Overview
An asset-based or asset-depletion loan turns your liquid assets, such as savings, investment and retirement accounts, into qualifying income using a lender formula.
It suits retirees and high-net-worth borrowers who have significant assets but limited regular income.
How an asset-based loan works
An asset-based loan, also called asset depletion or asset utilization, uses what you own, rather than a paycheck, to figure qualifying income. The lender totals your eligible liquid assets, subtracts what you need for the down payment, closing costs and reserves, and may reduce some account types. It then spreads the remainder over a set number of months to create a monthly income figure for the debt-to-income calculation. You do not have to withdraw the assets counted toward income.
Federal ability-to-repay rules allow this approach: lenders may base repayment ability on income, on assets other than the home being financed, or on both, as long as the amounts are verified with reliable records. Fannie Mae has a narrower version for certain retirement and severance assets, and Non-QM lenders offer broader programs under their own guidelines.
See also
Who an asset-based loan can fit
These programs suit people with substantial savings and investments relative to their regular income. Homeowners 62 and older who want to stay in their home and draw on its equity may also want to compare a reverse mortgage, which works very differently and is covered on its own page.
Examples of who an asset-based loan can fit:
- A retiree living on withdrawals from investment accounts, with a modest pension or Social Security income.
- A business owner who recently sold the company and has not started a new income stream.
- A self-employed borrower with uneven earnings but large brokerage balances.
- A borrower who received significant liquid assets, for example from an inheritance, a life insurance payout or a divorce settlement.
See also
Eligibility for borrowers living on their assets
Asset programs differ widely from lender to lender, so the specific guide matters a great deal. Fannie Mae's version of asset-based income adds its own limits. It applies only to purchases and limited cash-out refinances of a principal residence or second home, and only to employment-related assets such as retirement accounts and severance or lump-sum retirement payouts.
Elements common to lender programs:
- Assets must be in your name, or every co-owner must also be a borrower.
- Accounts are usually held at U.S. financial institutions and documented with recent statements.
- Large recent deposits must be sourced, and some programs require assets to be held for a set period.
- Some programs exclude business accounts from the calculation.
Credit standards on an asset-based loan
Credit still matters on an asset-based loan. Lenders review your credit reports and scores, set program minimums and weigh late payments and past credit events. Because borrowers using these programs are often retired or between careers, some have little recent credit activity, and how a lender treats a limited history varies.
A past bankruptcy, foreclosure or short sale is subject to each program's waiting periods, which vary by lender. If you have had a recent credit event, your loan officer may compare a credit event program that can also take your assets into account.
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Equity and asset use at closing
The money you bring to closing comes out of the same pool used to calculate income, so a larger down payment leaves fewer assets to convert into income. Lenders subtract funds for the down payment, closing costs and required reserves before running the calculation. Each program also sets a maximum loan-to-value ratio, and Fannie Mae's version ties its limit partly to whether the asset owner is at least 62 at closing.
This creates a balancing act: putting more down shrinks the loan but also shrinks qualifying income. Your loan officer can run several combinations so you can see the tradeoff with real figures before you decide.
Which assets count and how income is calculated
Eligible assets commonly include checking, savings and money market accounts, certificates of deposit, stocks, bonds and mutual funds, and retirement accounts you can access. Many lenders count cash at full value and reduce investments and retirement accounts to allow for market swings, taxes and early-withdrawal penalties. Fannie Mae's version subtracts any penalty that would apply to a full withdrawal.
The net figure is divided by a number of months that the program sets. Fannie Mae divides by the loan's amortization term in months, while Non-QM lenders choose their own schedules, so the same savings can produce noticeably different income at different lenders. Ask your loan officer which schedule the program uses.
Documents you will usually provide:
- Recent statements for each account, with every page
- Proof that you can withdraw from retirement accounts being counted
- Sources for large recent deposits
- Trust documents, if assets are held in a trust you control
Debt-to-income with asset income
Asset-depletion programs generally calculate a debt-to-income ratio just as they would with wages. The monthly figure from your assets, plus any pension, Social Security or other documented income, is compared with your housing payment and other debts. For a home you live in or a second home, Regulation Z requires the ratio or a residual income test to be considered and leaves the maximum to the lender.
Other debts still count in full, and the result depends heavily on the divisor and the reductions the lender applies. If the ratio is tight, adding documented income or changing how much you put down can shift the result.
Property types for asset-based loans
Fannie Mae limits its asset-income path to a principal residence or second home. Non-QM lenders vary: some offer asset programs only for homes you will occupy, while others also allow investment property. Within those limits, eligible homes usually include single-family houses, condos, townhomes and small multi-unit buildings.
For a vacation home or a place near family, a second home loan using asset income can be one option, and the lender will confirm you plan to use the home yourself. For a rental where the rent can cover the payment, a DSCR loan qualifies on the property instead and may be worth comparing.
Why borrowers with large savings consider asset-based loans
For borrowers whose wealth sits in accounts rather than paychecks, asset qualification can describe their real ability to pay more accurately than a tax return.
- Many lenders do not require a job or a set income history.
- Assets counted toward income can stay invested instead of being sold.
- Many lenders let you add Social Security, a pension or other documented income.
- Fannie Mae offers a version for certain retirement assets that may be worth comparing.
- It can help during transitions, such as after selling a business.
Asset reductions, lender formulas and other tradeoffs
Asset-based loans usually cost more than conventional loans and may require more equity. Counting retirement funds in the calculation does not withdraw them, but if you later draw on those accounts to make payments, taxes and penalties could apply, and market declines could shrink the cushion you were counting on.
The calculation is also sensitive. A lender that divides over fewer months shows more income, while one that applies bigger reductions shows less, and the money you use at closing reduces the pool. Some programs exclude business accounts, and many need recent large deposits explained, which can be complicated after selling property or a business.
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Asset-based loans compared with related options
Asset-based options overlap in purpose but work very differently. The table compares features only.
A conventional asset path may be worth checking first if your assets are mainly retirement accounts and the home is a principal residence or second home. Freddie Mac also has a path for using accumulated assets as income, which it revised in 2026; ask your loan officer whether a lender offers it and how it compares. A reverse mortgage is a different product: it is only for older homeowners, its balance grows over time and it is usually repaid when the home is sold.
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| Feature | Asset-based (Non-QM) | Fannie Mae asset income | Reverse mortgage (HECM) |
|---|---|---|---|
| What it uses | Liquid assets turned into income | Retirement or severance assets turned into income | Home equity |
| Monthly mortgage payments | Required | Required | Not required; taxes and insurance still due |
| Eligible assets | Cash, investments, retirement accounts | Employment-related assets such as retirement accounts | Not based on assets |
| Occupancy | Varies; some allow rentals | Principal residence or second home | Home you live in |
| Age | No requirement | No requirement, but age affects limits | Older homeowners only |
| Rules set by | Each lender | Fannie Mae | HUD, through FHA insurance |
Compare with
Asset-based scenarios: a retired couple, a founder, a retirement account
Illustrations only; outcomes depend on the lender and your full file.
- A retired couple with a pension and large brokerage and IRA balances wants a smaller home. The lender adds asset-based income to the pension to calculate their ratio.
- A founder sold her company last year, and the proceeds sit in a brokerage account documented with the sale agreement. Fannie Mae's version is limited to employment-related assets, so her loan officer compares Freddie Mac's accumulated-assets path, where a lender offers it, with Non-QM asset programs.
- A borrower in his fifties with a large 401(k) learns that one lender counts retirement funds at a reduced value before retirement age, while another uses a different reduction.
- A widower wants a condo near his grandchildren as a second home. He uses an asset program that allows second homes, with his Social Security added to the calculation.
Documenting assets and what happens after you apply
Timing depends on how many accounts are involved and how quickly the sources of large deposits can be documented. Avoid moving money between accounts during the process without telling your loan officer. Typical steps:
- Your loan officer lists your accounts and asks how each is titled and whether any funds are restricted.
- You provide recent statements for every account being used, plus explanations for large deposits.
- The lender applies its reductions and divisor, then runs the debt-to-income ratio.
- The appraisal and title work proceed.
- Updated statements may be requested before closing, especially if markets have moved.
Asset-based myths about selling investments and counting every dollar
Reviews slow down when assets were moved or deposited recently without clear sources, are held jointly with someone not on the loan, or cannot be withdrawn. Common myths:
- Myth: I have to cash out my investments. Reality: Assets counted toward income can stay where they are; only the money used at closing has to come out.
- Myth: Every dollar counts. Reality: Funds for closing and reserves are subtracted, and investments and retirement accounts are often reduced.
- Myth: The home's value can stand in for assets. Reality: For a home you live in or a second home, federal rules do not let a lender rely on the value of the home being financed to decide you can repay.
- Myth: All lenders use the same formula. Reality: Divisors, reductions and eligible accounts vary widely.
- Myth: Crypto counts like cash. Reality: Fannie Mae excludes virtual currency, and Non-QM treatment varies.
Common questions
14 questions
Do I have to spend my assets to get an asset-based loan?
No. The lender uses your eligible assets to calculate a qualifying income, and you do not have to withdraw them. Money you use for the down payment, closing costs and required reserves is subtracted first, and some accounts, such as retirement accounts, may count at a reduced value.
Which assets can count toward an asset-based loan?
At many Non-QM lenders, checking, savings, money market accounts and CDs can count, along with stocks, bonds, mutual funds and retirement accounts, which often count at a reduced value. The assets must be documented with recent statements and sourced or seasoned for a period the lender sets.
Is there a conventional version of asset-based qualifying?
Yes, with limits. Fannie Mae lets lenders turn employment-related assets, such as 401(k) and IRA balances or a lump-sum severance or retirement payout, into qualifying income on a purchase or limited cash-out refinance of a primary residence or second home; ordinary savings and virtual currency generally do not count. Freddie Mac revised its accumulated-assets-as-income path in 2026, and it can also count savings and investment accounts. Lenders choose whether to offer either path, and Non-QM asset-based programs set their own rules.
Is an asset-based loan only for retirees?
No. Retirees living on savings and investments use it often, but it can also fit self-employed borrowers with uneven income and other borrowers with substantial liquid assets. Your loan officer can compare it with qualifying on your regular income.
Can I use an asset-based loan for an investment property?
At some lenders, yes. Others limit asset-based programs to primary residences and second homes, which is also the rule for Fannie Mae's conventional version. Your loan officer can check which programs match the property you are buying.
Is there a loan for a home I live in that does not verify income?
Federal Ability-to-Repay rules require lenders to verify your income or assets with reliable records before making a mortgage on a home you live in, and the home's value alone cannot be the basis. If your income is hard to document, programs that qualify on documented assets or on bank statements may fit. Loans that qualify on rent instead of personal income, such as DSCR loans, are only for investment properties.
How do lenders turn my assets into monthly income?
They start with eligible balances, subtract money needed for closing and reserves, apply any reductions for investments or retirement accounts, and divide what is left by a number of months the program sets. Fannie Mae uses the loan's amortization term in months, while Non-QM lenders pick their own schedules. Dividing by fewer months produces more monthly income from the same assets, so compare programs with real figures before you choose.
How long do my assets need to be in my accounts?
Programs set their own seasoning rules. Many want recent statements covering a few months and an explanation, with sourcing, for any large deposit, while others want assets held for a longer period before they count. Money from a recent sale, inheritance or settlement may be usable once it is deposited and documented, depending on the program, and the lender will want the paperwork that shows where it came from.
Why do retirement accounts count at a lower value?
Withdrawals from many retirement accounts are taxable, and taking money out before retirement age can trigger penalties. To reflect that, Fannie Mae subtracts any penalty that would apply to a full withdrawal, and many Non-QM lenders count retirement balances at a reduced value, sometimes depending on your age. You also need unrestricted access to the funds; money you cannot withdraw, such as unvested balances, generally does not count.
Can assets held jointly with someone who is not on the loan count?
Usually not in full. Fannie Mae requires assets used for this calculation to be owned by the borrower alone, or for every co-owner to be a borrower on the loan, and Non-QM lenders generally want the assets in the borrower's name as well. If a relative's name is on an account with yours, ask your loan officer whether adding that person as a co-borrower makes sense and what it would mean for both of you.
Do cryptocurrency or business accounts count as assets?
Fannie Mae does not count virtual currency for its asset-income calculation, and Non-QM lenders differ. Some programs accept only assets held at U.S. financial institutions in U.S. dollars, which leaves out holdings that have not been converted and deposited. Business accounts vary too: some asset programs exclude them entirely. Check how the specific program treats these holdings before you count on them.
Is an asset-based loan the same as a reverse mortgage?
No. An asset-based loan is a regular mortgage with monthly payments, qualified using your savings and investments. A reverse mortgage, most commonly the FHA-insured Home Equity Conversion Mortgage, is only for homeowners 62 and older, requires no monthly mortgage payments while you live in the home, and its balance grows over time and is usually repaid when the home is sold. Property taxes, insurance and upkeep still apply. Your loan officer can compare both.
What if the stock market drops while my loan is in process?
Lenders base the calculation on recent statements, and some ask for updated statements before closing. If your investments lose value, the income figure can fall with them, which may change how much you can borrow. Building in some margin, and keeping the money you need for closing in cash rather than in volatile investments, can reduce the chance of a last-minute surprise.
This page explains how this type of loan generally works. Programs, guidelines and availability vary by lender and change often. Contact Ruben to see which options are available for your scenario today.