The Quick Read: An asset depletion refinance turns your eligible savings and investments into a monthly qualifying income, so you can refinance a rental without leaning on tax-return income. Nothing is sold or pledged. The rate-and-term version pays off your old loan and puts no cash in your hands. On an investment property it runs up to 65% loan-to-value, through select programs and subject to underwriting.
- Who it fits: people with large balances and thin documented income, such as retirees, business sellers, and households living off a portfolio.
- The core math: usable assets, after haircuts, divided by 60 months, equals your qualifying income.
- The test that still applies: that income must carry the new housing payment and your other debts.
- The biggest swing factor: what type of assets you hold, because each type counts at a different percentage.
- When DSCR is better: when the rental’s own rent covers its payment and you would rather qualify on the property.
Does Asset Depletion Work on a Rental Property?
Yes, but only on one of the two asset-based paths, and only for the borrower who fits it. Across the wholesale network Lendmire places files with, investment property is eligible on the asset depletion path. It is not eligible on the asset qualifier path, which is limited to principal residences and second homes.
Here is the split. The asset qualifier path drives lender review on assets alone. Your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. The asset depletion path works differently. It converts your usable assets into monthly income, and that income runs through a debt-to-income test.
A borrower is qualified on one path at a time. You never blend the two tables. For a rental refinance, you are on the depletion path, so every figure below belongs to that path unless the text says otherwise.
(This catches many readers off guard. They hear that assets can cover a whole loan, then find out that feature stops at the owner-occupied homes.)
The rental can still be your collateral. The loan is simply underwritten on you and your balance sheet. Subject to underwriting, the depletion path covers loan amounts from $125,000 to $3,500,000. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What Rate-and-Term Means on a Rental
A rate-and-term refinance replaces your current mortgage with a new one and gives you no cash back. You change the pricing or the loan structure, and the balance stays about where it was. A cash-out refinance is a separate product. It pays off the old loan and hands you extra proceeds.
The two have different leverage limits on the depletion path. On an investment property, the program allows up to 65% loan-to-value (LTV, the loan balance as a share of the appraised value) on a purchase or a rate-and-term refinance. A cash-out on an investment property tops out at 60%. Cash-out proceeds never count as qualifying assets.
For a principal residence or second home, the same path allows up to 80% on a purchase or rate-and-term and 60% on cash-out. Do not carry those residence figures over to a rental. That is the most common mix-up on these files.
If a low appraisal is your worry, Lendmire’s piece Appraisal Came In Low on a Rental Property Refinance: Rate-and-Term vs Cash-Out at the Lower Value covers how the lower value changes your options.
Step by Step: How Underwriting Treats the File
The lender builds your qualifying income from assets, then tests it against the new payment. The steps below are the sequence most programs follow. The lender’s own calculation governs.
1. Choose the transaction. You are paying off the existing loan and taking no cash out. Confirm the balance and the lien position with your payoff statement.
2. Inventory your assets. List every account you want counted. The lender reviews statements for each one, and the sources of any large deposits.
3. Apply the haircuts. A haircut is the share of a balance the lender discounts because the asset can swing in value or is hard to reach. The table in the next section shows the percentages.
4. Check the minimums. Usable assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, they must also never fall below $250,000 in liquid form.
5. Divide by 60 months. The usable total divided by 60 is your monthly qualifying income. The assets stay in your accounts. The division is a qualifying convention, not a withdrawal plan. A consumer-finance explainer on asset depletion mortgages describes the same idea of dividing eligible assets over a set period, though each program picks its own period.
6. Run the debt-to-income test. Debt-to-income (DTI) compares your monthly debts to your monthly income. The new housing payment, which covers principal, interest, taxes, insurance, and any HOA dues, goes in with your other debts. Your derived income sits on the other side.
7. Review the property. A rental refinance needs an appraisal. For a one-unit rental it usually includes a market rent schedule (Form 1007). For two to four units it is typically a small-residential-income report (Form 1025). Title, insurance, and the payoff statement round out the file.
The decision comes down to a few things. Net usable assets and the divisor matter most. The new payment, your other debts, credit, appraised LTV, and the history on the loan being refinanced all sit behind them.
Why the Lender Documents Your Assets
Asset depletion is a convention, not a loophole. This loan is a consumer mortgage, so the lender has to make a reasonable, good-faith determination that you can repay it. The CFPB’s regulation page states that standard. The rule text says the lender may consider your income or assets and must verify what it relies on with reasonably reliable third-party records.
Two practical points follow. First, assets are a recognized basis for repayment, which is why this program exists. Second, a trade commentary on non-QM lending notes that a lender relying on assets must still consider debt-to-income or residual income. The depletion path does exactly that. The qualifier path rests its review on the assets themselves.
So the phrase “no income documentation” never means “no documentation.” You document the assets on both paths.
Which Assets Count, and at What Percentage
Each asset type counts at a different share of its balance on the depletion path. Cash and CDs count in full. Everything volatile or restricted gets cut.
| Asset type | Share that counts | Watch for |
|---|---|---|
| Cash accounts | 100% | Large recent deposits |
| Certificates of deposit | 100% | Early-withdrawal terms |
| Securities | 80% | Market swings |
| Private stock | 75% | Valuation support |
| Retirement accounts | 70% at any age | Counted below the qualifier path’s figure |
| Real-estate equity | 60% | Subject property equity is not a shortcut |
Several assets do not count on this path at all. They include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies.
Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible on either path. Business accounts count only for your ownership share, and only if they are otherwise eligible. If you hold those assets, the documented route is to convert them to a seasoned cash balance in a regulated account. The lender then reviews the source. They never count at a percentage as-is.
Compare that with the qualifier path, which gives brokerage, CDs, money market, and savings 100%, and retirement balances 90% under age 59½ and 100% after. Those are qualifier-path figures for residences. Never apply them to a rental.
A Worked Example
Say you hold $1,500,000 in securities and $300,000 in cash. Securities count at 80%, so they contribute $1,200,000. Cash counts at 100%, so it contributes $300,000. Your usable total is $1,500,000.
Divide that by 60 months. The result is $25,000 of monthly qualifying income. That income then has to carry the new housing payment and your other debts through the debt-to-income test.
Notice what the example does not do. It does not touch the loan amount, the payment, or the rent. Those inputs depend on the property and the loan. The lender’s own calculation governs, and this arithmetic is a teaching illustration, not an offer.
Now run it as a thought experiment. If you pulled out some of the cash to fund a purchase elsewhere, the usable total drops, and so does the income. That is why many investors hold the assets in place and refinance instead of selling.
Where the General Rule Breaks
The 60-month division sounds tidy. The edge cases are where files get stuck.
Retirement accounts count, but at 70%. On the depletion path, retirement balances count at 70% at any age. A reader used to the qualifier path might expect 90% or 100%. That is a different path with different rules.
Rent may or may not enter the file. A DSCR file is reviewed on rent divided by the monthly obligation. An asset depletion file qualifies you. Programs differ on whether the rental’s income can be added to your qualifying income or whether the payment is simply tested against assets-derived income. Ask early. This is the single question that most changes how a rental refinance is structured.
Cash-out is a different product. The depletion path allows cash-out on an investment property up to 60%. Never assume a lender will follow a rate-and-term file with a cash-out request on the same terms.
Asset income can supplement documented income. If you also have pension, wage, or other documented income, asset-derived income may supplement it, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. That is useful for a borrower with moderate income and a sizable portfolio.
First-time investors face a higher bar. A first-time investor on the depletion path needs a 700 score. Beyond that, credit follows the lender’s matrix, so there is no single published floor to quote. Housing history is reviewed at 0x30x12, meaning no 30-day lates in the last twelve months. One 30-day late in that window is considered case by case. Multiple bankruptcies are not eligible. A housing event such as a foreclosure needs 4 years of seasoning on this path.
Statement seasoning is strict. Statements must be at least 120 days old at application, plus the most recent statement within 45 days. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that seasoning. A recent windfall is not automatically a problem.
Vesting matters. Because this is a consumer mortgage, expect the borrower to be an individual. Whether a rental can be held in an LLC is subject to program terms, so ask before you start moving titles around.
One more edge: tax. Tax treatment varies; consult a qualified professional before relying on any deduction.
For the broader picture of how these programs sit next to rental financing, Lendmire’s complete DSCR loans guide walks through the property-based options.
Asset Depletion, DSCR, and Bank Statement: Which Fits a Rental Refinance?
All three can refinance a rental. They differ in what the lender studies.
DSCR stands for debt service coverage ratio. It divides the rental’s monthly rent by its monthly obligation (principal, interest, taxes, insurance, and HOA dues). It is a business-purpose investor loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Some DSCR programs below 1.00 coverage are available through select lenders in the network, but LTV and terms adjust.
| Factor | Asset depletion | DSCR | Bank statement |
|---|---|---|---|
| Reviewed on | Your assets | The property’s rent | Your deposits |
| Loan purpose | Consumer mortgage | Business purpose | Documented income |
| Rent coverage matters | Depends on program | Central | Not the focus |
| Best for | Big balances, low income | Strong-rent rentals | Self-employed with deposits |
Choose asset depletion when your balances are large, your documented income is thin, and the rental’s rent does not cover its own payment. Choose DSCR when the rent carries the payment and you want the property to do the qualifying. Choose a bank statement program when you earn real income that shows up in deposits rather than traditional personal-income documentation.
A rental that falls short of its payment is where this decision gets interesting. DSCR may still be available with adjusted terms, but you give up leverage. Asset depletion lets your balance sheet cover the shortfall, but it asks you to keep a large pool of assets in place.
Many investors with several rentals end up using different programs for different properties. The right program is the one that fits the specific property and your specific documents.
Key Terms Defined
Asset depletion: a qualifying method that divides usable assets by a set number of months to produce monthly income, without selling anything.
Haircut: the discount a lender applies to an asset’s balance because it can fall in value or is hard to access.
Rate-and-term refinance: a refinance that replaces your current loan and gives you no cash at closing.
Loan-to-value (LTV): the loan balance divided by the property’s appraised value.
Debt-to-income (DTI): your monthly debts divided by your monthly income.
Seasoning: the time an asset or loan has been in place, which lenders use to confirm where the money came from.
What the Decision Looks Like in Practice
Start with a plain question: is the refinance worth doing at all? A rate-and-term refinance only makes sense if the new loan improves your position in a way that outlasts the cost of getting it. Add up what the refinance costs, compare it to what you expect to save, and see how many months it takes to break even. If you may sell the rental before then, skip it.
Next, size the asset pool honestly. Your balance sheet is doing the qualifying, so a market drop that shrinks it can change your usable total. Securities at 80% and retirement accounts at 70% are the most exposed. Cash and CDs are steady.
Then think about what you give up. Assets used in the calculation need to stay where they are. You cannot count the same balance for reserves, a down payment elsewhere, and this file all at once. Keep documentation clean: the 120-day statements, the recent statement within 45 days, and a clear story for any big transfer.
A pattern many brokers see: borrowers who qualify comfortably on paper often stumble on paperwork rather than math. A deposit that cannot be explained, or an account that moved between institutions mid-file, costs more time than any ratio.
Finally, ask whether DSCR would work better. If your rental’s rent comfortably covers the monthly obligation, a property-based file may preserve your assets and avoid the seasoning rules. If it does not, an asset-based file is likely the cleaner route.
Frequently Asked Questions
Can I use asset depletion to refinance a rental property?
Yes, on the asset depletion path through select programs, subject to underwriting. Investment property is eligible there at up to 65% LTV on a rate-and-term refinance. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Do I have to sell my investments to qualify?
No. The assets are divided over 60 months to create a qualifying income, but they stay in your accounts. What changes is how the lender counts them, since securities count at 80% and retirement accounts at 70%.
Does the rental’s rent count toward my income?
It depends on the program. Some files qualify you on assets-derived income alone, while others allow rental income to be considered. Ask the lender how it treats rent before you apply, because it changes the debt-to-income picture.
Can I take cash out on the same loan?
A cash-out refinance on an investment property is a separate product at up to 60% LTV on this path. A rate-and-term refinance gives you no cash back. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Is this available in my state?
Lendmire arranges consumer mortgages in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. If your property is elsewhere, the investor-focused DSCR route is the more likely fit.
Next Step
If you are qualifying on assets rather than income and want to see how the numbers work, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage, and your goals. Program details change, every file is underwritten individually, and nothing here is a commitment to lend.
A rental refinance built on your balance sheet only holds up if the balance sheet stays put, so the best first step is deciding which assets you are willing to leave untouched.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — 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. Benzinga, asset depletion mortgage
2. CFPB, Regulation Z § 1026.43
3. 12 CFR 1026.43 (Cornell Legal Information Institute)
4. CFS Review, CFPB addresses non-QMs under the ability-to-repay rule
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Asset Depletion vs Bank Statements vs DSCR for a Luxury Rental Buyer · Can You Do a Cash-Out Refinance on an Asset Depletion Loan? · Do Cash-Out Proceeds Count as Assets on an Asset Depletion Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.