Freddie Mac Expands Asset-Based Income Qualification: A Major Change for Asset-Rich Mortgage Borrowers

Freddie Mac Expands Asset-Based Mortgage Income Rules for 2026

Qualifying for a mortgage has traditionally centered around one question:

How much income do you earn each month?

For borrowers with a salary, W-2 income, or predictable self-employment income, that question is relatively straightforward.

But what about someone who has $500,000, $1 million, or several million dollars in savings and investments, yet does not show much traditional monthly income?

Freddie Mac just made an important change that may help.

In Bulletin 2026-10, Freddie Mac updated its rules for using accumulated assets as qualifying income. The changes are required for mortgages with settlement dates on or after February 3, 2027, but Freddie Mac is allowing lenders to implement them immediately.

The biggest change is particularly meaningful:

Freddie Mac is reducing the divisor used to convert qualifying assets into monthly income from 240 months to 180 months.

That may sound like a small underwriting change.

It is not.

For the same amount of eligible assets, the new calculation can produce approximately 33% more qualifying monthly income.

And that is only one of several improvements.

What Does “Accumulated Assets as Income” Mean?

Normally, mortgage qualification relies on income such as:

• Salary
• Hourly wages
• Bonuses
• Commission
• Self-employment income
• Pension income
• Social Security
• Rental income

But some borrowers have substantial wealth without receiving enough traditional monthly income to qualify for the mortgage they want.

Freddie Mac allows certain eligible assets to serve as a basis for repayment of obligations.

In plain English, the lender can take eligible assets, subtract amounts that cannot be counted, and convert the remaining assets into an equivalent monthly qualifying-income amount.

Freddie Mac’s current Guide already allows qualifying assets to be divided by 240 to determine the qualifying asset amount used in the borrower’s debt-to-income ratio.

Bulletin 2026-10 changes that divisor to 180.

That makes a potentially significant difference.

The Biggest Change: Divide Assets by 180 Instead of 240

Under the existing Freddie Mac calculation:

Net eligible assets ÷ 240 = qualifying monthly income

Under the updated rule:

Net eligible assets ÷ 180 = qualifying monthly income

Let’s look at what that means.

Example: $900,000 of Net Eligible Assets

Under the old calculation:

$900,000 ÷ 240 = $3,750 per month

Under the new calculation:

$900,000 ÷ 180 = $5,000 per month

That is an additional:

$1,250 per month of qualifying income

without the borrower earning another dollar.

Example: $1.5 Million of Net Eligible Assets

Old calculation:

$1,500,000 ÷ 240 = $6,250 per month

New calculation:

$1,500,000 ÷ 180 = $8,333 per month

Difference:

Approximately $2,083 more qualifying income every month.

For an asset-rich borrower whose mortgage approval is being limited by debt-to-income ratio, that difference can be substantial.

Why Is Freddie Mac Making This Change?

Freddie Mac describes the update as aligning its guidelines with the industry standard that accumulated assets may be used as qualifying income.

The larger idea is simple.

A borrower with significant liquid wealth may have a strong ability to repay a mortgage even if their taxable or recurring employment income is relatively modest.

This can apply particularly to:

• Retirees
• High-net-worth borrowers
• Recently retired executives
• Business owners
• Investors
• Borrowers living primarily from accumulated wealth
• Borrowers who recently sold a business
• Borrowers who recently sold real estate
• People intentionally keeping taxable income low

For these borrowers, traditional income documentation may not provide the full picture of their financial strength.

Freddie Mac Is Also Eliminating the 80% LTV Restriction

This is another major change.

Under the current Freddie Mac rules, mortgages using assets as the basis for repayment are generally limited to a maximum 80% LTV/TLTV/HTLTV, subject to certain exceptions.

Bulletin 2026-10 removes that special 80% limitation.

Instead, the mortgage can follow the applicable maximum LTV requirements in Freddie Mac Guide Section 4203.1.

In practical terms, borrowers will no longer automatically be required to put at least 20% down simply because they are using accumulated assets to help qualify.

The actual permitted LTV will depend on the transaction, occupancy, property, underwriting findings, and applicable Freddie Mac guidelines.

That makes the program considerably more flexible.

Investment Properties Are Now Eligible

This may be one of the most interesting changes for real estate investors.

Under Freddie Mac’s existing guideline, assets used as a basis for repayment are limited to mortgages secured by a one- or two-unit primary residence or second home.

Under the new guideline, Freddie Mac will permit:

• Primary residences
• Second homes
• Investment properties

That opens the door to an entirely new group of borrowers.

Imagine an investor who has substantial brokerage accounts and cash reserves but whose tax returns do not show enough qualifying income because of depreciation, business deductions, or other legitimate tax strategies.

Previously, conventional asset qualification may have been much more restrictive for that investment purchase.

The updated Freddie Mac guideline could create another avenue to qualify.

This Does Not Turn Conventional Loans Into DSCR Loans

There is an important distinction here.

Using accumulated assets does not make the loan a DSCR mortgage.

A DSCR loan primarily qualifies an investment property based on the property’s rental income relative to its housing expense.

Freddie Mac’s accumulated-assets method is different.

It converts the borrower’s eligible personal assets into qualifying income and uses that income within conventional underwriting.

For some investors, one approach may work better than the other.

That is why comparing loan structures matters.

The Mortgage Must Receive an “Accept” Finding

Under the new requirements, Freddie Mac specifies that the mortgage must be an Accept Mortgage.

In practical terms, the loan must receive the applicable acceptable automated underwriting result through Freddie Mac’s Loan Product Advisor.

This is important because accumulated assets alone do not override the rest of the mortgage file.

The borrower, credit, property, transaction, liabilities, and overall risk profile still need to satisfy Freddie Mac’s underwriting requirements.

Having enough assets does not automatically guarantee approval.

Minimum Net Eligible Assets: $30,000

Freddie Mac is also establishing a minimum:

At least $30,000 in net eligible assets must remain for the asset-income calculation.

Remember that the starting account balance is not necessarily the amount that gets divided by 180.

Freddie Mac’s current calculation requires lenders to subtract items such as:

• Funds required for the down payment
• Closing costs
• Gift funds
• Borrowed funds
• Assets pledged as collateral
• Other encumbered amounts

The amount remaining is considered the net eligible asset amount.

Under the updated guideline, that resulting amount must be at least $30,000.

An Example of How the Calculation Actually Works

Suppose a borrower has:

$1,000,000 in eligible assets

But needs:

$150,000 for down payment and closing

Assume there are no other required deductions.

The calculation would start with:

$1,000,000
− $150,000
= $850,000 net eligible assets

Then:

$850,000 ÷ 180
= approximately $4,722 per month

That $4,722 can potentially be used as qualifying income, subject to the complete Freddie Mac requirements and underwriting approval.

Under the previous 240-month calculation, the same $850,000 would produce only:

approximately $3,542 per month

That is almost $1,181 more monthly qualifying income under the new calculation.

Freddie Mac Is Removing the Age Restriction for Certain Assets

Another useful change involves borrower age.

Freddie Mac is removing the borrower age restriction applicable to depository accounts and securities when those assets are being used for qualification under the updated provision.

That expands the usefulness of this strategy beyond borrowers who may traditionally have been associated with retirement-based asset qualification.

In other words, someone does not necessarily need to be retirement age to have significant accumulated wealth considered as qualifying income.

This could be particularly relevant for:

• Younger entrepreneurs
• Investors
• People who sold a business
• Executives with substantial investment portfolios
• Individuals who inherited or accumulated substantial assets
• Financially independent borrowers who stopped working early

Depository and Securities Accounts Will Generally Need a 12-Month History

Freddie Mac is also tightening documentation in some areas.

Under the new rule, eligible depository accounts and securities generally must be seasoned for 12 months before the Note Date, unless the account was funded from an eligible documented source.

Why?

Freddie Mac wants to establish that the assets truly belong to the borrower and were not temporarily moved into the account simply to qualify for the mortgage.

This is particularly important because the assets are effectively being treated as the borrower’s source of mortgage repayment.

What Happens If Your Bank Balance Changed Significantly?

Freddie Mac is creating specific rules for depository accounts when the balance today differs materially from the balance 12 months earlier.

If the Account Decreased by More Than 20%

The account generally cannot be used to qualify the borrower if its balance decreased by more than 20% during the 12-month period.

There is an exception if the decrease can be documented as a transfer into eligible:

• Securities accounts
• Retirement accounts

The logic is reasonable.

If an account is rapidly declining, simply dividing today’s balance over 180 months may overstate the long-term financial resources available to repay the mortgage.

What If the Account Increased by More Than 20%?

Freddie Mac is also addressing the opposite situation.

If the depository account increased by more than 20% over the previous 12 months, the amount eligible for qualification is generally limited to:

120% of the account’s value 12 months earlier.

Example

Suppose the borrower had:

$300,000 twelve months ago

but now has:

$600,000

Without acceptable documentation for where the increase came from, Freddie Mac would generally limit the eligible amount to:

$300,000 × 120% = $360,000

rather than allowing the entire $600,000 to be used.

That prevents someone from placing a large amount of unexplained money into an account immediately before applying for a mortgage.

Documented Transfers Can Avoid That Limitation

The 120% limitation does not apply when the increase is properly documented as coming from certain eligible sources, including:

• Eligible retirement accounts
• Another eligible depository account
• Eligible securities
• A qualifying lump-sum distribution
• Sale of the borrower’s business
• Sale of the borrower’s real property

This is another reason why documentation becomes extremely important.

Where the money came from can matter just as much as how much money is currently in the account.

Proceeds From Selling a Business Can Be Used

Freddie Mac also clarified its treatment of proceeds from the sale of a borrower’s business.

The funds must have been deposited into a depository or securities account owned by the borrower and held continuously for at least:

90 days as of the current account statement.

This could be particularly valuable for entrepreneurs who recently sold a company and no longer receive the business income they previously used to qualify.

Someone could have substantial wealth after selling a business but little conventional employment income.

This new framework gives lenders a clearer way to evaluate that situation.

For borrowers with complex self-employed income, we also offer other mortgage solutions for self-employed borrowers, including conventional and alternative-income programs.

Freddie Mac Adds Real Estate Sale Proceeds as an Eligible Source

Another helpful clarification is the addition of proceeds from the sale of the borrower’s real property as an eligible source for funding a depository or securities account.

Consider someone who:

1. Owns a home without much traditional income.
2. Sells that home.
3. Deposits $800,000 of net proceeds into an investment account.
4. Wants to purchase another property.

Rather than automatically requiring the newly deposited money to age for a full 12 months, properly documented proceeds from the real estate sale may qualify as an eligible source under the updated rules.

This can be particularly important for retirees and move-up or downsizing buyers.

Third-Party Asset Verification Will Be Permitted

Freddie Mac is also adding eligible third-party verification reports as a method for documenting depository accounts and securities, provided they meet the requirements of Guide Section 5302.3(a).

This can make documentation more efficient because lenders may be able to verify qualifying assets electronically rather than relying exclusively on borrowers manually providing statements.

For consumers, that could mean less paperwork in certain transactions.

Purchase and No-Cash-Out Refinances Only

The updated accumulated-asset provisions apply when the mortgage is either:

• A purchase transaction, or
• A no cash-out refinance

This means the provision is not designed as an asset-income solution for conventional cash-out refinancing.

That distinction is important when determining which mortgage strategy is available.

Who Could Benefit Most From Freddie Mac’s New Rule?

This update may be particularly useful for borrowers who are asset rich but income light.

Here are several examples.

Retirees

A retired borrower may have $2 million invested but deliberately withdraw only enough money each year to support their lifestyle.

Traditional income calculations may not fully reflect their financial strength.

Using accumulated assets may provide another way to qualify without necessarily creating additional taxable distributions solely for the mortgage application.

High-Net-Worth Borrowers

Someone may have substantial:

• Brokerage assets
• Cash
• Securities
• Retirement funds

but relatively little traditional W-2 income.

The updated formula can make those assets substantially more powerful for mortgage qualification.

Business Owners

Business owners frequently reduce taxable income through legitimate business expenses.

Someone can operate a very successful company while showing taxable income that does not support the mortgage amount they want.

Depending on the situation, accumulated asset qualification may be an alternative to conventional tax-return income analysis.

We already help borrowers evaluate several self-employed mortgage options, including bank statement, P&L, and asset-utilization programs.

Real Estate Investors

The addition of investment properties may be particularly valuable.

An investor may have:

$1.5 million in liquid investments

but relatively low taxable income because of:

• Depreciation
• Business deductions
• Real estate expenses

The new Freddie Mac rules could potentially allow those assets to strengthen conventional qualification.

People Who Recently Sold a Business

Someone who just sold a successful business may suddenly have millions in assets but no longer have the operating income from that business.

The updated treatment of documented business-sale proceeds can help address that situation.

People Who Recently Sold Real Estate

Likewise, documented proceeds from the sale of real property can now provide an eligible source for funding qualifying accounts.

Freddie Mac Asset Qualification vs. Non-QM Asset Utilization

Asset-based qualification is not new.

Non-QM lenders have offered asset-utilization or asset-depletion mortgages for years.

At Innovative Mortgage Brokers, we already help borrowers use asset-utilization mortgage programs when traditional income does not adequately reflect their financial resources.

The big difference is that Freddie Mac’s updated guideline creates greater flexibility within conventional financing.

That can potentially mean:

• Different interest-rate structures
• Different fees
• Different underwriting standards
• Different down-payment requirements
• Different property eligibility
• Different documentation

Neither conventional asset qualification nor Non-QM asset utilization is automatically better.

The right program depends on the borrower’s complete financial situation.

A $1 Million Example Shows Why This Change Matters

Let’s put the new rule into perspective.

Assume a borrower has $1,000,000 in net eligible assets after all required deductions.

Current Freddie Mac Calculation

$1,000,000 ÷ 240 =

$4,167 per month of qualifying income

New Freddie Mac Calculation

$1,000,000 ÷ 180 =

$5,556 per month of qualifying income

That is an increase of:

$1,389 per month

or approximately:

$16,667 per year of additional qualifying income

without the borrower receiving any additional salary, pension, or other recurring income.

For someone sitting near the maximum permitted debt-to-income ratio, that could potentially change the outcome of the mortgage application.

$2 Million Makes the Difference Even More Significant

With $2 million of net eligible assets:

Divide by 240

$8,333 per month

Divide by 180

$11,111 per month

Difference:

$2,778 per month

That is approximately:

$33,333 more qualifying income per year.

For high-net-worth borrowers, the underwriting impact can be substantial.

Does the Borrower Actually Have to Spend the Assets Every Month?

Not necessarily.

This is a mortgage qualification methodology.

The lender is converting eligible accumulated wealth into an equivalent monthly amount for underwriting purposes.

The borrower is not necessarily required to establish an automatic monthly withdrawal of exactly that amount.

The assets simply demonstrate an available financial resource that can support repayment, subject to Freddie Mac’s eligibility and documentation rules.

Can You Use Employment Income and Asset Income Together?

Potentially, yes.

Accumulated asset qualification does not necessarily mean the borrower has no other income.

The qualifying asset amount may be considered along with other eligible income when calculating the borrower’s debt-to-income ratio, subject to the applicable Freddie Mac requirements.

That can be especially powerful.

For example, a borrower may have:

$7,000/month pension and Social Security

plus

$4,000/month of qualifying accumulated asset income

The combination could significantly increase the mortgage amount they qualify for compared with using traditional income alone.

This Is Not Simply “Assets Divided by 180”

Although the change sounds simple, the actual underwriting is more nuanced.

Not every dollar in every account automatically qualifies.

The lender must evaluate:

• Asset type
• Ownership
• Account history
• Source of funds
• Required funds for closing
• Pledged assets
• Large balance changes
• Eligible transfers
• Loan transaction
• Occupancy
• Automated underwriting findings
• Other Freddie Mac requirements

That is why someone with $1 million in assets should not automatically assume:

“$1 million ÷ 180 means I have $5,556 of qualifying income.”

The first step is determining the net eligible asset amount.

When Does the New Freddie Mac Rule Take Effect?

The rule becomes mandatory for eligible mortgages with settlement dates on or after:

February 3, 2027

However, Freddie Mac specifically permits Sellers to implement the changes immediately.

That means some lenders may begin offering the expanded guideline well before February.

But lenders do not all implement optional guideline changes at the same time.

One lender may adopt it immediately.

Another may wait months.

Another may wait until the mandatory effective date.

This is one of the reasons there can be a meaningful difference between asking:

“Does Freddie Mac allow this?”

and

“Does this particular lender allow this today?”

A mortgage broker can be especially useful in situations like this because different wholesale lenders may adopt the change at different times.

Why This Change Matters

This is a relatively technical Freddie Mac bulletin, but it could have a very real impact on consumers.

The major improvements include:

• Divisor reduced from 240 to 180
• Approximately 33% more qualifying income from the same net eligible assets
• Special 80% maximum LTV restriction removed
• Investment properties added
• Borrower age restriction removed for depository accounts and securities
• Business-sale proceeds clarified
• Real-estate-sale proceeds added as an eligible source
• Electronic third-party verification permitted
• Clearer rules for large changes in account balances

For the right borrower, this could be the difference between:

Not qualifying

and

qualifying for a conventional mortgage.

The Bottom Line

Not everyone earns their financial strength through a paycheck.

Some borrowers accumulate wealth through decades of saving, investing, building businesses, or owning real estate.

Freddie Mac’s updated accumulated-assets guideline recognizes that reality more effectively.

The reduction from a 240-month divisor to 180 months is particularly significant because it increases the monthly income generated by the same amount of eligible assets by approximately one-third.

Combined with higher permitted LTVs and newly eligible investment properties, this is one of the more meaningful conventional mortgage changes for asset-rich borrowers.

If you have substantial savings or investments but have been told your income is too low to qualify for the mortgage you want, it may be worth reviewing the numbers again.

At Innovative Mortgage Brokers, we work with more than 30 lenders and can compare conventional asset qualification with other available options, including asset-utilization mortgages, bank-statement programs, P&L loans, and other mortgage options. Your particular combination of assets, income, property, and goals will determine which approach makes the most sense.

You can schedule a mortgage consultation to review your situation, and provide you with current options, or a plan.