The Quick Read: Yes, an IRA usually counts on an asset qualifier mortgage, and it counts at 90% of its balance if you are under 59½ or 100% once you reach 59½, because this path drives lender review on assets alone and your IRA stays invested and untouched, subject to underwriting and the lender’s review of your statements. On the separate asset depletion path, the same IRA counts at 70% at any age.
- The asset qualifier path asks whether eligible assets equal or exceed the entire loan amount.
- Counting an IRA is not the same as withdrawing from it.
- The asset depletion path turns assets into monthly income instead, and it discounts retirement money more heavily.
- Dollars used for the down payment or closing costs cannot be counted a second time.
- Investment property is only available on the depletion path, at lower leverage.
Two Paths, Two Different Answers
The answer depends on which path you use, because the two paths treat your IRA differently. A borrower is qualified on one path at a time, and the two should never be blended.
The asset qualifier path covers the whole loan with eligible assets. Lenders document no employment and no income on this path. They add up your accounts at their credit percentages, and the total must equal or exceed the loan amount. It applies to principal residences and second homes, with loans up to $4,000,000 through select programs.
The asset depletion path works differently. Usable assets, after haircuts, are divided by 60 months. The result becomes a monthly qualifying income. That income then runs through a debt-to-income test with the new housing payment and your other debts. Loans on this path run from $125,000 to $3,500,000, and it is the only asset path that allows investment property.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| What it tests | Assets cover the whole loan | Assets become monthly income |
| IRA or 401(k), under 59½ | Counts at 90% | Counts at 70% |
| IRA or 401(k), 59½ or older | Counts at 100% | Counts at 70% |
| Brokerage or securities | 100% | 80% |
| Cash, savings, CDs | 100% | 100% |
| Statements | Two months, 60 days seasoning | One within 45 days, others 120 days old |
Most borrowers with large retirement balances do best on the qualifier path, because the credit percentages are higher. The depletion path makes sense when your assets are enough to produce income but do not cover the loan outright. It also fits when you want to buy an investment property.
How an IRA Is Counted, Step by Step
The lender starts with the statement balance and applies a credit percentage by account type and age. It subtracts any dollars already committed elsewhere. It then runs the path’s test. Across the wholesale network, this is the same sequence on nearly every file.
1. Confirm the account. Traditional, Roth, SEP and SIMPLE IRAs are generally the account types lenders look at. The balance must be yours, vested and accessible.
2. Pull statements. The qualifier path wants two months of statements for each qualifying account, with 60 days of seasoning. The depletion path wants statements at least 120 days old plus the most recent one within 45 days.
3. Apply the percentage. On the qualifier path that is 90% under 59½ and 100% after. On the depletion path it is 70% at any age.
4. Net out other uses. Money that goes to the down payment or closing costs leaves the pool before the test is run.
5. Run the test. Qualifier path: do usable assets equal or exceed the loan? Depletion path: does the derived monthly income carry the payment and other debts?
Here is a qualifier-path illustration. Say the loan is $800,000. The borrower has $330,000 in brokerage accounts (100% counts, so $330,000), a $300,000 IRA and she is under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). Usable assets total $800,000, which matches the loan. The file is reviewed on assets alone. If she were 59½ or older, the IRA would count at $300,000, and the file would carry a $30,000 cushion.
The depletion path gives a different picture. Take a $1,000,000 IRA (70% counts, so $700,000) and $800,000 in cash (100%). Usable assets are $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. These figures are illustrative, and each lender’s own calculation governs.
Counting an IRA Is Not Withdrawing From It
Showing an IRA balance to a lender does not trigger a distribution. The balance stays invested, and no tax event occurs from the review alone.
This is the most common misunderstanding. Many borrowers assume they must liquidate retirement money to use it. They do not, on either path. Lendmire’s piece Do You Have to Liquidate Assets to Reserve an Asset Qualifier Mortgage? covers the same point for reserves.
The discount exists because of what a withdrawal would cost. The IRS says IRA owners can take distributions at any time without proving hardship. Those distributions are taxable income, and before age 59½ a 10% additional tax may apply unless an exception is met. A retirement dollar is therefore worth less than a checking dollar, and underwriters price that in. That is why the qualifier path gives 90% credit under 59½ and full credit afterward.
Taking money out to bring cash to closing is a different matter. That is a real distribution with real tax cost. A borrower should not liquidate retirement funds just to satisfy a lender, and the plan should be built so that other cash covers the closing. Tax treatment varies; consult a qualified professional before acting.
Do You Need to Be Retired or Take Distributions?
No. Neither path requires you to be retired, and neither requires you to take monthly distributions from the IRA. The lender looks at the balance and the account rules, not your employment status. On the qualifier path, no employment or income is documented at all.
Age matters in only one place. On the qualifier path, the credit percentage steps up from 90% to 100% at 59½. On the depletion path, retirement accounts count at 70% regardless of age. Some borrowers assume the opposite, that a younger borrower is penalized more on the depletion path. The published figures do not change by age there.
IRA Edge Cases Worth Checking Before You Apply
Several situations come up often enough to plan for. Programs change and every file is underwritten individually, so treat these as questions to settle before applying.
Roth IRAs. The IRS notes that qualified Roth distributions are not taxed. Tax preparers also explain that Roth contributions can generally be withdrawn first. That is a tax point, though, and the lender’s percentages apply to the retirement balance as a whole. Ask whether the program reviews Roth balances any differently.
Self-directed IRAs. An IRA that holds real estate, private notes or similar assets is a different animal. Illiquid holdings generally will not count. Only balances that can be shown as seasoned, accessible funds in a regulated account are likely to help. Confirm this with the program before relying on it.
Inherited IRAs. Ownership and access rules differ here, and the lender will want to see the account titled correctly. This is a pre-review question, not one to guess at.
Joint and spousal accounts. A spouse’s separate IRA generally does not count unless that spouse is a borrower on the loan. The account owner must be on the file.
Double counting. One dollar cannot do two jobs. If the IRA balance is used to meet the loan test, it cannot also be set aside for reserves or cash to close.
Recent rollovers or large deposits. Moving money between accounts shortly before applying can raise sourcing questions and may break seasoning. The depletion path excuses sale-of-business, inheritance and legal-settlement funds from the 120-day statement age. The qualifier path still wants 60 days of seasoning.
Assets that do not count. On the depletion path, custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units are not eligible. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds 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.
Using the Same IRA for Closing and Qualifying
You can use one IRA for both jobs, but the math shrinks. Anything withdrawn for the down payment or closing costs is no longer in the account, and it was taxed on the way out. The remaining balance is what counts toward the test.
On the qualifier path, this matters a great deal. Eligible assets must equal or exceed the entire loan. Suppose the borrower in the earlier illustration pulled $50,000 from her IRA for closing costs. The IRA would then hold $250,000, and at 90% it would count for $225,000. The file would fall $45,000 short of the $800,000 test. Planning which account funds the closing is therefore part of choosing the path.
Reserves follow the same logic. On the qualifier path, no reserves are required at or below 75% loan-to-value, and above that the lender sets them. Lendmire’s article How Many Months of Reserves Does an Asset Qualifier Mortgage Require? goes deeper on that point. The depletion path has no published reserve months.
What About Leverage and Credit?
Your IRA can clear the asset test and the loan can still fail on leverage or credit. The published figures are ceilings and floors, never offers, and every one is subject to underwriting.
- Asset qualifier path: up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home. The minimum credit score is 600.
- Asset depletion path, principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance. The lender’s own score and loan-amount matrix sets the credit requirement. A first-time investor needs a 700 score.
- Asset depletion path, investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out.
- Depletion minimums: qualified assets of 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 must also be at least $250,000.
Cash-out proceeds never count as qualifying assets. Credit history still matters, with a 0x30x12 housing history expected and one 30-day late in the last twelve months considered case by case. These are consumer mortgages, so the loan is documented and reviewed as such. Assets are documented on both paths. An asset qualifier mortgage skips income documentation, not documentation.
The Investor Angle: Where DSCR Fits
If the goal is a rental, a DSCR loan is usually the better tool, and the IRA plays a supporting role. 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.
On a DSCR file, the loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your IRA does not become income. It shows up as reserves or liquidity, and the lender decides how much of it counts. Investors can read the complete DSCR loans guide for how that coverage test works. Select lenders in the network will review coverage below 1.00, but loan-to-value and terms adjust when they do.
That leaves a clear decision.
- Buying a home to live in or a second home, with a large IRA and little income: the asset qualifier path is the first one to price, because retirement money counts at up to 100%.
- Buying an investment property with assets but thin tax-return income: the depletion path is the asset route, at 65% on a purchase, and DSCR is the alternative when rent covers the payment.
- Rental with strong coverage: DSCR usually fits better, and the IRA works as backup liquidity.
The flip point is the property. If the rent comfortably covers the monthly obligation, DSCR avoids converting your IRA into income at a 70% haircut. If it does not, an asset-based path may be the only way to qualify without income documents.
Before You Apply: A Short Checklist
- Gather full statements for every account you plan to use, showing the owner’s name and balance.
- Confirm account age and seasoning against the path you plan to use.
- Decide which account funds the down payment and closing, and keep that money out of the qualifying pool.
- Avoid moving large sums between accounts right before applying.
- Check whether your date of birth puts you over or under 59½ at application.
- Ask in advance about any self-directed, inherited or jointly titled accounts.
A common mistake is assuming the IRA counts at full face value on every path. The second is counting the same dollars twice. The third is treating a qualifier-path answer as if it applied to the depletion path. Each one can shrink the usable total by tens or hundreds of thousands of dollars.
Key Terms Defined
Asset qualifier mortgage: a loan where eligible assets, after credit percentages, equal or exceed the entire loan amount, with no employment or income documented.
Asset depletion: a method that divides usable assets by 60 months to produce a qualifying monthly income, which is then tested against debt-to-income.
Haircut: the share of an account’s balance that a lender does not count, which reflects tax cost or market risk.
Seasoning: the length of time funds have sat in an account, shown through statements.
Debt-to-income ratio: the share of monthly income that goes to the housing payment and other debts.
Frequently Asked Questions
Does a Roth IRA count the same as a traditional IRA?
Both are retirement accounts, and the published percentages apply to retirement balances. The tax rules differ, since qualified Roth distributions are not taxed, but the lender’s percentage does not change on that basis in the figures above. Confirm with the program how your specific Roth balance will be reviewed.
Will I owe taxes if my IRA counts toward the loan?
No. Counting the balance is not a distribution. Taxes arise only when money actually leaves the account, such as a withdrawal for a down payment. Tax treatment varies; consult a qualified professional.
Can I use my IRA and keep it invested?
Yes. On both paths the account stays where it is. The lender reviews your statements and applies a percentage. You do not sell holdings or move the money to qualify.
Does my spouse’s IRA count if it is in their name only?
Generally not, unless the spouse is a borrower on the loan. The account owner needs to be on the file. If both of you are borrowers, accounts can combine, subject to underwriting.
Is an asset qualifier loan the same as an asset depletion loan?
No. The qualifier path asks whether assets cover the whole loan and documents no income. The depletion path converts assets into monthly income and runs it through a debt-to-income test. Percentages, loan amounts and eligible property types differ between the two.
Next Step
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. Lendmire is a broker that places these consumer loans through select lenders in its network, in 16 states, and approval is not guaranteed.
A retirement balance that looks modest at 70% on one path can look strong at 100% on the other. Running both versions against the same statements is usually the fastest way to learn which one your assets support.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. IRS – IRA FAQs, Distributions
2. IRS bulletin – Distributions before 59½
3. H&R Block – IRA withdrawal rules
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Do Cash-Out Proceeds Count as Assets on an Asset Depletion Refinance? · Asset Qualifier Mortgage vs Bank Statement Mortgage · How Lenders Count Assets Toward an Asset Depletion Mortgage
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.