The Quick Read: On an asset-based mortgage, the lender counts the account at the balance on your most recent statement, applies the program’s credit percentage, and re-runs the qualifying math, so a drop in the market becomes a drop in the number the lender can use.
- On the asset qualifier path, brokerage balances count at 100%, so every lost dollar reduces your usable assets by a dollar.
- On the asset depletion path, securities count at 80%, and the total is divided by 60 months to produce qualifying income.
- A drop usually surfaces when a newer statement replaces an older one in the file.
- If the new number falls short, the usual fixes are more eligible assets, a smaller loan, a different path, or documented income that supplements the assets.
- Every figure here is a ceiling or floor on select programs in Lendmire’s wholesale network, subject to underwriting. The lender’s own calculation governs.
Which Path Is Your Account Carrying?
Your account does one of two jobs, and the job decides how a drop hurts. On the asset qualifier path, your assets must cover the entire loan, and no income is documented. On the asset depletion path, your assets are converted into monthly income that has to carry the housing payment and other debts.
These two paths are never blended. A borrower is qualified on one at a time. Across the network, this is the first question on every file with a large portfolio and little paycheck income. Retirees, people who sold a business, and households living off a portfolio land here most often.
Both paths are consumer mortgages. They cover principal residences and second homes. Investment property is eligible only on the depletion path.
Buying a rental that is reviewed on its own rent is a different product. The complete DSCR loans guide covers that business-purpose route.
How Underwriting Counts a Brokerage Account, Step by Step
The lender takes a snapshot of your balance, discounts it, and compares the result to a requirement. A falling market changes the snapshot, so it changes everything after it. Here is the sequence on a typical file.
1. The lender collects statements. On the qualifier path, that means 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, it means statements at least 120 days old at application plus the most recent statement within 45 days.
2. The latest balance gets the credit percentage. The qualifier path counts brokerage accounts at 100%. The depletion path counts securities at 80%.
3. The lender adds up usable assets. Accounts combine, so the total can include brokerage, savings, certificates of deposit, money market and retirement funds.
4. The lender runs the path’s test. On the qualifier path, usable assets must equal or exceed the whole loan amount. On the depletion path, usable assets divided by 60 months become monthly qualifying income, which then runs through the debt-to-income test.
5. Open items are cleared. Underwriters ask for a newer statement if the one in the file is too old. They ask for a source if a large deposit appears.
The assets are documented on both paths. Skipping income documentation does not mean skipping documentation.
What Changes When the Balance Falls
The percentage stays the same, but the base underneath it shrinks. The lender never negotiates with the market. It simply uses the newest verified number.
Run the numbers on the qualifier path. Assume an $800,000 loan backed by $330,000 in brokerage accounts, $300,000 in a 401(k) under age 59½, and $200,000 in savings. Brokerage counts at 100%, which is $330,000. The 401(k) counts at 90%, which is $270,000. Savings count at 100%, which is $200,000. Usable assets total $800,000, and the file is reviewed on assets alone. This is an illustration, and the lender’s own calculation governs.
Now suppose the brokerage account falls 20% before the next statement lands. It counts as $264,000. Usable assets become $734,000, which is $66,000 short of the loan amount. Nothing else on the file changed, but the file no longer works as structured.
Depletion works differently. Take $1,500,000 in securities, which counts at 80% for $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 of usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income.
Let the securities fall 20%, to $1,200,000. They now count at 80%, for $960,000. With the cash, usable assets are $1,260,000. That is 16% less income for a 20% drop in the portfolio.
The haircut softens the blow on the depletion path only because it was already taken off the top. It does not protect you. It changes the slope.
Two other tests sit beside the income math. The depletion path requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. It also requires at least $250,000 liquid when depletion is the only income source. A large drop can break one of those floors before it breaks the income test.
Why a Drop Usually Surfaces at the Statement Refresh
You rarely get asked about the market. You get asked for a new statement. Lenders set a maximum age for statements, so a file that sits longer than expected can pull in newer, lower numbers. Delays in an appraisal, a title search or a document request can all push a statement past its limit.
On the depletion path, the 45-day freshness window on the most recent statement is the trigger. On the qualifier path, the two-month statement history serves the same purpose. The balance you uploaded on day one is not final.
For contrast, the agency world ties statement age to the application date. Fannie Mae’s Selling Guide requires monthly depository statements dated within 45 days of the initial application. That is an agency rule for agency loans. Asset-based programs set their own timing.
If you plan to sell shares to fund part of the purchase, a different number rules. The actual sale proceeds, documented in a regulated account, are what count. The earlier statement stops mattering once the money is cash.
How the Same Drop Plays Out by Role
The same decline hits differently depending on the job the account does. This table summarizes the main roles on these programs.
| Role of the account | What the lender checks | Effect of a drop |
|---|---|---|
| Qualifier path: covers the loan | Usable assets vs. loan amount | Dollar-for-dollar loss at 100% |
| Depletion path: becomes income | Assets ÷ 60 vs. debt-to-income | Income falls by 80% of loss ÷ 60 |
| Shares sold for cash to close | Actual sale proceeds | Proceeds on the sale date count |
| Retirement account | 90% or 100% (qualifier), 70% (depletion) | Same recalculation, bigger haircut |
If the account is one of several, the other accounts can absorb part of the hit. A file with a cash-heavy mix is far less exposed than one built on a single brokerage account.
Retirement Accounts, Margin and Other Complications
Retirement balances fall with the market too. On the qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. The recalculation is the same on both paths, and a lower credit percentage simply means less of each dollar in the account is counted toward qualifying.
Pledged or borrowed funds are not published as eligible on either path. If you hold a margin balance against the account, expect the lender to count only what you own outright. A falling market can also trigger a margin call from the brokerage, which shrinks the account further. That is a brokerage-side event, not a lender action, and it is easy to confuse with the mortgage review. Keep them separate in your planning.
Some holdings do not count at all. On the depletion path, these are not eligible:
- Custodial accounts
- Deferred compensation
- Escrow accounts
- Foreign funds
- Cash on hand
- Stock options
- Non-vested restricted stock units
- Funds from non-regulated financial companies
Cryptocurrency, precious metals and collectibles are not published as eligible on either path. The documented route is to convert them into a seasoned cash balance in a regulated account, with the source reviewed by the lender. Pledged funds follow the same logic.
Concentrated accounts deserve extra care. A portfolio that is mostly one stock swings harder than a diversified one, and some lenders in the network look more closely at those files. Private stock counts at 75% on the depletion path, and it is harder to document at all.
Cash-out proceeds from a refinance never count as qualifying assets on the depletion path. You cannot refinance your way back above the line.
If your funds come from a business sale, Lendmire’s piece on how a lender seasons business funds before closing covers that seasoning. Sale-of-business, inheritance and legal-settlement funds are excused from the 120-day statement rule on the depletion path.
Where the General Rule Breaks
Three edge cases change the picture.
A cushion above the line. If usable assets exceed the requirement by a wide margin, a modest drop does nothing. The file still clears, and the lender never raises it. The problem is the borrower who qualified by a thin margin.
Leverage tied to the asset position. Leverage ceilings are separate from the asset math. On the qualifier path, the ceiling is 80% on a purchase and 75% on a refinance. On the depletion path, a principal residence or second home goes to 80% on a purchase or rate-and-term refinance and 60% on a cash-out. An investment property on the depletion path goes to 65% on a purchase or rate-and-term and 60% on a cash-out. A drop does not change the ceiling, but it can change which structure still works.
Reserves. On the qualifier path, no reserves are required at or below 75% loan-to-value, and above that the lender sets them. The depletion path publishes no reserve months. So a drop is less likely to trip a reserve test on these programs than on many investor-rental loans. It is much more likely to trip the main asset test.
Where the Federal Frame Fits
Asset-based mortgages are reviewed under ability-to-repay rules, and those rules explicitly allow assets. The CFPB’s small entity compliance guide lists income or assets, excluding the dwelling itself, among eight factors a creditor must consider. It does not set a haircut or a drop-in-value rule. The percentages come from each program, which is why they differ so much from lender to lender.
What To Do If Your Account Has Already Dropped
Act before the underwriter asks. These steps keep the options open, and you can work through them in order.
1. Recalculate with your own numbers. Take the latest balance, apply your path’s percentages, and compare the total to the loan or the income requirement. Your loan officer can do this in minutes.
2. Tell your loan officer. A drop that surfaces in underwriting costs you choices. A drop you raise early lets the broker restructure the file.
3. Add eligible assets. Seasoned cash or other eligible accounts fill a gap cleanly. Money moved in recently needs its own seasoning and a documented source.
4. Shrink the loan. On the qualifier path, a smaller loan lowers the bar your assets must clear. A larger down payment from other funds does the same.
5. Switch paths. If the qualifier path no longer works, the depletion path may. It converts assets to income, so a shortfall becomes an income question rather than a coverage question.
6. Supplement with documented income. On the depletion path, asset-derived income can supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
7. Weigh selling. Selling locks in the current value but turns shares into cash and may create a taxable event. Tax treatment varies, so consult a qualified tax professional before selling.
Going forward, move the funds you will need out of securities and into cash or certificates of deposit, which count at 100% on both paths. Keep a cushion above the minimum. Avoid borrowing against the account you are counting.
For a related look at how much a brokerage account backs on different transactions, see Lendmire’s piece on a brokerage account on a purchase versus a cash-out.
Key Terms Defined
Haircut: The percentage of an account’s balance a lender refuses to count, to allow for price swings.
Credit percentage: The share of a balance that counts. A 100% credit means no haircut.
Seasoning: The period an asset must sit in your account, shown on statements, before the lender relies on it.
Asset qualifier path: A program path that drives lender review on eligible assets equal to or above the entire loan amount.
Asset depletion path: A program path that divides usable assets by 60 months to create monthly qualifying income.
Usable assets: The total of your balances after each account’s credit percentage has been applied.
Margin call: A demand from a brokerage to add funds or sell holdings when a margin-borrowed account falls too far.
Frequently Asked Questions
Can a lender deny me after the market drops?
A drop does not automatically end a file. If the new number still clears the path’s test, nothing changes. If it falls short, the lender may ask you to add assets, shrink the loan or restructure. Approval stays subject to underwriting from start to finish.
Should I sell before closing to lock in the value?
It depends on the path and the cushion. Selling turns shares into cash that counts at 100% and removes market risk from the file. It may also create a taxable event. If your cushion is thick, holding may be fine. If your file clears by a thin margin, many borrowers move the amounts they need into cash first.
Does a drop in a retirement account matter differently?
The recalculation is the same, but the percentage differs. On the qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. Because they count at less than 100%, each lost dollar costs you slightly less usable value than it would in a brokerage account on the qualifier path.
How recent do my statements need to be?
On the qualifier path, expect 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, statements must be at least 120 days old at application, plus one dated within 45 days. A file that sits past those limits needs fresh statements, and they may show a lower balance.
Do I have to tell my loan officer about a drop?
Yes, and the sooner the better. The newest statement will show it anyway. Raising it early gives the broker time to recalculate and choose a structure before underwriting does it for you.
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 is a broker that arranges these loans through select lenders in its network, and its consumer mortgage lending is licensed in 16 states.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B3-4.4-02
2. CFPB ATR/QM 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: Brokerage Dividends vs Asset Depletion for a Retiree on a Jumbo Loan · HELOC Documentation for Retirees Qualifying on Assets Alone · How to Refinance a Jumbo Loan in Retirement on Assets
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- 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.