Fannie Mae Asset Depletion Calculator

Fannie Mae’s method uses the mortgage amortization term rather than a borrower life-expectancy period. A thirty-year loan therefore uses 360 months. A fifteen-year loan uses 180 months. The calculation should begin only after determining which assets are eligible, owned, vested, liquid, available, properly sourced, and accessible.

Optional account-loan deductions and custom investment haircuts are visibly labeled as overlays. They do not silently alter the base formula.

1. Enter borrower age, application date, closing date, and a file reference.
2. Choose the loan purpose, occupancy, unit count, property value, lien amounts, and amortization term.
3. Add every asset account separately. Enter its documented and vested balances.
4. Confirm ownership, liquidity, availability, unrestricted access, distribution status, and source documentation.
5. Enter penalties applicable to complete distribution, plus documented transaction costs.
6. Enter down payment, closing costs, reserves, and any verified offsets.
7. Use reverse mode to estimate assets needed for a target income.
8. Use DTI mode and scenarios for planning comparisons.
9. Review every warning and documentation item before using the result in a loan file.

Loan purpose and occupancy

The employment-related asset method is designed for purchase and limited cash-out refinance transactions. The property must be a principal residence or second home. This calculator marks cash-out refinances and investment properties as failing the automatic screen.

Maximum LTV, CLTV, and HCLTV

The standard maximum is 70 percent. The maximum can be 80 percent when the borrower using the qualifying assets is at least 62 years old at closing and the ownership requirements are satisfied. Jointly owned assets require every owner to be a borrower. The calculator evaluates LTV, CLTV, and HCLTV separately because all applicable ratios must pass.

Eligible ownership

An asset may be owned individually by the borrower. A jointly owned asset may be considered when the co-owner is also a borrower. The ownership percentage field supports situations where the documented share is less than the full account balance, but an underwriter must confirm the supported amount.

Liquidity and access

Assets must be liquid and available. For a 401(k), IRA, SEP, or Keogh account, unrestricted access means the borrower has an unqualified and unlimited right to request distribution of all funds at the time of calculation. A tax withholding possibility or distribution penalty does not by itself remove access, but the applicable penalty must be deducted.

Existing distributions

A retirement account may be used under this method when distribution has not already been established, or when an established distribution is insufficient to qualify. When a sufficient recurring distribution exists, the payment may need evaluation under retirement-income rules instead. The calculator flags this situation rather than counting the account automatically.

Retirement accounts

Vested 401(k), traditional IRA, Roth IRA, SEP IRA, and Keogh funds are included as selectable categories. The most recent monthly, quarterly, or annual statement should document the account, its asset composition, the vested amount, and the terms. The tool also asks whether the borrower can request a full distribution.

Severance and lump-sum retirement proceeds

A non-self-employed severance package or lump-sum retirement distribution can qualify when documented and deposited into a verified asset account. Supporting evidence can include an employer distribution letter and Form 1099-R. The calculator adds those items to the generated checklist.

Checking and savings accounts

Ordinary checking and savings balances are generally not employment-related assets for this method. They can be considered when the source is an eligible employment-related asset, such as documented severance or a lump-sum retirement distribution. Choose the specially labeled sourced checking or savings option and preserve the paper trail.

Trusts funded recently

When eligible employment-related assets were liquidated and placed into a trust within twelve months of the application date, the income calculation remains subject to this framework. Trust documents and evidence of the original eligible source are important.

Generally ineligible categories

The automatic screen excludes stock options, non-vested restricted stock, lawsuit proceeds, lottery winnings, real-estate sale proceeds, inheritance, divorce proceeds, and virtual currency. These items may have other roles in a loan file, but they are not treated as employment-related assets by this calculation.

Asset statements should identify the financial institution, the borrower as account holder, at least the last four digits of the account number, the covered period, and the ending balance. Depository statements should include transaction activity. Retirement statements should be current and should identify vested amounts and applicable terms.

Document the penalty that would apply if the account were completely distributed at the time of calculation. Do not apply a percentage only to the amount remaining after closing unless that method is supported by the current guide and the lender’s interpretation. The official example applies the early-distribution penalty to the complete account before subtracting transaction funds.

Required reserves should come from the actual underwriting findings or a properly completed reserve analysis. Reserve requirements may change based on occupancy, number of units, other financed properties, transaction type, and underwriting method. This calculator therefore accepts a reserve amount instead of pretending that one universal reserve rule applies.

Keep a copy of the inputs, the account-level audit table, the generated checklist, and the source statements. A transparent worksheet is easier to review than a single unexplained income number.

• B3-3.4-06, Employment Related Assets as Qualifying Income
• B3-4.1-01, Minimum Reserve Requirements
• B3-4.2-01, Verification of Deposits and Assets
• B3-4.3-03, Retirement Accounts

Guide content can change. Confirm the current publication and lender overlays on the calculation date.