Fannie Mae vs Freddie Mac Asset Depletion Guidelines

Fannie Mae and Freddie Mac both publish an asset-qualification guideline, and the two produce very different numbers on the same borrower. Freddie counts more account types, subtracts less, and divides by a smaller number. As of August 5, 2026 it also has a rewritten rulebook that most loan officers have not read yet.

Neither agency uses the phrase "asset depletion"

Search either rulebook for that phrase and you get nothing back, which is the first practical problem. The vocabulary borrowers use and the vocabulary underwriters use do not overlap here.

The general mechanism, the haircuts, and how the agency versions compare to non-QM programs are covered in the companion post on how an asset depletion loan works. The two agency rulebooks diverge on eligibility, arithmetic, and loan parameters, and every divergence has a section number behind it.

Fannie's topic sat at B3-3.1-09 for years and moved to B3-3.4-06 on March 4, 2026 under Announcement SEL-2026-02, mandatory for applications dated on or after June 1, 2026. Plenty of lender matrices and articles still point at the retired number.

What Fannie Mae's asset depletion guideline requires (B3-3.4-06)

B3-3.4-06 is narrow by design, and the adjective in its title carries the weight. Eligible sources are retirement accounts the borrower can fully access, documented non-self-employed severance packages, and non-self-employed lump-sum retirement distributions evidenced by a distribution letter or Form 1099-R.

The access test is specific: the borrower must have, at the time of calculation, the unqualified and unlimited right to request a distribution of all funds in the 401(k), IRA, SEP, or Keogh. A penalty does not disqualify the account. It gets subtracted.

The Selling Guide lists as ineligible "non-employment-related assets (for example, stock options, non-vested restricted stock, lawsuits, lottery winnings, sale of real estate, inheritance, and divorce proceeds)." Checking and savings accounts are generally not eligible either, unless the balance came from an eligible employment-related asset. Virtual currency is not eligible.

The calculation runs:

1. Total the eligible employment-related assets.
2. Subtract the penalty that would apply if the account were completely distributed at the time of calculation.
3. Subtract funds used for down payment, closing costs, and required reserves.
4. Divide the result, "Net Documented Assets," by the amortization term of the loan in months.

The guide's own worked example takes a $500,000 IRA, subtracts a $50,000 penalty and $100,000 of funds to close, and divides $350,000 by 360 to reach $972.22 a month.

The loan box is tight. Maximum LTV, CLTV, and HCLTV is 70%, rising to 80% only when the owner of the asset being used is at least 62 at closing and every joint owner of that asset is a borrower. Purchase and limited cash-out refinance only. Principal residence and second home only.

Two rows of that guideline get overlooked and both work in the borrower's favor. Income history requires no minimum, and income continuance does not need to be documented, because the figure is derived from the loan term rather than from a payment stream. Borrowers who have been told they need a three-year history of distributions are being quoted a different policy.

What Freddie Mac's asset depletion guideline requires (Section 5307.1)

Section 5307.1 starts from a wider asset definition and a simpler arithmetic.

Three eligible categories carry most files.

• Retirement assets must sit in an IRS-recognized account, be solely owned, be fully vested, and not already be used as a source of income. As of the note date the borrower must be able to withdraw the balance in its entirety without penalty.
• Depository accounts and securities carry a different condition set. At least one borrower who is an account owner must be at least 62, and all joint owners must be borrowers or on title. The funds must sit in a U.S.- or state-regulated financial institution, verified in U.S. dollars. The seller documents the source of any deposit exceeding 10% of the borrower's total eligible assets.
• Proceeds from the sale of a business qualify when the borrower solely owns the account holding them. The sale must have left behind no retained business assets, no existing secured or unsecured debt, no ownership interest, and no seller-held note to the buyer.

Cryptocurrency may not be included.

The calculation subtracts funds required to complete the transaction, gift and borrowed funds, and any portion of the assets pledged as collateral or otherwise encumbered, then divides by 240.

That divisor has moved before. Freddie set it at 360, then cut it to 240 in a 2019 Guide Bulletin after sellers said the original calculation was too limiting.

The optional-implementation window is the part worth acting on. Between August 5, 2026 and February 3, 2027, two Freddie Mac sellers can both be correct while quoting a borrower qualifying incomes that differ by a third, because one has adopted the new divisor and the other has not. Asking which version of 5307.1 a lender has implemented is a more useful question right now than asking for a rate.

Fannie Mae vs Freddie Mac — head to head

What each agency subtracts before dividing

Most comparisons stop at 360 versus 240 and miss that the two agencies are dividing different numerators.

Fannie subtracts required reserves from the asset pool before dividing. Freddie's Step 2 subtracts funds to complete the transaction, gift and borrowed funds, and pledged or encumbered amounts, and reserves are absent from that list. Freddie still requires reserves elsewhere in its guide; they simply do not shrink the qualifying figure. On a file carrying six months of PITIA in reserves, that difference alone can be worth a few hundred dollars a month of qualifying income before the divisor does anything.

The penalty treatment splits the same way, and it decides files for borrowers under 59½. The IRS applies a 10% additional tax to most early distributions from a qualified plan or traditional IRA before that age. Fannie's rule tolerates it and takes the penalty off the top. Freddie's retirement conditions require penalty-free access as of the note date, so the same borrower usually cannot use the account at all. For a 55-year-old with a large 401(k) and little else, Fannie Mae is typically the only agency door open, which reverses the general ordering.

Check the exceptions before accepting that. The IRS waives the additional tax when the borrower separated from service during or after the year they turned 55. A borrower who meets that test can satisfy Freddie's penalty-free condition after all. The exception covers 401(k)-style plans and not IRAs, and whether you qualify for it is a question for your tax preparer.

The age-62 rule almost everyone misstates

You will read that Freddie Mac requires a borrower to be 62 to use assets as income. That is wrong in a way that costs younger borrowers a legitimate option. The condition attaches to depository accounts and securities only. Retirement assets under 5307.1 carry no age requirement, just vesting, sole ownership, penalty-free access, and the account not already being used as income.

Freddie explained the reasoning when it added those account types in 2017, and the explanation is unusually candid for a guide bulletin.

Bulletin 2026-10 removes that restriction and replaces it with seasoning and balance-variation tests, which target the same underlying worry through account behavior rather than birthdate. Fannie's use of 62 is unrelated and narrower: it moves the LTV ceiling from 70% to 80%, and the borrower who is 62 has to be the owner of the asset generating the income.

Worked example: the same borrower under both guidelines

A 64-year-old buying a primary residence with a 30-year fixed. She holds $900,000 in an IRA she can withdraw in full without penalty and $400,000 in a taxable brokerage account she has held for three years. Funds to close are $180,000, and required reserves are $20,000.

Three numbers from one borrower and one set of statements, and the spread is more than threefold. Eligibility moves the result even more than the divisor does: Fannie drops $400,000 out of the calculation before any division happens, because a taxable brokerage balance falls outside its employment-related definition. Had this borrower been 58, the current Freddie path would close entirely: the brokerage account fails the age-62 condition, and the IRA fails the penalty-free condition. Fannie Mae, which tolerates the penalty and simply subtracts it, would be the only agency option left.

When to use Fannie Mae vs Freddie Mac for asset depletion

Fannie Mae fits a borrower whose wealth is concentrated in retirement accounts, especially one under 59½ who would trip Freddie's penalty-free condition, and a borrower comfortable inside a 70% LTV (or 80% at 62+). It also fits anyone whose money arrived as a documented severance package or lump-sum retirement distribution, which is exactly the profile the topic was written for.

Freddie Mac fits a borrower with meaningful taxable brokerage or depository balances, a borrower who sold a business and parked the proceeds, and anyone who needs more qualifying income per dollar of assets. Under the new bulletin it also becomes the only agency path for an investment property, and the only one without a hard LTV ceiling of its own.

Neither fits a borrower whose pool is largely real estate equity, crypto, or restricted stock, or whose loan amount exceeds conforming limits. Those files land outside the agency market entirely, where the non-QM asset programs and bank statement loans live. If the subject property is a rental rather than a residence, a DSCR loan is usually the cleaner answer, and the DSCR investment property guide covers where that line falls.

When the file should be priced both ways

The general ordering (Freddie pays more per dollar of assets) reverses often enough that assuming it is a mistake. Three situations call for running the numbers under both guidelines before picking one.

Mixed asset pools. A borrower holding both an accessible IRA and a taxable brokerage account gets a bigger Fannie numerator than the eligibility rules suggest at a glance, because the IRA counts in full there. Whether Freddie's larger pool and smaller divisor still win depends on the ratio between the two accounts.

Borrowers under 59½. Freddie's penalty-free condition usually closes the door that Fannie leaves open. That flips the default entirely, and it flips back if the separation-from-service exception applies.

Short amortization terms. Fannie divides by the loan term, so a 15-year mortgage divides by 180 — the same figure Freddie moves to under Bulletin 2026-10, and better than Freddie's current 240. A borrower who wants a 15-year term has no divisor penalty at Fannie at all.

The comparison costs a loan officer a few minutes, and it is a reasonable thing to ask for by name.

How to prepare an agency asset depletion file

The two guidelines ask for different paperwork, so your document list follows from the agency before it follows from your accounts. An underwriter works from the same underlying inventory under either guideline — the asset and liability schedule behind any personal net worth statement — and the two rulebooks diverge on what you have to prove about it.

A Fannie Mae file turns on proving the source. Employment-related is a claim about origin: a balance qualifies because of where it came from. A retirement account needs evidence of the unqualified right to take a full distribution, which is a plan document rather than a statement and takes longer to obtain than most borrowers expect. A severance package or lump-sum distribution needs the distribution letter or Form 1099-R plus a deposit trail into the account holding it. A balance with no documented employment origin does not count, however large it is.

A Freddie Mac file turns on proving the account sat still. Sourcing is already required on any deposit exceeding 10% of total eligible assets. Bulletin 2026-10 adds 12-month seasoning on depository accounts and securities, a 90-day holding period on business-sale proceeds, and a comparison against the statement from 12 months prior.

Pull those older statements now. A lender working from the new section will ask for the current statement and the one from a year earlier. A balance that moved more than 20% either way needs documentation tying the change to an eligible transfer.

Account movement costs you differently under each. Under Fannie a transfer between your own accounts mostly buys a document request; under Freddie's new balance-variation test it can cut the eligible amount outright, so leave balances alone once a file is open. Expect to sign a Form 4506-C for tax transcripts either way, and if you own property, to produce a schedule of real estate owned.

Then ask three questions in order: which agency guideline the file is going to, which version of it the lender has implemented, and whether reserves come out of the asset pool. The answers set your qualifying income before anyone quotes a rate.

StatementsReady builds the personal financial statement that carries this inventory. It is document-preparation software: we do not originate loans, underwrite files, make lending decisions, or pull credit. Getting the asset schedule accurate up front is what shortens the reconciliation, and the personal financial statement template and net worth calculator are where that inventory gets built. Retirees running this for the first time may find the retiree financial statement walkthrough a closer fit; self-employed borrowers should start with the self-employed personal financial statement guide.

More on how lenders read borrower documents is in Business Lending, and the balance-sheet fundamentals sit under Personal Finance.