The Quick Read: A Pennsylvania retiree can finance a smaller home by qualifying on verified assets instead of paycheck income. Either the assets cover the whole loan, or they are converted into a monthly qualifying income. The assets are documented in full, and every figure stays subject to underwriting.
- The asset qualifier path counts eligible assets against the entire loan and documents no employment or income.
- The asset depletion path divides usable assets by 60 months to create a qualifying income, which then runs through a debt-to-income test.
- A borrower is qualified on one path at a time, never both.
- This is a consumer mortgage for a home you live in. It is not a rental loan.
- Retirement accounts count, but at a reduced share on most paths.
What Is an Asset Qualifier Mortgage?
An asset qualifier mortgage is a loan that is reviewed around what you own instead of what you earn. Lenders also call the family asset-based, asset utilization, or asset depletion lending. These are non-QM loans, meaning they fall outside the standard mortgage box that relies on pay stubs and traditional personal-income documentation.
Across the wholesale network Lendmire works with, the programs come in two versions. Keeping them straight is the most important step here.
- The asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented.
- The asset depletion path. Your eligible assets, after haircuts, are divided by 60 months. The result is a monthly qualifying income that must carry the full housing payment and your other debts.
Both are offered through select programs for principal residences and second homes, subject to underwriting. Your credit, the property, and the loan amount still matter.
One fork trips up many retirees. The smaller home you will live in cannot be financed with a DSCR loan. 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. Your portfolio helps a DSCR file as reserves and strength, but it does not count as income there. A home you will live in needs an income-substitute lane like the two above. Lendmire’s complete DSCR loans guide covers the rental side in full.
Why Do Downsizers Use One Instead of Paying Cash?
Many do it to keep their portfolio working. A retiree who sells a large home often has the cash to buy the next one outright. Paying cash, though, can pull a large share of liquid wealth into one building.
A mortgage keeps that wealth invested and available. It also leaves room for medical costs, family help, or a market dip. Selling investments to fund a purchase can also trigger tax bills, so some retirees prefer to borrow against the portfolio’s strength instead.
The tradeoff is real. A mortgage in retirement is a monthly obligation that continues whether the portfolio is up or down. If markets fall, the asset pool that supported the loan shrinks, but the loan balance does not. Some retirees do better paying cash. This article lays out both sides so you can decide on facts.
How Does Qualifying Work, Step by Step?
Underwriting follows the same logic on both paths. The lender builds a pool of usable assets, tests it against the loan, and documents everything.
1. Inventory your assets. List brokerage, savings, money market, CDs, and retirement accounts. Accounts you own combine.
2. Apply the credit percentages. Each asset type counts at a share of its balance. The tables below show them.
3. Check seasoning and statements. The lender wants the money to have been in your accounts for a set period, and wants statements to prove it.
4. Run the path test. On the asset qualifier path, the usable pool must meet or exceed the loan. On the asset depletion path, the pool divided by 60 becomes monthly income.
5. Test debts on the depletion path. The new housing payment, including taxes, insurance, and any HOA dues, plus other debts, must fit within the derived income.
6. Order the appraisal, title, and insurance as on any home purchase.
On the depletion path, asset-derived income can also supplement documented income, such as a pension or Social Security, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Leverage differs by path and by the loan’s purpose. On the asset qualifier path, loan-to-value (LTV, the loan as a share of the home’s value) goes up to 80% on a purchase and 75% on a refinance of a principal residence or second home. On the asset depletion path, a principal residence or second home goes up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Loan amounts reach $4,000,000 on the qualifier path and run from $125,000 to $3,500,000 on the depletion path.
Credit counts too. The qualifier path has a 600 minimum score. The depletion path follows the lender’s matrix. Housing history of 0x30x12 is standard, and one late in the last twelve months is considered case by case.
What Do the Numbers Look Like for a Retired Couple?
These examples are illustrative. The lender’s own calculation governs.
Path one, asset qualifier. Picture an early-retired couple, under 59½, buying a smaller home with an $800,000 loan. They hold the following:
- $330,000 in brokerage accounts, counted at 100%, or $330,000.
- $300,000 in a 401(k), counted at 90% under age 59½, or $270,000.
- $200,000 in savings, counted at 100%, or $200,000.
Usable assets total $800,000. That equals the loan, so they qualify on assets alone, subject to underwriting. At 59½ or older, the same 401(k) counts at 100%.
Path two, asset depletion. Say another household holds $1,500,000 in securities, counted at 80%, or $1,200,000. They also hold $300,000 in cash, counted at 100%. Usable assets are $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then carries the housing payment and their other debts through the debt-to-income test.
Notice what changed. On the first path the assets must cover the loan. On the second, the assets must produce enough income to carry the payment. A retiree with a modest loan relative to assets may fit the first. A retiree with a larger loan, or pension income to add, may fit the second.
Which Assets Count?
Each path treats assets differently. The shares below are the portion of the balance that counts, subject to underwriting.
Asset qualifier path
| Asset type | Share that counts |
|---|---|
| Brokerage accounts | 100% |
| CDs, money market, savings | 100% |
| 401(k) and IRA, under 59½ | 90% |
| 401(k) and IRA, 59½ or older | 100% |
Asset depletion path
| Asset type | Share that counts |
|---|---|
| Cash accounts and CDs | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts, any age | 70% |
| Real-estate equity | 60% |
Some assets do not count on the depletion path at all. These include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units. Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Seasoning rules differ as well. 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. That route excuses sale-of-business, inheritance, and legal-settlement funds from the seasoning rule.
How Do You Handle the Sale of Your Current Home?
Sale proceeds are the piece most retirees ask about first. Proceeds can become part of your asset pool once they sit in a regulated account, and the lender reviews where the money came from.
Sequence matters. If the sale closes before the purchase, the proceeds are a documentable balance with a clear paper trail. If the purchase closes first, the lender may want the sale contract or settlement statement, and the file gets more complicated. Plan the order with your agent and your loan officer before you list.
Whether freshly deposited sale proceeds must also meet the seasoning period depends on the path and the lender, so ask early. Statements that show money arriving from a closing are normal, but large recent deposits get a written explanation.
Tax treatment varies; the federal home-sale exclusion described in IRS Publication 523 and by Nolo carries ownership-and-use tests, so consult a qualified professional before relying on it.
Where the General Rule Breaks
The step-by-step above fits a typical file. These cases bend it.
Assets that sit outside your name. Funds in a trust, or belonging to a spouse who is not on the loan, usually need access and ownership proof. Expect extra paperwork. Retirees with trusts should raise this at the start.
A thin asset pool relative to the loan. The depletion path requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. It also requires at least $250,000 in liquid assets when assets are the only income source. A retiree with a large home sale but a small portfolio may not meet it.
Early withdrawals. A 401(k) at 59½ or older counts in full on the qualifier path. Below that age, it counts at 90%. On the depletion path it counts at 70% at any age. The haircut is an underwriting device. It is not a prediction of your tax bill.
Keeping the old house as a rental. This changes the file. A property you rent out is investment property, and its financing runs through a DSCR loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your new home runs through the asset path. Keeping them separate avoids mixing rental cash flow with your personal debt test.
Credit events. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
Assets are also a recognized basis for repayment under the federal ability-to-repay rule. The CFPB’s Regulation Z page says the lender must verify the assets it relies on and keep written policies for how it treats them. That is why asset files carry more paper than a retiree might expect.
Is It Right for You?
The asset qualifier path often fits when your liquid assets can cover the whole loan and you want to skip income documentation. The depletion path often fits when you have a large portfolio, some pension or Social Security income, and want assets to fill the gap. Neither fits if your wealth is mostly illiquid.
| Option | Best when | Main tradeoff |
|---|---|---|
| Asset qualifier path | Assets cover the whole loan | Pool must equal the loan |
| Asset depletion path | Large portfolio, modest income | Haircuts and debt test apply |
| Paying cash | Ample liquid wealth, no wish for debt | Ties up liquidity |
| Keep old home as rental | Rent covers its payment | Separate DSCR file needed |
Lendmire’s piece Do You Have to Liquidate Assets to Reserve an Asset Qualifier Mortgage? explains how the portfolio stays in place.
What Documents Should You Gather?
Start collecting these before you apply:
- Two months of statements for every account you plan to count.
- Older statements if you may use the depletion path.
- A written explanation for any large recent deposit or transfer.
- Closing paperwork from the sale of your current home, if the proceeds count.
- Pension, Social Security, or required-distribution award letters, if you plan to add them.
- Proof of ownership for any trust or jointly held accounts.
- Photo ID and the usual purchase paperwork.
What Are the Common Stumbling Blocks?
Files most often stall on timing and documentation. A balance moved between accounts just before applying can break the paper trail. An asset class that does not count, such as cash on hand, can shrink the pool. A purchase that closes before the sale leaves the lender asking more questions.
Pennsylvania buyers should also plan for the practical side of a smaller home. Condo and HOA review, a 55-plus community’s rules, and age-in-place features all affect the appraisal and the monthly cost. These are property questions, not program questions, so check them before you make an offer.
Key Terms Defined
Asset qualifier path: The version where eligible assets must equal or exceed the entire loan, with no income documented.
Asset depletion path: The version where usable assets divided by 60 months become a monthly qualifying income.
Haircut: The share of an asset’s balance the lender does not count.
Seasoning: The period money must have sat in your accounts before the lender counts it.
Non-QM: A loan that falls outside standard mortgage rules and is underwritten to its own guidelines.
Debt-to-income ratio: Your monthly debts, including the new payment, compared to your qualifying income.
Frequently Asked Questions
Does my age affect whether I can get one of these loans?
Age is not the test. Credit, assets, the property, and the loan amount are. Age does matter for one detail: 401(k) and IRA balances count at 90% under 59½ and at 100% at 59½ or older on the qualifier path, subject to underwriting.
Do I have to sell my investments to use the asset depletion path?
No. The lender converts your assets into a notional monthly income. You keep them invested. You will still document them with statements, and the lender reviews how long the money has been in your accounts.
Can I add Social Security or a pension to the asset income?
On the depletion path, yes. Asset-derived income can supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived when it does. Qualifier-path files document no income at all.
Does the smaller home have to be my primary residence?
Not always. Both paths cover principal residences and second homes, subject to underwriting. The depletion path also reaches investment property, at lower leverage. A rental purchase more often goes through a DSCR loan instead.
Can couples combine accounts?
Accounts you own combine into one pool. A spouse not on the loan, or funds held in a trust, usually need ownership and access documentation. Raise this early, because it shapes which path fits.
Next Steps
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 mortgage broker. It arranges these loans through select lenders in its network, and consumer mortgage lending is licensed in 16 states, Pennsylvania included. Program details change, and every file is underwritten individually. Talk with your tax professional before you sell, since the gain from a long-held Pennsylvania home deserves its own plan.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. Nolo: the $250,000/$500,000 home sale tax exclusion
3. CFPB Regulation Z, Section 1026.43
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 an Asset Depletion Mortgage Works · Can You Get an Asset Depletion Mortgage After a Foreclosure or Short Sale? · Does Real Estate Equity Count on an Asset Qualifier Mortgage?
Guides: Asset-Based Mortgage in Pennsylvania
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
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.