The Quick Read: Usually when your wealth sits in brokerage, savings, or retirement accounts, your documented income is too thin to pass a standard debt-to-income test, and the property is a home you will live in or a second home, because asset-based programs can turn those balances into qualifying income or cover the loan outright. Debt-to-income, or DTI, is the share of your monthly income that goes to debt payments. If you are buying a rental to hold, a DSCR loan, which qualifies the property’s rent instead of you, is usually the better tool. Programs and figures below are typical ranges through select programs, subject to underwriting.
- Conventional wins when pensions, Social Security, and regular distributions already carry your DTI.
- Asset depletion wins when the portfolio is large and the paycheck is small.
- The asset qualifier path can cover the whole loan with assets and document no income.
- Rentals usually belong on DSCR, not on a personal-income method.
- Assets are always documented. Only the income paperwork changes.
Key Terms Defined
Four terms come up in every conversation about this topic.
Asset qualifier path: A path where your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
Asset depletion path: A path where usable assets are divided by 60 months to produce a monthly qualifying income. That income then runs through the DTI test.
Haircut: The share of an account’s balance that a lender does not count, because the money carries market risk or withdrawal cost.
Seasoning: How long the money has sat in your accounts. Lenders use it to confirm the funds are really yours.
A borrower is qualified on one path at a time. The two tables never blend.
The Decision at a Glance
Here is how the choice usually falls for a retiree. Verdicts depend on the file, so treat this as a starting map.
| Your situation | Usually the better path | Main tradeoff |
|---|---|---|
| Pension and Social Security cover DTI | Conventional | Less flexibility on odd assets |
| Income exists only if you start withdrawals | Asset qualifier or depletion | Assets get documented in detail |
| Large portfolio, thin income, home to live in | Asset qualifier or depletion | Lower leverage on some paths |
| Buying a rental that cash-flows | DSCR | Credit and reserves matter more |
| Buying a thin-rent luxury rental | Asset depletion, subject to its limits | Lower leverage on investment property |
How Do the Two Asset Paths Work?
The asset qualifier path asks one question: do your usable assets equal the loan? The asset depletion path asks a different one: does the income your assets create carry the payment?
Start with the qualifier path. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts, which count at 100%. You hold $300,000 in a 401(k) while under age 59½, which counts at 90%, or $270,000. You hold $200,000 in savings, which counts at 100%. That adds up to $800,000 of usable assets, so the file is reviewed on assets alone. Nothing about your job or income enters the review. Leverage on this path runs up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home, subject to underwriting.
Now the depletion path. Suppose you hold $1,500,000 in securities, which count at 80%, or $1,200,000. You also hold $300,000 in cash, which counts at 100%. That is $1,500,000 usable. 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 DTI test. The lender’s own calculation governs, and this math is illustrative.
Leverage on the depletion path is different. On a principal residence or second home it runs up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance. Cash-out proceeds never count as qualifying assets.
Loan sizes differ too. The qualifier path goes up to $4,000,000. The depletion path runs from $125,000 to $3,500,000.
Which Assets Count, and How Much?
Cash counts fully on both paths. Retirement money is where the paths split sharply. The table shows the share of each balance that counts.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage and securities | 100% | 80% |
| Certificates of deposit | 100% | 100% |
| Savings and money market | 100% | 100% (as cash) |
| 401(k) and IRA | 90% under 59½, 100% after | 70% at any age |
| Private stock | Not listed | 75% |
| Real-estate equity | Not listed | 60% |
Age 59½ matters a great deal on the qualifier path. A retiree past that mark gets full credit for an IRA there. On the depletion path, age changes nothing, and retirement money counts at 70%.
Some assets do not count on the depletion path at all: 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, pledged or borrowed funds, and business accounts beyond your ownership share 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 lender reviewing the source.
Seasoning, Credit, and Minimum Assets
Seasoning rules differ by path. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants statements 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.
Credit starts at a 600 minimum score on the qualifier path. The depletion path follows the lender’s matrix for score and loan amount. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, though one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
The depletion path also has asset minimums. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When depletion is your only income source, you also need at least $250,000 liquid. Asset-derived income can instead supplement documented income, up to a 45% DTI, and then the minimum-assets rule is waived. That supplement route suits a retiree with a modest pension and a mid-sized portfolio.
On reserves, the qualifier path requires none at or below 75% loan-to-value. Above that, the lender sets them. The depletion path publishes no reserve months.
When Does a Conventional Mortgage Still Win?
Conventional wins more often than the asset-loan pitch admits. If your pension, Social Security, and required distributions already clear the DTI test, you do not need to convert assets into income. You also avoid the tighter leverage that some asset paths carry.
Agency-style conforming programs also have their own limited ways to count assets or retirement distributions. They generally spread those assets over a far longer period than the 60 months used here, so the income they produce is smaller. That longer window is usually why a retiree with a large portfolio still gets declined on income and ends up looking at asset-based options. Those are those programs’ rules, not the rules of the asset paths described above.
Starting documented IRA distributions is another way to make conventional work. If you were going to draw down the account anyway, regular, documented distributions can count as income under those programs’ own terms. The catch is that you start withdrawals on a schedule set by the loan, not by your retirement plan.
One more point is worth weighing. Asset depletion does not move any money. Nothing is sold or pledged. The lender uses the calculation to show repayment ability, and your portfolio stays invested.
What Changes for a Pennsylvania Borrower?
The program figures do not change by state. A Pennsylvania retiree sees the same percentages, seasoning rules, and loan limits described here. Lendmire’s consumer mortgage lending is licensed in 16 states, Pennsylvania among them. It arranges these loans as a broker, through select lenders in its network.
What does change is local context. Property taxes, insurance, and prices vary by county, and they affect how much housing payment your qualifying income has to carry. They are context for your budget, not program parameters.
Seasonal and out-of-state buyers should note one thing. A home you will live in part of the year may still qualify as a second home. A property you will rent out does not fit a personal second-home loan. Settle that occupancy question first, because it decides the product.
What About Rental Properties?
Asset depletion is a personal-income method, and it does not fit a rental well. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The ratio divides the property’s monthly rent by its full monthly housing obligation. Your personal income stays out of that test, and your portfolio shows up as reserves and credit strength. Some select lenders in the network will review rentals below 1.00 coverage, but leverage and terms adjust when they do.
This difference matters for portfolio growth. DTI tightens with every financed property, so a retiree with several mortgaged rentals can run out of capacity under a fixed imputed income. DSCR avoids that. Lendmire’s complete DSCR loans guide covers how the ratio works in full.
Asset depletion does win in one rental case: a high-priced property that rents too thinly to cover its payment. Here the rent does not have to carry the loan. The cost is lower leverage, with the depletion path capped at 65% on an investment-property purchase and 60% on a cash-out.
Many retirees use both tools. DSCR handles the rentals that cash-flow, and an asset path handles the home you live in. The sequence matters because the same assets cannot be counted twice.
Four Retiree Scenarios, Four Verdicts
The pension couple. A retired couple has pension and Social Security income that clears the DTI test on a new primary home. Verdict: conventional. Converting assets into income adds nothing here.
The income-light portfolio. A retired executive holds the $1,500,000 mix from earlier and has almost no documented income. She wants a primary residence. Verdict: asset depletion, with $25,000 of monthly qualifying income, on a purchase at up to 80% loan-to-value, subject to underwriting.
The cash buyer who wants a mortgage anyway. A retiree over 59½ holds brokerage, savings, and an IRA that together exceed the loan amount. He wants a primary residence with no income paperwork. Verdict: asset qualifier path, where the IRA counts at 100%.
The rental builder. A retiree wants two duplexes whose rents comfortably cover their payments. Verdict: DSCR for both, with the portfolio supporting reserves. The asset paths would count her debts against a fixed income and waste capacity.
Does the Lender Still Verify Everything?
Yes. Skipping income documents does not mean skipping verification. The CFPB’s compliance guide for the ability-to-repay rule says a lender may consider assets other than the home’s value. It also says the lender must verify the assets it relies on with reasonably reliable third-party records. That is why statements are demanded for every qualifying account.
Law-firm commentary points the same way. Cullen and Dykman notes that lenders must consider and verify income or assets and keep written policies and records. Ballard Spahr’s Consumer Finance Monitor adds that the general rule moved away from a fixed DTI cap. Because these are consumer mortgages, expect full consumer disclosures and heavy documentation.
Where Retirees Get Burned
Here are the usual mistakes.
- Counting assets twice. The pool that qualifies the home cannot also be the reserve pool for a rental. Plan the order.
- Forgetting seasoning. On the depletion path, statements must be at least 120 days old at application. Moving money late can break the file.
- Assuming retirement money counts fully. It counts at 70% on the depletion path at any age.
- Choosing the product before the property. Match the product to occupancy and rent coverage instead.
- Ignoring portfolio risk. Balances move. Qualifying on a thin margin leaves little room if markets fall before the file is reviewed.
Skip asset depletion if conventional already works, if the property is a pure rental, or if your balances sit in assets the program does not accept.
What Should You Gather First?
Lenders on both paths want a clean paper trail. Bring these items.
- Statements for every account you plan to count, covering the periods above.
- Proof of where large recent deposits came from.
- Your age and the account type for each retirement balance.
- A list of existing mortgages and other debts.
- A clear answer on occupancy: primary home, second home, or rental.
Frequently Asked Questions
Do I have to sell my investments to use asset depletion?
No. Nothing is sold or pledged. The lender divides your usable assets by 60 months on the depletion path, or compares them to the loan on the qualifier path. Your portfolio stays invested, though you must keep the qualifying balances in place through the review.
Can my IRA or 401(k) count toward qualifying?
Yes. On the asset qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the asset depletion path, they count at 70% at any age. Both treatments are subject to underwriting.
Is asset depletion the same as no-doc?
No. Only employment and income documentation goes away on the qualifier path. Your assets are documented with statements, seasoning, and source review on both paths, and credit is still reviewed.
Can I use asset depletion for a rental property?
The depletion path allows investment property at up to 65% on a purchase and 60% on a cash-out, with tighter credit rules for first-time investors. Still, DSCR is usually the better fit for a rental that covers its own payment, because it qualifies the property.
What if my portfolio drops after I apply?
Qualification rests on the balances the lender documents, so a large drop before approval can change the result. Keep a cushion above the minimum-assets rule rather than qualifying at the edge.
Next Step
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 Pennsylvania page presents the program for Pennsylvania 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. CFPB ATR/QM Small Entity Compliance Guide
2. Cullen and Dykman LLP, QM/ATR changes
3. Consumer Finance Monitor, CFPB final ATR/QM rule
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Brokerage Dividends vs Asset Depletion for a Retiree on a Jumbo Loan · How an Asset Depletion Mortgage Works · Is an Asset Qualifier Mortgage Harder to Get Than an Asset Depletion Loan?
Guides: Asset-Based Mortgage in Pennsylvania
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.