Short answer (Dusty Lloyd, Orange County mortgage broker, October 2026): Often, yes, if the assets and the loan meet program rules. Retirees and other clients with large portfolios can qualify using their assets as income: the lender divides eligible assets by a set number of months and counts the result as monthly income. Under Freddie Mac's new formula, $1.8 million in eligible assets counts as $10,000 a month.
Here's a situation financial advisors run into: a client wants to buy a home in retirement, has plenty of money, and a bank has told them their income is too low. That client usually has strong credit and substantial savings. Traditional underwriting just looks for a paycheck, and they don't have one.
Patty owns a $3 Million home in Redlands. Her husband passed away years ago and left her a beautiful 6000 sqft home and she works as a nurse. Her Financial Advisor found an opportunity to invest $1 Million and the solution was to get it out of her Free and Clear Home. She didn't make enough money so we were able to deplete the assets in her $2 Million Brokerage Account and get her the money she needed. Her nursing income would have only approved her for a $600,000 loan and not met her needs.
How asset-based qualifying works
The lender takes a client's eligible assets, divides by a fixed number of months, and counts the result as qualifying income. Take a client with $2 million saved who puts $200,000 down: that leaves $1.8 million in eligible assets.
Program | How income is calculated | Key limits | $1.8M in eligible assets becomes |
|---|---|---|---|
Freddie Mac (new rule) | Net eligible assets ÷ 180 months | LPA "Accept" loans; purchase or no cash-out refinance; most accounts seasoned 12 months; $30,000 minimum | $10,000/month |
Fannie Mae | Employment-related assets (401(k), IRA, SEP, severance) after any early-withdrawal penalty ÷ loan term in months | Purchase or limited cash-out refinance; primary or second home; max 70% LTV (80% if the account owner is 62+) | About $5,000/month on a 30-year loan |
Non-QM | Varies by lender; some use much shorter divisors | Lender-specific; rates are typically higher | Often higher |
Freddie Mac announced in August 2026 that it's cutting its divisor from 240 months to 180, which raises qualifying income by a third for the same portfolio. Lenders can use the new formula now, and it's required for loans settling on or after February 3, 2027.
What advisors should know before the client applies
Seasoning matters. Under Freddie's rule, accounts generally need 12 months of history, and if a balance grew more than 20% in that time, the extra may not count. Talk to the lender before consolidating accounts or moving money between custodians.
Down payment and reserves come out first. Money used to close isn't counted again as income.
Not every lender offers every version. Some only allow asset-based income on loans they underwrite themselves, which is one reason a broker who can shop multiple lenders helps.
Jumbo loans follow different rules. In Orange County, many purchases exceed the conforming limit, and jumbo and non-QM lenders set their own formulas.
Why this matters for the financial plan
Without this option, clients sometimes take a large IRA distribution or sell appreciated stock just to show income. Both can create a tax bill. Qualifying on assets avoids that forced move. Whether to finance or pay cash is still a planning decision for the client and advisor.
Bring me the scenario
Send me the client's target price, location and a redacted asset statement. I'll send back a qualifying-income estimate within one business day and flag any issues early.
949-371-5363 · dlloyd@promiseloans.com ·
Dusty Lloyd, Mortgage Broker, Promise Home Loans · NMLS #247106 · Company NMLS #2372318 · NMLS Consumer Access · Equal Housing Opportunity. No referral fees are paid to or accepted from financial advisors. This article is general information, not a loan commitment. Program guidelines change and vary by lender. Sources: Freddie Mac Bulletin 2026-10 summary, Fannie Mae Selling Guide B3-3.4-06.
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