Don’t Sell Your Stocks to Buy a House: Use An Asset Depletion Mortgage

Investing in stocks and retirement accounts has been the primary way everyday Americans build wealth. Whether you started early with an employer-sponsored 401(k), built up a taxable brokerage over the years, or rode the market’s growth through index funds and individual equities, those assets represent years — maybe decades — of disciplined saving and compounding returns.

So why should you give it all up — triggering taxes, penalties, and lost future growth — just to buy a home?

There is a better way. You don’t need to liquidate your long-term investments to qualify for a mortgage — and you certainly don’t want to let Uncle Sam take a big chunk of your gains in the process.

Why Selling Stocks or Tapping Your Retirement Accounts for Homeownership Is a Bad Trade

Let’s be honest: your investments in stocks, bonds, mutual funds, and retirement accounts like 401(k)s or IRAs weren’t meant to be short-term cash sources. They were meant to grow over decades, helping pay for the future you envision — retirement, freedom, legacy.

When you prematurely sell appreciated stock or withdraw from tax-advantaged retirement accounts, you face two costly downsides:

1. Capital gains taxes: Selling appreciated stock or ETFs typically triggers capital gains tax. Even long-term gains can hit you with a meaningful tax bill, shrinking what you keep and reducing the benefit of years of growth.

2. Withdrawal penalties and lost compounding: With retirement accounts, if you’re under age 59½ you may owe a 10% early-withdrawal penalty and income tax on distributions — effectively eroding a large portion of what you’ve worked hard to save.

Meanwhile, taking money from these accounts doesn’t change how much house you can afford most of the time — because mortgage underwriting typically looks at income and debt ratios, not how many stocks you sold last Tuesday.

So selling investments or raiding retirement accounts just to buy real estate can feel like cutting off the very branch you’re sitting on.

The Problem: Traditional Mortgages Generally Don’t Recognize Your Investments to Qualify For the Mortgage You Want

Most mortgage lenders want to see predictable income — W-2s, pay stubs, sometimes rental income — and they don’t always count stocks or retirement accounts the way you might expect.

That means even if you’re sitting on a large portfolio or decades of retirement savings, traditional lenders often won’t factor those assets into your qualifying picture unless you:

• Sell them and show the cash; or

• Use them as collateral in some way.

For stocks, that usually means liquidating positions, taking a tax hit, and reducing future growth potential. For retirement accounts, it means early penalties or complicated IRS rules around distribution exceptions — not exactly the path to financial confidence.

A Better Solution: Asset Depletion Mortgages Without Liquidating Your Investments

At LendFriend Mortgage, we believe wealth isn’t one-dimensional — and your mortgage strategy shouldn’t be either.

Instead of forcing you to sell productive assets, we help you qualify for a home loan using your existing investment strength in ways that preserve long-term growth.

How?

Asset-Based Income Calculation Using an Asset Depletion Mortgage

Rather than treating your stocks or retirement accounts as something you must cash out, an asset depletion mortgage allows those assets to be used for qualification without selling them. Instead of focusing solely on W-2 income, this approach converts a portion of your verified investment and retirement balances into a calculated monthly income for underwriting purposes.

In plain English, the lender looks at the value of your portfolio — taxable brokerage accounts, certain retirement accounts, and other eligible assets — and spreads that value over a defined period to determine qualifying income. You’re not liquidating anything. You’re not triggering capital gains or early-withdrawal penalties. And you retain full control of assets that were meant to compound over time.

This strategy works particularly well for high-net-worth households, investors, and business owners whose financial strength doesn’t show up cleanly on a pay stub. If your balance sheet is strong but your W-2 doesn’t tell the full story, an asset depletion mortgage bridges that gap.

Why This Matters for Stockholders and Long-Term Investors

Imagine you’ve built a substantial brokerage account over the years — one million to three million dollars or more — invested across index funds, dividend-paying stocks, and long-term growth equities. Selling even a portion of that portfolio to fund a down payment means paying capital gains taxes and permanently removing assets that were designed to grow over decades. The real cost isn’t just the tax bill today. It’s the compounded growth you give up forever.

The same logic applies to retirement accounts. Four-hundred-one(k)s and IRAs are specifically structured to defer taxes and maximize long-term growth. Tapping them early — even when IRS exceptions apply — often results in immediate taxation, potential penalties, and a smaller retirement cushion down the road.

An asset depletion mortgage flips that equation. Instead of forcing you to sell productive assets, it allows your investment portfolio to be recognized as financial strength. The result is a mortgage strategy that preserves long-term growth, avoids unnecessary taxes and penalties, and still allows you to qualify confidently for the home you want — without sacrificing flexibility for retirement or future investments.

Real People, Real Results

Take a hypothetical buyer who has $2M in a taxable brokerage account and a strong credit profile. Under a traditional mortgage underwriting model, a lender might only give weight to a fixed income stream — leaving that investor stuck with selling assets or struggling to qualify.

Instead, with an asset-based approach, that same investment portfolio can be translated into steady qualifying income — letting the buyer secure financing without selling shares or leaving retirement on the table. That’s the kind of strategy that keeps wealth where it belongs — working for you.

The Bottom Line: Don’t Sacrifice Your Future for Today’s Purchase

Owning a home is a defining financial milestone — and one that should be approached with strategy, not sacrifice.

Selling stocks or withdrawing from retirement accounts to buy a house might feel like a way to accelerate ownership, but it often comes at the cost of long-term financial security. Investment portfolios and tax-advantaged retirement accounts are built for future financial comfort — not short-term cash grabs.

Instead, work with a lender who understands how to leverage your full financial picture, including stocks, bonds, brokerage accounts, and retirement plans — without forcing you to liquidate them. That’s how you buy a home and preserve a secure financial future.

At LendFriend Mortgage, we tailor your mortgage strategy to your financial life — not some outdated underwriting rulebook. From asset-based qualification to creative income modeling, we help sophisticated buyers turn investments into ownership — without unnecessary financial sacrifice.