The Quick Read: Usually yes, once the proceeds are in your accounts and documented: an asset-based mortgage can use them to cover the loan outright or convert them into qualifying income, and a rental purchase can qualify primarily on property-level rental income covering the payment, subject to lender guidelines. The deciding factors are the sale structure, the paper trail, and what the loan is for.
- Your own home: the loan runs on assets, not on a paycheck you no longer draw.
- A rental: the property’s rent is the main test, and the proceeds fund the down payment and reserves.
- Gross price is not cash: escrow, earn-outs, and seller notes do not count as money on hand.
- Paper trail wins: the purchase agreement, settlement statement, and account statements make the proceeds traceable.
- Every file is underwritten individually: figures here are ceilings and floors, never offers.
Why Does a Practice Sale Confuse Underwriters?
A practice sale hands you the most cash you will ever hold at the moment your paycheck stops. A lender who reads your last tax return sees a business that no longer exists. A lender who reads your bank statement sees a large deposit with no obvious story.
Your job is to connect those two pictures. The sale explains the deposit, and the deposit becomes the basis for the loan.
Most physicians stall for one of three reasons. The proceeds are not all in one place, the paperwork does not match the deposit, or the borrower picked the wrong loan path for the property. This article walks through the paths, the math, and the traps.
Which Path Fits the Property You Want to Buy?
Three routes cover most retiring physicians: the asset qualifier path, the asset depletion path, and a DSCR loan for rentals. Across Lendmire’s wholesale network, the first two apply to consumer mortgages on a home, and asset depletion also reaches investment property. The third applies to business-purpose rental purchases. A borrower is qualified on one path at a time.
| Path | What it relies on | Best fit | Main trade-off |
|---|---|---|---|
| Asset qualifier | Assets cover the whole loan | Home buyer with large balances | Needs assets at least equal to the loan |
| Asset depletion | Assets become monthly income | Home or investment property | Lower leverage, asset minimums |
| DSCR | Rent covering the property payment | Rental purchase | Property must support the payment |
The asset qualifier path counts eligible assets, after credit percentages, against the entire loan amount. If they equal or exceed the loan, no employment or income is documented. Leverage typically runs up to 80% on a purchase and 75% on a refinance of a principal residence or second home, through select programs. Loans run up to $4,000,000, and the credit floor is 600, subject to underwriting.
The asset depletion path divides usable assets by 60 months. The result is monthly qualifying income that must carry the full housing payment and other debts through the debt-to-income test. Leverage is typically up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance of a principal residence or second home. For an investment property, it is 65% and 60%. Loans run from $125,000 to $3,500,000, and credit follows the lender’s matrix. A first-time investor on this path needs a 700 score.
If you want a deeper look at how one-time proceeds fit this second path, Lendmire’s piece Can Sale Proceeds Alone Qualify You for an Asset Depletion Loan? covers it.
What Counts as Usable Proceeds?
Only money sitting in your accounts counts. The headline sale price is a different number, and the gap between them is where most files go sideways.
Start with structure. Practice sales are usually either stock sales or asset sales, and the American Osteopathic Association notes that a selling physician has to decide between a stock purchase agreement and an asset purchase. The structure shapes what you receive and when.
Then look at timing. A practice-sale pricing article from Dental Economics explains that buyers often defer part of the price through an earn-out, escrow, holdback, or promissory note. Each of those is a promise, not cash.
Here is how a lender tends to view the pieces:
- Cash wired at closing: counts once it lands in a regulated account and is documented.
- Escrow or holdback: does not count until it is released and deposited.
- Earn-out: depends on future performance, so it stays out of the asset total.
- Seller-held note: a promise to pay later. Treat it as a receivable, not liquidity.
- Rollover equity: an ownership stake in the buyer, not cash.
- Working-capital adjustments: these often get trued up after closing, so your final net figure can shift.
Subtract what you owe on the way out. That includes partner buyouts, debt payoffs, tail coverage, and money you must set aside for what the sale will cost you later. Tax treatment varies by how the sale is structured; consult a qualified professional before relying on any net figure.
One more wrinkle: many buyers want you to keep practicing for a transition period. One industry guide to selling a medical practice puts that at one to three years. You may not be fully retired at closing, which affects how the file is described. On the asset paths, your future earnings are not the test, so the file still rests on what you hold.
Worked Example: One Sale, Two Ways to Qualify
Picture a physician whose net proceeds have landed and been invested. The numbers below are illustrative, and the lender’s own calculation governs.
Asset qualifier path. Say the loan is $800,000, and the borrower holds $330,000 in brokerage accounts, $300,000 in a 401(k), and $200,000 in savings. Brokerage counts at 100%, which is $330,000. The 401(k) counts at 90% under age 59½, which is $270,000. Savings counts at 100%, which is $200,000. Usable assets total $800,000, which equals the loan. The file is reviewed on assets alone, subject to underwriting. At 59½ or older, that same 401(k) counts at 100%.
Asset depletion path. Now take $1,500,000 in securities and $300,000 in cash. Securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000. Usable assets total $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test.
The two results are different tests. The first asks whether the assets can cover the loan. The second asks whether assets, converted to income, can carry the payments. Never blend the two tests.
The depletion path has minimums worth knowing. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are the only income source, liquid assets can never fall below $250,000. If you also have documented income, such as a pension or Social Security, the assets can supplement it up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Here is the honest tradeoff. The qualifier path asks for fewer assets relative to the loan and no income math. The depletion path asks for a larger asset pile, and a bigger housing payment can fail the debt-to-income test even with plenty of assets. A physician with a mixed portfolio might reasonably work both and see which one fits.
How Do You Document the Proceeds?
Document the money from the signature to the statement. A big deposit alone is not proof. A closing document showing where the funds came from is.
Build the file in this order:
1. The executed purchase agreement.
2. The closing or settlement statement showing the wire or disbursement.
3. Bank or brokerage statements showing where the net proceeds landed.
4. Statements for every other account you want counted.
The assets are documented on both asset paths. No income documentation never means no documentation. Federal rules require lenders to verify the assets they rely on using third-party records, and the CFPB’s ability-to-repay compliance guide lists account statements among the acceptable records.
Seasoning is the waiting period assets must sit in an account before they count. The two paths treat it differently:
- Asset qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Asset depletion path: statements at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business funds are excused from that seasoning, which helps a physician who sold last month.
Do not shuffle the money around before you apply. Moving proceeds between accounts creates new transactions to explain. 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.
Some assets are excluded outright on the depletion path. That list includes custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units. Your escrow holdback from the practice buyer falls into the escrow category until it is released.
Can the Proceeds Fund a Rental Purchase Instead?
Yes, and the rental route has its own logic. 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 primarily for a business or commercial purpose from the consumer ability-to-repay framework.
In practice, a DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR stands for debt service coverage ratio, which is the property’s rent divided by its monthly housing payment. Lenders still look at credit, reserves, and the source of your down payment. Your sale proceeds fund the down payment and reserves, and the lender sources them with the same documents described above. Many investors treat this as the cleaner fit: no personal income test, and no asset-to-income conversion.
Leverage, credit minimums, and reserves vary by program and property. Select lenders in the network will also look at coverage below 1.00 with adjusted leverage and terms. The details live in the complete DSCR loans guide.
The decision comes down to what you are buying. Buying a retirement home? That is a consumer mortgage, so use an asset path. Adding a rental to a portfolio? That is a DSCR file. Some physicians do both, and the second file benefits from the first closing being clean.
Consider an investment property financed on the asset depletion path. Leverage drops to 65% on a purchase, and the debt-to-income test applies. Many physicians find that a DSCR loan on a well-rented property is cleaner, because the property’s rent does the heavy lifting rather than a derived income number. Lendmire’s piece How to Qualify on Asset Depletion Using One-Time Sale Proceeds goes deeper on that math.
Key Terms Defined
Asset qualifier path: a loan that qualifies when eligible assets, after credit percentages, equal or exceed the whole loan amount.
Asset depletion path: a loan that divides usable assets by 60 months to create monthly qualifying income.
Seasoning: the time funds must sit in an account before a lender counts them.
Earn-out: part of the sale price paid later, based on how the practice performs.
Holdback or escrow: a slice of the price a buyer keeps back for a set period after closing.
DSCR: the ratio of a property’s rent to its monthly housing payment.
LTV: loan-to-value, the loan amount as a percentage of the property’s value.
Mistakes That Stall Files
- Counting the sticker price. Your usable number is net, in your account, after obligations.
- Treating a seller note as cash. It is a promise, not a balance.
- Mixing the paths. Quoting qualifier-path leverage on a depletion-path file leads to a wrong plan.
- Moving money before applying. Each transfer adds paperwork and delays the story.
- Using the wrong loan for the property. A rental bought on the consumer path faces lower leverage than the same rental on a DSCR file.
- Assuming retirement accounts count the same everywhere. They count at 90% under 59½ on the qualifier path and 70% at any age on the depletion path.
When Is This the Wrong Move?
Sometimes the best answer is a smaller loan or paying cash. If your usable assets are modest and your plan depends on a large loan, neither asset path may fit. If a large earn-out or seller note is most of your price, wait until it converts to cash.
It is also fair to ask whether leaving proceeds invested while borrowing makes sense for you. That is a planning decision, and a financial advisor can weigh it against your goals.
Frequently Asked Questions
Does retiring mean I cannot qualify for a mortgage?
No. Both asset paths exist for borrowers whose balances are large and whose documented income is not. The qualifier path ignores income and tests assets against the loan. The depletion path converts assets into monthly income. Approval depends on credit, documentation, and underwriting.
Do I need to wait after the sale before applying?
It depends on the path. The qualifier path wants 60 days of seasoning and two months of statements per account. The depletion path wants statements at least 120 days old plus one within 45 days, but sale-of-business funds are excused from that seasoning. The lender’s review governs.
Does the full sale price count as an asset?
No. Only funds actually in your accounts count. Escrow holdbacks, earn-outs, seller notes, and rollover equity stay out until they become seasoned cash. Subtract what you owe on the way out as well. The lender works from the net balance shown on your statements.
Can I use proceeds to buy a rental instead of a home?
Yes. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your proceeds fund the down payment and reserves and are sourced like any other asset. An investment property on the depletion path is also possible, at 65% on a purchase and 60% on a cash-out.
Which retirement accounts count, and at what percentage?
On the qualifier path, 401(k) and IRA balances count at 90% under 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. Securities count at 80% there, and cash and CDs at 100%.
Your Next Step
Consumer mortgage lending through Lendmire is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. 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. Programs are placed through select lenders in Lendmire’s network, subject to underwriting, and nothing here is a commitment to lend.
For the physician with a closed sale and a seasoned account, the strongest file is usually the one where every dollar has an address and a document.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. American Osteopathic Association: selling a solo practice
2. Dental Economics: purchase price negotiation
3. GetPracticeHelp: selling a medical practice
4. CFPB ATR/QM compliance guide
5. eCFR 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 to Qualify for an Assets-Only Mortgage · How an Asset Depletion Mortgage Works · How to Document an Assets-Only 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.