The Quick Read: Usually when your balances are large but your documented monthly income is thin, because an asset-based file lets savings and investments carry the loan, while a conventional file needs steady pension, Social Security or established distribution income that clears the debt-to-income test on its own. Debt-to-income (DTI) simply compares your monthly debts to your monthly income. Conventional wins when that income already covers the payment, or when you want the most familiar structure.
- Assets large, income thin: an asset-based loan usually fits better.
- Pension plus Social Security covers the payment: conventional is usually the simpler route.
- Two asset paths exist: one covers the whole loan with assets, the other turns assets into income.
- Retirement accounts count differently on each path. Age 59½ matters.
- Everything is subject to underwriting, and the lender’s own calculation governs.
When Does an Asset Depletion Loan Beat a Conventional Mortgage?
It wins when your paperwork undersells your wealth. Picture a retiree in a Carmel suburb who sold a business, holds a large brokerage account and draws very little each month. A conventional underwriter sees low income. An asset-based underwriter sees a balance sheet.
It also wins when you would rather not sell holdings or take larger retirement withdrawals just to build a paper income stream. Your money stays invested. The lender only counts it.
Conventional wins in the opposite case. If Social Security plus a pension already covers the payment with room to spare, you probably do not need a specialty file. Simple is good. It usually carries fewer moving parts.
Across the select lenders in Lendmire’s wholesale network, the pattern is consistent. The more your wealth sits in accounts and the less it shows up as monthly deposits, the more an asset-based file makes sense. Lendmire’s consumer mortgage business is licensed in Indiana, and the program figures below do not change by state.
How Do the Two Asset-Based Paths Work?
There are two paths, and you qualify on one at a time. Mixing them is a common mistake.
The asset qualifier path uses assets alone. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. The assets themselves are fully documented.
The asset depletion path turns assets into income. Usable assets, after haircuts, are divided by 60 months. That monthly figure must carry the housing payment and your other debts through the DTI test.
Here is the depletion math, using illustrative numbers. Say you hold $1,500,000 in securities, counted at 80%, which is $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 of usable assets. Divided by 60 months, you get $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the DTI test.
Now the qualifier math. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100%), $300,000 in a 401(k) while under 59½ (90%, so $270,000) and $200,000 in savings (100%). That counts $800,000 of usable assets, enough to qualify on assets alone. Both examples are illustrative, and the lender’s own calculation governs.
Which Assets Count, and for How Much?
Retirees care most about the retirement account line. It differs by path, and the difference can decide which path you pick.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage accounts | 100% | Securities 80% |
| Cash, savings, money market | 100% | Cash accounts 100% |
| Certificates of deposit | 100% | 100% |
| 401(k) and IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Private stock | Not published | 75% |
| Real-estate equity | Not published | 60% |
Read that table once more with your own birthday in mind. At 59½ or older, a large IRA counts in full on the qualifier path. On the depletion path it counts at 70% no matter your age. That is a real gap. Many retirees with big retirement balances find the qualifier path stretches further.
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.
Crypto, 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 to convert them into a seasoned cash balance in a regulated account. The lender then reviews the source of those funds.
What Leverage and Loan Size Can You Expect?
Leverage differs by path and by property use. These are ceilings, never offers, and each is subject to underwriting through select programs.
- Qualifier path: up to 80% loan-to-value (LTV, the loan as a share of the home’s value) on a purchase and 75% on a refinance, for a principal residence or second home. Loans run up to $4,000,000.
- 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 $125,000 to $3,500,000.
Cash-out proceeds never count as qualifying assets. And investment property is available only on the depletion path.
That investment-property ceiling matters if you are a retiree-investor. A conventional-style retiree file for a rental would also run tighter than for a home you live in. Neither path is built for buying a rental on thin leverage.
What Does Conventional Do for Retirees That People Overlook?
Plenty. Conventional underwriting is not closed to people without paychecks.
An agency-style conventional loan can count Social Security and pensions. Fannie Mae’s guidance on retirement and employment-related assets confirms that a retirement distribution you already receive can be used as income. Fannie Mae generally wants that income to continue for three years.
If you are drawing from an IRA on a steady schedule, that route may be all you need. If you receive survivor or spousal Social Security, expect the lender to ask whether those benefits will continue, because they are drawn on someone else’s work record.
Conventional can also count assets, but narrowly. Fannie Mae’s Selling Guide allows asset-based income only from employment-related assets, such as 401(k) and IRA accounts, with set loan parameters. It caps LTV at 70%, or 80% when the asset owner is 62 or older. Inheritance, real-estate sale proceeds and lottery winnings are ineligible there. Checking and savings generally do not count unless the balance came from an eligible employment-related source.
Those are the agency’s rules, not this program’s. The network figures above stand on their own. The practical contrast is simple. An agency file limits what assets can be used. The asset-based paths on Lendmire’s side accept a wider range, subject to underwriting.
Which Path Fits Your Situation?
Use this as a first sort. It is not a decision. Your statements, credit and property decide the file.
| Retiree profile | Better fit | Deciding factor |
|---|---|---|
| Pension and Social Security cover the payment | Conventional | Documented income already clears DTI |
| Large portfolio, modest withdrawals | Asset depletion | Assets become qualifying income |
| Large IRA, age 59½ or older | Asset qualifier | Retirement balances count at 100% |
| Business sale or inheritance proceeds | Asset-based | Seasoning excused on depletion path |
| Buying a rental, not a home to live in | Depletion path or DSCR | Property use changes the program |
One more distinction. Asset depletion qualifies you, the borrower. A DSCR loan is reviewed for the property. DSCR loans are designed for non-owner-occupied investment properties, and because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. If rent drives the case, read the complete DSCR loans guide. If your portfolio drives it, stay with the asset paths.
What Are the Credit, Seasoning and Minimums?
Credit. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix. 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. A housing event needs four years of seasoning on the depletion path.
Seasoning. Seasoning means how long money has sat in your accounts. On the qualifier path, funds need 60 days, with two months of statements per 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.
Minimums. The depletion path wants qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is your only income, you also need at least $250,000 liquid. Asset-derived income can instead supplement documented income, up to a 45% DTI. Then the minimum-assets rule is waived.
Reserves. The qualifier path requires none at or below 75% LTV. Above that, the lender sets them. The depletion path has no published reserve months. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Large balances also bring appraisal questions. A high-value home gets a closer look at comparable sales, and the appraisal sets the value your leverage is measured against. If the appraised value comes in below the contract price, the maximum loan shrinks to match the ceiling for your path. Plan some cushion in your assets and cash so a lower value does not break the file.
What Do You Give Up by Using Assets Instead of Selling Them?
Mostly pricing and simplicity. A specialty loan generally prices differently from a standard conventional loan. Ask for the full terms side by side before deciding. Pricing is not covered here.
You gain flexibility. You avoid selling appreciated positions or pulling extra from pre-tax accounts just to look like you have income. Tax treatment varies; consult a qualified tax professional.
The depletion path has a quieter risk too. The qualifying income is a formula, not a paycheck. If markets fall after closing, the formula does not follow you down, but your actual cushion does shrink. Keep liquidity beyond what the lender requires.
When Should You Not Use It?
Skip an asset-based loan in these cases.
- Conventional already works. Then you are adding complexity for little gain.
- Your wealth is mostly illiquid. Crypto, collectibles and borrowed funds must be converted into a seasoned cash balance first.
- Your balances fall short. The depletion path has asset minimums, and the qualifier path needs assets to equal the whole loan.
- You want a rental financed on its rent. That is a DSCR file, not an asset file.
What Is the Process?
1. Pick a path. Assets cover the loan outright, or assets become income.
2. Inventory accounts. List each account, balance and type, and note your age against 59½.
3. Gather statements. Two months per account for the qualifier path. For the depletion path, statements 120 days old plus one recent statement.
4. Explain unusual deposits. Business-sale or inheritance funds need a paper trail.
5. Run the numbers both ways. Compare the conventional and asset-based files on leverage and structure.
6. Underwrite. Credit, property and appraisal follow like any mortgage. This is a consumer mortgage, so standard disclosures apply.
Recent deposits trip up many applicants. Lendmire’s article Bank Statement vs Conventional Mortgage When Deposits Shifted Recently explains the sourcing questions that follow.
Frequently Asked Questions
Can I combine asset-derived income with Social Security or a pension?
Yes, on the depletion path. Asset-derived income may supplement documented income up to a 45% DTI, and when it does, the minimum-assets rule is waived. That can help a retiree whose pension covers most, but not all, of the payment. It remains subject to underwriting.
Do my IRA and 401(k) count?
They count on both paths, at different percentages. On the qualifier path they count at 90% under age 59½ and 100% at 59½ or older. On the depletion path they count at 70% at any age. Accounts combine, subject to the lender’s review.
Can I use this for a second home or a lake-area cabin?
Yes. Principal residences and second homes are eligible on both paths. Investment property is eligible only on the depletion path, at lower leverage.
Does the loan require me to sell my investments?
No. Assets are documented and counted for qualification. They are not liquidated or pledged by the loan. You still need enough cash for your down payment and closing costs.
Is an asset depletion loan the same as a DSCR loan?
No. Asset depletion is reviewed against your balance sheet. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. They suit different goals.
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. Lendmire is a mortgage broker, so lenders in its network review and approve each file, and nothing here is a commitment to lend.
Key Terms Defined
Asset depletion: a method that divides usable assets by 60 months to create monthly qualifying income.
Asset qualifier: a path where eligible assets alone must cover the entire loan amount.
Debt-to-income (DTI): monthly debts divided by monthly income, used to test whether you can carry a loan.
Haircut: the share of an asset’s balance a lender discounts before counting it.
Seasoning: the time funds must sit in your accounts before a lender counts them.
Loan-to-value (LTV): the loan amount as a percentage of the property’s value.
Lendmire’s asset-based mortgage in Indiana page presents the program for Indiana borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae FAQs: using income from retirement and employment-related assets
2. Fannie Mae Selling Guide: employment-related assets as qualifying income
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 Much Can You Cash Out of a Rental Property on an Asset Depletion Loan? · When Does Asset Depletion Beat a Conventional Mortgage for a Washington Retiree? · Asset Qualifier vs Asset Depletion for a California Retiree
Guides: Asset-Based Mortgage in Indiana
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.