Yes — you can use a 401(k) to qualify for a mortgage. The loan program that does it is called an asset depletion loan. The lender adds up your retirement account, applies a 30% haircut to cover early-withdrawal penalties and taxes, subtracts what you need for down payment and reserves, then divides what’s left by a fixed number of months to produce qualifying income. That income runs through a standard debt-to-income ratio just like a paycheck would. No W-2. No tax-return income test. The retirement account itself stays invested.
The whole question matters because most loan officers either tell people “you can’t” or quote them a single calculation method when there are actually three — and the wrong one can cut your qualifying income by more than half. Here’s how the math actually works.
The Short Answer
A 401(k), traditional IRA, Roth IRA, or any IRS-recognized retirement account can be used to qualify for a mortgage through a Non-QM asset depletion loan. You do not need to be drawing distributions from the account. You do not need to be retired. There is no minimum age. The account just needs to be in your name, fully vested, and accessible without penalty as of the note date.
Brokerage accounts, mutual funds, stocks, bonds, checking, savings, and money market accounts can be stacked on top of the retirement balance. The combined pool gets run through the asset depletion calculation to produce your qualifying income.
How a 401(k) Turns Into Qualifying Income
Walk through a real example. Borrower has a $1,200,000 401(k), a $300,000 brokerage account, and $100,000 in savings. They want to buy a $750,000 home with 20% down.
Step 1 — Apply the haircuts
401(k) at 70%: $1,200,000 × 0.70 = $840,000
Brokerage at 80%: $300,000 × 0.80 = $240,000
Savings at 100%: $100,000
Total Eligible Assets: $1,180,000
Step 2 — Subtract what the deal needs
Down payment (20% of $750,000): $150,000
Closing costs estimate: $20,000
Reserves (6 months PITI estimate): $30,000
Net Eligible Assets: $980,000
Step 3 — Divide
240-month divisor (Alternative AUS): $980,000 ÷ 240 = $4,083/month
84-month divisor (Asset Utilization): $980,000 ÷ 84 = $11,667/month
Same assets. Same borrower. Same loan amount. The difference between the two calculation paths is roughly $7,600 a month in qualifying income — enough to determine whether the loan approves at all, what loan amount the borrower can support, and what rate tier they price into. The shorter divisor produces more monthly income but comes with stricter program rules.
Which Accounts Count and at What Percentage
Not every dollar in your portfolio counts at face value. The Non-QM Income Qualifying program applies these standard haircuts:
The 70% haircut on the 401(k) covers the early-withdrawal penalty plus federal and state tax that would hit if the borrower actually liquidated. The lender is not assuming you will liquidate. It’s a conservative valuation to make sure the asset base supports the loan in a stress scenario.
The Three Calculation Paths
Most loan officers know about one of these. We run all three on every file to find the cleanest approval.
Path 1: Alternative AUS Asset Depletion (240 months)
Net Eligible Assets divided by 240 months. Minimum $1,000,000 in net eligible assets. Maximum 80% LTV. Purchase, rate/term, and cash-out all eligible. Two years of tax returns required. DTI up to 49.99%.
Path 2: Asset Utilization, DTI Calculation (84 months)
Net Qualified Assets divided by 84 months. Borrower must have the lesser of 1.5× the loan balance or $500,000 in qualified assets net of closing costs and reserves. Higher monthly income because of the shorter divisor — but cash-out is not allowed.
Path 3: Asset Depletion, Total Asset Calculation (no DTI)
No debt-to-income ratio is run at all. Instead, eligible assets must cover the loan amount, down payment, closing costs, reserves, and five years of current monthly obligations. Employment and income do not need to be disclosed on the 1003. This is the cleanest path for retirees with a large portfolio and no W-2 income to source.
What You Cannot Do
Three rules trip up borrowers more than anything else:
1. You cannot count business accounts. Only personally held accounts are eligible. If your wealth is sitting in a business operating account, it needs to be moved into a personal account and seasoned first.
2. You cannot count crypto or foreign accounts. Eligible assets must be held in a US account. Bitcoin, Ethereum, foreign brokerage accounts, and offshore holdings are all excluded from the calculation.
3. You cannot stack W-2 income from the same account holder. Asset depletion may not be combined with employment income from any borrower who is an account holder on the assets being used. If your spouse is not on the 401(k) but earns W-2 income, that income can still be used for qualifying. If you’re on the 401(k) and also earn W-2 income, you have to pick one or the other.
Related Reading
Main Hub
Asset Depletion Loans — Full Program Overview
Complete asset depletion program details including LTV limits, credit score minimums, eligibility tables, and the full eligible-asset breakdown.
Non-QM Mortgage Loans
Overview of every Non-QM program — bank statement, DSCR, asset depletion, 1099, P&L, ITIN, and foreign national.
Bank Statement Loans
For self-employed borrowers whose tax returns understate true income. Qualify on 12 or 24 months of deposits.
DSCR Loans
Investment-property loans qualified by the property’s rental income — not the borrower’s personal income.
P&L Statement Loans
Qualify using a CPA-prepared profit and loss statement. The fastest path for established self-employed borrowers.
FAQ
Do I have to be 59½ to use my 401(k) for asset depletion?
No. There is no age requirement. The 70% haircut on retirement accounts already accounts for the early-withdrawal penalty and taxes that would apply if you were under 59½. The lender is valuing the asset conservatively — they are not asking you to withdraw it.
Will the lender ask me to liquidate my 401(k)?
No. The depletion calculation is a math model only. Your account stays invested. The lender confirms you have access to withdraw the funds without penalty as of the note date, then uses the balance to produce qualifying income.
Can I use my spouse’s 401(k) if they are not on the loan?
Generally no. Eligible assets must be solely owned by the borrower or jointly owned where each owner is a borrower on the mortgage. A spouse’s separately titled retirement account is not eligible unless they are also on the loan.
What if I’m still working — can I use both my paycheck and my 401(k)?
Not on the same loan if you are the account holder. Asset depletion cannot be combined with employment income from any borrower who is an account holder on the assets being used. The cleaner path in that case is usually a standard W-2 qualification — or putting the W-2 income on one borrower and asset depletion on the other.
Does a Roth IRA count the same as a traditional 401(k)?
Both are IRS-recognized retirement accounts and both count at 70% on the Non-QM Income Qualifying program. The account must be vested and accessible to the borrower without penalty as of the note date.
Can I use asset depletion for a cash-out refinance against my home?
Yes on the Alternative AUS asset depletion path and on the Total Asset Calculation path. The 84-month Asset Utilization path does not allow cash-out.
Written by
J.D. Peck
Area Manager and Mortgage Loan Originator at Paramount Residential Mortgage Group, Inc. NMLS #314883. 25+ years of mortgage experience, 3,100+ closed loans, Scotsman Guide Top Originator 2026.
Last updated: May 2026. Loan program parameters subject to change — confirm current eligibility on your specific scenario before relying on any figure shown.
Run the Math on Your Scenario
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