The Quick Read: Fannie Mae’s asset-based income method is a narrow agency tool for owner-occupied homes that counts mainly retirement accounts and documented severance or lump-sum retirement funds, while a non-QM asset depletion loan accepts a wider mix of liquid assets, allows investment property, and runs on a lender matrix instead of an agency guide. A Tennessee retiree buying a primary home with a large 401(k) may fit the agency path. A borrower who holds brokerage accounts and cash, or who wants a rental, usually lands on the non-QM side. Both options turn savings into qualifying income without liquidating anything.
- Fannie Mae’s method covers principal residences and second homes only, and the assets must be employment-related.
- A non-QM asset depletion loan can include investment property, with lower leverage than a primary home.
- Non-QM also offers an asset qualifier path, where assets alone cover the whole loan and no income is documented.
- Both options require full asset documentation. Neither one is a no-documentation loan.
Side-by-Side
The table compares the agency method as published with the non-QM depletion path as Lendmire’s wholesale network places it. The Fannie Mae column reflects published Fannie Mae Selling Guide rules and may change. The non-QM column reflects typical select-program guidelines, subject to underwriting.
| Factor | Fannie Mae method (published norms) | Non-QM depletion (network programs) |
|---|---|---|
| Review basis | Eligible assets become monthly income | Usable assets ÷ 60 months becomes income |
| Eligible assets | Retirement accounts, severance, lump sums | Cash, CDs, securities, retirement, equity |
| Property types | Principal residence, second home | Plus investment property |
| Loan purpose | Purchase, limited cash-out | Purchase, rate-and-term, cash-out |
| Leverage | 70%, or 80% at age 62+ | 80% to 60% by occupancy and purpose |
| Entity vesting | Assets owned by the borrower | Personal borrower; business share limited |
| Documentation | Agency asset documentation | Statements, seasoning rules per program |
| Reserves | Set by agency underwriting | Depletion: none published (qualifier: none at 75% LTV or below) |
| Review style | Agency guide, automated findings | Manual review against a lender matrix |
The leverage row needs context. Fannie Mae’s published ceiling is 70% on a principal residence or second home, rising to 80% when the asset owner is at least 62 at closing. In Lendmire’s network, the depletion path reaches up to 80% on a purchase or rate-and-term refinance of a principal residence or second home, subject to underwriting. An investment property tops out at 65% on a purchase or rate-and-term refinance on that path.
How Fannie Mae Asset Depletion Actually Works
Fannie Mae does not run a general asset depletion program. Its Selling Guide topic is titled employment-related assets as qualifying income. That name tells you the scope.
The rules that matter most are these:
- The property must be a principal residence or a second home. An investment property fails at the first step.
- The loan must be a purchase or a limited cash-out refinance.
- Assets must belong to the borrower, or any co-owner must also be on the loan.
- A 401(k), IRA, SEP or Keogh counts only if the borrower has an unqualified right to request a full distribution.
- If a penalty would apply to a full distribution, that penalty is subtracted before the income stream is computed.
The eligible asset types are retirement accounts plus documented severance packages and lump-sum retirement distributions. Ordinary checking, savings and brokerage balances generally do not count unless they came from one of those employment-related sources. That surprises many borrowers. A household with $2 million in a taxable brokerage account and no retirement plan may find the agency method counts none of it.
The same assets might still count under other agency income topics, such as interest and dividend income or pension and annuity income. That is a different calculation, so a loan officer should run each one.
Agency rules also move. Freddie Mac’s Bulletin 2026-10 updates its own accumulated-assets section, and sellers may adopt it before its settlement-date cutoff. Read the bulletin itself instead of relying on secondhand summaries, because a rule you saw described last month may already be stale. This article covers Fannie Mae’s published method, not Freddie Mac’s.
How a Non-QM Asset Depletion Loan Works
A non-QM asset depletion loan is a consumer mortgage placed through select lenders. Lendmire arranges it as a broker. The lender reviews the file and decides.
Across Lendmire’s wholesale network, a borrower is qualified on one path at a time.
The asset depletion path. The lender applies a haircut to each asset type, adds up what remains, and divides by 60 months. The result is monthly qualifying income. That income must carry the full housing payment and other debts through the debt-to-income test.
The asset qualifier path. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. This path covers principal residences and second homes, and loans reach up to $4,000,000, subject to underwriting.
Here are the haircuts on the depletion path:
- 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%.
Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units are not eligible on this path. Cryptocurrency, precious metals and collectibles are not published as eligible on either path. The documented route is to convert them into a seasoned cash balance in a regulated account, with the lender reviewing the source.
The qualifier path uses different credit percentages. Brokerage, CD, money market and savings balances count at 100%. A 401(k) or IRA counts at 90% under age 59½ and at 100% at 59½ or older. Never blend the two tables. A figure belongs to one path only.
What the Math Looks Like
Two shapes show how the paths differ. The lender’s own calculation governs in every real file.
Depletion path. Say a borrower holds $1,500,000 in securities and $300,000 in cash. The securities count at 80%, or $1,200,000. The cash counts at 100%, or $300,000. Usable assets total $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test.
Qualifier path. Say a borrower wants an $800,000 loan. The borrower holds $330,000 in brokerage accounts, $300,000 in a 401(k) and $200,000 in savings, and is under 59½. The brokerage and savings count in full. The 401(k) counts at 90%, or $270,000. That totals $800,000 of usable assets, which meets the loan amount, so the file can qualify on assets alone.
The 401(k) shows the practical difference. On the depletion path it counts at 70%. On the qualifier path it counts at 90% or 100%, depending on age. A retiree whose wealth sits mostly in retirement accounts should price out both paths before choosing.
When Fannie Mae Asset Depletion Is the Better Fit
Fannie Mae’s method is the stronger choice for a narrow but real profile. The borrower is buying a home to live in, or a second home, and the wealth sits in retirement accounts or a documented severance or lump-sum distribution.
It tends to fit best when:
- The borrower is 62 or older and wants the higher agency leverage tier on a principal residence or second home.
- The borrower is a recent retiree with a rollover IRA or 401(k) and wants a conventional, agency-governed loan.
- The borrower values a published, uniform rulebook over a lender-by-lender matrix.
- The borrower has no need for investment property, cash-out beyond the limited agency allowance, or assets outside the employment-related list.
Agency loans follow public guidelines, so a borrower can read the rules and compare quotes on a like-for-like basis. That transparency counts for something. Non-QM programs vary from one lender to the next, which makes comparison harder.
Here is the flip point. If most of your liquid wealth sits in taxable brokerage or savings accounts, or you are buying a rental, the agency path usually runs out of road. It is not a flaw in the method. The method was built for a different borrower.
When a Non-QM Asset Depletion Loan Is the Better Fit
A non-QM asset depletion loan is the stronger choice when the agency definition does not match your balance sheet. That covers more Tennessee borrowers than the agency path does.
Consider these profiles:
- The portfolio household. Brokerage accounts, money market funds and CDs count in the non-QM tables. Under Fannie Mae’s method, they generally count only if they came from an employment-related lump sum.
- The business seller. Sale proceeds, inheritance and legal-settlement funds are excused from the depletion path’s seasoning window, subject to lender review.
- The rental buyer. Investment property is available on the depletion path, 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.
- The borrower who wants assets to cover the loan outright. The qualifier path documents assets only, with no employment or income, and with no reserves required at or below 75% loan-to-value; above that, the lender sets them.
- The income-light buyer with a large first-time purchase. Loans on the depletion path run from $125,000 to $3,500,000, and the qualifier path reaches $4,000,000.
The tradeoffs are real. Non-QM leverage on an investment property is lower than on a primary home. The depletion path has minimum asset thresholds: the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when depletion is the only income source. A first-time investor on the depletion path needs a 700 score. Credit on the qualifier path starts at a 600 floor, while the depletion path follows the lender’s score and loan-amount matrix. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning on the depletion path.
Seasoning rules are strict too. 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. Large recent deposits into a checking account need a documented source. Balances that moved last month tend to cause trouble.
A related point: asset depletion can also supplement documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. A borrower with a modest pension and a large portfolio may fit that structure.
A Tennessee Reality Check
The program figures do not change by state. Lendmire’s consumer mortgage platform operates in 16 states, and Tennessee is one of them. The same depletion and qualifier tables apply to a buyer in Nashville, Knoxville or a Smoky Mountains second home, subject to underwriting.
State context matters at the margins. Local prices and insurance costs shape how much loan you need. They never change the program tables above. Tennessee borrowers should size the loan first, then test it against both paths.
If your goal is a rental, a third option often sits next to these two. A rental that earns well can qualify on property income under a DSCR loan. DSCR qualifies the property, while asset depletion qualifies the person. Lendmire’s complete DSCR loans guide explains when each fits. A borrower with strong assets and a property that does not cover its payment may need asset depletion. A borrower with a cash-flowing rental and thin personal documentation may need only DSCR.
For a wider look at how asset depletion stacks against bank statement and 1099-only qualifying, see Lendmire’s piece Bank Statement vs 1099-Only vs Asset Depletion for Liquid-Asset Borrowers.
Key Terms Defined
Asset depletion. A method that converts a borrower’s eligible assets into a monthly qualifying income, without requiring the borrower to sell them.
Asset qualifier. A non-QM path where eligible assets alone must equal or exceed the entire loan amount, with no income documented.
Employment-related assets. Fannie Mae’s term for retirement accounts and documented severance or lump-sum retirement funds.
Haircut. The percentage of an asset’s balance that a lender excludes from the usable total.
Non-QM. A mortgage that falls outside agency qualified-mortgage standards and is underwritten to a lender’s own program guide.
Seasoning. The length of time funds must sit in an account before the lender counts them.
The Verdict
Neither option wins by default. Fannie Mae’s method fits the borrower who is buying a primary home or second home, holds mostly retirement accounts or documented employment-related lump sums, and prefers a published agency rulebook. A non-QM asset depletion loan fits the borrower whose wealth sits in brokerage, cash and CDs, who is buying an investment property, or who wants assets to cover the loan outright.
Three questions decide most cases:
1. Will you live in the property? If not, Fannie Mae’s method is out.
2. Where are the assets held? Retirement accounts lean toward the agency method or the qualifier path. Taxable accounts lean toward non-QM.
3. Do you need more leverage or flexibility than the agency tier offers? That points to non-QM, with the tradeoffs above.
Many borrowers should have a broker run both. Lendmire can place the non-QM side through select lenders and help you compare it against the agency route based on your statements, the property, your credit profile, leverage and goals. If you are qualifying on assets rather than income and want to see how the numbers work, reach Lendmire at 828-256-2183. Every file is underwritten individually, and nothing here is a commitment to lend.
Frequently Asked Questions
Can I use a brokerage account under Fannie Mae’s method?
Generally not on its own. Fannie Mae’s method centers on employment-related assets such as retirement accounts, severance and lump-sum retirement distributions. A non-QM depletion path counts securities at 80% and the qualifier path counts brokerage accounts at 100%, subject to underwriting.
Do I have to sell my investments to qualify?
No. Both methods are qualifying calculations. The lender treats your assets as a source of income or as proof the loan is covered, and you keep the accounts. The lender still reviews statements and seasoning, so large recent moves of money need a documented source.
Can I buy a rental with asset depletion?
Not under Fannie Mae’s published method, which is limited to principal residences and second homes. Through select non-QM programs, the depletion path allows investment property at up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. That is lower than the 80% purchase ceiling on a principal residence.
Does a retirement account count the same way on both non-QM paths?
No. On the depletion path, retirement accounts count at 70% at any age. On the qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. Borrowers heavy in retirement accounts should compare both paths.
Is asset depletion the same as a no-documentation loan?
No. Assets are documented on both paths, with account statements and seasoning requirements. What changes is that employment and income documentation is replaced by asset documentation. Credit, property review and the lender’s guidelines still apply.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of traditional personal-income documentation, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. 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 (B3-3.4-06)
2. Freddie Mac Guide Bulletin 2026-10
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Real Estate Equity vs Liquid Assets on an Asset Depletion Mortgage · Can You Get an Asset Depletion Loan While Paying Alimony? · Can You Buy a California Rental Property on Asset Depletion Income?
Guides: Asset-Based Mortgage in Tennessee
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.