# How Retired Clients Qualify for a Mortgage Without a Paycheck (2026 Rules)

By Dusty Lloyd (@dustylloyd) · Published 2026-10-17

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## How Retired Clients Qualify for a Mortgage Without a Paycheck (2026 Rules)

**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 ·

[https://calendly.com/dlloyd-promiseloans/30min](https://calendly.com/dlloyd-promiseloans/30min)

_Dusty Lloyd, Mortgage Broker, Promise Home Loans · NMLS #247106 · Company NMLS #2372318 ·_ [_NMLS Consumer Access_](https://www.nmlsconsumeraccess.org) _· 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_](https://www.tenaco.com/?p=14564)_,_ [_Fannie Mae Selling Guide B3-3.4-06_](https://selling-guide.fanniemae.com/sel/b3-3.4-06/employment-related-assets-qualifying-income)_._