Seasoning, Statements, and the “No Documentation” Myth
This is where a lot of retirees get surprised. The assets are documented. The program skips income documentation, not documentation.
On the qualifier path, funds need 60 days of seasoning, with two months of statements for each qualifying account. On the depletion path, statements must be at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business, inheritance, and legal-settlement funds are excused from that seasoning.
This lines up with the broader rule that a lender must verify what it relies on. The CFPB’s small-entity compliance guide says a lender must consider current or reasonably expected income or assets and verify them with reliable third-party records. Assets are a legitimate basis for repayment ability. They are not a loophole.
Moving money around right before applying is the classic problem. If a large deposit lands inside the seasoning window, expect questions. Lendmire’s piece Bank Statement vs Conventional Mortgage When Deposits Shifted Recently covers the same seasoning logic from the income-documentation side.
When Does Conventional Win Instead?
Conventional wins more often than the sales pages admit. Honest decision rules help here.
| Situation | Likely better fit |
|---|---|
| Pension and Social Security already cover the payment | Conventional |
| Retiree buying a principal residence with steady, established distributions | Conventional |
| Large taxable portfolio, low reportable income, wants to stay invested | Asset depletion |
| Retiree buying a rental property | Asset depletion or DSCR |
| Liquid assets well under the depletion minimums | Neither asset path; consider another route |
| Retiree wants lowest cost and has clean income | Conventional |
Pricing is the tradeoff. Non-QM structures generally carry pricing above conventional, and this article does not quote it. If conventional works on paper, the cost difference alone can decide it. Run both before choosing.
Conventional also wins when the retiree can simply document enough income. The asset path earns its place only where conventional fails or forces a costly sale.
What About Michigan Specifically?
Michigan changes the planning, not the program. The same figures apply to a Michigan borrower. The program does not vary by state.
The tax angle is the useful part. Drawing from an IRA or 401(k) to demonstrate income can create a taxable event, and asset depletion lets the retiree qualify without taking that withdrawal. That is the “no liquidation” benefit. Michigan has also been phasing in a retirement-income subtraction, so a retiree should confirm current treatment with the state Treasury. Tax treatment varies; consult a qualified professional.
Picture a few Michigan profiles.
- The downsizer. A retiree sells a larger home in metro Detroit and buys a smaller one. Sale proceeds sit in cash, which counts at 100% on the depletion path. If leverage is modest, the qualifier path may cover the loan outright.
- The lakefront second home. A retiree wants a second home up north while holding a large brokerage account. Second homes are eligible on both paths, subject to underwriting.
- The post-business-sale borrower. Proceeds from a sale are excused from the depletion path’s statement-age requirement, which helps when funds are new.
- The rental buyer. A retiree who wants an investment property can use the depletion path at lower leverage, or compare DSCR financing, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
Asset Depletion or DSCR for a Rental?
For a retiree buying a rental, the real choice is often between asset depletion and DSCR, not conventional. Agency asset-income rules are limited to a principal residence or second home, so they do not reach a rental purchase.
DSCR looks at the property. If rent comfortably covers the monthly obligation, DSCR may be simpler, because the retiree’s own income and assets are not the qualifying basis. Asset depletion helps when the property is thin on coverage, not yet rentable, or when the retiree prefers personal qualification. Sub-1.00 coverage structures may exist through select lenders in the network, but leverage and terms adjust.
For the investor side, the complete DSCR loans guide walks through how the rental-income review framework works.
Key Terms Defined
- Asset qualifier path: a program where eligible assets must cover the whole loan and no income is documented.
- Asset depletion path: a program that divides usable assets by 60 months to create qualifying income.
- Haircut: the share of an account’s balance that is not counted, applied to reflect volatility or access limits.
- Seasoning: how long funds have sat in an account before the lender will count them.
- Debt-to-income (DTI): monthly debts divided by monthly income, used to test whether the payment is affordable.
- Employment-related assets: the narrow agency category, mainly retirement accounts and documented lump sums.
What Should a Retiree Watch For?
A few risks deserve a plain look.
Market drops. Securities count at 80% on the depletion path. If markets fall between application and closing, usable assets and income can shrink. Retirement accounts count at 70% on that path regardless of age.
Tax cost of drawing accounts. Paying cash from a retirement account can trigger taxes. Asset-based qualification avoids forcing that withdrawal, but the retiree still needs to plan for ongoing payments.
Asset lock-up. Assets used to qualify must stay documented through the process. Some borrowers prefer buying with cash and refinancing later. That is a judgment call, and it depends on liquidity needs.
Appraisal scope. For a rental, rent-schedule and small-income-property appraisal forms (1007 and 1025) may apply when the property’s rent matters to the file.
Pricing. Expect pricing above conventional. A refinance into conventional later, once income documents cleanly, is a reasonable exit for some borrowers.
Frequently Asked Questions
Can a retiree qualify if Social Security and a pension are their only income?
Yes, in many cases. Those income streams can be counted, and on the depletion path asset-derived income can supplement documented income up to a 45% debt-to-income ratio. Whether the file works depends on the loan size, credit, and the lender’s review.
Do I have to sell my investments to use asset depletion?
No. Assets are used to calculate qualifying income or to cover the loan on paper. They are documented with statements, but they are not liquidated. Pledged or borrowed funds do not count, and cash-out proceeds never count as qualifying assets.
Does my IRA or 401(k) count the same on both paths?
No. On the qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. Never mix the two tables.
Can I use asset depletion on a rental property?
Yes, on the depletion path only, at up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. The qualifier path covers principal residences and second homes. DSCR financing is a separate option worth comparing for rentals.
Is this the same as no documentation?
No. Income and employment are not documented on the qualifier path, but assets are fully documented with statements and seasoning. The lender still reviews ability to repay, and the loan is a consumer mortgage.
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.
A Michigan retiree whose portfolio is large and whose paper income is small should price the asset path against a clean income-based file before assuming either one wins.
Lendmire’s asset-based mortgage in Michigan page presents the program for Michigan borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide FAQ on retirement and employment-related assets
2. Homebuyer.com explainer on Fannie Mae B3-3.1-09
3. CFPB ATR/QM Small Entity Compliance Guide
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 Asset Depletion Mortgage Eligible Assets Work for Rental Investors · Asset Depletion vs Bank Statement HELOC for a Retiree · How Much Can a Retiree Borrow on a Jumbo Loan Using Asset Depletion?
Guides: Asset-Based Mortgage in Michigan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.