The Quick Read: Not on the asset qualifier path, where only liquid, documented accounts count and equity earns nothing. On the separate asset depletion path, select programs credit real-estate equity at 60%. Cash-out proceeds never count on that path. Either way, subject to underwriting, equity is the weakest asset you can bring.
- Asset qualifier path: eligible assets must cover the entire loan. Brokerage, CDs, money market and savings count at 100%. Equity is not on the list.
- Asset depletion path: usable assets are divided by 60 months into qualifying income. Real-estate equity counts at 60%, below cash at 100% and securities at 80%.
- Rental purchase: most investors skip both and qualify on the property’s rent through a DSCR loan.
- Cash-out refinance: borrowed funds are not published as eligible on either path.
Lendmire is a mortgage broker. It places these files through select lenders in its wholesale network, and every figure below is a ceiling or floor, subject to underwriting.
Two Paths, Two Answers
People hear both “yes” and “no” on this question because two different loans share one nickname. Across the wholesale network, one borrower is reviewed on one path at a time.
| Feature | Asset qualifier path | Asset depletion path |
|---|---|---|
| What it tests | Assets cover the whole loan | Assets become monthly income |
| Income documented | None | Derived from assets |
| Real-estate equity | Not on the eligible list | Counts at 60% |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum score | The lender’s matrix |
On the qualifier path, your eligible assets, after the credit percentages, must equal or exceed the full loan amount. Nobody asks about your job. On the depletion path, the lender adds up usable assets, divides by 60 months, and treats the result as income. That income then has to carry the housing payment and your other debts through the debt-to-income test.
Key Terms Defined
Asset qualifier: a loan where verified assets alone must cover the entire loan amount, with no income documented.
Asset depletion: a loan that converts usable assets into monthly qualifying income by dividing them by 60 months.
Haircut: the share of an account’s balance a lender refuses to count, because the account can lose value or carries penalties.
Liquid asset: money you can reach as cash without selling a building, such as savings, CDs, and brokerage accounts.
Seasoning: how long funds must sit in your account before they count.
Equity: what a property is worth minus what you owe on it. It is wealth on paper, not a balance you can withdraw.
Why Equity Earns Nothing on the Qualifier Path
An underwriter on this path asks one question: could this borrower pay the loan from accounts alone? Equity fails that test for three reasons.
It isn’t cash. To spend equity, you sell the property or borrow against it. Neither is a balance on a statement.
Its value is an opinion. A brokerage account has a posted balance. A building has an appraisal, and appraisals move.
It sits behind a lien. Equity is what remains after another lender gets paid first. That is a thin cushion to lean a whole loan on.
So the qualifier path counts only what it can verify with statements. Brokerage accounts, CDs, money market and savings count at 100%. Retirement accounts count at 90% if you are under 59½ and 100% once you reach it. Accounts combine.
Here is an illustration; the lender’s own calculation governs. Take an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) under 59½ (90%, so $270,000), and $200,000 in savings (100%, so $200,000). That is $800,000 of usable assets, and the file is reviewed on assets alone. Now suppose you also own a rental with $400,000 of equity. It adds nothing to that total.
Leverage on this path tops out at 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home. Reserves are not required at or below 75% loan-to-value. Above that, the lender sets them. Whether cash-out is allowed on this path is the lender’s call and isn’t published, so don’t plan around it.
Where Equity Does Count: The Depletion Path
The depletion path is the one place in this program family where real-estate equity earns credit. It counts at 60% of its value. That is the lowest percentage on the menu.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage and securities | 100% | 80% |
| Retirement accounts | 90% under 59½, 100% after | 70% at any age |
| Real-estate equity | Not eligible | 60% |
Run it with the sanctioned shape. Say you hold $1,500,000 in securities (80% counts, so $1,200,000) and $300,000 in cash (100%). That is $1,500,000 usable, divided by 60 months, or $25,000 of monthly qualifying income. Add $300,000 of equity in a rental, counted at 60%, and you add $180,000 of usable assets. That lifts qualifying income by a modest amount each month. Useful, but modest next to the same dollars sitting in cash.
Three limits keep equity in a supporting role:
- The minimums are about liquidity. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, you also need at least $250,000 liquid. Equity is not liquid, so it can’t fill that second requirement.
- Cash-out proceeds don’t count. On this path, money you pull out through a cash-out refinance is never a qualifying asset.
- Other things are excluded. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units are not eligible.
How a lender defines eligible equity, including which properties qualify, is set by the program and reviewed file by file. Expect scrutiny on the valuation and the lien behind it.
What the Federal Rule Says
There is a floor underneath all of this. The federal ability-to-repay section in CFPB Regulation Z, § 1026.43 tells lenders to weigh income or assets other than the value of the dwelling securing the loan. It lists examples such as savings, vested retirement funds, stocks and bonds, and CDs. Home equity is not among them.
That rule only takes the dwelling securing the loan off the table. It does not say what a program must do with equity in other property. That choice belongs to each investor’s guidelines. So expect any equity credit to come from other real estate, not the home you are buying.
Can You Turn Equity Into Qualifying Cash?
Sometimes, but the sequence matters. Equity becomes useful only after it turns into a seasoned balance in a regulated account.
Selling a property. Sale proceeds are cash. Once they sit in a regulated account, they count like any other cash balance. The qualifier path wants 60 days of seasoning and two months of statements for each account. The depletion path wants statements at least 120 days old at application, plus the most recent one within 45 days. Funds from a business sale, inheritance, or legal settlement are excused from that depletion-path seasoning.
Borrowing against equity. A cash-out refinance or a home equity line produces borrowed money. Pledged or borrowed funds are not published as eligible on either path, and depletion-path cash-out proceeds are expressly excluded. Don’t assume you can borrow your way into a qualifying balance. Ask the program first.
Other illiquid holdings. Cryptocurrency, precious metals, collectibles, and business accounts beyond your ownership share are not published as eligible on either path. The documented route is converting them to cash in a regulated account and letting the lender review the source.
Also, don’t count the same dollars twice. Cash you use for the down payment, closing costs, or reserves comes out of the pool first. It can’t also generate qualifying power.
If you wonder whether you must sell anything, you don’t. The test measures your balances. Nothing is liquidated or pledged. Lendmire’s piece Do You Have to Liquidate Assets to Reserve an Asset Qualifier Mortgage? goes deeper. For reserve expectations on the qualifier path, see how many months of reserves an asset qualifier mortgage requires.
Buying a Rental? Skip the Asset Test
Here is the practical turn for investors. Both asset paths are consumer mortgage programs built around principal residences and second homes. The depletion path also allows investment property, at up to 65% loan-to-value on a purchase or no-cash-out refinance, and 60% on a cash-out refinance.
Most rental buyers never need that. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Federal rules exempt credit extended for a business purpose, per 12 CFR 1026.3 at Cornell Law School’s Legal Information Institute.
A DSCR file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your bank balances and your equity are not the test. That is why an equity-heavy, cash-light investor is often shut out of an asset-based loan yet fits a DSCR loan well. Our complete DSCR loans guide explains how the coverage number is built and which programs fit.
Think of it as matching the loan to where your wealth sits. Rent-producing property points to DSCR. Large liquid balances and thin documented income point to an asset-based path.
Mistakes That Sink Equity-Based Files
- Treating net worth as qualifying assets. A paid-off portfolio feels like a balance sheet. On the qualifier path, the underwriter sees zero.
- Counting closing funds twice. Down payment and reserves leave the pool before the test runs.
- Moving money in at the last minute. Funds need seasoning and statements. Unsourced transfers invite questions.
- Expecting borrowed cash to count. Borrowed and pledged funds aren’t published as eligible.
- Mixing the two tables. Qualifier-path percentages and depletion-path haircuts differ. Quote a figure only with its path attached.
- Assuming “no income documentation” means no documentation. Assets are documented on both paths. Only the income side is different.
Quick Decision Guide
- Mostly cash, brokerage, and retirement accounts, little documented income? Start with the asset qualifier path if assets can cover the whole loan. If not, test the depletion path.
- A mix of securities and some rental equity? The depletion path may count part of that equity at 60%, after you clear the liquid-asset minimums.
- Mostly property equity, modest cash? Compare DSCR for a rental purchase. For other goals, plan on equity contributing nothing to an asset-based qualification.
- Living on a portfolio after selling a business? Sale proceeds in a regulated account are cash. Check the seasoning rules for your path.
This article is general information, not legal or tax advice. Consult a qualified attorney or CPA about your own situation.
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. Lendmire arranges these consumer mortgages through select lenders in its wholesale network and is licensed for consumer lending in 16 states. It does not lend directly. This is not a commitment to lend.
Frequently Asked Questions
Does equity in the home I’m buying count?
No. The dwelling that secures the loan can’t serve as your qualifying asset. On the qualifier path, no real-estate equity counts at all. On the depletion path, any equity credit comes from other property, at 60% and subject to underwriting.
What if I sell a property first?
Sale proceeds are cash, and cash counts. Once the money sits in a regulated account, it is a cash balance. The qualifier path asks for 60 days of seasoning and two months of statements per account. The depletion path asks for statements at least 120 days old plus one within 45 days.
Can a HELOC or cash-out refinance fund my qualifying assets?
Not reliably. Borrowed and pledged funds are not published as eligible on either path, and depletion-path cash-out proceeds never count. A cash-out refinance can still be a sound strategy for other reasons. Confirm with a broker how a specific program treats new cash before you rely on it.
Are asset qualifier and asset depletion the same loan?
No. The qualifier path tests whether assets cover the full loan, with no income documented. The depletion path divides usable assets by 60 months into income, then runs a debt-to-income test. Credit percentages and leverage differ, and a borrower is qualified on one path at a time.
Can I use these loans to buy a rental?
Only on the depletion path, at up to 65% loan-to-value on a purchase and 60% on a cash-out refinance. Most investors compare DSCR first, because it qualifies primarily on the property’s rental income covering the payment, subject to lender guidelines.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB, Regulation Z § 1026.43, Minimum Standards for Transactions Secured by a Dwelling
2. Cornell Law School Legal Information Institute, 12 CFR 1026.3, Exempt Transactions
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 Qualifier Mortgage Loan Limits Work · Asset Qualifier vs Asset Depletion for a Cash-Out Refinance · How to Qualify for an Asset Qualifier Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.