The Quick Read: A home you bought with cash has no mortgage on it, so you recover money by placing a new first mortgage on it, which lenders treat as a cash-out refinance, and asset depletion only decides whether your balances turn into enough monthly income to qualify, while separate leverage limits and waiting rules decide how much cash comes back. Two questions get blended in most conversations. One is timing and amount. The other is how you qualify. Keep them apart and the whole topic gets simpler.
- Asset depletion is a way to qualify. It is not a loan type, and it does not set your cash-out amount.
- On the depletion path, a cash-out refinance on a principal residence, second home, or investment property tops out at 60% loan-to-value, subject to underwriting.
- Your qualifying income comes from usable assets divided by 60 months, after each asset type is discounted.
- Cash-out proceeds never count as qualifying assets, so the money you pull out cannot be used to qualify for the loan that produced it.
- Paying cash for the home shrinks the pool of balances you qualify on. The order of operations matters.
Two Problems, Not One
Recovering cash from an owned-outright home is two separate jobs. Job one is getting a lender to put a loan on a property that has no debt. Job two is proving you can carry that loan when your paychecks are small or gone.
Job one is about timing and sizing. Lenders ask how recently you bought, what you paid, and whether the loan should be sized from your documented cost or from a fresh appraisal. Job two is about you. If you are retired, sold a business, received an inheritance or settlement, or live off a portfolio, your balances are large and your documented income is not. Asset-based qualification exists for that profile.
Across the wholesale network Lendmire works with, the programs that do this are consumer mortgages placed through select lenders. Lendmire is the broker. It arranges the file and does not lend or approve. Every figure below is a ceiling or floor from select programs, subject to underwriting, never an offer.
Key Terms Defined
Cash-out refinance: A new mortgage that pays off any old loan and hands you the difference in cash. On a home with no debt, the entire loan amount you receive is cash.
Asset depletion: A qualifying method that converts eligible balances into imputed monthly income on paper. Nothing is sold, pledged, or withdrawn.
Asset qualifier path: A separate route where eligible assets, after credit percentages, must equal or exceed the entire loan amount, and no income is documented.
Seasoning: The time money or ownership has sat in place before a lender will rely on it. It applies to bank statements and to how long you have owned the property.
Delayed financing: A lender-set exception that lets a cash buyer refinance soon after purchase. Proceeds are generally capped near what you documented paying.
Loan-to-value (LTV): The loan amount as a percentage of the home’s value.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Which Situation Are You In?
Your starting point sets the timing rule and what limits your proceeds. Sort yourself first.
| Situation | Timing question | What limits proceeds |
|---|---|---|
| Just bought with cash | Delayed financing or wait | Documented cost, then LTV cap |
| Owned a while, no loan | Usually no wait | Appraised value times LTV cap |
| Inherited or settlement funds | Statement seasoning often excused | LTV cap and asset minimums |
| Investment property | Depends on occupancy and use | Lower LTV cap, lender matrix |
Delayed financing on non-agency files is set by each lender, not by one industry rule. Some lenders in the network allow it, some want ownership seasoning first, and a few will weigh documented renovation spending. Ask before you buy, not after.
How Underwriting Treats a Cash-Out on an Owned-Outright Home
Underwriters work through this in a set order. Knowing the sequence tells you where a file can stall.
1. Lien check. The settlement statement shows no purchase-money financing, and title shows no recorded loan. A recorded hard-money or bridge loan changes the answer, covered below.
2. Path choice. The file is qualified on one path at a time: asset qualifier or asset depletion. They are never blended.
3. Sizing. The lender picks the basis, either documented purchase cost or appraised value, then applies the LTV cap for the occupancy type.
4. Asset review. Each qualifying account is discounted by type and checked for age and ownership.
5. Income or coverage test. On depletion, the derived income runs through the debt-to-income test. On the qualifier path, the assets must cover the entire loan.
6. Credit and property. Credit follows the lender’s matrix, and the property gets its own review.
Documentation is real on both paths. Skipping income documents never means skipping documents.
Why Assets Can Carry a Consumer Mortgage
Consumer mortgages must pass an ability-to-repay review. Lenders are required to consider eight factors, and the first is current or reasonably expected income or assets. That is the legal room asset-based programs operate in. A regulatory commentary on non-QM lending adds a limit: a lender may base its finding on verified assets alone, but it still has to separately consider DTI or residual income.
That limit is why the depletion path pushes derived income through a DTI test. It is also why the qualifier path demands that assets cover the entire loan.
One more rule matters here. The assets counted must be other than the value of the property that secures the loan. So equity in the very home you are refinancing is collateral, not a qualifying asset. Plenty of owners-outright assume their free-and-clear home counts toward qualifying. It does not.
The Two Paths, Side by Side
Asset qualifier path: Eligible assets, after the percentages below, must equal or exceed the whole loan. No employment or income is documented. Loans run up to $4,000,000, with leverage up to 75% LTV on a refinance (principal residence or second home). Whether cash-out proceeds are allowed on this path, and at what leverage, is set by the lender and is not published. Ask each lender directly. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Asset depletion path: Usable assets divided by 60 months become monthly qualifying income. That income must carry the full housing payment and other debts through the DTI test. Loans run from $125,000 to $3,500,000. Cash-out refinances cap at 60% LTV on a principal residence, second home, or investment property. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
For cash recovery on an owned-outright home, the depletion path is the documented route. The qualifier path is worth a conversation if your balances cover the whole loan, but expect the lender to tell you whether cash-out is on the table.
How Each Asset Counts
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Savings and cash accounts | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage / securities | 100% | 80% |
| Retirement (401(k), IRA) | 90% under 59½, 100% after | 70% at any age |
| Private stock | Not listed | 75% |
| Real-estate equity | Not listed | 60% |
Money market balances count at 100% on the qualifier path, and accounts combine. These percentages are typical of select programs and subject to underwriting.
Several assets do not count on the depletion path at all: 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. The documented route is converting them into a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Worked Examples
Both examples below are illustrative, and the lender’s own calculation governs.
Qualifier path. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). Usable assets total $800,000. That equals the loan amount, so the file is reviewed on assets alone.
Depletion path. Take $1,500,000 in securities (80% counts, so $1,200,000) plus $300,000 in cash (100%, so $300,000). Usable assets are $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That figure then has to carry the housing payment and your other debts through the DTI test.
This pool also clears the depletion minimums: qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When depletion is your only income source, liquid assets can never fall below $250,000. If asset income only supplements documented income, it can support a DTI up to 45%, and the minimum-assets rule is waived.
What Actually Caps Your Cash
Several limits stack. Whichever binds first sets your proceeds.
- The LTV cap. On the depletion path, a cash-out refinance tops out at 60% LTV whether the home is a principal residence, second home, or investment property. That is a lower ceiling than the same path allows on a purchase or rate-and-term refinance: up to 80% on a principal residence or second home, and 65% on an investment property.
- The cost-basis cap. If a lender uses delayed financing, sizing often tracks what you documented paying, not what the home is now worth. Renovation spending may not count.
- The DTI test. The derived income has to carry the new housing payment plus everything else you owe.
- The loan-amount window. On the depletion path, loans run $125,000 to $3,500,000. Small loans fall below the floor.
- The asset minimums. Qualified assets must meet the lesser of $1,000,000 or 1.25 times the loan, and never less than $250,000 liquid if depletion is your only income.
(Cash-out proceeds never count as qualifying assets. You cannot recycle the money you pull out to prop up the file.)
Here is the point many cash buyers miss. A 60% cash-out ceiling means you will not recover everything you paid, even on a full appraisal. That is a feature of the program, not a lender being stingy. If you want more leverage, the purchase transaction is where it lives. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Order-of-Operations Trap
Paying cash drains the very balances asset depletion lives on. Cash and certificates of deposit count at 100% on the depletion path. Securities count at 80%. Retirement accounts count at 70%.
Say you hold a large brokerage account plus a stack of cash, and you buy a home outright with the cash. Your remaining pool is now weighted toward securities and retirement balances, which are discounted. Your qualifying income has dropped before you have even applied.
That is the practitioner read: price the refinance before the purchase. Compare two routes with a broker first. One is paying cash and refinancing later at the cash-out ceiling. The other is a purchase mortgage, where the same path allows higher leverage on a principal residence or second home. (Often the purchase loan wins on retained liquidity, though the right answer depends on the file.)
An asset counted for income generally cannot be counted a second time elsewhere in the file. Lenders also want the balances aged. On the depletion path, statements must be at least 120 days old at application, plus a most recent statement within 45 days. On the qualifier path it is 60 days of seasoning and two months of statements per account. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that seasoning on the depletion path. Everyone else should leave the money alone and let it age.
Where the General Rule Breaks
- A hard-money or bridge purchase. If a lender recorded a lien at purchase, the cash-purchase exception generally falls away. The transaction becomes a normal refinance, with its own seasoning.
- Rehab spending. Documented renovation money is often not recovered under delayed financing, because sizing tracks purchase cost. Some lenders will season by ownership instead and size from a new appraisal, which can reward the improvement, depending on comps and underwriter review.
- Borrowed purchase funds. Cash from a line of credit secured on a different property is treated differently by different lenders. Pledged or borrowed funds are not published as eligible assets, and the lender may route proceeds to pay that line down.
- Equity in the subject home. It does not qualify you, as covered above. Equity in a different property counts at 60% on the depletion path, subject to review.
- First-time investor. On the depletion path, a first-time investor needs a 700 credit score. Other borrowers follow the lender’s score and loan-amount matrix.
- Housing events. A foreclosure or similar housing event needs 4 years of seasoning on the depletion path. Multiple bankruptcies are not eligible. One 30-day late in the last twelve months is considered case by case.
- Qualifier-path credit. The published floor is a 600 minimum score, subject to underwriting.
- Consumer versus business purpose. This is a consumer mortgage, even when the collateral is an investment property. A pure rental financed on the property’s income is a different animal, and I cover it next.
When This Is the Wrong Tool
Asset depletion fits a borrower whose balances are big and whose income on paper is small. It is a poor fit if the home is a pure rental whose rent can carry itself. That is DSCR territory. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Select lenders in the network will review coverage below 1.00, but leverage and terms adjust. The complete DSCR loans guide walks through that path.
Other alternatives are worth a look.
- A home equity loan or line of credit. These are products with their own waiting periods, lien positions, and income checks. They are not asset depletion.
- Waiting out seasoning. If you have no urgent need, ownership seasoning may unlock appraised-value sizing.
- Selling investments. This avoids a new loan but changes your market exposure.
For a retiree weighing whether to stay put or sell, Lendmire’s piece Jumbo Cash-Out and Stay vs Sell for a Retiree Using Asset Depletion covers that fork.
One honest caution. A new mortgage puts a payment and a lien on a home that was debt-free. For a retiree living on a portfolio, that is a real tradeoff. Stress-test the payment against a down market, not just a flat one.
Prep Checklist Before You Talk to a Broker
- The settlement statement and proof of how the purchase was funded.
- Statements for every account you plan to count, aged to the path’s requirement.
- A clean read on which accounts are retirement, brokerage, cash, or private stock.
- Documentation for any inheritance, business sale, or settlement funds.
- Any renovation receipts, if the home was improved.
- A credit report review, including any housing events and first-time investor status.
- A plan for what you will do with the cash, since its use may affect how the file is treated.
Frequently Asked Questions
Can asset depletion be used on a home I own with no mortgage?
Yes, on the depletion path, subject to underwriting. The loan is a cash-out refinance, capped at 60% LTV on a principal residence, second home, or investment property. Usable assets divided by 60 months become your qualifying income, and that income must carry the full payment through the DTI test. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Does the equity in my paid-off home count as an asset?
No. The home securing the new loan is the collateral, not a qualifying asset. Equity in a different property can count at 60% on the depletion path, subject to review.
Can I use the cash I pull out to qualify for the same loan?
No. Cash-out proceeds never count as qualifying assets. The file must stand on balances that existed and aged before the loan.
How much cash can I recover right after a cash purchase?
It depends on lender policy. Delayed financing, where offered, generally caps proceeds near your documented purchase cost, and the 60% LTV ceiling still applies on the depletion path. Waiting for ownership seasoning may allow sizing from a new appraisal, but terms vary by lender.
Is asset depletion the same as selling my investments?
No. Nothing is sold, pledged, or withdrawn. It is a paper calculation that treats a portion of your balances as monthly income for qualifying purposes.
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. Reach the team at 828-256-2183 or request a quote. Lendmire arranges consumer mortgage financing in Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington, through select lenders in its network. Programs change, every file is underwritten individually. This is not a commitment to lend.
Most owners-outright who run the numbers find the balances they hold decide the outcome more than the home itself.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Federal Register: Ability-to-Repay and Qualified Mortgage Standards final rule
2. CFS Review: CFPB addresses non-QMs under the ability-to-repay rule
3. CFPB Ability-to-Repay and Qualified Mortgage small-entity compliance guide
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Asset Depletion Income Is Calculated From Your Portfolio · How an Asset Depletion Jumbo Loan Works · 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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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.