The Quick Read: Fannie Mae’s asset method is a narrow tool for owner-occupied purchases and limited cash-out refinances that turns employment-related retirement assets into income over the loan’s term, while a non-QM asset depletion loan is a lender-built product that counts a wider asset menu, divides over a shorter period, and reaches investment property. For a California borrower, the choice usually comes down to the property and the type of assets held. Both paths still require fully documented assets.
- Fannie Mae’s version covers a principal residence or second home only, not a rental purchase.
- Its published cap is 70% loan-to-value, or 80% when the asset owner is 62 or older.
- Lendmire’s network offers two non-QM paths: assets that cover the whole loan, or assets converted to income over 60 months.
- Investment property is available only on the depletion path, subject to underwriting.
- Neither path lets you skip statements. Only income documentation drops away.
Who Each Option Is Really For
Fannie Mae’s method fits a retiree or early-retired borrower who holds a 401(k) or IRA, wants a conforming loan on a home they will live in, and can live with a lower leverage cap. The non-QM depletion loan fits a borrower with large brokerage, cash or mixed balances and little documented income, especially one buying a second home or a rental. It also fits a borrower whose assets are not retirement accounts.
Fannie Mae has no program literally named asset depletion. The relevant topic in its Selling Guide is titled employment-related assets as qualifying income, and the title tells you how narrow it is. The column below describes Fannie Mae’s published norms. Lendmire’s wholesale network places non-QM asset-based loans through select lenders, and those figures come from the network’s guidelines, subject to underwriting.
Side-by-Side
| Factor | Fannie Mae (published norms) | Network asset qualifier path | Network asset depletion path |
|---|---|---|---|
| Review basis | Eligible assets become income | Assets cover the entire loan | Usable assets ÷ 60 months = income |
| Income documented | Counted with other income | None | Derived income runs through DTI |
| Property types | Principal residence, second home | Principal residence, second home | Adds investment property |
| Transactions | Purchase, limited cash-out | Purchase, refinance | Purchase, rate-and-term, cash-out |
| Entity vesting | Borrower or co-borrower owns assets | Borrower-owned accounts | Borrower-owned accounts |
| Asset scope | Employment-related assets | Brokerage, CDs, cash, retirement | Cash, securities, retirement, equity |
| Statements | Within standard age rules | Two months per account | 120 days old plus one within 45 days |
| Reserves | Set by overall loan terms | None at or below 75% LTV | No published reserve months |
On Fannie Mae’s side, the guide says assets must be owned by the borrower alone, or the co-owner must be a co-borrower. It says nothing about LLC borrowers. On the network side, entity ownership and any unusual titling go to the lender for review, so raise them early.
Key Terms Defined
Asset qualifier path: the non-QM route where eligible assets, after credit percentages, must equal or exceed the entire loan amount, with no employment or income documented.
Asset depletion path: the non-QM route where usable assets divided by 60 months become monthly qualifying income that carries the housing payment and other debts through the debt-to-income test.
Haircut: the share of an account’s balance that does not count, such as the 20% reduction on securities on the depletion path.
Divisor: the number of months used to spread assets into income. A longer divisor produces less income from the same portfolio.
How the Math Differs
Fannie Mae’s method subtracts any early-withdrawal penalty first, then removes funds needed for the transaction. Practitioner explainers describe the remainder as divided over the loan’s amortization term, so a 30-year loan uses 360 months. That long divisor is why the method produces modest income for most portfolios.
The network’s depletion path divides over 60 months. Here is the sanctioned shape. Take $1,500,000 in securities at 80%, which counts $1,200,000, plus $300,000 in cash at 100%. That is $1,500,000 of usable assets. Divided by 60 months, it is $25,000 of monthly qualifying income. That income must then carry the housing payment and other debts through the debt-to-income test. The lender’s own calculation governs the actual result.
The qualifier path works differently because it never converts to income. Take an $800,000 loan with $330,000 in brokerage accounts (100%), $300,000 in a 401(k) under age 59½ (90%, or $270,000) and $200,000 in savings (100%). That counts $800,000 of usable assets, so the file is reviewed on assets alone, subject to underwriting. The same 401(k) counts at 100% once the borrower reaches 59½.
A borrower is reviewed on one path at a time. The two tables never blend, and a file is named by path every time a figure appears.
When Fannie Mae’s Version Is the Better Fit
Fannie Mae’s version is the better fit when the property is a home you will live in and the assets are retirement accounts with unrestricted access. It also suits a borrower who has documented severance or a lump-sum retirement distribution. Its published cap is 70% loan-to-value, or 80% if the asset owner is 62 or older at closing, on a purchase or limited cash-out refinance of a principal residence or second home. For comparison, the network’s depletion path runs up to 80% on a purchase or rate-and-term refinance of a principal residence or second home, subject to underwriting.
Fannie Mae’s path also helps in a few other cases:
- The borrower is 62 or older and wants the higher 80% cap on a conforming loan.
- The borrower has other income, and the asset method only fills a gap.
- The borrower wants a standardized, published rulebook instead of a lender-defined one.
- The penalty on retirement funds is small, so netting it out costs little.
The guide also points failing files toward other income rules, such as interest and dividend income or annuity, pension and retirement income. A file that misses the asset method may still work under one of those, so ask before assuming the answer is no.
The trade-off is a narrow asset base. Ordinary brokerage balances, business sale proceeds and cash savings do not fit the employment-related definition. Stocks, bonds and mutual funds inside eligible accounts are discounted for volatility.
When a Non-QM Asset Depletion Loan Is the Better Fit
A non-QM asset depletion loan is the better fit when the assets are not retirement accounts, when the property is an investment property, or when the shorter divisor is needed to produce enough income. The network’s depletion path counts assets at these shares, subject to underwriting:
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
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 and collectibles 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.
The leverage ceilings on the depletion path are:
- On a principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- On an investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
Cash-out proceeds never count as qualifying assets. Loan amounts run from $125,000 to $3,500,000 on this path. The qualifier path reaches $4,000,000, with leverage up to 80% on a purchase and 75% on a refinance of a principal residence or second home, subject to underwriting. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The depletion path has minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, liquid assets can never fall below $250,000. If the assets only supplement documented income, the derived income can fill a gap up to a 45% debt-to-income ratio and the minimum-assets rule is waived.
Credit is reviewed too. The qualifier path publishes a 600 minimum score, while the depletion path follows the lender’s score and loan-amount 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.
For a larger California loan, the qualifier path is often the cleaner read. If balances already exceed the loan amount after the credit percentages, no income conversion is needed. Lendmire’s piece on non-QM super jumbo requirements after selling a property covers that situation in more detail.
Where California Files Get Stuck
Most problems come from the asset pool, not the borrower’s credit. A borrower expects a large number, then the haircuts and exclusions shrink it. Real-estate equity counts at only 60%, a bigger haircut than the 70% credit given to retirement accounts at any age.
Stale statements cause the next set of delays. The depletion path wants statements at least 120 days old at application, plus the most recent one within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning. The qualifier path wants 60 days of seasoning and two months of statements per account. Fannie Mae’s side follows its own allowable document age rules.
Titling matters in California, where assets often sit in joint names or trusts. Under Fannie Mae’s norms a co-owner of the assets must be a co-borrower, and for the 62-and-older cap the older owner must be a borrower. On the network side, any account not solely in the borrower’s name goes to the lender for review. Gather the ownership paperwork before the file goes in.
High California price points raise another question: whether the portfolio can support the loan size at the leverage allowed. On the depletion path, 80% on a purchase requires more usable assets than 65% on an investment property, because the lender checks both the derived income and the minimum-assets rule. Run both before choosing a path.
Penalties matter on retirement funds. Fannie Mae nets the penalty out first. Tax treatment varies; consult a qualified professional before relying on any deduction.
If the Property Is a Rental
Fannie Mae’s asset method does not apply to a rental purchase, since investment property is outside its list of eligible occupancies. How a rental file is classified also changes the paperwork. Under the CFPB’s Regulation Z business-purpose rules, the treatment of a rental depends on owner occupancy and unit count.
The network’s depletion path can place an investment property, with the 65% and 60% ceilings noted above. For a pure rental, a DSCR loan may be the better fit. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Asset depletion is the alternative when the rent does not carry the loan. Lendmire’s complete DSCR loans guide explains how that comparison works. Its comparison of bank statement vs 1099-Only vs asset depletion for liquid-asset borrowers covers the other alternatives.
Balanced Verdict
Neither option is better in general. Fannie Mae’s method rewards a borrower who has retirement assets, is buying a home to live in, and wants a published standard. A non-QM asset depletion loan rewards a borrower who needs a wider asset menu, a shorter divisor, higher leverage on a home, or financing for an investment property. The cost of that flexibility is a lender-defined product with its own minimums and a credit review that follows the lender’s matrix.
A practical test for a California borrower is to sort the assets first. If most of the balance sits in a retirement account and the property is a primary home, start with Fannie Mae’s method. If the balance is in brokerage, cash or sale proceeds, or the property is a second home or rental, start with the network’s paths.
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. California is one of the 16 states where Lendmire’s consumer mortgage lending is licensed, and all figures remain subject to underwriting and are not a commitment to lend.
Frequently Asked Questions
Does Fannie Mae have an asset depletion program?
Not under that name. It applies to purchases and limited cash-out refinances of a principal residence or second home, with a published cap of 70% or 80% for owners 62 and older.
Can I use asset depletion to buy a rental with a conforming loan?
Not under Fannie Mae’s published occupancy limits, which exclude investment property. On the network side, the depletion path can place an investment property up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out, subject to underwriting.
Do I have to sell my investments to qualify?
No. The assets show repayment capacity on both paths, and they stay in your accounts. They must be documented with statements, and cash-out proceeds never count as qualifying assets.
How much of my retirement account counts?
It depends on the path. On the asset qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. On the asset depletion path it counts at 70% at any age. Fannie Mae’s method nets out any early-withdrawal penalty first.
Does it matter that I live in California?
The program figures do not change by state. California matters mainly because loan sizes are often large and assets are often held jointly or in trusts, so ownership documents and the minimum-assets test deserve early attention.
Lendmire’s asset-based mortgage in California page presents the program for California 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 Selling Guide: employment-related assets as qualifying income
2. CFPB Regulation Z, section 1026.3 (exemptions)
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement Loan vs Asset Depletion Loan for Professional Athletes · How an Asset Depletion Jumbo Loan Works · How Asset Depletion Jumbo Loan Limits Work
Guides: Asset-Based Mortgage in California
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.