How You Can Use Your Assets to Qualify for a Mortgage
(Also known as “asset depletion”)
When you think about qualifying for a mortgage, you probably picture pay stubs, W-2s, tax returns, and employment history. But what if you don’t have a traditional paycheck—or your income doesn’t reflect the financial strength you really have? That’s where assets as income (or “asset depletion”) comes in. If you have liquid assets like savings, investments or retirement funds, you might be able to use them to qualify for a home loan—either under conventional guidelines or a non-QM option. At JPAL Mortgage, we help Michigan borrowers tap this route when it makes sense.
Here’s what you need to know.
1. What Does “Assets as Income” or “Asset Depletion” Mean?
Asset depletion is a way of converting your assets—cash, brokerage accounts, retirement accounts, etc.—into a calculated monthly income figure that lenders can use to determine your ability to repay a mortgage. Rather than relying solely on traditional income, the lender calculates how long your assets will last (or will “deplete”) and uses that to supplement or replace regular income. For example, if you have $360,000 in eligible assets and the lender uses a 360-month period (30 years), your “asset-based income” might be $1,000 per month ($360,000 ÷ 360) under one method. Blueprint+2Finance Strategists+2
2. What Do Fannie Mae and Freddie Mac Say About It?
Fannie Mae
In the Fannie Mae Selling Guide under Asset Assessment, they explain how assets must be verified and can be considered for repayment of obligations. Selling Guide+1
Additionally, in their “Other Sources of Income” section, Fannie specifies how various income streams (including income derived from assets) can be documented. Selling Guide+1
Freddie Mac
Freddie’s Guide explicitly states: “Assets that will be used by the Borrower for the repayment of their monthly obligations may be used to qualify the Borrower for the Mortgage.” Freddie Mac Guide+1
Various summary sources explain Freddie Mac’s asset‐depletion method: e.g., divide the net eligible assets by 240 months in some cases. Blueprint+1
3. How Does the Calculation Work?
Here’s a simplified version of how lenders often do it:
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Total your eligible assets: liquid savings, investment accounts, certain retirement funds (as allowable). Finance Strategists+1
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Subtract any amounts not available: down payment, closing costs, reserve requirements, or penalties for non-accessible funds.
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Divide the remainder by a set number of months to turn it into a monthly income number. For example:
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Fannie may use 360 months (30 years) as a depletion period. Blueprint
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Add that figure to any traditional income (if applicable) and then calculate qualifying ratios (DTI, etc.) like any mortgage.
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Document carefully: You’ll need statements, verification that the assets are unrestricted, not borrowed funds, etc. Blueprint+1
4. Who Can Benefit from Asset Depletion Qualifying?
This method is especially helpful for:
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Retirees with substantial savings but modest monthly income.
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Business owners or self-employed borrowers whose tax returns show lower income than their true ability to pay.
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Investors or individuals relocating who have liquid assets but not regular wage income.
If you fall into one of those categories, using “assets as income” could open the door to homeownership when traditional income alone wouldn’t.
5. What Are the Conventional vs. Non-QM Options?
Conventional (Fannie/Freddie) Asset-Depletion Path
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If your asset‐based income meets their formula and you satisfy other guidelines, you can get a conforming loan.
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Because this uses standard agency sellable loans, rates and terms may be more favorable than alternative options.
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You must follow agency rules precisely (document assets, follow LTV/DTI limits, etc.).
Non-QM (“Non-Qualified Mortgage”) Options
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These are non-agency loans that allow greater flexibility (sometimes allow higher DTI, use broader asset types, or alternative documentation).
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They tend to carry slightly higher interest rates or fees because they’re considered higher risk.
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For borrowers with complex or non-traditional income/assets, they provide useful alternatives when agency product is not a fit.
At JPAL Mortgage, we offer both conventional asset‐depletion qualification and non-QM options, tailored for Michigan buyers who have strong assets but low “paycheck” income.
6. What Are the Risks and What Should You Watch For?
Using assets as income is a powerful tool—but it’s not without considerations:
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You’re using up (or “depleting”) your assets over time. If you draw heavily, you may reduce reserves for retirement or unexpected costs.
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Some asset types may not count (real estate holdings, restricted accounts, or borrowed funds) or may be discounted.
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Non-QM loans may have higher interest rates or less favorable terms.
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Because the income is derived from assets, the underwriting may require stronger documentation or stricter review.
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Regulations require that you still show ability to repay; using assets doesn’t waive all standard underwriting. occ.gov
- Guidelines can change. It’s always important to seek advice from your loan officer regarding current available programs.
Ready to Explore This Route?
If you’re in Michigan and have significant assets but your paycheck or tax-return income doesn’t reflect your full ability to repay a loan, let’s talk. At JPAL Mortgage, we’ll review your asset portfolio, walk you through conventional or non-QM options, and help you determine if asset-depletion qualifying makes sense for your home-buying goals.
Also…Claim your FREE appraisal reimbursement from JPAL!
We want to ease your home purchase with a starting gift. Simply fill out this form and when you finance a home with us, we’ll reimburse the cost of your appraisal (up to $600) at closing.** We’ll respond within 30 minutes of filling out the form.
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**All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. Appraisal reimbursement available for loans closed with JPAL Mortgage LLC and applied at closing. NMLS ID #2189752 | Equal Housing Opportunity.
Quick FAQ: Using Assets to Qualify for a Mortgage
Q1: What is asset-based qualifying?
It’s when lenders consider your savings, investments, and other liquid assets as income to help you qualify for a mortgage.
Q2: Which assets count?
Savings/checking accounts, stocks, bonds, CDs, and retirement accounts are the most common, but verify with your loan officer to be certain.
Q3: How is “income” calculated from assets?
Lenders subtract debts from your eligible assets, then divide the balance over a set period to create a monthly income figure.
Q4: Can I use retirement accounts?
Yes—many retirement accounts can count, even if you’re not currently withdrawing from them. Rules vary by lender.
Q5: Are there limits?
Assets must be liquid or easily accessible, and lenders may have minimum balance requirements.
Q6: Which loans allow this?
Both conventional and certain non-QM loans can use assets as income.
Q7: Why choose JPAL Mortgage for asset qualifying?
We’ve used these programs several times! We analyze your assets, run calculations, and guide you to the mortgage program that fits your financial situation—making the process smooth and stress-free.
Q8: Who benefits most?
Retirees, investors, self-employed individuals, and anyone with significant assets but limited traditional income.
Let’s Connect!
All loans require complete underwriting approval, including satisfactory appraisal and clear title work. Interest rates and closing costs are subject to change. Appraisal reimbursement available for loans closed with JPAL Mortgage LLC and applied at closing. NMLS ID #2189752 | Equal Housing Opportunity.