The Quick Read: Yes, but the lump sum counts as an asset, not as monthly income, and it can support a loan either by covering the loan outright or by being converted into a qualifying income figure, subject to underwriting and lender guidelines.
- On the asset qualifier path, eligible assets must equal or exceed the whole loan, and no employment or income is documented.
- On the asset depletion path, usable assets are divided by 60 months to create qualifying income that runs through the debt-to-income test.
- Where the money sits matters: cash in a bank account and a rollover IRA are credited differently.
- A check paid to you generally arrives with 20% withheld, so the headline offer and the countable amount differ.
- These figures apply through select programs in Lendmire’s network, and every file is underwritten individually.
A pension lump sum is one-time money. Underwriters want recurring income, so a lump sum does not get treated like a monthly pension check. It gets treated like a balance. That is good news for a buyer whose paycheck has stopped but whose accounts are large.
This article is written for a Pennsylvania borrower. The program figures below do not change by state. Lendmire is a broker. It arranges these loans through select lenders in its network, and the lender’s own calculation governs.
Why a Lump Sum Isn’t Treated Like a Pension Check
A monthly pension is income. A lump sum is a one-time payout of the plan’s value. Once the plan pays it out, the stream is gone, and the money becomes an asset on your statements.
Most lenders won’t count the same dollars as both. If you take the lump sum, the monthly benefit stops. If you keep the monthly benefit, there is no lump sum to count. Pick one when you plan the purchase, and don’t plan on both.
Asset-based programs exist for this exact profile. Think of a retiree, an early-retired professional, or a household living off a portfolio. Balances are large and documented income is not. Lendmire’s asset-based mortgage program is built around that profile. It uses no traditional personal-income documentation, pay stubs or employment verification. It is still fully underwritten, and the assets are documented with statements.
Two Paths, One at a Time
A borrower is reviewed on one path per loan. Don’t blend the two tables.
| Factor | Asset qualifier | Asset depletion |
|---|---|---|
| How it works | Assets cover the whole loan | Assets become monthly income |
| Income documented | None | Derived income, run through DTI |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Purchase leverage | Up to 80% | Up to 80% (primary or second home) |
| Refinance leverage | Up to 75% | 80% rate-and-term, 60% cash-out |
| Credit | 600 minimum | The lender’s matrix |
On the depletion path, an investment property is capped at 65% on a purchase or rate-and-term refinance, and 60% on a cash-out. Cash-out proceeds never count as qualifying assets. On the qualifier path, whether cash-out is allowed is set by the lender and is not published, so no cash-out figure applies there.
Lenders review credit as part of every file. A first-time investor on the depletion path needs a 700 score. Housing history is 0x30x12, and one late payment in the past year is considered case by case. All of this is subject to underwriting.
Where Your Money Sits Decides What Counts
The same pension dollars get different credit depending on the account they land in. Here is how it works across the two paths.
| Where the lump sum sits | Qualifier path credit | Depletion path credit |
|---|---|---|
| Savings or money market | 100% | 100% (cash accounts) |
| Certificate of deposit | 100% | 100% |
| Brokerage account | 100% | 80% (securities) |
| Rollover IRA, under 59½ | 90% | 70% |
| Rollover IRA, 59½ or older | 100% | 70% |
Two things stand out. On the qualifier path, a rollover IRA at 59½ or older counts in full. On the depletion path, retirement balances count at 70% at any age.
Cash looks cleaner, but it has its own cost. Moving it into a bank account usually means taking a distribution rather than a direct rollover. That is where the withholding question comes in.
What Actually Lands in Your Account
A lump sum rarely arrives at its headline number. IRS Topic 413 explains that eligible rollover distributions paid to you are generally subject to mandatory 20% withholding. A direct rollover, where the plan sends the money straight to an IRA, avoids that withholding.
If you take the check and later want to roll over the full amount, you have to replace the withheld portion from other funds. The IRS rollover guidance also describes a 60-day rollover window, and a possible waiver in some cases beyond your control. Miss it, and the unrolled part stays a distribution.
Here is how the two routes compare for a buyer.
| Factor | Direct rollover to IRA | Check paid to you |
|---|---|---|
| Withholding | Generally none | Generally 20% |
| Where funds sit | Retirement account | Your bank account |
| Credit on qualifier path | 90% or 100% by age | 100% as savings |
| Credit on depletion path | 70% | 100% as cash |
Tax treatment varies by plan and by how the money is moved, so consult a qualified tax professional before electing. Make that call before you sign the election form, not after.
Down Payment or Qualifying Assets? Not Both
The same dollars cannot work twice. Money spent on the down payment and closing costs is gone from your post-closing balance. On the depletion path, the lender subtracts those funds before it divides by 60. On the qualifier path, you need eligible assets at least equal to the loan itself.
So you choose how to use the lump sum.
1. Use it to carry the loan. On the qualifier path, the assets stay in the accounts and the loan is covered by them.
2. Use it to create income. On the depletion path, usable assets divide by 60 months into income.
3. Use it for the cash to close. That cash comes out of what counts, so run the numbers both ways first.
Two Illustrative Examples
These shapes show how the percentages work. They are illustrative only, and the lender’s calculation governs.
On the qualifier path, picture an $800,000 loan. A buyer holds $330,000 in brokerage accounts, which count at 100%, so $330,000. The same buyer holds $300,000 in a 401(k) under 59½, which counts at 90%, so $270,000. Add $200,000 in savings at 100%. The total is $800,000 of usable assets, which meets the loan amount on assets alone.
On the depletion path, picture $1,500,000 in securities at 80%, which is $1,200,000. Add $300,000 in cash at 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.
A pension lump sum that sits in a rollover IRA belongs on the retirement line of whichever path you use. A lump sum held in savings belongs on the cash or savings line.
Seasoning and Statements
Assets have to be documented, and they have to have been in place long enough.
- Qualifier path: 60 days of seasoning, and two months of statements for each qualifying account.
- Depletion path: 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 the depletion-path seasoning. A pension lump sum is not on that list. If you just received one, expect the lender to review its source and how long it has been in the account. A direct rollover that has sat in an IRA with statements is easier to document than cash that arrived last week.
Large new deposits draw questions. Keep the plan’s distribution statement, your election form, and the account statements that show the money moving. The lender also reviews your credit profile and the property.
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 your only income source, you also need at least $250,000 in liquid assets. If asset income only supplements documented income, it can be used up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Lump Sum or Keep the Monthly Pension?
This is the real decision, and it is bigger than the mortgage.
Taking the monthly benefit gives you steady income. Taking the lump sum gives you a large balance and ends the monthly stream. For some buyers, the large balance is what makes the mortgage work. For others, the monthly income is worth more than the extra borrowing power.
Look at it as a qualification question alongside the retirement question. Ask the plan administrator whether a lump sum is offered at all. Not every plan pays one. Then compare what the balance can do on each path against the loan you want.
A Pennsylvania Buyer, Step by Step
Take a Pennsylvania retiree who is about to elect a lump sum and wants to buy a primary residence. Here is the order that keeps the file clean.
1. Ask the plan administrator about the lump sum. Confirm the amount, the election deadline, and whether a direct rollover is available.
2. Decide where the money lands. Compare a direct rollover with a check paid to you, using the tables above.
3. Pick the path. If your eligible assets cover the loan outright, the qualifier path fits. If you want income derived from assets, the depletion path fits.
4. Season the funds. Keep statements in the accounts the lender will count.
5. Gather documents. The distribution paperwork, the election form, account statements, and a short explanation of any large deposit.
6. Talk to a tax professional. Do it before the election is final.
Pennsylvania state tax rules are a separate question from the loan. They are context for the plan decision, not a program parameter, and your tax professional can answer them for your plan.
Buying a Rental With the Lump Sum
The asset-based program can apply to an investment property on the depletion path, at 65% on a purchase and 60% on a cash-out, as noted above. That loan is business-purpose.
Most pure rental purchases go a different way. Business-purpose rental financing qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your pension lump sum is not income there. It shows up as down payment, reserves, and source-of-funds proof.
That means savings can help with cash to close and cushion, but they cannot rescue a property whose rent does not cover its obligation. Decide first whether the property’s income works. Then decide how to hold the pension funds.
Key Terms Defined
Pension lump sum: A one-time payout of a pension plan’s value, paid in place of monthly benefits.
Direct rollover: A transfer of plan money straight into an IRA, so it never passes through your hands.
Eligible rollover distribution: A plan payout that can be rolled over, which is generally subject to 20% withholding if paid to you.
Asset qualifier: A path where eligible assets, after credit percentages, must equal or exceed the whole loan.
Asset depletion: A path where usable assets divided by 60 months become qualifying monthly income.
Seasoning: The time funds must sit in an account before a lender counts them.
Common Mistakes
- Planning on the headline lump sum instead of the net amount after withholding.
- Rolling over a check without replacing the withheld portion.
- Counting the same dollars as both down payment and qualifying assets.
- Counting the monthly pension and the lump sum together.
- Moving funds between accounts with no paper trail.
- Assuming retirement balances count at face value on the depletion path, where they count at 70%.
- Treating cryptocurrency, precious metals or collectibles as counting at a percentage. They 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.
The consumer-lending side matters here too. Under the federal ability-to-repay rule, a creditor may consider assets other than the dwelling that secures the loan, but the rule does not set comprehensive underwriting standards. That is why the lender’s own review of your assets governs the file.
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.
Frequently Asked Questions
Can I get a mortgage with only a lump sum and no job?
Yes, through an asset-based program, subject to underwriting. On the qualifier path, eligible assets must cover the whole loan, and no employment or income is documented. On the depletion path, your assets become derived income through the debt-to-income test.
Does a rollover IRA count?
Yes. On the qualifier path, an IRA counts at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. Statements must show the seasoning each path requires.
What if taxes were withheld?
Then the countable amount is lower than the headline lump sum. A check paid to you generally arrives with 20% withheld, per IRS Topic 413. A direct rollover generally avoids the withholding, so plan the route before you elect.
Can I use it for the down payment and still qualify?
Possibly, but the same dollars cannot count twice. Funds spent on the down payment and closing costs come out of what counts as qualifying assets. Run the numbers with and without the cash to close before you commit.
What if my plan won’t pay a lump sum?
Then there is no lump sum to count, and your monthly benefit is the stream you have. Ask the plan administrator before you plan around it. If you hold other eligible accounts, those can still be used on either path.
Lendmire’s asset-based mortgage in Pennsylvania page presents the program for Pennsylvania borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages for self-employed and high-net-worth borrowers are arranged through wholesale lenders on primary residences, second homes and investment properties; every file is underwritten by the lender under its program guidelines. 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
1. IRS Topic 413, Rollovers from retirement plans
2. IRS, Rollovers of retirement plan and IRA distributions
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Florida Buyer Qualify for a Mortgage on IRA Assets Without Withdrawals? · How to Refinance a Pennsylvania Mortgage After Retiring With No W-2 Income · How Pennsylvania Retirees Downsize on an Asset Qualifier Mortgage
Guides: Asset-Based Mortgage in Pennsylvania
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.