Most people retiring to Sun City Hilton Head have spent decades saving, and then hit a strange wall at the mortgage stage. The paycheck is gone, Social Security alone doesn't cover the payment on paper, and a lender says you don't have enough income. You probably do. It's just sitting in your IRA and brokerage account.
Plenty of Sun City buyers skip this problem entirely. Roughly 40% to 45% pay cash, and if that's you, you don't need this article. It's for everyone else: buyers who want to keep their savings invested, keep cash on hand for the years ahead, or just don't want most of their net worth tied up in one house.
Asset depletion, which Freddie Mac calls assets as income, turns those balances into monthly qualifying income without you selling anything or starting withdrawals. A 2026 rule change made it far more generous. Here's how it works for a Sun City buyer, with real numbers.
How Asset Depletion Works
The lender adds up your eligible accounts, subtracts what you're spending to buy the home, and divides what's left by a set number of months. The result counts as monthly income, the same way a pension or paycheck would.
- Start with your eligible balances: savings, CDs, brokerage and, in many cases, retirement accounts.
- Subtract your down payment, closing costs and any reserves the loan requires.
- Divide what's left by the program's divisor. Under Freddie Mac's current rule, that's 180 months.
You never have to withdraw a dollar. The math only shows a lender that your savings could support the payment.
What Changed in 2026
Freddie Mac's Bulletin 2026-10 cut the divisor from 240 months to 180. The same savings now produce about a third more qualifying income. It also changed three other things that matter to retirees:
- No more 20% down requirement. The old 80% loan-to-value cap is gone, so standard conventional down payment limits apply.
- Second homes and rentals qualify. The rule now covers primary homes, second homes and investment properties.
- No age floor on savings and brokerage accounts. The old rule required a borrower to be at least 62 to use them.
What's left after closing has to be at least $30,000. The loan has to be a purchase or a refinance that doesn't take cash out. I go deeper on the full rule in How Freddie Mac's New Rule Lets Your Savings Qualify You.
Which Accounts Count
For most Sun City buyers, the big question is the IRA or 401(k). Under Freddie Mac's rule, a retirement account counts at its full balance if three things are true:
- You can withdraw all of it now without an early withdrawal penalty. For most people that means you're 59½ or older.
- You're not already taking regular distributions from it.
- You own it outright and the funds are fully vested.
Savings, money market, CDs and brokerage accounts count too. They generally need 12 months of history. A savings balance that dropped more than 20% over the past year needs an explanation, such as a transfer into your brokerage account.
If you're already drawing from an IRA every month, that account doesn't go into the asset math. The distributions can count as regular income instead, as long as the account can keep paying them for at least three years.
Example: A Couple Buying in Sun City
A retired couple, 66 and 64, is moving down from New Jersey. They have $4,200 a month in Social Security, a $500,000 IRA they aren't drawing from, and $400,000 in a brokerage account. They're buying a $550,000 home in Sun City with 20% down.
What they spend to buy. $110,000 down, plus about $16,500 in closing costs. That includes roughly $7,500 in Sun City's own resale fees: the transfer fee of two-thirds of 1%, the $3,500 community enhancement fee and the $300 administrative fee. It all comes out of the brokerage account, leaving $273,500 there.
Their monthly costs.
| Item | Per Month |
|---|---|
| Principal and interest ($440,000 at 7.0%, 30 years) | $2,927 |
| Property tax (4% legal residence rate) | $223 |
| Homeowners insurance (estimate) | $250 |
| Sun City base dues | $235 |
| Car payment | $400 |
| Total monthly debts | $4,035 |
How much income each method gives them. Their eligible savings after closing total $773,500: the full $500,000 IRA plus the $273,500 left in brokerage.
| How the Lender Counts Savings | Income From Savings | Total With Social Security | Debt-to-Income |
|---|---|---|---|
| Social Security only | $0 | $4,200 | 96% |
| Fannie Mae (IRA only, divided by 360) | $1,389 | $5,589 | 72% |
| Freddie Mac, old rule (divided by 240) | $3,223 | $7,423 | 54% |
| Freddie Mac, 2026 rule (divided by 180) | $4,297 | $8,497 | 47.5% |
Lenders generally want debt-to-income at or under about 45% to 50%. On Social Security alone, this couple can't come close. Under the old Freddie Mac math they still miss. Under the 2026 rule they're in range, without selling a single investment.
The tax line assumes they file for South Carolina's 4% legal residence rate. Until that's approved, the county bills at 6%, which would add about $460 a month here, because the 6% rate also drops the school operating credit. I explain that rule in South Carolina Property Taxes: The 4% vs. 6% Rule.
Conventional or Non-QM?
For most Sun City buyers, Freddie Mac's rule is now the first place to look. It's a standard conventional loan with conventional pricing.
Non-QM loans come from private lenders, and each one sets its own rules and pricing. Many price well above conventional. One I like for Sun City buyers is NexBank's Assets as ATR program, which prices much closer to a conventional loan than most non-QM options.
It works differently from Freddie Mac. There's no monthly income calculation and no debt-to-income ratio. NexBank checks that what you'll have left after closing comfortably covers the loan. Social Security and pensions don't even enter into it.
How NexBank counts your accounts
| Account | Counted At |
|---|---|
| Checking, savings, money market, CDs | 100% |
| Stocks, bonds, mutual funds | 80% |
| IRA or 401(k), age 59½ or older | 80% of the vested balance |
| IRA or 401(k), under 59½ | 70% of the vested balance |
| Cash value of life insurance or annuities | 100% |
You qualify if those counted balances, after closing, meet one of three tests. The simplest: at least 120% of the new mortgage, plus 30% of your other debt balances.
Our Sun City couple under NexBank. After closing they'd have $618,800 counted: 80% of the $500,000 IRA plus 80% of the $273,500 brokerage balance. The simple test needs $534,000: 120% of the $440,000 loan plus 30% of a $20,000 car loan balance. They pass with room to spare, and nobody has to calculate a ratio.
The documentation is simpler too: six months of statements, with balances verified within 120 days of closing.
Non-QM can make sense when:
- You're under 59½ and most of your money is in retirement accounts. NexBank still counts them at 70%.
- You're already drawing from your IRA and still come up short on a debt-to-income ratio.
- Your balances moved around too much in the last 12 months to meet Freddie Mac's history rules.
- You'd rather qualify on what you have than document every income source.
The catch is that only what's left after your down payment and closing costs counts, and it has to stay in your accounts. The rate usually runs a bit higher than conventional, too. Because I shop more than 150 wholesale lenders, I run the conventional and non-QM options side by side and show you the difference.
What to Have Ready
- Account statements. The most recent statement for every IRA, 401(k), brokerage and bank account, plus the statement from 12 months earlier for savings and brokerage accounts.
- Social Security award letters. Pension award letters too, if you have them.
- An explanation of big moves. Any large transfers or deposits in the last year, such as money from a home sale up north.
- The specific home. Sun City dues vary by neighborhood, and taxes vary by district, so the qualifying math runs on a real address.
If you're selling a home in another state, those proceeds can count once they're deposited into your account. If you need to buy before you sell, there are ways to do it without a bridge loan. See Buy Before You Sell, Without a Bridge Loan. For the rest of what goes into buying here, from dues to closing fees, see Buying in Sun City Hilton Head.
Frequently Asked Questions
Do I have to withdraw money from my IRA to qualify?
No. The lender only uses the balance in the calculation. Nothing gets sold or withdrawn, and there's no tax hit.
Can I use my IRA if I'm under 59½?
Not under Freddie Mac's rule, because the account has to be available without an early withdrawal penalty. Savings and brokerage accounts still count at any age, and NexBank's non-QM program counts retirement accounts at 70% for borrowers under 59½.
Does it matter that Sun City is a 55+ community?
No. Financing works the same as in any HOA community. Your dues do count against your debt-to-income ratio, so the neighborhood you pick matters.
Can I combine this with Social Security or a pension?
Yes. Asset income stacks on top of any other income you have, as in the example above.
Does it work for a second home in Sun City?
Yes. Freddie Mac's 2026 rule covers second homes. Remember that a second home is taxed at South Carolina's 6% rate, which raises the payment you have to qualify for.
Retiring to Sun City? Send Me Three Numbers
Roughly what's in your accounts, your monthly Social Security and pension, and the price range you're looking at. I'll run the asset math against real Sun City dues, taxes and insurance and tell you what you qualify for, before you fall in love with a house. Call me at (843) 940-8410 or email Brad@TheNoPayneBroker.com.
I'm a mortgage broker, not a financial or tax advisor. Loan approval depends on your full file, and guidelines and rates change. The example uses illustrative numbers. Sources: Freddie Mac Bulletin 2026-10 summary, Fannie Mae Selling Guide B3-3.4-06, NexBank Non-QM Reduced Doc Guidelines (07.15.2026).