Conventional Loan Asset Income Requirements for a Condo Purchase

The Quick Read: A conventional loan can count savings, retirement funds, or investments as qualifying income, but only through a specific method inside a normal Fannie Mae or Freddie Mac loan. It is not a separate loan product. A condo adds a second, independent test: the building and its HOA must be eligible, however strong the borrower looks. Both gates must pass, and a strong file cannot fix an ineligible project.

What Does “Assets as Income” Actually Mean?

Assets as income is a way of qualifying, not a type of loan. A lender takes a pool of documented assets, subtracts the money you need for the purchase, and spreads the remainder over a set number of months. The result is a monthly figure that goes into your debt-to-income ratio (DTI) alongside any other income.

You will hear several names for this: “asset depletion,” “asset qualifier,” “assets as income.” Be careful with them. Some non-QM lenders sell a product with a similar name, and its rules are written by the lender. The conventional version follows agency guidelines instead. Credit score, occupancy, property type, reserves, and lender overlays all still apply.

Lendmire is a mortgage broker licensed for consumer lending in 16 states. It arranges conventional files through wholesale lenders, and the first question on this kind of file is always which agency method fits the borrower’s asset mix. Agency rules are the same on every file. What differs is the borrower’s assets.

Buyers who typically look at this method:

• Retirees with large balances and modest pension or Social Security income
• Self-employed buyers whose traditional personal-income documentation understates their real resources
• Asset-rich buyers between jobs or with irregular pay

If you are weighing the broader conventional picture first, Lendmire’s conventional loan programs page outlines the leverage and credit framework this method sits inside. On a purchase, that is 97% LTV for a first-time buyer on a one-unit primary residence and 95% otherwise, with a 620 decision score as the wholesale floor and a 50% ratio ceiling on automated findings. Every figure is subject to lender guidelines and full file review.

Key Terms Defined

Net eligible assets: The documented assets left after you set aside what the purchase itself requires.

Divisor: The number of months the remaining assets are spread across to produce monthly income.

DTI (debt-to-income ratio): Your total monthly obligations, including the full housing payment, divided by your qualifying income.

Project review: The lender’s check that the condo building and HOA meet agency standards, separate from your own qualification.

Warrantable: Informal shorthand for a condo project that passes agency review and can back a conventional loan.

How Is the Loan Underwritten, Step by Step?

The two agencies handle this differently, so the steps below flag where they split. The sequence runs the same way on any file.

1. Pick the path. The lender decides whether Fannie Mae or Freddie Mac rules fit your assets.

2. Inventory the assets. Fannie Mae counts employment-related assets only: retirement accounts, severance, and lump-sum retirement distributions. Freddie Mac counts retirement, depository, and securities accounts. Cryptocurrency is excluded at Freddie Mac.

3. Document them. Under Freddie Mac’s rule, standard documentation is two months of statements or a verification of deposit. The streamlined option is one month of statements or a verification of deposit.

4. Deduct. At Freddie Mac, subtract the funds you must pay to complete the transaction (down payment and closing costs), required reserves, gift funds, borrowed funds, and any pledged or encumbered assets. At Fannie Mae, an early-distribution penalty that would apply to a full withdrawal is subtracted first.

5. Divide. Freddie Mac’s calculation divides net eligible assets by a set number of months. The Fannie Mae divisor should be confirmed against its Selling Guide section on a live file, so this article does not state it.

6. Add to DTI. The monthly result joins any other income. It is measured against total monthly obligations, and for a condo that includes HOA dues.

7. Run the project review. The lender checks the building in parallel.

8. Appraise. The appraisal and the project review run separately. A good appraised value does not cure an ineligible project.

Here is the practical consequence of step 4. Your assets serve three jobs at once: the down payment, the reserves, and the income. Every dollar you put toward a larger down payment is a dollar that no longer converts into qualifying income. A buyer who puts down the minimum often qualifies more easily than one who puts down more, though a bigger down payment cuts the loan and the payment. That tradeoff needs to be run both ways before you commit funds.

What Do the Two Agencies Require?

Fannie Mae’s Selling Guide B3-3.4-06 covers employment-related assets as qualifying income. The rules that matter most for a condo buyer:

• Leverage cap. The maximum LTV is 70%, rising to 80% when the asset owner is at least 62 at closing. Fannie Mae raised that cap for older owners in Announcement SEL-2018-08.
• Purpose and occupancy. Purchase and limited cash-out refinance only, on a principal residence or second home.
• Ownership. Assets must belong to the borrower, or any co-owner must be a co-borrower. For the 80% cap, the borrower using the income must be 62 or older.
• Fallback. A file that misses these parameters may still use ordinary income sections, such as interest and dividends or annuity, pension, and retirement income.

Freddie Mac’s Section 5307.1 works differently, and a Freddie Mac bulletin changes it for later settlements:

• The division factor drops from 240 to 180.
• Net eligible assets must total at least $30,000.
• The old 80% maximum LTV is removed. Limits follow the agency’s standard leverage section.
• The borrower age restriction on depository accounts and securities is removed.
• The mandatory date for settlements is February 3, 2027, but each lender chooses its own adoption date. A broker has to confirm which version of the rule a given lender is applying.

One misconception is worth correcting. A plain checking or taxable brokerage balance does not automatically count at Fannie Mae, since the policy is built around employment-related assets. Gifts, inheritances, and lottery winnings can help with a down payment or reserves, but they do not convert into income under that policy.

Where Does the Condo Add a Second Test?

Whether you qualify and whether the building qualifies are separate questions. A strong borrower can be stopped by project status alone. A project problem can surface after the borrower has already been reviewed.

Fannie Mae’s project standards in B4-2.1-01 define a condo as a development declared as a horizontal property regime. The lender then reviews the project through Fannie Mae’s Condo Project Manager tool, or through Freddie Mac’s Condo Project Advisor. Review methods include a full review, an FHA-approved status, and certain waivers.

Projects that fail include:

• Any project showing “Unavailable” or “Not Eligible” status in those tools
• Timeshares, fractional projects, and condo hotels
• Projects in litigation, in termination, or under an evacuation order
• Projects needing critical repairs, or failing mandatory structural, safety, or habitability inspections
• Projects where the HOA draws more than 10% of its budgeted income from non-incidental business arrangements
• Projects with excessive single-investor concentration or too much commercial space

Newer buildings carry their own rule. A new or newly converted project must be substantially complete, meaning a certificate of occupancy has been issued, before a full review applies. Buyer-selection items like appliances do not have to be installed.

Detached condo units and certain refinances can be exempt from project review under the waiver provisions, subject to property eligibility. That is an exception, not a plan.

How Do HOA Dues Affect the Math?

HOA dues are part of the housing payment, so they feed your DTI. This matters more under the asset method than under ordinary income, because the asset-derived monthly figure is often modest compared with a salary. A building with high dues can push a ratio past the ceiling even when the loan amount is small.

The practical move is to ask for the HOA budget and current dues early, then have the lender run the ratio with dues included before you fall for a unit. A neighboring building with lower dues may qualify when the first one does not. Special assessments deserve the same early look, since they draw on the same pool of cash you are counting.

What Does the Decision Look Like in Practice?

Picture a retired buyer in their late sixties with a large retirement balance and a small pension. At Fannie Mae, age 62 or older opens the 80% LTV cap instead of 70%, so a larger share of the price can be financed. That is a real cash-to-close difference. A buyer in their fifties holding the same balance faces the 70% cap and needs more down, which then shrinks the asset pool that produces income. Run it both ways before you decide which unit to chase.

Now take a self-employed buyer in their forties with brokerage and depository accounts. Fannie Mae’s employment-related definition may exclude most of that balance. Freddie Mac’s method may fit better, once the lender has adopted the newer rule. In that case the lender selection matters as much as the property.

Here is the order that tends to save the most trouble on these files:

1. Confirm the assets fit one agency’s definition before shopping.

2. Choose a condo, then request the project documents and run the project review right away.

3. Document the assets, and avoid moving money between accounts mid-file.

4. Run the DTI with HOA dues included.

Across wholesale files like these, the failure points repeat. Commingled accounts, jointly owned assets where a co-owner is not on the loan, assets already counted as income elsewhere, and projects that fail review after the borrower is already approved are the common ones. If a project fails review, the loan cannot close under a conventional program, and the choice is a different building or a different program. Neither is a bad outcome if it is found early. It is a bad outcome found late.

What If This Route Doesn’t Fit?

Three alternatives are worth knowing about.

Another consideration is that Fannie Mae and Freddie Mac both limit this method to purchases and no-cash-out or limited cash-out refinances. A full cash-out refinance cannot use it. If a retiree is thinking ahead to tapping equity later, two Lendmire pieces cover that ground: one on conventional cash-out for retirees living on pension and asset income, and one that ends with conventional cash-out without tax returns for a retiree on asset income.

The same method is available for a second home at Fannie Mae. Occupancy decides leverage, and second homes cap at 90% on a conventional purchase. Keep in mind that the asset method has its own, lower LTV cap on top of that.

Documentation Checklist

• Statements for each account (one or two months, by documentation type)
• Proof of ownership, with co-owners as co-borrowers
• Documentation of any early-withdrawal penalty
• Evidence that funds are not borrowed, gifted, or pledged

• HOA budget, dues, and any pending special assessment
• Project documents for the lender’s review
• Owner-occupancy mix, investor concentration, and commercial space details
• Certificate of occupancy for a new or newly converted building

Mortgage insurance applies above 80% LTV on a conventional purchase. You can request cancellation at 80% of original value with a good payment history, and the servicer must end it at 78%. Published typical annual premiums run from 0.58% to 1.86% of the balance. That is a range, not a quote. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.

Next Step

If you are buying a condo 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. Program details are subject to lender guidelines and full file review, and nothing here is a commitment to lend. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Fannie Mae Selling Guide B3-3.4-06, Employment Related Assets as Qualifying Income

2. Fannie Mae Announcement SEL-2018-08

3. Freddie Mac Guide Section 5307.1, Accumulated assets as income

4. Fannie Mae Selling Guide B4-2.1-01, General Information on Project Standards