The Quick Read: It depends on which path you use. On the asset qualifier path, no reserves are required at or below 75% loan-to-value, and above that the lender sets them. On the asset depletion path, no reserve months are published, but your assets still have to be large enough to carry the loan and the income test.
- Qualifier path: eligible assets must equal or exceed the entire loan amount, with no income documented.
- Depletion path: usable assets divided by 60 months become qualifying monthly income.
- Reserves are not the same as your down payment. Reserves are what remains after closing; down payment and closing costs come out first.
- Same dollars cannot count twice. Assets that qualify you cannot also serve as extra reserves.
- Every file is underwritten individually, subject to lender guidelines and program changes.
Many borrowers expect a loan built on assets to ignore cash after closing. That is the wrong picture. Assets drive the qualification, so the question is how much is left afterward, and which dollars were already spoken for.
This guide is written for retirees, business sellers, inheritance recipients, early-retired professionals, and households living on a portfolio. Their balances are large and their documented income is not. Lendmire is a broker, and everything here describes select programs through its wholesale network. Figures are ceilings and floors, never offers. Lendmire’s complete DSCR loans guide covers the separate rental-property side.
What Are “Reserves” in Plain Terms?
Reserves are liquid funds you still hold after the loan closes. Lenders usually count them in months of the full housing payment: principal, interest, taxes, insurance, and association dues.
Four terms get mixed up:
| Term | What it means |
|---|---|
| Down payment | Your cash toward the purchase price |
| Cash to close | Down payment plus closing costs and prepaids |
| Reserves | Liquid funds remaining after closing |
| Escrow reserves | Tax and insurance money the servicer holds monthly |
Escrow reserves are a servicing item. They have nothing to do with the cushion an underwriter counts when reviewing your file.
Two Paths, Two Answers
A borrower is reviewed on one path at a time. Mixing the two tables is the most common planning mistake.
Asset Qualifier Path
Here, eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. Through select programs, leverage runs up to 80% on a purchase and 75% on a refinance, on a principal residence or second home. Loans go up to $4,000,000.
On this path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them. A purchase between 75% and 80% is where reserve conversations usually start. Whether cash-out proceeds are allowed on this path is set by the lender and is not published, so plan around that uncertainty.
The credit percentages work like this:
- Brokerage, certificates of deposit, money market, and savings count at 100%.
- Retirement accounts count at 90% under age 59½ and 100% at 59½ or older.
- Accounts combine.
Asset Depletion Path
This path turns assets into income. Usable assets divided by 60 months become monthly qualifying income, which must carry the housing payment and other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000.
No reserve months are published on this path. That does not mean zero cushion. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when depletion is your only income source. That floor works as a built-in reserve, because those dollars must exist and be documented at application.
Leverage on this path:
- On a principal residence or second home, up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- On an investment property, up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
Cash-out proceeds never count as qualifying assets. The haircuts are heavier here:
- Cash and certificates of deposit count at 100%.
- Securities count at 80%.
- Private stock counts at 75%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
All of this is subject to underwriting.
The Same-Dollar Problem
The bigger risk is counting one dollar three times. Money used for the down payment cannot also be a reserve or a qualifying asset.
On the qualifier path, suppose an $800,000 loan is supported by $330,000 in brokerage accounts (100% counts as $330,000), $300,000 in a 401(k) under 59½ (90% counts as $270,000), and $200,000 in savings (100% counts as $200,000). Together that is $800,000 of usable assets, which is reviewed on assets alone. This is illustrative, and the lender’s own calculation governs.
The catch is that this borrower has used every eligible dollar to cover the loan. The down payment and closing costs must come from somewhere else. If they come out of those same accounts, usable assets fall below the loan amount, and the file no longer works.
On the depletion path, take $1,500,000 in securities (80% counts as $1,200,000) plus $300,000 in cash (100% counts as $300,000). That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test. Again, this is illustrative.
Plan in this order:
1. Set aside cash to close, which is the down payment, costs, and prepaids.
2. Count what remains using the right path’s percentages.
3. Test that remainder against the loan amount or the income test.
4. Treat whatever is left over as your real cushion.
What About Funds That Do Not Count?
Cryptocurrency, precious metals, collectibles, pledged or borrowed funds, and business accounts beyond your ownership share 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.
On the depletion path, these are also not eligible: 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.
Seasoning and Documentation
“No income documentation” never means “no documentation.” The assets are documented on both paths.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Depletion path: statements 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 large deposit without a paper trail triggers sourcing questions. Move money before you apply, not during review. Lendmire’s piece How to Use Retirement Accounts for Reserves on an Asset Depletion Mortgage walks through how retirement balances fit this picture.
Credit, Experience, and Other Conditions
The qualifier path has a 600 minimum score. The depletion path follows the lender’s matrix, so no second floor applies. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
Asset-derived income may also supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. That is useful for a borrower who still has part-time or pension income.
How This Differs From Agency Rules
Agency programs treat assets differently. Fannie Mae’s Selling Guide on income assessment describes how an agency program uses assets as qualifying income. Those are that program’s rules. They do not set the figures for non-agency programs placed through Lendmire’s network.
Large banks and retail lenders may also run their own versions with different overlays. A borrower comparing quotes should line up reserves, haircuts, and leverage item by item rather than headline to headline.
Where Investors Get It Wrong
Investment property appears only on the depletion path, at lower leverage. A borrower who also holds rentals should not assume those properties’ equity counts at full value. Real-estate equity counts at 60% on that path.
Business-purpose rental financing is a different product. Rental income can qualify a purchase on its own through DSCR loans, and the bank statement program is for borrowers who document income with deposits. An asset-based mortgage is for the household that wants neither.
Common mistakes:
- Spending the “extra” cash after qualifying, then discovering the file no longer clears.
- Treating a retirement balance as if it counts at 100% on both paths.
- Counting cash-out proceeds as a qualifying asset.
- Assuming that a lower reserve requirement means lower asset needs. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
If your numbers only work at the edge, a smaller loan or more leverage room usually helps more than a creative reading of the guidelines.
After Closing: What You May Do With the Money
Published program information does not describe a post-closing check on reserves. Reserve rules govern what you show at underwriting, and the program does not require you to hold a balance indefinitely. Even so, the lower-risk move is to keep a cushion of your own for repairs, vacancies if you rent a unit, and market swings. Securities fluctuate, and the haircuts reflect that.
Key Terms Defined
- Asset qualifier path: a way to qualify where eligible assets cover the entire loan and no income is documented.
- Asset depletion path: a way to qualify where usable assets divided by 60 months become monthly income.
- Haircut: the share of an asset’s value that a lender does not count.
- Seasoning: the length of time funds have been in your account before you apply.
- Debt-to-income ratio: monthly debts compared to qualifying income.
Frequently Asked Questions
Do I need reserves on the asset qualifier path?
Not at or below 75% loan-to-value. Above that, the lender sets them. Because the purchase ceiling is 80%, a purchase at the top of the range is where reserves may appear. Terms are subject to underwriting and program changes.
Can my retirement account count toward reserves?
Retirement balances count toward qualifying, at 90% under age 59½ and 100% at 59½ or older on the qualifier path, and at 70% on the depletion path. Whether a given balance also serves as a cushion depends on the lender, and the same dollars cannot count twice.
Do cash-out proceeds count as assets?
Not on the depletion path, where cash-out proceeds never count as qualifying assets. On the qualifier path, cash-out terms are set by the lender and are not published, so plan without them.
Is this the same as a securities-backed or pledged-asset loan?
No. Nothing is pledged or liquidated for either path. The lender reviews your assets as evidence of capacity, and the loan remains a standard mortgage secured by the property.
Does the program ask for no documentation?
No. Income is not documented on the qualifier path, but the assets are documented fully, with statements and seasoning. Credit and property review still apply, subject to lender guidelines.
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.
Cash-rich borrowers tend to plan around the headline asset total, but the figure that decides the file is what remains after closing costs, haircuts, and the down payment come out.
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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.
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 Many Months of Reserves Does a Super Jumbo Loan Require for an Asset-Rich Executive? · How Asset Qualifier Income Is Calculated for a Jumbo Mortgage · How an Asset Depletion Mortgage Works
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.