You spent forty years being exactly the borrower every lender wanted. You retired, and within a year you became someone whose file nobody knows how to write.
Your net worth went up. Your qualifying income, as far as an underwriting system is concerned, went to nearly nothing.
There are three ways to build an income out of what you have. They produce meaningfully different numbers, and most lenders run one.
Route one: distributions and benefits as income
The ordinary route. Social Security, pension income, annuity payments, and regular distributions from retirement accounts, documented and shown to continue.
This is what most lenders do, and for a retiree with a solid pension and Social Security it frequently works on its own.
Two things worth knowing:
Non-taxable income is grossed up 125% under CMG Financial's Non-QM Sharp Series guidelines (NMLS #1820, revised 09/21/2026). A meaningful portion of Social Security is often non-taxable, and grossing it up raises the figure used to qualify. Confirm your file received that treatment, because it is frequently missed.
Continuance matters. Income has to be shown to continue. Distributions you started recently, or can stop at will, are treated differently from a pension with a defined term.
The limitation of this route is simple. If you structured retirement to draw as little as possible for tax reasons, the documented distributions understate what you could pay. Which leads to route two.
Route two: asset depletion
Instead of asking what you withdraw, this asks what you have.
Qualifying assets with a utilization draw schedule of seven years, qualified assets divided by 84, will be used as qualifying income.
Then you are tested on a debt-to-income ratio with that income.
The asset requirement: the lesser of $1 million in qualifying assets, or qualifying assets greater than or equal to 125% of the original subject loan amount. Across both asset programs there is a floor of $450,000 in qualifying assets, and assets must be seasoned 120 days unless pre-approved.
The haircuts, applied to net assets:
- 100% checking, savings and money market
- 100% life insurance and annuity cash surrender value
- 80% stocks, bonds and mutual funds
- 70% all vested retirement assets
- 60% Bitcoin or other cryptocurrency
That 70% on vested retirement matters more to retirees than anyone else, because it is where most of the money sits. A $1,000,000 IRA contributes $700,000 to the calculation, not $1,000,000.
Route three: asset qualifier
Same divisor, different test.
Qualifying assets divided by 84 months. From this number, subtract the borrower's total monthly debt obligation to come up with residual income. That residual must clear a floor: $1,500 for a one person household, $2,500 for two, plus $150 for each additional household member. Tax deductions are not imputed in that calculation.
The asset requirement is stated differently here: total post-closing assets must be greater than or equal to 125% of the original subject loan amount.
Residual income is an absolute test rather than a proportional one, which is why it rescues borrowers whose monthly obligations are large relative to their portfolio. A retiree carrying a car payment, a HELOC on another property and real monthly commitments may fail a debt-to-income ratio and clear residual income comfortably.
The three numbers, on one file
A retiree with $250,000 in checking and savings, $900,000 in a brokerage account, $700,000 in a vested IRA, Social Security of $2,400 a month of which a portion is non-taxable, and no pension. Buying with $250,000 down from the checking account.
Route one: Social Security only, with the non-taxable portion grossed up 125%. A number in the low thousands. Insufficient for most Scottsdale purchases.
Routes two and three: remove the $250,000 down payment from checking first, because assets used for down payment or costs to close must be excluded from the balance before analyzing the portfolio for income qualification. That leaves nothing in checking.
- Checking after closing funds: $0
- Brokerage: $900,000 at 80% = $720,000
- Vested IRA: $700,000 at 70% = $490,000
Qualifying assets: $1,210,000. Divided by 84 = approximately $14,404 in monthly qualifying income.
Same borrower. Route one produces a figure that buys very little. Routes two and three produce a figure that buys a house in this market.
And note the down payment's effect. Drawing the $250,000 from checking erased that account's contribution entirely. Had the same borrower brought $150,000 instead, $100,000 would have stayed in the calculation at 100%, adding roughly $1,190 a month. Where the closing money comes from is a decision worth making deliberately.
What these programs will not do
Read this before you plan around them:
- Owner occupied only. Non-owner occupied and second homes are not permitted. For a retiree buying a winter place in Scottsdale while keeping a home elsewhere, occupancy is the threshold question and it has to be answered honestly.
- No cash-out.
- No gift funds.
- No business assets.
- No foreign assets.
- No non-occupant co-borrowers.
- No other employment income. A borrower using asset depletion or asset qualifier cannot use other sources of employment income. Non-employment income is considered case by case. So part-time or consulting work cannot be stacked on top.
Maximum 85% loan-to-value, minimum 700 FICO. Reserves are not required on either program.
And the tier gate: neither program is eligible on Sharp Standard. You need Sharp Premium (36 months or more clean housing event history, 1x30x12) or Sharp Expanded (48 months or more, 0x30x12).
Two documentation points that help
Sale of real estate owned counts toward qualifying assets with a copy of the final closing disclosure and evidence the funds were deposited. So a retiree who sold the family home and is buying smaller can count those proceeds, once they have landed and been documented.
Trust assets must fully meet Fannie Mae guidelines. Many retirees hold assets in a revocable living trust. That is common and workable, and it needs the documentation done properly rather than assumed.
What to ask your lender
- Did you gross up my non-taxable income 125%?
- Did you run asset depletion, and what was the qualifying income?
- Did you run asset qualifier, and what was my residual income against the household requirement?
- Which assets did you exclude as closing funds, and would a different source improve the calculation?
- What tier am I in, and does it allow these programs?
Five questions. A lender who cannot answer all five has run one calculation and quoted you the result.
Common questions
Can I get a mortgage with no job in retirement? Yes, through three routes: documented distributions and benefits, asset depletion, or asset qualifier. They produce very different qualifying numbers on the same file.
How is asset depletion income calculated? Qualifying assets divided by 84 months, on a seven year utilization draw schedule, after applying haircuts by account type and removing any assets used for closing.
How much of my IRA counts? 70% of vested retirement assets. Stocks, bonds and mutual funds count at 80%, and checking, savings, money market, life insurance and annuity cash surrender value at 100%.
Is my Social Security grossed up? Non-taxable income is grossed up 125%. Confirm your file received that treatment, because it is often missed.
Can I use an asset based program for a second home in Scottsdale? No. Asset depletion and asset qualifier are owner occupied only. Non-owner occupied and second homes are not permitted.
Can I take cash out of my home with an asset based loan? No. Cash-out is not permitted on either program.
Related reading
- Asset based and no-income home loans, the full index for this topic
- Asset Based Home Loan FAQ: Qualifying With Assets Instead of Income
- Asset Depletion or Asset Qualifier: Two Programs, Two Completely Different Tests
- The Double Count Problem: Why Money Used for Closing Cannot Also Be Income
Why bring this file to us
- We run all three calculations. Most retirees are shown one number by one lender and never learn it was the lowest of three.
- We keep the closing funds separate from the income assets, which is where a qualifying number quietly disappears.
- We are honest about what asset based programs will not do, including the no cash-out and owner occupied restrictions.
- Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending and a Certified Mortgage Planner, NMLS #173141, originating mortgages since 1999. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
Send me a one page summary of your accounts by type and your monthly obligations, and I will run all three calculations and show you the spread.
Program figures in this post come from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. CMG Financial is the parent company of EPiQ Lending. These figures describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.
Find out which documentation option qualifies you for the most
Bank statements, a third-party P&L and full documentation routinely produce very different qualifying income from the same business. Tell me the shape of yours and I will run all three.
