Can you qualify for a mortgage after giving notice at your job before retirement?
Usually not on your salary. Once you've given notice, underwriting can't count that income because there's no likelihood it will continue. One solution is an assets-as-income loan. In this case study, a retiring teacher from El Dorado Hills wasn't taking Social Security or retirement distributions yet. Fannie Mae's standard asset depletion calculation was too conservative, so we used our portfolio option, which spreads his $1,050,000 in retirement and investment account balances over 60 months. That qualified him for a $695,000 second home in South Lake Tahoe with 30% down.
Best for: Retirees and soon-to-be retirees with significant savings but little or no current income
He was getting ready to retire and had already given notice when the perfect home came on the market in South Lake Tahoe. He was ready to be out of the city and closer to the mountains, where he's a member of the Tahoe Backcountry Ski Patrol. What he didn't know was that giving notice meant he could no longer qualify using his salary as a teacher. Here's how we used his retirement savings to get him the cabin anyway.
The Problem: Giving Notice Ends Your Qualifying Income
To count income, underwriting needs a reasonable likelihood that it will continue. Once he gave notice, his full-time teaching salary no longer met that test, even though he was still working. He also wasn't planning to start Social Security or take taxable distributions from his retirement accounts yet. On paper, he had no qualifying income, and he was worried he'd miss the opportunity.
The Solution: Assets as Income
He did have something that could make qualifying a breeze: $1,050,000 in retirement and investment accounts. An assets-as-income loan turns account balances into monthly qualifying income, without requiring you to withdraw anything.
Why the 60-Month Calculation Made the Difference
The standard Fannie Mae asset depletion calculation was too conservative for his purchase. Fannie Mae typically spreads eligible balances over the full loan term, which turns even a large balance into a modest monthly figure. Our portfolio assets-as-income option uses a 60-month calculation instead. Dividing the same balances over 60 months produced more than enough qualifying income for the purchase. The terms: - Purchase price: $695,000 - Down payment: 30% ($208,500) - Loan amount: $486,500 - Occupancy: second home - Qualified on: $1,050,000 in retirement and investment account balances
Same $1,050,000 in accounts, two calculations
South Lake Tahoe second home: $695,000 purchase, 30% down, $486,500 loan
| Standard Fannie Mae asset depletion | Portfolio assets as income (his loan) | |
|---|---|---|
| Months used | Typically the loan term (360 months) | 60 months |
| Monthly income from $1,050,000 | Up to about $2,917 | Up to $17,500 |
| Result for this purchase | Too conservative | More than enough to qualify |
| Withdrawals or Social Security needed | No | No |
| Occupancy | — | Second home |
The Result: A Cabin on the Edge of South Lake Tahoe
He got the perfect little cabin in the woods on the edge of South Lake Tahoe. It's a crash pad for all the free time he'll have to escape to the mountains in retirement, and it's not too far a drive from his main home in El Dorado Hills. For more on buying in the area, see our El Dorado County mortgage lender page, or read about asset depletion loans in California.
Model Your Qualifying Income
Assets as Income Calculator
Enter your savings, investments, and retirement balances once and see all three calculations side by side — the Lumen 36-month, the Lumen 60-month, and the Fannie Mae method — with your qualifying monthly and annual income for each. Toggle retirement age, loan term, and funds-to-close to watch the numbers move, and layer in any other monthly income you have.
Compare three methods
The Lumen 36-month, Lumen 60-month, and Fannie Mae employment-related-assets calculations, side by side on one screen.
See why portfolio wins
Watch why the portfolio programs out-qualify the agency calc — often by several times the monthly income.
Layer in other income
Add Social Security, pension, or part-time W-2 income on top of any of the three asset methods.
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Frequently Asked Questions
Can I qualify for a mortgage after giving notice at my job?
What is an assets-as-income loan?
How is a 60-month asset depletion calculation different from Fannie Mae's?
Do I need to take Social Security or retirement distributions to qualify?
Can I use assets as income to buy a second home?
Have Questions About Your Mortgage?
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Bottom Line
If you're retiring, or already retired, and your savings are bigger than your income, you may qualify on your assets instead. See what your accounts could support in the assets-as-income calculator, then call Lumen Mortgage at 503-966-9255 or email dblackmon@lumenmortgage.com. Licensed in Oregon and California. NMLS #1498678.
