The Quick Read: Someone two years from retirement can qualify in one of three ways. They can use the paycheck they still have, use their savings and investments as the qualifying source, or buy a rental that is reviewed on its own rent. The right choice depends on whether you will live in the home or rent it out, and on how much of your wealth sits in accounts the lender will count. Each path is reviewed on its own terms, subject to lender guidelines and underwriting.
- A paycheck makes a standard loan easier to document, but it is not required on the asset-based paths.
- The asset qualifier path covers the entire loan with eligible assets and documents no employment or income.
- The asset depletion path turns assets into monthly income by dividing usable assets by 60 months.
- A rental purchase uses a DSCR loan, which looks at the property’s rent instead of your income.
- Retirement accounts count, but for less than cash, and the rules change at age 59½.
Why Two Years Out Is a Useful Window
Two years before retirement you still have documentable income, and you also have time to organize your assets. That combination gives you the most options. Waiting until after you stop working does not close the door, but it changes which door you walk through.
Underwriters like paychecks because a pay stub is simple to verify. After retirement, income comes from pensions, Social Security, distributions, or the assets themselves. Each takes more explanation. Many pre-retirees do not need to rush, but the two-year mark is a good time to decide which path fits and to start seasoning the money you plan to use.
Notice what is missing from that picture: a mandatory waiting period. Programs differ, and some lenders want a stretch of history for certain income types. Across the wholesale network Lendmire works with, the asset-based programs do not depend on how long you have been retired at all.
Key Terms Defined
Asset qualifier path: A way to qualify where eligible assets, after the credit percentages, equal or exceed the entire loan amount. No employment or income is documented.
Asset depletion path: A way to qualify where usable assets are divided by 60 months to create a monthly qualifying income. That income runs through the debt-to-income test.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Seasoning: How long money has sat in your account before the lender will count it.
DSCR: Debt service coverage ratio. It compares a rental’s monthly rent with its full monthly payment, including principal, interest, taxes, insurance, and any HOA dues.
Non-QM: A mortgage that falls outside standard agency guidelines. It still has to be underwritten with care, but it can use different evidence of repayment ability.
Step One: Decide How You Will Use the Property
Everything else follows from use. If you will live in the home, or use it as a second home, you need a consumer mortgage. If you will rent it to tenants, you need a rental 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. That also means a DSCR loan cannot finance the home you plan to retire in. Claiming otherwise would be an occupancy misrepresentation, and it is a mistake that sinks files.
Many pre-retirees want both: a place to live and a rental that pays them in retirement. Those are two loans, and each runs through its own lane. Lendmire’s complete DSCR loans guide covers the rental side in full.
How Underwriting Treats Each Path
Here is how each lane works in practice. Lenders in the network apply them one at a time, so you qualify on one path per loan.
| Factor | Asset qualifier | Asset depletion | DSCR rental |
|---|---|---|---|
| Use | Residence or second home | Residence, second home, investment | Investment only |
| What qualifies you | Assets cover whole loan | Assets become income | Property rent |
| Income documented | None | Derived from assets | Not the test |
| Employment needed | No | No, if assets are the only source | No |
The asset qualifier path
On this path, the lender adds up your eligible assets after applying credit percentages. If the total equals or exceeds the whole loan, you qualify on assets alone. No employment or income is documented. The loan is still a consumer mortgage reviewed individually, and the assets are fully documented.
Here is how the credit percentages work:
- Brokerage accounts, certificates of deposit, money market, and savings count at 100%.
- 401(k) and IRA balances count at 90% if you are under 59½, and 100% once you reach 59½.
- Accounts combine, so you can mix types.
Take an $800,000 loan. Say you hold $330,000 in brokerage accounts (100% counts as $330,000), $300,000 in a 401(k) while under 59½ (90% counts as $270,000), and $200,000 in savings (100% counts as $200,000). That adds up to $800,000 of usable assets, so the loan is reviewed on assets alone. This is illustrative arithmetic, and the lender’s own calculation governs.
Leverage on this path goes up to 80% loan-to-value on a purchase and 75% on a refinance of a principal residence or second home. Loans run up to $4,000,000. The credit floor is 600, subject to underwriting. Seasoning is 60 days, with two months of statements for each qualifying account. Reserves are not required at or below 75% loan-to-value, and above that the lender sets them.
The asset depletion path
This path turns your balances into income. The lender applies haircuts, adds up the usable total, and divides by 60 months. The result must carry the full housing payment and your other debts through the DTI test.
The haircuts are different from the qualifier table:
- 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%.
Run an example. Suppose you hold $1,500,000 in securities (80% counts as $1,200,000) and $300,000 in cash (100% counts as $300,000). Usable assets are $1,500,000. Divided by 60 months, that creates $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts.
Several minimums apply. 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. Asset income can instead supplement documented income, up to a 45% DTI. In that case the minimum-assets rule is waived.
This is the path that can finance an investment property on a consumer basis, with lower leverage. Loans run from $125,000 to $3,500,000. Credit follows the lender’s matrix, and a first-time investor needs 700. Statements must be at least 120 days old at application, plus a recent one within 45 days. Sale-of-business, inheritance, and legal-settlement funds are excused from that seasoning.
The DSCR rental path
When the property will be a rental, the lender looks at rent, not your paycheck or pension. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Credit, reserves, and an appraisal still apply.
Some select lenders in the network offer programs below 1.00 coverage, but leverage and terms adjust when they do. The loan is also underwritten for a property that carries itself, which matters if your earned income is about to drop.
What Leverage to Expect on Each Path
Leverage depends on the path and on what the property is. These are ceilings, not offers, and all are subject to underwriting.
| Scenario | Max LTV |
|---|---|
| Qualifier, purchase | 80% |
| Qualifier, refinance | 75% |
| Depletion, residence or second home purchase or rate-and-term | 80% |
| Depletion, residence or second home cash-out | 60% |
| Depletion, investment property purchase or rate-and-term | 65% |
| Depletion, investment property cash-out | 60% |
Cash-out proceeds never count as qualifying assets on the depletion path. Whether the qualifier path allows cash-out at all is the lender’s call and is not published, so ask before you plan around it.
Why Your Retirement Account Is Not Free Cash
Retirement balances count, but not like checking balances. The IRS applies a 10% additional tax to most early IRA withdrawals before age 59½ (IRS Topic 557), and tax treatment varies, so consult a qualified professional before relying on any withdrawal.
That penalty is why programs discount retirement money. On the qualifier path, retirement funds receive a reduced credit before age 59½ and full credit after. On the depletion path, the credit is also reduced at any age. If you are two years from 59½, the qualifier math improves on its own. Waiting a little can move a 401(k) from reduced credit to full credit.
Where the General Rule Breaks
Unusual assets. Cryptocurrency, precious metals, collectibles, and pledged or borrowed 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, and the lender reviews the source.
Ineligible accounts. On the depletion path, custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units do not count. Funds from non-regulated financial companies are out as well.
Recent credit trouble. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path. One 30-day late in the last twelve months is considered case by case.
Business accounts. Only your ownership share counts, and it needs documentation.
Mixed goals. A borrower can hold a DSCR rental loan and a separate asset-based loan on a residence. Each file gets its own review, and one does not rescue the other.
Fully documented loans. If you prefer a standard full-documentation loan, your current paycheck helps. Lendmire’s piece How to Use Two Years of Tax Returns for a Jumbo Loan Before Selling explains how that history gets used.
A Two-Year Timeline
Planning matters more than speed here. Think in milestones, not deadlines.
| Months out | What to do |
|---|---|
| 24 | Choose property use. Check credit. Inventory every account. |
| 18 | Move funds into regulated accounts you plan to use. Stop commingling. |
| 12 | Confirm statements are seasoned. Compare the paths on your numbers. |
| 6 | Avoid new debt and large transfers. Review leverage options. |
| 3 | Gather fresh statements. Line up the property’s appraisal and rent. |
The seasoning rule is the quiet one. Funds need to sit in documented accounts before the lender counts them. Starting early means that rule never becomes a problem.
Mistakes That Derail Files
- Moving money between accounts right before applying, which resets seasoning.
- Counting on a crypto balance that the program does not list as eligible.
- Planning to live in a property financed with a DSCR loan.
- Assuming a retirement account counts at 100% when you are under 59½.
- Opening new credit cards or car loans while the file is open.
- Treating an approval as proof you can afford the payment. Lenders review ability to repay, which is a different question from comfort. The federal Ability-to-Repay rule requires verification of only the income or assets a lender actually relies on (Federal Register). That is why asset-based files lean so heavily on statements.
Should You Do It? A Quick Stress Test
A lender’s approval is not a budget. Before you commit, run your own test.
1. Assume your paycheck is gone. List only pension, Social Security, rent, and sustainable portfolio withdrawals.
2. Ask whether that income carries the payment, taxes, insurance, and upkeep with room left over.
3. Check what the loan does to your cushion. Using assets to qualify does not mean spending them.
4. For a rental, confirm the rent covers the full payment with a margin for vacancy. A DSCR comfortably above the lender’s floor is a better sign than a bare pass.
5. Plan for the asset-based paths needing strong balances after closing, not just before.
For short-term rental plans, rules can vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income.
Special Situations
Self-employed pre-retirees. A business owner who is selling a company may use sale proceeds on the depletion path, because those funds are excused from the standard seasoning.
Phased retirement. If you keep part-time income, the depletion path lets asset income supplement it up to a 45% DTI.
Couples retiring at different times. Each borrower’s accounts can combine, subject to documentation, so a working spouse’s paycheck and a retiring spouse’s assets can sit in one file.
Frequently Asked Questions
Do I have to tell my lender I’m retiring?
Yes, if the program relies on income from your job. On the asset qualifier path, no employment is documented, so your retirement date does not drive the decision. On a paycheck-based loan, the lender verifies what you earn, and a known upcoming change matters. Being open early prevents surprises late in the file.
Can I qualify with no income at all?
Yes, on the asset qualifier path, if eligible assets cover the whole loan. That does not mean no documentation. Statements, seasoning, credit, and the property are all reviewed, subject to underwriting and the lender’s ability-to-repay review.
Does my 401(k) count the same as savings?
No. On the qualifier path, a 401(k) or IRA counts at 90% under 59½ and 100% at 59½ or older. On the depletion path it counts at 70% at any age. Savings, money market, and certificates of deposit count at 100% on both.
Can I use a DSCR loan for the home I’ll retire in?
No. DSCR loans require non-owner occupancy. A residence needs a consumer program, such as one of the asset-based paths. A DSCR loan fits when you are buying a rental to produce income in retirement.
What if I’m under the asset minimums for depletion?
Then that path may not fit. It requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan, and never less than $250,000 liquid when assets are your only income. The qualifier path, a smaller loan, or a rental structure may be worth comparing.
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 loans through select lenders in its network, and its consumer mortgage lending is licensed in 16 states. Programs change, and every file is underwritten individually, so nothing here is a commitment to lend. Reach the team at 828-256-2183 or through Lendmire’s quote page.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
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.
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References
1. IRS Topic 557, additional tax on early distributions from IRAs
2. Federal Register, CFPB Ability-to-Repay and Qualified Mortgage final 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 Document an Asset Qualifier Mortgage · How an Asset Qualifier Jumbo Mortgage Works · How an Assets-Only Mortgage Works
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.