The Quick Read: Usually yes, because on the asset qualifier path no income is documented and no debt-to-income test runs, so a deferred student loan stays out of the math, though your credit report is still reviewed. On the asset depletion path, the loan very likely counts in your debt-to-income ratio, and the lender decides how.
- Qualifier path: your eligible assets must cover the entire loan, subject to underwriting. Student loans matter only through your credit file.
- Depletion path: your assets become monthly income, and that income carries your debts, including a deferred student loan.
- Deferment alone does not hurt a credit score. A delinquency or default does.
- Using assets to pay off the loan shrinks the asset base you are qualifying on. Run that trade before you do it.
Everything below is how Lendmire’s team sees these files across a wholesale network of select lenders. Programs change, and every file is underwritten individually.
Asset-Based Mortgage, in Plain Terms
An asset-based mortgage is reviewed around what you own, not on what a paycheck says. It is a consumer mortgage for a home you live in or a second home, and on one path it can also cover an investment property. It fits a cash-heavy, income-light reader: a retiree, someone who just sold a business, an inheritance or settlement recipient, an early-retired professional, or a household living off a portfolio.
There are two paths, and a borrower is qualified on one at a time.
The asset qualifier path asks one question: after the credit percentages are applied, do your eligible assets equal or exceed the entire loan amount? If yes, no employment or income is documented.
The asset depletion path converts your usable assets into monthly income. Usable assets are divided by 60 months. That income must then carry the housing payment and your other debts through a debt-to-income test.
Debt-to-income, or DTI, is the share of your monthly income that goes to debt payments. Student loans matter where a DTI test exists and mostly do not where it doesn’t.
Do Deferred Student Loans Count on the Qualifier Path?
On the qualifier path, a deferred student loan does not enter a payment calculation. No income is documented, so there is no ratio to put the loan into. The lender’s review rests on the assets, and your credit report is still pulled.
Here is an example. Say the loan is $800,000. You hold $330,000 in brokerage accounts (counted at 100%), $300,000 in a 401(k) while under age 59½ (counted at 90%, so $270,000), and $200,000 in savings (counted at 100%). Usable assets come to $800,000, which covers the loan on assets alone. A student loan balance, deferred or not, does not change that arithmetic. The lender’s own calculation governs, and this is illustrative only.
Three things still apply:
- Credit. The published floor on this path is a 600 score, subject to underwriting. A deferred loan reported as current is not a problem. A late or defaulted student loan is a derogatory item, and it can lower the score.
- Housing history. The program looks for 0x30x12. One 30-day late in the last twelve months is considered case by case.
- Assets. Qualifier-path assets need 60 days of seasoning and two months of statements per account. Those statements are the documentation. “No income documentation” never means “no documentation.”
Leverage runs up to 80% on a purchase and 75% on a refinance of a principal residence or second home, through select programs. Loans go up to $4,000,000. Reserves are not required at or below 75% loan-to-value, and above that the lender sets them.
Do They Count on the Depletion Path?
On the depletion path, expect the student loan to count. This path runs your derived income through a DTI test, so every recurring debt on your credit report competes for room, including one you are not paying today.
The sanctioned example: $1,500,000 in securities counts at 80% ($1,200,000). Add $300,000 in cash at 100%. That is $1,500,000 of usable assets, divided by 60 months, for $25,000 of monthly qualifying income. That income carries the new housing payment and your other debts through the DTI test.
If the lender counts a deferred student loan at some placeholder payment, that payment eats into the $25,000 before the housing payment is even considered. How the placeholder is figured is the lender’s call, and it varies across the programs in the network. We will not guess a number for you. Ask the question up front, before you pay for an appraisal.
Why do lenders count a payment you are not making? Because the pause ends. Agency loans, the standard mortgages sold to Fannie Mae and Freddie Mac, are the usual reference point. Freddie Mac’s Seller/Servicer Guide includes installment debts with more than 10 months of payments remaining, even when they are in deferment or forbearance. Experian reports that Fannie Mae requires lenders to use the actual payment or a percentage of the balance for these loans. Those are agency rules, not this program’s. They show why a rich borrower with a big student balance can still get declined on a conventional loan, and why asset-based files get a second look.
Side by Side: Where the Student Loan Lands
| Factor | Qualifier path | Depletion path |
|---|---|---|
| How you qualify | Assets cover the entire loan | Assets ÷ 60 months = income |
| DTI test | None; no income documented | Yes, on the derived income |
| Deferred loan counted? | Not in a ratio | Likely, at the lender’s calculation |
| Credit review | 600 floor | The lender’s score matrix |
| Investment property | Not available | Yes, at lower leverage |
How to Get an Asset-Based Mortgage With Student Loans in Deferment
Here is the practical order of operations. It works the same whichever path fits.
1. Pick the path by your balance sheet. If eligible assets can equal the whole loan, the qualifier path is cleaner. If they can’t, the depletion path may work, with a larger asset requirement.
2. Pull your credit report first. Confirm the student loans show as current, not delinquent. Fix errors before an inquiry goes out.
3. Check the deferment type. Deferment and forbearance both pause payments, but they are different statuses. More on that below.
4. Gather the asset statements. Qualifier path: two months per account, with 60 days of seasoning. Depletion path: statements at least 120 days old, plus the most recent one within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning on the depletion path.
5. Ask how the lender counts deferred debt if you are on the depletion path. Get the answer before you commit.
6. Keep the deferment in good standing. Lenders read a clean status as a neutral fact. They do not read a default that way.
Documents that usually come up are ID, the asset statements, a credit authorization and the purchase contract. A servicer letter for the student loan is usually not needed on the qualifier path. On the depletion path, a lender may ask for one to document the balance and status. Subject to underwriting, of course.
Deferment vs. Forbearance: Does It Matter?
It matters for your balance, less for eligibility. Both pause payments. Interest may keep building during either, depending on the loan type, so the balance can grow while you wait.
| Status | What it is | Credit effect |
|---|---|---|
| Deferment | Approved pause, often for school or hardship | Not harmful by itself |
| Forbearance | Temporary pause, usually servicer-granted | Not harmful if reported current |
| Default | Missed payments past the servicer’s limit | Derogatory item; can cut the score |
Experian says the deferment itself won’t hurt a credit score. The same logic extends to a pause reported current. The risk lives in a late payment or default, not in the pause.
One timing trap deserves a plain mention. If your deferment ends while the file is open, the loan goes from paused to paying. On the qualifier path, nothing changes in the math. On the depletion path, the debt the lender counts may change. Tell your loan officer the end date early.
Should You Pay Off the Student Loan With Your Assets?
Maybe, but the trade is sharper here than on a conventional loan. Your assets are the thing being qualified. Spend them to kill a loan and the qualifying base gets smaller.
Run it both ways on the depletion path. Paying off a loan removes a debt from the DTI test. But every dollar you pull out of securities also reduces the usable assets divided by 60. Depending on the balance, you may gain ratio room and lose income. Which side wins depends on the numbers, and the lender’s own calculation governs.
On the qualifier path, the test is simple: do eligible assets still equal or exceed the entire loan after the payoff? If yes, the payoff costs you nothing on qualification, though it may cost you flexibility in cash afterward. If no, you have defeated the purpose.
A related question comes up often. Do You Have to Liquidate Assets to Reserve an Asset Qualifier Mortgage? covers how your holdings are treated, so you know what stays put.
Another honest option is leaving the loan alone and waiting. If it carries a favorable status and you have no pressure to pay it, a deferment is not a reason to drain assets.
What Counts as an Asset?
The percentages matter because they set how much of your balance the lender will use.
Qualifier path (share of balance counted):
- Brokerage accounts, certificates of deposit, money market and savings: 100%.
- 401(k) and IRA balances: 90% under age 59½, 100% at 59½ or older.
- Accounts combine.
Depletion path (share of balance counted):
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
Several things do not count on the depletion path: 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 pledged or borrowed funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
The depletion path also has minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never be below $250,000 liquid when depletion is your only income source. Asset-derived income may also supplement documented income up to a 45% DTI, and in that case the minimum-assets rule is waived. Loans run from $125,000 to $3,500,000 on this path, subject to underwriting.
Leverage and Credit on Each Path
| Item | Qualifier path | Depletion path |
|---|---|---|
| Purchase, principal residence or second home | Up to 80% | Up to 80% |
| Refinance, principal residence or second home | Up to 75% | 80% rate-and-term; 60% cash-out |
| Investment property | Not available | 65% purchase or rate-and-term; 60% cash-out |
| Loan size | Up to $4,000,000 | $125,000 to $3,500,000 |
Cash-out proceeds never count as qualifying assets on the depletion path. The qualifier path’s cash-out leverage is lender-set and not published, so ask. These figures are ceilings through select programs, not offers.
Credit rules apply to both. A first-time investor on the depletion path needs a 700 score. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
The Investor Angle: When Student Loans Push You Toward DSCR
Many readers of this page are not buying a home to live in. They are buying rentals, and they have big student balances. Physicians and other professionals fit this pattern.
For that reader, the asset depletion path allows investment property, but at lower leverage, and it still runs a DTI test. A DSCR loan is a different tool. 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. The CFPB’s text of the business-purpose exemption is why that review is different.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. A mandated personal DTI test is not part of that framework. Your credit file and reserves still get reviewed, and a personal guarantee is common even when the loan closes in an LLC, depending on program guidelines. Select lenders in the network also offer sub-1.00 coverage, though LTV and terms adjust.
Know the limit, too. A deferred loan doesn’t improve a rental deal. A property that can’t cover its own payment is not rescued by your assets. Lendmire’s complete DSCR loans guide walks through that math.
Key Terms Defined
Asset qualifier path: the route where your eligible assets, after credit percentages, must equal or exceed the entire loan.
Asset depletion path: the route where usable assets are divided by 60 months to create qualifying income for the DTI test.
Debt-to-income (DTI): the share of monthly income that goes to debt payments.
Deferment: an approved pause in student loan payments.
Forbearance: a temporary pause, usually granted by the servicer, during which interest may still build.
Seasoning: how long funds have sat in your account before the lender will count them.
Placeholder payment: a payment the lender assigns to a loan showing no payment, so the debt is counted anyway.
Questions to Ask Your Loan Officer
- Which path am I on, and why?
- On the depletion path, how is a deferred student loan counted in my DTI?
- If I pay the loan down, what happens to my usable assets?
- What happens if my deferment ends before the file is done?
- Which of my accounts count, and at what percentage?
Terms vary by lender and every file is underwritten individually. Asset-based loans are consumer mortgages, so the standard consumer mortgage disclosures apply.
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, arranging these loans through select lenders in its network, with consumer mortgage lending licensed in Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. Reach the team at 828-256-2183.
Frequently Asked Questions
Do I have to pay off my student loans before applying?
No. Paying off the loan is not a program requirement. On the qualifier path no DTI test exists, so the balance doesn’t enter a ratio. On the depletion path a payoff may help your DTI but also reduces the assets being divided by 60. Run both versions before spending anything.
Does forbearance work differently from deferment on an asset-based file?
For eligibility, the pause itself matters little in either case. Lenders care how the account reports, current or delinquent. Interest may still build, so your balance can grow, but that doesn’t change which path you qualify on.
What if my student loans are in default?
A default is a derogatory item on your credit report. It can lower your score below the program floor, and it may trigger extra review. Resolve it first, then apply. Approval is never promised, and each file is underwritten individually.
Do I need a servicer letter?
Often not on the qualifier path, since no DTI is calculated. On the depletion path, a lender may ask for one to confirm the balance and the status. Having it ready costs nothing.
Can I use this to buy a rental property with student loans?
Only on the depletion path, at 65% leverage on a purchase and 60% on a cash-out for investment property, subject to underwriting. Many investors find a DSCR loan fits better, since it qualifies primarily on the property’s rental income. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Tax treatment varies; consult a qualified professional.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Seller/Servicer Guide, Section 5401.2
2. Experian: How Student Loans Affect Debt-to-Income Ratio
3. Experian: Student Loan Deferment vs. Forbearance
4. CFPB, Regulation Z, 12 CFR 1026.3
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 Mortgage Eligible Assets Work for Rental Investors · How to Qualify for an Asset Qualifier Mortgage · How Asset Qualifier Mortgage Loan Limits Work
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.