The Quick Read: On an asset-based mortgage, an inherited brokerage account is usually the simpler asset to document and the more flexible one to use. An inherited IRA can still count, but it comes with a withdrawal clock, taxable distributions, and a lender review of how the beneficiary account is titled. Both are reviewed file by file, subject to underwriting.
- An inherited brokerage account has no mandatory withdrawal schedule, and its statement shows holdings and value plainly.
- An inherited IRA is a beneficiary account. Most non-spouse heirs must empty it within a set window, and withdrawals are generally taxable.
- On the asset qualifier path, brokerage balances count at 100%. Retirement balances count at 90% under age 59½ and 100% at 59½ or older.
- On the asset depletion path, securities count at 80% and retirement accounts at 70% at any age.
- Using the account as proof of assets, instead of cashing it out, keeps the balance intact and avoids a tax event.
The Honest Answer on Who Each One Is For
An inherited brokerage account fits the heir who wants the cleanest file and the most freedom. You can sell shares, keep them, or leave them as proof of assets. Nothing forces your hand.
An inherited IRA fits the heir who will keep the money invested and let it count as an asset without touching it. It works best if you don’t need the cash. If you plan to spend the balance on a down payment, the tax bill changes the math.
Both accounts support a consumer mortgage on a home you will live in or a second home. This is not a rental-property DSCR loan. DSCR loans are business-purpose loans that qualify primarily on property-level rental income covering the payment, subject to lender guidelines. This article covers the asset-based alternative for cash-heavy, income-light borrowers, such as retirees, business sellers, and people who just inherited.
Side-by-Side
The table below shows how each account typically plays in the asset-based programs Lendmire places through its wholesale network. These are ceilings and floors from select programs, subject to underwriting. They are not offers.
| Factor | Inherited IRA | Inherited Brokerage |
|---|---|---|
| Qualifier-path credit | 90% under 59½, 100% at 59½+ (lender confirms) | 100% of balance |
| Depletion-path credit | 70% (retirement, any age) | 80% (securities) |
| Core documentation | Beneficiary-titled statement, death and transfer papers | Retitled statement showing holdings and value |
| Property types | Primary home, second home; investment on depletion path | Same |
| Entity vesting | Individual borrower | Individual borrower |
| Withdrawal pressure | Taxable withdrawals; usually a multi-year emptying clock | No required distributions |
| Reserves | None at or below 75% LTV on qualifier path | Same |
| Seasoning | 60 days (qualifier); 120-day statements (depletion) | Same |
Two notes on the table. First, “lender confirms” on the inherited IRA row is deliberate. Programs written for ordinary retirement accounts do not always spell out how a beneficiary account is treated, and the reviewing lender decides that. Second, the investment-property option applies to the asset depletion path only. The asset qualifier path covers principal residences and second homes.
Key Terms Defined
Asset qualifier path: The loan is qualified on assets alone. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
Asset depletion path: Eligible assets, after haircuts, are divided by 60 months into a monthly qualifying income. That income runs through the debt-to-income test.
Haircut: The share of an account’s balance the lender does not count. A 70% credit means a 30% haircut.
Seasoning: How long funds have sat in an account before you apply. Statements prove it.
Step-up in basis: A reset of an inherited asset’s tax cost to its value at the owner’s death, so gains before the death generally go untaxed.
Beneficiary account: An inherited IRA titled in your name as heir. It is not the same as an IRA you own.
Why the Two Accounts Behave Differently
The difference comes from the tax code, not from the mortgage lender. The lender simply has to work around it.
An inherited traditional IRA keeps its tax-deferred status. Per IRS Publication 590-B, you are the beneficiary, and taxable distributions are included in your gross income. Kiplinger explains that most non-spouse heirs must empty the account within 10 years of the owner’s death. Exceptions cover surviving spouses, minor children of the owner, chronically ill or disabled heirs, and heirs not more than 10 years younger than the owner.
Whether you must take withdrawals along the way depends on the owner. SmartAsset notes that if the owner had already started required distributions, the heir keeps taking them and still empties the account within 10 years. If not, the heir must empty it within 10 years but need not withdraw annually.
An inherited brokerage account works differently. Under IRS Publication 551, inherited property generally takes a basis equal to its fair market value at the date of death, or on the alternate valuation date if the estate chose it. There is no emptying clock. Selling does not create ordinary income on the whole balance, only tax on gains above the reset basis.
Those facts shape how a mortgage reviewer sees each account. A brokerage account is spendable at any time. An IRA is spendable only at a tax cost, and the clock may shrink it while your loan is in process. Tax treatment varies; consult a qualified professional before relying on any of this.
When the Inherited Brokerage Account Is the Better Fit
Choose the brokerage account as your lead asset when you want maximum credit and minimal friction. Three situations stand out.
You are using the asset qualifier path. Brokerage balances count at 100% there, with no age test. A borrower who inherited a large brokerage account can often cover a loan with that account alone, subject to underwriting and a credit score of 600 or higher on this path. Leverage tops out at 80% on a purchase and 75% on a refinance.
You need to sell some shares anyway. Because basis generally resets at death, selling soon after inheriting usually produces little taxable gain. That makes a brokerage account a practical source of closing funds if you decide to use cash, not just proof of assets. Money you spend on the down payment cannot also count as an asset on the application.
You want a clean paper trail. Brokerage statements show holdings and current value, and they are easy to season. On the qualifier path, you need two months of statements for each qualifying account and 60 days of seasoning. On the depletion path, inheritance funds are excused from the seasoning requirement, but the statements are still reviewed.
One honest drawback: brokerage balances move with the market. A stock-heavy account can drop between application and closing, and the lender looks at the documented value. On the depletion path, securities already carry an 80% credit, which absorbs some of that swing but not all of it.
When the Inherited IRA Is the Better Fit
An inherited IRA earns its place when the balance is large, you do not want to trigger taxes, and a lender will count it as an asset without any withdrawal.
You want to keep the account intact. Counting the IRA as proof of assets leaves the balance in place. Nothing is liquidated and no distribution lands on your tax return. That can matter if your IRA is much larger than your brokerage holdings.
Your age fits the qualifier-path credit. Retirement balances count at 90% under age 59½ and 100% at 59½ or older on the qualifier path. If you are 59½ or older, an IRA can count as fully as cash, subject to the lender confirming how a beneficiary account is treated. Do not assume that one answer carries over. Ask first.
You are a surviving spouse. Per Publication 590-B, a spouse can treat an inherited IRA as their own by designating themselves as account owner. That removes the beneficiary label and the 10-year clock, and the account may then look like an ordinary retirement account on your application. A non-spouse cannot do this.
The tradeoffs are real. On the depletion path, retirement accounts count at 70% at any age, below the 80% for securities. The emptying clock can also shrink the balance if you must take required distributions. Many heirs learn they must withdraw only after they have begun the application. Reading your account’s rules first saves a surprise.
(Also be careful with the word “inherited.” A beneficiary IRA is not an IRA you can treat like your own savings, and lenders read the titling closely.)
A Worked Example
Say you inherit two accounts and plan to buy a home using the asset depletion path. You hold $500,000 in a brokerage account of securities and $500,000 in an inherited IRA. This is an illustration only, and the lender’s own calculation governs.
- Brokerage securities: $500,000 at 80% counts $400,000.
- Inherited IRA: $500,000 at 70% counts $350,000.
- Usable assets total $750,000.
- Divided by 60 months, that is $12,500 of monthly qualifying income.
That income then has to carry the housing payment and your other debts through the debt-to-income test. The depletion path also has minimum assets: the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when depletion is your only income source. Leverage on a principal residence or second home reaches 80% on a purchase and 60% on a cash-out refinance. Investment property is capped lower, at 65% on a purchase and 60% on a cash-out.
Now flip it. On the qualifier path, a borrower aged 59½ or older with the same $500,000 in each account would see $500,000 in brokerage credited at 100%, and the retirement credit would also be at 100% if the lender accepts the account. The two paths treat the same assets very differently. One borrower can only be on one path at a time, so the decision is about which path fits the loan, not about mixing them.
What Reviewers Look at on an Inherited Account
Across the wholesale network Lendmire works with, a few documentation patterns repeat on inherited-asset files. Brokerage files need a statement showing holdings and value, retitled into the heir’s name. Retirement files need a statement showing the vested value, and an inherited IRA also needs proof of the beneficiary registration.
The estate matters. Assets still in the decedent’s name or still in probate are not yet yours, so many reviewers want the transfer finished and the statement retitled before they count the balance. Whether a given program accepts a file at an earlier stage is a guideline question for the lender, not something to assume.
A related point on timing. Funds that arrive from an inheritance are, on the depletion path, excused from the standard statement-age rule. The 120-day statement requirement and the recent statement within 45 days still apply to accounts you held before the inheritance.
Cryptocurrency, precious metals, and collectibles inside or alongside an estate 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 source reviewed by the lender. Pledged or borrowed funds are in the same category.
Common Mistakes
Treating the statement balance as the counted balance. Credit percentages apply. A $500,000 retirement account does not show up as $500,000 on the depletion path.
Cashing out an IRA to look liquid. Withdrawals from an inherited traditional IRA are generally taxable, so the cash you net may be much less than the balance. Counting the account as an asset, instead of liquidating it, is often the better move.
Assuming the step-up applies to the IRA. It does not. Brokerage assets may get a reset basis, but traditional retirement accounts do not.
Applying before the transfer is done. An account still in probate is not yet your asset. Retitle first.
Mixing the paths. The qualifier path and the depletion path use different tables. Name the path before quoting any figure.
Missing a required distribution. If you inherited an IRA from an owner who had begun required withdrawals, skipping them creates a separate problem for your balance and your tax return.
The Balanced Verdict
If you hold both accounts, lead with the brokerage account and keep the IRA as a supporting asset. Brokerage balances are simpler to document, they count at higher percentages, and they do not force a tax bill when you use them. The inherited IRA still adds real weight, especially for an older heir on the qualifier path or a surviving spouse who treats the IRA as their own.
If you hold only an inherited IRA, you are not shut out. You are simply earning a more cautious review. Ask how a beneficiary account is treated before you build a plan around it.
If your plan is to buy a rental instead, a DSCR loan is reviewed primarily on the property’s rent covering the payment, subject to lender guidelines, not on your portfolio. In that case an inherited account typically shows up as reserves, if at all.
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. Consumer mortgage lending is available in 16 states, subject to underwriting.
Frequently Asked Questions
Can I use an inherited IRA to qualify for a mortgage?
Often yes, but it depends on the program and the lender’s review of the beneficiary account. On the qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path they count at 70%. The lender confirms how an inherited account is treated, subject to underwriting.
Do I have to sell the inherited brokerage account?
No. A brokerage account can count as an asset while you keep it. You may choose to sell some shares for closing funds, but there is no requirement to liquidate. Balances you spend cannot also count toward qualifying.
Can I apply before the inheritance is retitled?
Usually it is better to wait. Assets still in the decedent’s name or in probate are not yet yours, and many reviewers want the statement retitled first. Whether a program accepts an earlier stage is a guideline question.
Does a large withdrawal from an inherited IRA cause a problem?
It can, because withdrawals from an inherited traditional IRA are generally taxable income, and cash you pull out becomes a source you must document. Keeping the balance in place and counting it as an asset often avoids both issues.
Is inherited money treated differently from my own savings?
Slightly. On the depletion path, inheritance funds are excused from the standard seasoning rule. On the qualifier path, the 60-day seasoning and two months of statements still apply. In both cases the assets are documented, and the lender reviews the source.
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.
Investors who want the broader program framework can review how DSCR loans work.
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References
2. Kiplinger, IRS 10-Year Rule
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 to Refinance a Mortgage After Retiring With No W-2 Income · How Financially Independent Households Get a Mortgage Without Working · Can a Florida Buyer Qualify for a Mortgage on IRA Assets Without Withdrawals?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.