The Quick Read: A brokerage account does not “back” a loan the way a house does. On a purchase, it mostly helps you show the down payment, closing costs and reserves. On a cash-out refinance, the home’s equity sets the loan size, and the account mostly shows you can handle the cash to close and the reserves. The amount that counts depends on how the account is used, what it holds, and what you owe against it.
Here is the honest sorting. A purchase suits you if you are buying a home and the account is your down payment. A cash-out refinance suits you if you already own the home, have built equity, and want to pull some out. Neither loan is built to lend against your stocks.
Key Takeaways
- Stocks, bonds and mutual funds can count toward a down payment, closing costs and reserves, once the lender verifies ownership and value.
- Value is measured net of any margin loan, and unvested stock or options do not count.
- If the account is worth at least 20% more than the money you need, the file can often skip proof of sale.
- A purchase and a cash-out refinance reach different leverage, and the cash-out has seasoning clocks that can decide eligibility first.
Side-by-Side
The table below uses the conventional program figures across the wholesale lenders Lendmire works with. Every figure is subject to lender guidelines and full file review.
| Factor | Purchase | Cash-out refinance |
|---|---|---|
| Leverage, one-unit primary home | 95% LTV; 97% for first-time buyers | 80% LTV |
| Leverage, 2-4 units | Up to 95% on a primary home | 75% LTV |
| Second home / rental | 90% second home; 85% or 75% rental | 75% LTV |
| Credit floor | 620 decision score to start | 620 to start; 680 on the 89.99% lane |
| Mortgage insurance | Required above 80% LTV | None at 80%; none on the 89.99% lane |
| Seasoning | None | Loan 12 months old; 6 months on title |
| Occupancy | Primary, second home or rental | Same, with lower leverage |
| What the account shows | Down payment, closing costs, reserves | Cash to close, reserves |
| Documentation | Statements, ownership, large deposits | Same, plus existing loan and title history |
LTV, or loan-to-value, is the loan balance divided by the home’s value. A decision score is the credit score the lender’s automated review uses to make its finding. Mortgage insurance protects the lender if you stop paying, and it applies to some loans above 80% LTV. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
One rental note: occupancy decides leverage, which is why the table shows lower numbers for second homes and rentals. This article stays on the home you live in.
How a Brokerage Account Counts
The account counts as an asset, and the lender decides what portion of it is usable. Fannie Mae’s Selling Guide allows vested stocks, government bonds and mutual funds for the down payment, closing costs and reserves. The lender must verify you own them and what they are worth.
Value comes from your most recent monthly or quarterly statement. If you have a margin loan against the account, that balance comes off the top. Vested options count at their gain if exercised and sold. Unvested options do not count at all. Government bonds generally count at purchase price unless you document their redemption value.
Reserves are the months of housing payments you hold in the bank after closing. They are measured in months of the full monthly housing payment, and money needed to close is subtracted before reserves are counted. So the same dollar cannot do two jobs.
Across the wholesale programs Lendmire places files with, this is where most surprises come from. A borrower says “I have plenty in my brokerage account.” Then the statement shows a margin balance, a block of unvested shares and a position concentrated in one company. The usable number ends up well below the headline.
The 20% Cushion Test
When you need to sell securities to close, the lender asks whether you must prove the sale. Fannie Mae’s announcement sets the test: if the asset is worth at least 20% more than the funds needed, no proof of liquidation is required. Without that cushion, the file must document that you received the sale proceeds.
For reserves, the same announcement allows 100% of the asset’s value, and you do not have to sell anything to count it. That is a real advantage. A balance you leave invested can still strengthen the file.
A quick picture, in percentages only: say you need a certain amount to close, and the account holds that amount plus 25%. You clear the cushion test, and the sale is not part of the paperwork. Hold only a 10% cushion and the sale needs to be documented from start to finish.
Selling can also create a tax bill or lock in a loss. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
When a Purchase Is the Better Fit
A purchase is the better fit when you are buying a home and the account is the source of your cash. Leverage is higher, and the account’s job is simple: down payment, closing costs and reserves.
The numbers favor a purchase on cash needed. A one-unit primary home reaches 95% LTV, which means 5% down. First-time buyers can reach 97% LTV, or 3% down, on a one-unit home with a fixed-rate loan. A first-time buyer here is someone with no ownership interest in a residence in the previous three years. Two- to four-unit primary homes also reach 95%. Mortgage insurance is required above 80% LTV. You can ask to cancel it at 80% of the original value with good payment history and no subordinate liens. The servicer must end it automatically at 78%. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
A purchase also has no seasoning clock. You do not need to have owned anything for a set time. If your account is large, you may keep some of it invested and show it only as reserves, since reserves can count at full value without a sale.
Credit matters too. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. A bigger account does not replace the score. It supports the file, but it does not substitute for credit.
Choose a purchase when:
- You are buying and want the lowest cash commitment.
- You would rather keep more of the account invested as reserves.
- You qualify as a first-time buyer and want the 3% down lane.
- Mortgage insurance is acceptable to you while you build equity. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
When a Cash-Out Refinance Is the Better Fit
A cash-out refinance is the better fit when you own the home, have real equity, and want cash without selling investments. Here the appraisal drives the loan size, and the account serves as supporting strength.
Leverage is lower, and the clocks matter. A conventional cash-out reaches 80% LTV on a one-unit primary home. It reaches 75% on two- to four-unit homes, second homes and rentals. The loan you are paying off must be at least 12 months old, counted from note date to note date. At least one borrower must have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards, as Fannie Mae’s cash-out rules lay out. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Delayed financing is the one to know if you paid cash for the home. A cash-out is allowed within six months of an all-cash purchase when the source of those funds is documented. A brokerage account can be part of that story. Lendmire’s piece How Much a Delayed-Financing Cash-Out Returns vs Appraised Value walks through that case.
A wholesale lane also reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed loan, a primary residence and a conforming loan balance, with its own six months of seasoning. Texas homestead rules cap a cash-out on the homestead at the agency figure, so that lane is not written there. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
On a cash-out, a higher debt-ratio file can trigger a reserve requirement. A brokerage balance can supply those reserves without being sold. That is where an account earns its keep on this loan. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Review Lendmire’s cash-out refinance programs to see how these lanes line up with your equity.
Choose a cash-out when:
- You have owned the home long enough to meet the seasoning clocks.
- You want to use home equity instead of selling investments.
- Your debt ratio is reasonable and the account can cover reserves.
- You have a clear, lasting use for the cash.
The Risk Side of Cash-Out
A cash-out refinance replaces your original mortgage. Home equity loans and HELOCs leave the first loan alone, which is a different structure, as the CFPB’s research blog explains. You also give up the equity you draw out.
The risk grows if the cash pays off unsecured debt. Missing payments on a credit card is unlikely to cost you your home. Missing payments on a mortgage can. Once you fold that debt into the mortgage, it is tied to the house.
What About Streamlines and Existing Government Loans?
If you already hold an FHA or VA loan, a streamline may fit better than a cash-out. An FHA Streamline needs an existing FHA loan, offers no appraisal and a limited credit review, and requires a net tangible benefit. A VA IRRRL needs an existing VA loan, carries a 0.5% funding fee unless you are exempt, requires no VA appraisal, and requires a net tangible benefit. Seasoning is the later of 210 days and six payments.
Both are limited-cash products. They are not built to hand you equity. Funds you need to close must still be verified, as HUD’s reference guide notes, though that page is archival. Lenders may add their own overlays.
What Can Shrink the Number
Several things can cut the usable amount, and they apply to either loan:
- Margin loans. They come off the account’s value.
- Unvested shares or options. They count for nothing.
- Concentration. One heavy position can swing the value between statements. Some lenders look harder at it.
- Recent or large deposits. Expect questions about where the money came from, especially in a newly opened account.
- Funds to close. They come out before reserves are counted.
- Statement age. Use recent statements, and expect the lender to want fresh ones if yours go stale.
If you hold the account inside a retirement plan, the same valuation rules apply. For reserves, you generally do not have to withdraw the money.
Key Terms Defined
Reserves: the months of housing payments you still hold after closing.
Seasoning: the waiting period the lender wants before you refinance, such as the 12-month loan clock.
Liquidation: selling securities and moving the cash, which the lender may ask you to document.
Margin loan: a loan secured by your brokerage account, which reduces the account’s countable value.
Net tangible benefit: the real, measurable gain a streamline refinance must give you.
The Balanced Verdict
Pick the loan by your situation, not by the size of the account. If you are buying, the purchase gets you in with less cash and lets the account count as down payment and reserves. If you own and have equity, the cash-out can turn that equity into cash, at lower leverage and after the seasoning clocks run.
The account helps on both sides. It counts at full value for reserves at Fannie Mae, and the 20% cushion can spare you a sale at closing. It does not raise the loan limit. The home, the credit and the ratios do that.
Before a call with a broker, gather your latest brokerage statement, any margin balance, your vested versus unvested holdings, and the date you bought your home. If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches.
Frequently Asked Questions
Does my whole brokerage balance count toward a purchase?
Usually not at face value. The lender takes the latest statement value and subtracts any margin loan. Unvested options and restricted stock are left out. If you need the money to close, the lender may also ask for proof of sale unless the account clears the 20% cushion.
Do I have to sell stocks before I refinance?
Not for reserves. Fannie Mae counts 100% of an account’s value for reserves without a sale. You only face liquidation questions for money used to close, and a cushion of at least 20% can waive the proof.
Can I use a brokerage account on a cash-out refinance?
Yes, mostly for cash to close and reserves. The cash-out loan size comes from the appraisal and the 80% LTV limit on a one-unit primary home. Some files with higher debt ratios need reserves, and an invested balance can cover them. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Is a cash-out refinance a bigger version of a regular refinance?
No. It has its own seasoning rules: the first mortgage must be 12 months old, and a borrower must have been on title for six months. It also carries lower leverage than a purchase. A rate-and-term refinance, by contrast, only pays off the existing loan and costs, with incidental cash back.
Does the same logic apply to an FHA or VA streamline?
Partly. A streamline has fewer asset checks, but funds needed to close must still be verified. Details depend on the program and the lender, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B3-4.3-01: Stocks, Stock Options, Bonds and Mutual Funds
2. Fannie Mae Announcement SEL-2015-07
3. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
4. CFPB Office of Research Blog: Cash-Out Refinance Mortgages and Their Borrowers
5. HUD Archives: Refinances Reference Guide
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How a PAL Sizes on a Purchase vs Cash-Out Before a Maintenance Call · How Much More a Cash-Out Refinance Releases Behind a Low First Mortgage · How to Weigh a Cash-Out on a 2–4 Unit by Payment Math
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.