If most of your wealth is in retirement and investment accounts and very little shows up as monthly income, a conventional loan can still work. Freddie Mac asset depletion rules let a lender divide your net eligible assets by 240 months and treat the result as qualifying income. Fannie Mae uses a similar calculation, except it divides by your loan term.
The two agencies differ on the divisor, the down payment, the borrower’s age, and which accounts count. This guide covers what each one requires as of September 2026, what the same account balance produces under each formula, and where conventional rules end and a non-QM program takes over.
Key Takeaways
- Freddie Mac asset depletion divides net eligible assets by 240 months, so $1,000,000 in eligible assets produces $4,166.67 a month of qualifying income (Guide Section 5307.1, effective August 5, 2026).
- Fannie Mae divides net documented assets by the loan’s amortization term, so that same $1,000,000 produces $2,777.78 a month on a 30-year loan (Selling Guide B3-3.4-06).
- Freddie Mac caps these loans at 80% of the property’s value, meaning at least 20% down. Fannie Mae caps them at 70%, or 80% when the owner of the qualifying assets is at least 62 at closing.
- Under Freddie Mac rules, a bank or brokerage account counts only if at least one borrower who owns the account is 62 or older. Retirement accounts carry no age requirement.
- Fannie Mae counts only employment-related assets, including 401(k), IRA, SEP, and Keogh accounts, plus non-self-employed severance and lump-sum retirement distributions. Stock options, inheritances, lottery winnings, and proceeds from selling real estate are all excluded.
What Asset Depletion Means on a Conventional Loan
Neither agency uses the phrase “asset depletion.” Freddie Mac calls it assets as a basis for repayment of obligations. Fannie Mae calls it employment-related assets that qualify as income. Both rules do the same job. They turn accumulated savings into a monthly income amount an underwriter can run through a debt-to-income ratio.
Nothing is actually withdrawn. You are not committing to liquidate the account or to take monthly distributions from it. The lender documents the balance, subtracts what the transaction will consume, divides by a set number of months, and uses the result as income for qualifying purposes.
Knowing nothing has to be withdrawn changes the conversation for anyone told their income is too low to buy a home while holding seven figures in savings.
Freddie Mac Asset Depletion Guidelines, Step by Step
Freddie Mac’s version lives in Section 5307.1 of the Seller/Servicer Guide, and the current version took effect August 5, 2026. The loan itself has to clear three tests before any assets can be counted:
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- The property is a 1-unit or 2-unit primary residence, or a second home.
- The loan is a purchase, a no-cash-out refinance, or a Freddie Mac Enhanced Relief Refinance.
- The loan amount is no more than 80% of the property’s value, so the down payment starts at 20%.
The calculation itself runs in three steps. Total the eligible documented assets, subtract everything the transaction and the guide require you to subtract, then divide what remains by 240.
Which accounts count
Retirement accounts qualify when the account is IRS-recognized, the borrower is the sole owner, the borrower’s rights are fully vested, and the funds can be withdrawn in full without a penalty or an additional early distribution tax as of the note date. You can’t double-count an account you are already drawing on as income.
Bank accounts and securities are where the age rule appears. Those assets qualify only when at least one borrower who owns the account is at least 62 years old, and the funds have to sit in a U.S. or state-regulated institution and be verified in U.S. dollars. Lump-sum retirement distributions that land in a checking or brokerage account have their own requirements, and so do proceeds from the sale of a borrower’s business.
Cryptocurrency is excluded from the calculation entirely.
What comes out before the division
Freddie Mac subtracts the cash you must bring to closing, including the down payment and closing costs. Gift funds and borrowed funds come out next, along with any portion of the accounts pledged as collateral or otherwise encumbered. What remains is your net eligible assets, and only that amount gets divided by 240.
Documentation is lighter than most borrowers expect. A Streamlined Accept loan needs a one-month statement or a direct verification of deposit. Standard documentation calls for two months.
How Fannie Mae Asset Depletion Works
Fannie Mae’s rules are in Selling Guide B3-3.4-06, dated March 4, 2026, and they are narrower in two specific ways.
Eligibility is the bigger restriction. Only employment-related assets count: 401(k), IRA, SEP, and Keogh accounts; non-self-employed severance packages; and non-self-employed lump-sum retirement packages. The guide is explicit that stock options, non-vested restricted stock, lawsuits, lottery winnings, the sale of real estate, inheritance, divorce proceeds, and virtual currency are not eligible. Checking and savings balances are generally out too, unless the money in them came from an eligible employment-related asset.
Then there is the divisor. Fannie Mae asset depletion guidelines set no fixed number of months, so instead of the flat 240 Freddie Mac uses, Fannie Mae has the lender “divide ‘Net Documented Assets’ by the amortization term of the loan (in months).” On a 30-year loan that is 360 months. On a 15-year loan, it is 180, which doubles the qualifying income from the same account and is worth raising with your Mortgage Analyst before the term is locked in.
Net documented assets are the eligible balances minus any penalty that would apply if the account were distributed in full at the time of calculation, minus the funds used for down payment, closing costs, and required reserves. If a 10% early distribution penalty applies, it gets levied against both the cash coming out for closing and the remaining balance used to build the income stream.
One difference works in the borrower’s favor. Fannie Mae requires no minimum history of receipt and no documentation of continuance for this income, which is unusual for any qualifying income source.
The trade-offs show up on the loan itself. Purchases and limited cash-out refinances qualify, and nothing else does. The property has to be a principal residence or a second home. Financing stops at 70% of value unless the asset owner is at least 62, which raises it to 80%.
Freddie Mac vs. Fannie Mae, Side by Side
| Requirement | Freddie Mac (5307.1) | Fannie Mae (B3-3.4-06) | What it means for you |
|---|---|---|---|
| Divisor | 240 months | Amortization term, so 360 on a 30-year loan | Freddie Mac's fixed 240 produces 50% more qualifying income than a 30-year Fannie Mae calculation on the same balance |
| Minimum down payment | 20% (80% maximum financing) | 30%, or 20% if the asset owner is 62 or older | Under 62 with a Fannie Mae loan, plan on 30% down |
| Occupancy | 1-2 unit primary residence or second home | Principal residence or second home | Investment property is out at both agencies |
| Loan purpose | Purchase, no cash-out refinance, Enhanced Relief Refinance | Purchase, limited cash-out refinance | Neither agency allows cash-out on these rules |
| Eligible accounts | Retirement accounts, bank accounts and securities, lump-sum distributions, business sale proceeds | Employment-related assets only | A taxable brokerage account is eligible at Freddie Mac, not at Fannie Mae |
| Age requirement | 62 or older for bank and brokerage accounts; none for retirement accounts | None at 70% financing; 62 or older required for 80% | Turning 62 changes the math at both agencies |
| Cryptocurrency | Excluded | Not eligible | Move it well before you apply if you plan to use it for the down payment |
What the Divisor Does to Your Qualifying Income
The divisor moves the answer more than anything else in either rule set. Freddie Mac asset depletion holds at 240 months no matter which term you pick, while Fannie Mae ties the calculation to the term of the loan itself, which is why the same account produces three different amounts:
| Net eligible assets | Freddie Mac, 240 months | Fannie Mae, 30-year loan | Fannie Mae, 15-year loan |
|---|---|---|---|
| $500,000 | $2,083.33 | $1,388.89 | $2,777.78 |
| $1,000,000 | $4,166.67 | $2,777.78 | $5,555.56 |
| $1,500,000 | $6,250.00 | $4,166.67 | $8,333.33 |
| $2,000,000 | $8,333.33 | $5,555.56 | $11,111.11 |
Each monthly amount comes from the agency’s own formula applied to a round account balance, calculated by script rather than by hand. Fannie Mae publishes a worked example that follows the same arithmetic, showing $350,000 in net documented assets producing $972.22 a month on a 360-month term.
Qualifying income is only half of a debt-to-income ratio, so your car loan, credit cards, and the taxes and insurance on the new home all still count against it. On a 30-year loan, Freddie Mac’s shorter divisor is what gives the same balance more room.
Why Your Down Payment Lowers Your Qualifying Income
Both formulas subtract the cash you bring to closing before dividing, creating a tension worth understanding early. Put $250,000 of a $1,000,000 account toward the down payment and closing costs and the Freddie Mac calculation runs on $750,000, producing $3,125 a month instead of $4,166.67. Spending a quarter of the account costs you $1,041.67 a month of qualifying income.
At the same time, both agencies require real equity: 20% down at Freddie Mac, 30% at Fannie Mae for a borrower under 62. You cannot put less down to protect qualifying income, and you cannot put more down without giving some of that income up.
At Fannie Mae, required reserves come out of the same accounts, so the order you spend and hold in matters. Working out how much down payment your qualifying income can afford to lose, before you write an offer, is what keeps a strong asset position from turning into a tight approval.
Freddie Mac Assets as Income, and What Changes in February 2027
Freddie Mac has already published a revised version of Section 5307.1, effective February 3, 2027, announced in Bulletin 2026-10 as an update related to accumulated assets as income. Lenders are allowed to implement the new requirements before that mandatory date.
If you are planning a purchase in late 2026 or early 2027 using Freddie Mac assets as income, ask which version of Section 5307.1 your loan will be underwritten to, because the two versions can produce different amounts of qualifying income. We read these bulletins as they publish and can tell you how your accounts would be treated under either one.
When Conventional Rules Run Out
The gap in both rule sets is the same. A borrower under 62 who holds their wealth in a taxable brokerage account gets no credit for that account at Fannie Mae and none at Freddie Mac, even though the money is liquid.
Non-QM programs exist for that gap. An asset qualifier loan, a Non-QM product, sets the debt-to-income test aside and instead looks at your liquid assets against the loan amount, so no income or employment documents are required. Our asset depletion mortgage guide walks through how the non-QM version of this math works, and the full lineup sits on our non-QM programs page.
Conventional first is usually the right sequence, because pricing on an agency loan is better than pricing on a non-QM loan. The question is whether your accounts fit the agency boxes, and that takes about one conversation to answer.
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FAQs About Conventional Asset Depletion Rules
What is the asset depletion formula on a conventional loan?
Freddie Mac asset depletion divides net eligible assets by 240 months to produce the qualifying asset amount used in the debt-to-income ratio. Fannie Mae divides net documented assets by the loan’s amortization term, so 360 months on a 30-year loan. In both cases, net assets mean the documented balances minus the funds used for closing and any applicable withdrawal penalty.
Which agency gives more qualifying income from the same assets?
Freddie Mac’s 240-month divisor produces 50% more qualifying income than Fannie Mae’s 360-month divisor on a 30-year loan. Fannie Mae can produce more on a 15-year loan, where the divisor drops to 180 months, though the shorter term also raises the payment the ratio has to absorb.
Can I use a brokerage account for asset depletion if I am under 62?
Not under either agency’s conventional rules. Freddie Mac requires at least one borrower who owns a bank or securities account to be 62 or older, and Fannie Mae excludes non-employment-related accounts. Retirement accounts are the exception at Freddie Mac, which has no age requirement. A Non-QM asset qualifier loan is the usual route for a younger borrower with a taxable portfolio.
Do conventional asset depletion rules allow a cash-out refinance?
No. Freddie Mac limits these loans to purchases, no-cash-out refinances, and Enhanced Relief Refinance mortgages. Fannie Mae limits them to purchases and limited cash-out refinances. A rate-and-term refinance that lowers your payment still works under both rule sets, and a higher rate than the one you have now can still be the right move when the new payment is lower.
Does a shorter loan term change my qualifying income?
Yes, at Fannie Mae. Because the divisor is the amortization term, a 15-year loan divides by 180 months instead of 360, which doubles the income from the same balance. Freddie Mac’s divisor stays at 240 months regardless of the term you choose.
Do I still have to show employment or income?
Fannie Mae requires no minimum history of receipt and no evidence of continuance for employment-related asset income. Freddie Mac still asks that the loan application include employment and income information, even when the borrower qualifies on assets alone. The work happens in documenting the accounts themselves.
Ready to See What Your Accounts Qualify You For?
Conventional asset depletion rules reward preparation. Which accounts you use, how much you put down, which term you pick, and which agency buys your loan all change how much qualifying income your accounts produce, and each choice is easier to make before you are under contract.
Ready to see what your accounts qualify you for? Contact JVM Lending at (855) 855-4491 or apply online.
NOTE: Program rules in this guide come from the Freddie Mac Single-Family Seller/Servicer Guide and the Fannie Mae Selling Guide as published on September 21, 2026. Both agencies update their guides on a rolling schedule, and Freddie Mac has a revised version of this section dated February 3, 2027. Sources are linked at the bottom. JVM Lending is not a tax professional or financial advisor. Withdrawal penalties, distribution rules, and the tax treatment of retirement accounts depend on your situation, and we are glad to refer you to a professional who can advise on them.
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