Many borrowers see a large account balance and no idea what a lender will actually count. They are unsure how a divisor they have never heard of may influence the loan amount they reach. This guide covers the math that shapes an asset depletion file.
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How Is Asset Depletion Income Calculated?
SHORT ANSWER
Asset depletion income is calculated by subtracting the funds you need at closing from your documented assets and dividing the remainder by a set number of months. Fannie Mae uses the length of the loan term. Freddie Mac uses a flat 240.
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| Asset Depletion Calculation Question | Direct Answer |
|---|---|
| Asset depletion income formula | Net documented assets divided by months |
| Freddie Mac asset depletion divisor | 240 months |
| Fannie Mae asset depletion divisor | Months in your loan term |
| Fannie Mae asset depletion subtractions | Down payment, closing costs, reserves |
| Which asset depletion divisor produces more income on a 30-year loan | Freddie Mac. Dividing by 240 produces a larger monthly figure than Fannie Mae dividing by 360 |
| What Fannie Mae calls the accounts used for asset depletion | Employment-related assets, meaning retirement accounts, severance packages, and lump sum retirement distributions |
| Withdrawals required before using asset depletion | None. Fannie Mae asks for no history of receiving the income |
| Early withdrawal penalty on an asset depletion retirement account | Fannie Mae subtracts it from the balance before dividing |
| Access Fannie Mae requires to an asset depletion retirement account | An unrestricted right to withdraw the entire balance |
| Fannie Mae asset depletion loan-to-value cap | 70% of appraised value, or 80% when the account owner is at least 62 |
| Fannie Mae asset depletion occupancy and purpose limits | A primary residence or second home, on a purchase or a refinance taking limited cash out |
| Accounts held in a living trust for asset depletion | Freddie Mac treats them as owned by the borrower when the borrower created the trust |
| Non-QM asset depletion divisors | Set by each lender. Neither Fannie Mae nor Freddie Mac publishes a limit |
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| Asset Depletion Calculation Factor | What It Means for Your File |
|---|---|
| Why the Divisor Decides More Than the Balance Does | The divisor is the single number that decides how much income your accounts produce. Freddie Mac divides by 240 months on every loan it buys. Fannie Mae divides by the number of months in your loan term, which is 360 on a 30-year mortgage. The same $360,000 produces $1,500 a month under Freddie Mac and $1,000 under Fannie Mae. Neither number binds a lender working outside these two programs, and how that side of the market operates is covered on our Non-QM Home Loan guide. |
| Which Accounts Fannie Mae Calls Employment-Related Assets | Fannie Mae uses the term employment-related assets for the accounts this method draws on. That covers retirement accounts, severance packages, and lump sum retirement distributions. The name matters because it narrows what qualifies. An account that has no connection to past employment generally sits outside the category, which is why a large inherited balance does not behave the way borrowers expect it to. |
| Why You Do Not Have to Start Withdrawing First | A widespread belief holds that you must already be pulling money out of a retirement account before it can count. Fannie Mae asks for no history of receiving this income at all. The account can sit untouched. An account you are already drawing a set distribution from moves under retirement income rules instead, which means starting withdrawals to prepare for a loan can work against you rather than for you. |
| What Comes Out Before the Division Runs | Fannie Mae subtracts your down payment, your closing costs, and any required reserves from the eligible total. Any early withdrawal penalty that would apply comes off as well. What remains is the net documented assets figure, and that is the number the divisor is applied to. A larger down payment lowers the monthly income your accounts produce. |
| The Worked Example Fannie Mae Publishes | Fannie Mae publishes a worked example that shows how small the resulting figure can be. A borrower holds $500,000 in an individual retirement account. A $50,000 early withdrawal penalty comes off first, leaving $450,000. Another $100,000 goes to the down payment and closing costs, leaving $350,000. Divided across 360 months, that produces $972.22 in monthly qualifying income. Half a million dollars generates under a thousand dollars a month on a 30-year loan. |
| Where Fannie Mae Allows Asset Depletion to Be Used | Fannie Mae limits asset depletion to a home you live in or a second home, and to a purchase or a refinance that takes limited cash out. The loan cannot exceed 70% of appraised value, rising to 80% when the person who owns the accounts is at least 62 at closing. What asset depletion is and who it serves is covered on our Asset Depletion Home Loan guide. |
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| Asset Depletion Calculation Metric | What Lenders May Check on Your File |
|---|---|
| Documented Account Balance | A lender verifies the balance and the makeup of each account through recent statements. The statement has to show what the account actually holds, not just a total. |
| Access to the Funds | Fannie Mae counts a retirement account only when you hold an unrestricted right to request the entire balance. An account with withdrawal restrictions attached does not feed the calculation. |
| Ownership of the Account | The account must be in your name, or a co-owner must also be a borrower on the loan. Freddie Mac treats an account held by a living trust as owned by the borrower when the borrower created that trust. |
| Excluded Account Types | Stock options and unvested restricted stock do not count. Neither do lawsuit proceeds, lottery winnings, an inheritance, proceeds from selling real estate, a divorce settlement, or virtual currency. |
| Double-Counting Check | An account used to produce a monthly figure cannot also have its dividends or interest counted as separate qualifying income. Lenders check for this before finalizing the calculation. |
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| People Also Ask | Why These Questions Matter |
|---|---|
| Do you have to be taking withdrawals to use asset depletion? | Withdrawals are not required to use asset depletion. Fannie Mae asks for no history of receiving this income before counting it. An account you are already drawing a set distribution from is handled under retirement income rules instead, so starting withdrawals to prepare can work against you. |
| How much mortgage can you get with asset depletion? | The loan you reach depends on the divisor more than the balance. A $3,000,000 net balance divided across 360 months produces $8,333 a month in qualifying income. The same balance divided across 240 months produces $12,500. Your other monthly debts set the loan amount from there. |
| Do you have to be a certain age to use asset depletion? | Fannie Mae sets no minimum age for asset depletion. Reaching 62 raises the loan-to-value cap from 70% to 80%, which lets an older borrower put less down. Age changes the cap rather than deciding whether the method is available at all. |
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| Sources Used on This Page |
|---|
| This page uses the plain word “divisor” where the selling guides describe the amortization term of the loan or the 240-month period. Fannie Mae — Selling Guide B3-3.4-06 | Announcement SEL-2026-02. Freddie Mac — Bulletin 2019-7 | Bulletin 2026-4. |
| Last Verified August 2026 |
| Freddie Mac changed its divisor from 360 to 240 through Bulletin 2019-7. Older guidance describing a 360-month calculation on a Freddie Mac loan is out of date. Fannie Mae moved this policy from Selling Guide section B3-3.1-09 to B3-3.4-06. Divisors, the loan-to-value caps, the age that raises them, and the eligible account categories are revised through agency bulletins on their own schedule. Non-QM divisors are set by each individual lender and change without any published notice at all. |
| Disclaimer |
| Asset depletion is offered both as an agency qualifying method and through non-QM programs. Agency guidelines are set by Fannie Mae and Freddie Mac. All non-QM guidelines vary by lender and investor. The figures and rules shown on this page were checked against the sources listed above as of the Last Verified date. Each agency updates its guide on its own schedule. This page is provided for educational purposes only. Smart Loan Savings Educational Content |