"Can I Qualify for a Mortgage on My Savings Instead of a Paycheck? Freddie Mac's Divide-by-240 Rule"

The business sold in the spring. The proceeds went into a brokerage account, the paychecks stopped, and next year's tax return will show a small part of the income you lived on for years. You still want to buy the next home, and you would rather not start drawing the account down just so a lender can see a monthly deposit.

Yes, Freddie Mac lets a lender turn documented savings into qualifying income: it subtracts the money you need to close, any gift or borrowed funds and anything pledged as collateral, then divides what is left by 240. The loan has to be a purchase or a no cash-out refinance on a one- or two-unit home you will live in, or a second home, at 80 percent of value or less.

I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, NMLS #483943, through C2 Financial Corporation, licensed in fifteen states.

The rule is Section 5307.1 of the Freddie Mac Single-Family Seller/Servicer Guide, titled "Assets as a basis for repayment of obligations" and revised 08/05/2026. It says assets you will use to repay your monthly obligations "may be used to qualify [you] for the Mortgage," provided that section and Section 5301.2 are met. The quotes below say [you] where the guide names the client.

Freddie Mac's route and Fannie Mae's route are two different calculations

Last month I wrote about Fannie Mae's route for using retirement savings as qualifying income. That one is built on Fannie Mae's B3-3.4-06, divides by the months in the loan term, and caps the loan at 70 percent of value, or 80 percent once the account owner is 62. This is the Freddie Mac route, and its numbers come out differently, so please ask which agency's guide your loan is being underwritten to before you compare figures.

	Freddie Mac, Section 5307.1	Fannie Mae, B3-3.4-06
The balance is divided by	240	The months in the loan term (360 on a thirty-year loan)
Highest loan-to-value	80%	70%, or 80% once the account owner is 62
Checking and savings accounts	Eligible when an account owner on the loan is at least 62	Generally not eligible, unless the money came from an eligible employment-related asset
Proceeds from selling your business	Eligible, with conditions	Not one of the sources the section names
Taken off before dividing	Money to close, gift and borrowed funds, anything pledged	A distribution penalty, the down payment, closing costs and required reserves

How does Freddie Mac calculate income from assets?

Step 1. The lender will "Determine the total eligible documented asset amount." In plain terms, it adds up the accounts that meet the conditions further down this page, at the balances your statements show.

Step 2. The lender subtracts three things from that total:

• "Any funds required to be paid by [you] to complete the transaction (e.g., Down Payment and Closing Costs)"
• "Any gift funds and borrowed funds"
• "Any portion of assets pledged as collateral for a loan or otherwise encumbered"

Freddie Mac calls what remains the "net eligible assets."

Step 3. The guide's instruction is "Divide the 'net eligible assets' by 240." The result is the "qualifying asset amount," a monthly figure the lender uses in your debt-to-income ratio. The 240 is a fixed number, and the section does not change it for a fifteen-year or a thirty-year loan.

A gift from family can still help you close, and how a gift for a down payment gets documented covers that part. It cannot also count as savings that produce income, because it comes off in Step 2.

If your file also needs reserves, what counts as mortgage reserves explains how that money gets counted.

The loans that can use Freddie Mac's asset qualifying

The guide says the assets "may only be used to qualify [you] if the Mortgage meets all of the following requirements," and there are three:

• "The Mortgage is secured by a 1- or 2-unit Primary Residence or a second home"
• "The Mortgage is either a purchase transaction Mortgage, 'no cash-out' refinance Mortgage or Freddie Mac Enhanced Relief Refinance® Mortgage"
• "The Mortgage has a maximum loan-to-value (LTV)/total LTV (TLTV)/Home Equity Line of Credit (HELOC) TLTV (HTLTV) ratio of 80%"

That 80 percent bullet ends with an exception: a Freddie Mac Enhanced Relief Refinance follows the limits in Section 4304.3 instead. On a purchase, 80 percent of value means a down payment of at least 20 percent. A second mortgage or a home equity line counts inside that same 80 percent, so a second loan cannot bring your down payment lower. You cannot use this route on a cash-out refinance, an investment property, or a three- or four-unit property.

The accounts that count toward net eligible assets

Freddie Mac names four kinds of accounts, and each one has its own conditions. When we go through your statements together, this is what I will be looking for in each one.

Retirement accounts, such as a 401(k) or an IRA

The account needs to be a retirement account the IRS recognizes, in your name alone, and fully vested, so all of the money belongs to you. You also cannot already be drawing income from it. If you already take regular payments, your file follows how retirement income you already receive gets documented instead.

Freddie Mac also wants to see that on the day you sign your loan, you could withdraw the whole balance without a penalty or an extra early distribution tax. I would ask your tax advisor whether a penalty applies at your age before we count on this account.

A lump-sum distribution you did not roll over

This is money paid out to you from a retirement account and put into a checking, savings or regular investment account instead of another retirement account. You need to be the person who received it, and nobody who is not on the loan can be an owner of the account holding it. The money has to be available to you in full, and the payout cannot have carried a penalty or early distribution tax.

Checking, savings and investment accounts

These count when they are in your name, or when everyone on a joint account is on the loan, on the title to the home, or both. An account in a living trust counts as yours when you are the person who set up the trust. At least one owner of the account who is on the loan has to be 62 or older.

The money also needs to be at a U.S. or state-regulated bank or brokerage, counted in U.S. dollars, and available to withdraw in full without a penalty.

Freddie Mac's guide has a lighter and a fuller documentation level for these accounts. The lighter one asks for one month of statements and the fuller one asks for two, and your lender will tell you which one your file gets. Either one can use a verification of deposit instead, which is the lender confirming your balance directly with your bank.

Any deposit bigger than 10 percent of the total in these accounts needs a paper trail showing where it came from. If we cannot show that, the deposit comes out of the amount you qualify on. If you are thinking about selling investments to close, when you actually have to sell stock for a down payment covers the timing.

Proceeds from selling your business

This money counts when it is in a checking, savings or regular investment account, it belongs only to you or to others on the loan with you, and nobody outside the loan owns part of that account. It also has to be available to you in full. The guide says the sale "must not have resulted in the following: retention of business assets, existing secured or unsecured debt, ownership interest or seller-held notes to buyer of business." If you carried a note for the buyer or kept a piece of the company, this money does not count here.

Proceeds from selling your business count at any age. The 62-or-older requirement belongs to ordinary checking, savings and investment balances, and Freddie Mac lists business-sale money separately.

Cryptocurrency is left out of the calculation

Freddie Mac's guide says "Cryptocurrency may not be considered in the calculation of net eligible assets for establishing the DTI ratio." If part of your savings is in crypto, we will work out your numbers without it.

Your application still lists your job and your income

Form 65 is the Uniform Residential Loan Application. Freddie Mac's guide says it "should include information pertaining to [your] employment and income, even if [you qualify] for the Mortgage solely based on assets." Please list your current work and any income you receive, including part-time work or a pension.

A newer version of this section is on the way

Freddie Mac posts this alert at the top of Section 5307.1: "Refer to Bulletin 2026-10, which announced updates related to accumulated assets as income. Sellers may implement the new requirements prior to the mandatory February 3, 2027 version of this section." This page describes the version revised 08/05/2026, so please ask your lender which version applies to your file.

The steps to take before you apply

Sorting your accounts. You'll want to put each account into one of the four groups above, and set aside anything held in crypto or owned with somebody who will not be on the loan.

Asking the plan administrator. For a 401(k) or an IRA, please ask whether you could withdraw the full balance at closing without a penalty, then confirm the tax side with your tax advisor.

Gathering the documents. When you're ready, please provide the documents below, and for every statement please provide all pages, even if the last page is intentionally left blank.

• For a 401(k) or an IRA, your most recent statement.
• For a lump-sum distribution, your employer's distribution letter or check stubs, and your Form 1099-R if you have received it.
• For checking, savings and investment accounts, your most recent one or two months of statements, depending on the documentation level your file gets.
• For money from selling your business, the last three months of statements for the account holding it, and the fully executed closing documents showing the sales price and net proceeds. Please also provide the contract for the sale and your most recent business tax return from before the sale.

From there you can get pre-approved with your accounts and documents reviewed rather than estimated.

Common mistakes with asset-based qualifying

Planning around the full balance. Your down payment and closing costs come off your balance before Freddie Mac divides by 240. If you set your price range from the full balance, the monthly income figure will come out lower than you planned on.

Assuming the age requirement covers every account. The 62-or-older requirement applies only to checking, savings and investment accounts. Retirement accounts, lump-sum distributions and business-sale proceeds do not carry it, though a retirement account still has to be withdrawable without a penalty.

An illustration with made-up numbers

Numbers below are made up to show the mechanism.

A client is 64, with $950,000 in brokerage and savings accounts in her own name, $25,000 of it pledged against a line of credit. She is buying a $650,000 home with 20 percent down.

Savings and brokerage, client age 64

Eligible balances, documented             $950,000
Down payment                            (-) 130,000
Closing costs                             (-) 16,000
Pledged as collateral                     (-) 25,000
                                        -----------
Net eligible assets                       $779,000
Divided by 240                               / 240
                                        -----------
Qualifying asset amount, monthly         $3,245.83

Now the same home for a client who is 57 and sold her business cleanly last year, with $780,000 in net proceeds in her own brokerage account.

Business sale proceeds, client age 57

Sale proceeds, documented                 $780,000
Down payment                            (-) 130,000
Closing costs                             (-) 16,000
                                        -----------
Net eligible assets                       $634,000
Divided by 240                               / 240
                                        -----------
Qualifying asset amount, monthly         $2,641.67

The second client is under 62 and her money still counts, because business-sale proceeds count at any age. Whether either figure is enough depends on the taxes, insurance and rate on that home.

Your next step

You can run your numbers on the homepage and see rates priced for your own scenario, without a credit pull or an account. Then choose the option that works best for you, knowing that the selection can change as your file comes together.

Common questions

Can I qualify for a mortgage with no job if I have a lot of savings?

Often, yes, under Freddie Mac's Section 5307.1. The lender subtracts the money you need to close, any gift or borrowed funds and anything pledged from your eligible accounts, then divides the rest by 240 and counts that as monthly income.

Do I have to be 62 to use Freddie Mac's asset qualifying?

Only for checking, savings and investment accounts, where at least one owner of the account who is on the loan has to be 62 or older. Retirement accounts, lump-sum distributions and proceeds from selling your business do not carry that age requirement.

Do I have to withdraw money from my accounts to qualify this way?

The section does not say the money has to come out. For retirement, checking, savings and investment accounts, it asks that you be able to withdraw the entire balance without a penalty as of the date on your note.

Is Freddie Mac's 240 rule the same as Fannie Mae's asset rule?

No. Freddie Mac's Section 5307.1 divides net eligible assets by 240 and allows up to 80 percent of value. Fannie Mae's B3-3.4-06 divides by the months in the loan term and caps the loan at 70 percent of value, or 80 percent once the account owner is 62.

Does asset qualifying work on a cash-out refinance or a rental property?

No. Section 5307.1 limits this route to a purchase, a no cash-out refinance or a Freddie Mac Enhanced Relief Refinance, on a one- or two-unit primary residence or a second home. Those other loans have to qualify on income documented another way.

Nothing here is a credit decision, an approval or a denial. Agency guidelines change, so please confirm what applies to your own file.