Have plenty of money in savings or investments, but not enough traditional monthly income to qualify for the mortgage you want?
A major update from Freddie Mac could make that easier.
Freddie Mac has expanded its asset depletion mortgage guidelines, allowing more borrowers to use accumulated assets as qualifying income when purchasing or refinancing a home.
The official changes become mandatory for eligible mortgages with settlement dates on or after February 3, 2027, but Freddie Mac is allowing lenders to adopt the new guidelines immediately.
That could create new opportunities for retirees, investors, business owners and other borrowers who have significant assets but comparatively limited traditional income.
What Is an Asset Depletion Mortgage?
Asset depletion allows certain eligible assets to be converted into a monthly income amount for mortgage qualification.
Instead of looking only at income such as salary, Social Security or self-employment earnings, the lender may be able to use funds held in eligible accounts as another source of qualifying income.
Under Freddie Mac’s updated calculation:
Net Eligible Assets ÷ 180 = Monthly Qualifying Income
Previously, Freddie Mac used a 240-month divisor. The new 180-month calculation generates more qualifying income from the same amount of assets.
How Much More Income Can Your Assets Generate?
Here is a simple example.
Imagine that after required deductions, a borrower has $900,000 in net eligible assets.
Under the previous calculation:
$900,000 ÷ 240 = $3,750 per month
Under the new Freddie Mac calculation:
$900,000 ÷ 180 = $5,000 per month
That is $1,250 more qualifying income every month without the borrower actually earning another dollar.
The change from 240 months to 180 months means the same eligible asset balance can generate approximately 33% more qualifying monthly income.
Freddie Mac Removes the Age Requirement for Certain Assets
This may be one of the most important changes.
Previously, Freddie Mac placed age restrictions on the use of certain depository accounts and securities.
Under the updated guidelines, that age restriction has been removed for eligible depository accounts and securities.
That means a younger borrower with substantial savings or investments may potentially use those assets to qualify.
For example, someone in their 40s who owns a large brokerage portfolio but has recently retired, sold a business or reduced their traditional employment income may now have another conventional mortgage option to consider.
Are Retirement Accounts Included?
Retirement accounts work differently.
Accounts such as:
- 401(k)s
- IRAs
- Similar retirement accounts
generally must be accessible to the borrower without an early-withdrawal penalty before they can be used under the applicable asset-income calculation.
For many retirement accounts, unrestricted access begins around age 59½, although the exact treatment depends on the account and borrower circumstances. Freddie Mac’s new removal of the age restriction for depository accounts and securities does not eliminate the accessibility requirements for retirement assets.
Investment Properties Are Now Eligible
Another major change is the expansion of eligible occupancy types.
Under the updated guidelines, accumulated assets may potentially be used as qualifying income for:
- Primary residences
- Second homes
- Investment properties
Previously, Freddie Mac’s asset-based qualification rules were limited to primary residences and second homes.
For asset-heavy real estate investors, this could create an entirely new conventional financing option.
Freddie Mac Removes the Previous 80% LTV Limit
The previous guidelines generally limited these mortgages to a maximum 80% loan-to-value ratio.
That specific restriction is being removed.
Instead, the mortgage can follow Freddie Mac’s normal LTV requirements for the applicable transaction and occupancy type.
In plain English, using asset depletion no longer automatically means you need at least 20% down simply because you are qualifying with assets.
That could be particularly useful for borrowers who have substantial assets but do not want to liquidate a large portion of those assets for their down payment.
Freddie Mac Establishes a $30,000 Minimum
Under the updated guidelines, borrowers must have at least $30,000 in net eligible assets available for the asset-income calculation.
The important word here is net.
The amount sitting in your account is not necessarily the amount that gets divided by 180.
Freddie Mac requires certain amounts to be deducted before calculating qualifying income, including funds needed to complete the mortgage transaction.
Who Could Benefit From the New Asset Depletion Guidelines?
These changes may be particularly useful for borrowers who are financially strong but do not fit neatly into the traditional W-2 income box.
Examples could include:
- Retirees
- Early retirees
- Investors
- Business owners
- Borrowers who recently sold a business
- Borrowers with substantial brokerage accounts
- People living primarily from investments
- High-net-worth borrowers with limited taxable income
Having a strong balance sheet has always mattered when getting a mortgage. These changes simply give lenders another way to potentially turn that financial strength into qualifying income.
Asset Depletion vs. Traditional Mortgage Income
Asset depletion does not necessarily replace your other income.
Depending on the loan, qualifying asset income may be combined with other acceptable sources such as employment income, Social Security, pension income or rental income.
That can be powerful.
For example, a borrower may already have enough regular income to qualify for a $500,000 home but fall short of qualifying for the $650,000 property they actually want.
Converting eligible assets into additional monthly qualifying income could potentially help bridge that gap.
When Do the New Freddie Mac Guidelines Start?
Freddie Mac’s new accumulated-assets-as-income requirements become mandatory for eligible mortgages with settlement dates on or after:
February 3, 2027
However, Freddie Mac expressly allows lenders to implement the changes before that date.
That distinction matters because not every mortgage lender adopts optional guideline changes at the same time.
One lender may offer the expanded program immediately while another may wait until the mandatory implementation date.
Could Asset Depletion Help You Qualify for More?
If you have significant savings or investments but your traditional income does not fully represent your financial position, the expanded Freddie Mac asset depletion guidelines may create another path to mortgage qualification.
At Houzd Mortgage, we can look beyond just one loan program or lender.
We can review your income, assets, down payment and overall financial picture to determine whether conventional asset depletion or another asset-based mortgage strategy makes sense.
If you’re buying a home in Utah and wondering whether your assets could help you qualify, reach out to our Houzd Mortgage team and we can run the numbers.