The Quick Read: Fannie Mae’s version of asset depletion is built for primary and second homes, uses a narrow set of employment-related assets, and caps leverage low, while a non-QM asset depletion loan accepts a wider range of assets, larger loan amounts, and investment property through select programs, subject to underwriting. Neither option is better in general. The right one depends on what you are buying, which assets you hold, and how much leverage you need.
- Fannie Mae’s method covers a principal residence or second home only. A rental purchase falls outside it.
- A non-QM depletion loan counts more asset types, each at its own percentage, and runs usable assets through a 60-month divisor.
- A separate asset qualifier path covers the whole loan with assets and documents no income.
- Titling, seasoning, and ineligible asset types break more files than the math does.
- North Carolina borrowers see the same program figures as everyone else. The state changes the property mix, not the rules.
Side-by-Side
This table puts Fannie Mae’s published norms next to the non-QM depletion path placed through select lenders in Lendmire’s wholesale network. The Fannie Mae column shows published industry norms. Lendmire’s network column follows the guidelines of the select programs it places files with. Pricing is deliberately left out of both columns.
| Factor | Fannie Mae (published norms) | Non-QM depletion path |
|---|---|---|
| Review basis | Eligible assets become income in DTI | Usable assets ÷ 60 months, then DTI |
| Assets counted | Employment-related assets | Cash, CDs, securities, retirement, equity |
| Property types | Primary residence, second home | Primary, second home, investment property |
| Transaction types | Purchase, limited cash-out refi | Purchase, rate-and-term, cash-out |
| Leverage | 70%, or 80% if owner is 62+ | 80% / 60% on homes; 65% / 60% on rentals |
| Loan size | Agency limits apply | $125,000 to $3,500,000 |
| Titling | Borrower owns, or co-owner co-borrows | Lender sets titling rules |
| Statement age | Allowable-age rules for credit documents | 120 days old, plus one within 45 days |
| Reserves | Set by agency underwriting | No published reserve months |
The non-QM column describes one path. Lendmire’s network also places an asset qualifier path, which works differently and is covered below. Qualification is subject to lender guidelines, credit approval, and property review on every row.
Key Terms Defined
Asset depletion means converting a pool of assets into a monthly qualifying income figure on paper. The assets stay in place. Nobody has to liquidate anything.
Asset qualifier means the assets alone cover the entire loan amount. No employment or income is documented, but the assets are fully documented.
Haircut means the share of an asset’s balance a program will not count. A 20% haircut on securities means 80% counts.
When Fannie Mae Asset Depletion Is the Better Fit
Fannie Mae’s method fits a borrower buying or refinancing a home to live in, or a second home, whose assets sit in employment-related accounts such as retirement funds. The Fannie Mae Selling Guide topic B3-3.4-06 lays out the rules. It limits the method to a purchase or limited cash-out refinance on a principal residence or second home. Maximum LTV is 70%, or 80% when the owner of the assets is at least 62 at closing. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
That age-62 step is the one that matters for retirees. A borrower at 63 with a large retirement balance gets more leverage than a borrower at 55 with the same balance. The guide also says the assets must be owned individually by the borrower, or the co-owner must be a co-borrower on the loan. And if taking a distribution would trigger a penalty, the guide subtracts that penalty, after transaction costs, before the income stream is set.
The agency route is a reasonable choice in a few situations:
- You are buying a primary home and your assets are mostly retirement funds you can access.
- You are 62 or older and want the higher agency leverage ceiling.
- You prefer a conventional-style file and your debts are low enough that the derived income carries the payment.
- Your asset ownership is clean, individual, and well documented.
Fannie Mae also sends borrowers to other income topics, such as interest and dividend income or annuity, pension, and retirement income, when the depletion parameters are not met. Those are different qualification routes with their own rules. Check the guide itself before relying on any summary of it, including this one. Agency rules change, and Fannie Mae restructured its income chapter in a recent announcement.
The limits are plain. A rental purchase is outside the stated occupancy scope. Calling a rental a second home does not work, because the lender looks at how the property will actually be used. Brokerage balances and sale proceeds do not fit the employment-related category either. That sends many asset-heavy borrowers to a non-QM program.
When a Non-QM Asset Depletion Loan Is the Better Fit
A non-QM depletion loan fits a borrower with large balances in several account types, a need for higher leverage, a loan above agency size, or a rental purchase. Across Lendmire’s wholesale network, there are two asset-based paths. A borrower is reviewed on one path at a time. Never blend the two tables.
Path one: the asset depletion path
This path turns assets into monthly income. Usable assets are divided by 60 months. That income must carry the full housing payment and other debts through the debt-to-income test.
The credit percentages, through select programs and subject to underwriting:
- Cash accounts and certificates of deposit count at 100%.
- Securities count at 80%.
- Private stock counts at 75%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
Not eligible on this 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.
Leverage on this path is up to 80% on a purchase or rate-and-term refinance of a principal residence or second home. On a cash-out refinance of those homes it is 60%. An investment property goes up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets. Loan amounts run from $125,000 to $3,500,000.
Minimum assets are the lesser of $1,000,000 or 1.25 times the loan balance. They are never below $250,000 liquid when depletion is the only income source. If asset income only supplements documented income, it can do so up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
A worked example, illustrative only, since the lender’s own calculation governs. Take $1,500,000 in securities, which counts at 80%, so $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 usable. Divide by 60 months and you get $25,000 of monthly qualifying income. That figure then has to carry the housing payment and other debts through the debt-to-income test.
Path two: the asset qualifier
This path skips income entirely. Eligible assets, after the percentages below, must equal or exceed the whole loan amount. Leverage is up to 80% on a purchase and 75% on a refinance of a principal residence or second home. Loans go up to $4,000,000. Credit starts at a 600 minimum score, subject to underwriting. Reserves are not required at or below 75% loan-to-value. Above that, the lender sets them.
What counts on this path: brokerage accounts, certificates of deposit, money market, and savings all at 100%. A 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. Accounts combine.
Here is the one example. An $800,000 loan with $330,000 in brokerage accounts, $300,000 in a 401(k) under 59½ (counts at 90%, so $270,000), and $200,000 in savings counts $800,000 of usable assets. That is reviewed on assets alone, subject to underwriting.
Credit and seasoning
On the depletion path, credit follows the lender’s matrix. A first-time investor needs a 700 score. Housing history is 0x30x12. 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.
Seasoning differs 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. The assets are documented on both paths. Skipping income documentation never means skipping documentation.
Investment property on the depletion path
A rental purchase is the clearest reason to look at non-QM over the agency route. The depletion path allows investment property at lower leverage, as listed above. One regulatory point belongs here. The CFPB’s official commentary on business-purpose lending says a creditor must decide in each case whether a transaction is primarily for an exempt purpose. So the label on the application does not settle it.
The asset-based loans here are consumer mortgages, and consumer mortgage disclosure rules apply. A pure rental play is often a different product. 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. If you want the full picture on that route, Lendmire’s complete DSCR loans guide walks through it.
Where the Files Break
The math is rarely the problem. Documentation and eligibility are. These are the failure points that come up most often on asset-based files.
Account titling. Fannie Mae wants assets owned individually, or co-owned only with a co-borrower. An account held jointly with a non-borrowing spouse or a relative can drop out. Do not re-title accounts casually. Moving funds creates seasoning and sourcing questions of its own.
Stale statements. On the depletion path, statements must be at least 120 days old at application, plus a recent one within 45 days. Borrowers who open or fund an account shortly before applying run into this.
Assets that look liquid but are not eligible. 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. The lender then reviews the source. Plan that step before you apply, not during.
Unexplained deposits. Large deposits without a paper trail draw questions. Keep the sale agreement, inheritance letter, or settlement paperwork with the statements.
Counting the wrong number. A borrower who adds up gross balances is not working with usable assets. Run the percentages first, then the divisor.
Restricted balances. A balance that is encumbered, vesting, or tied to an employer plan may not count the way the statement implies.
On files like these, a clean one-page asset schedule with account type, titling, balance, and statement dates saves more back-and-forth than any other single document. Most network programs want to see the same facts in the same order, so the schedule travels well.
North Carolina Considerations
Program figures do not change by state. A North Carolina borrower sees the same percentages, seasoning, and loan limits as anyone else. What changes is the property mix and the borrower profile.
North Carolina buyers often shop for second homes, whether in the mountains or on the coast. Both fall on the second-home side of the table. Both are open to either path, depending on leverage and loan size. A buyer using a second home as a short-term rental needs to confirm local rules before counting on that income, since short-term rental rules can vary by city, county, HOA, and property type. An investor buying a long-term rental moves to the investment-property rows or to a DSCR loan.
North Carolina closings run through attorneys, so statements and source paperwork should be organized before the file reaches that stage. Lendmire arranges asset-based mortgages through select lenders in its wholesale network. North Carolina is one of the 16 states where Lendmire’s consumer mortgage business is licensed.
Which Path Fits Which Borrower
| Borrower | Likely fit |
|---|---|
| Retiree 62+, retirement-heavy, buying a home | Fannie Mae path |
| Retiree with brokerage and cash, high leverage | Non-QM depletion |
| Recent business seller, large cash balance | Non-QM, often the asset qualifier |
| Younger borrower, taxable portfolio | Non-QM depletion |
| Rental buyer with strong assets | Non-QM depletion, or DSCR |
| Borrower who documents income with deposits | Bank statement program |
Borrowers who document income through deposits have a different product. Lendmire’s piece Bank Statement vs 1099-Only vs Asset Depletion for Liquid-Asset Borrowers compares those three routes.
What to Compare Before You Choose
The biggest qualifying income number is not always the best fit for every borrower. Ask each lender to put the following in writing, and compare them side by side:
- Which assets count, and at what percentage.
- The divisor used to turn assets into income.
- How statements are aged and sourced.
- Leverage by occupancy and transaction type.
- Whether reserves are required.
- Prepayment terms and any documentation burden beyond the statements.
Pricing belongs in that comparison too, but it comes from a quote, not from an article. Tax treatment varies by account and how the funds are used, so consult a qualified tax professional before taking a retirement distribution.
The Balanced Verdict
Pick the Fannie Mae route if you are buying a home to live in or a second home, your assets are employment-related, and the lower leverage ceiling works for you. It is a narrower program, but a familiar one. Pick a non-QM path if you hold a mix of account types, need higher leverage or a larger loan, or are buying an investment property. Pick the asset qualifier if your assets cover the whole loan and you would rather not run income at all.
Some borrowers fit both. Run both. The comparison shows which one leaves you with the better leverage and the cleaner file, and that is a better test than the largest income number.
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 or through the quote request page.
Frequently Asked Questions
Do I have to withdraw the money to qualify?
No. Asset depletion converts balances to income on paper. The assets stay where they are, though they must remain documented and available through closing.
Can I use a brokerage account?
On Lendmire’s network programs, yes. Securities count at 80% on the depletion path. On the asset qualifier path, brokerage accounts count at 100%. Fannie Mae’s published method centers on employment-related assets, so ordinary brokerage balances do not fit it the same way.
Can I use either method on an investment property?
Only the non-QM depletion path allows it, at up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out, subject to underwriting. Fannie Mae’s method is limited to a principal residence or second home. Many rental buyers find a DSCR loan is the better fit.
Can I combine asset income with W-2 or other documented income?
Yes, on the depletion path. Asset income can supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Is cryptocurrency accepted?
It is not published as eligible on either path. The documented route is converting it to cash in a regulated account and seasoning that balance. The lender reviews the source of funds.
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, B3-3.4-06: Employment Related Assets as Qualifying Income
2. CFPB, Regulation Z § 1026.3 official commentary
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Retirement Account Withdrawals vs Asset Depletion for a Jumbo Loan · Does an Asset Depletion Loan Require Any Income? · Can You Do a Cash-Out Refinance on an Asset Depletion Loan?
Guides: Asset-Based Mortgage in North Carolina
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- 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.