The Quick Read: Only when the file fits a narrow lane: select programs in Lendmire’s network can finance a California rental by converting a large, documented portfolio into qualifying income, but this runs on the depletion path, not the assets-only path, and an investment-property purchase is capped at 65% loan-to-value, subject to underwriting.
- The assets-only (qualifier) path is published for principal residences and second homes. A rental purchase runs on the depletion path.
- Usable assets are divided by 60 months to create qualifying income, which then runs through the debt-to-income test.
- Leverage on an investment property is 65% on a purchase or rate-and-term refinance and 60% on a cash-out.
- A first-time investor on this path needs a 700 credit score, and assets must be large and seasoned.
- If the rental cash-flows well, a property-income (DSCR) loan is usually the simpler tool.
The property’s state does not change these figures. A California borrower faces the same program mechanics as anyone else, although California prices make the cash requirement heavier. Every figure here is a ceiling or floor from select programs, never an offer.
What Asset Depletion Actually Means
Asset depletion is a way of qualifying, not a loan type. The lender takes part of your verified liquid assets, applies a percentage to each account type, and divides the result into a monthly income figure. You do not sell anything, and the assets stay where they are.
Across Lendmire’s wholesale network, two different asset-based paths exist, and a borrower is qualified on one at a time. On the asset qualifier path, eligible assets must equal or exceed the entire loan amount, and no employment or income is documented. On the asset depletion path, the usable assets become income that must carry the housing payment and other debts through the debt-to-income test.
That distinction matters for this question. The qualifier path publishes leverage for principal residences and second homes. Investment property is available only on the depletion path, so that is the path a California rental buyer should plan around.
How the Income Gets Calculated
On the depletion path, usable assets are divided by 60 months. Here is the illustrative shape, and the lender’s own calculation governs. Suppose a borrower holds $1,500,000 in securities, which count at 80%, or $1,200,000. Add $300,000 in cash, which counts at 100%. That is $1,500,000 of usable assets, and dividing by 60 months gives $25,000 of monthly qualifying income.
That income then has to carry the full housing payment on the new property plus the borrower’s other debts. The 60-month divisor is generous compared with the longer, term-based divisors some lenders use, but the percentages applied to each asset and the leverage limits on investment property offset some of that advantage.
Documentation is not skipped. The assets are verified with account statements on both paths, and a file without income documents is not a file without documents.
Which Assets Count, and How Much
On the depletion path, each account type counts at a set share of its balance.
| Asset type | Share that counts |
|---|---|
| Cash accounts, CDs | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts | 70% at any age |
| Real-estate equity | 60% |
Several asset types are not eligible on this 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, pledged or borrowed funds, and business accounts beyond your ownership share 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 lender reviewing the source.
One more exclusion applies to this exact question. The federal consumer-finance regulator’s repayment-capacity compliance guide describes qualifying assets as those other than the value of the property securing the loan. Equity in the California rental you are buying cannot lift your own qualifying income.
What the Program Requires of the File
These are the depletion-path figures a California investor should check first, all subject to underwriting.
- Minimum assets: the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is the only income source.
- Loan amounts: $125,000 to $3,500,000.
- Credit: the lender’s score and loan-amount matrix applies, and a first-time investor needs 700.
- Housing history: 0x30x12, with one 30-day late in the last twelve months considered case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning.
- Statements: at least 120 days old at application, plus the most recent statement within 45 days. Funds from a business sale, inheritance or legal settlement are excused from that seasoning.
- Supplemental use: asset-derived income can add to documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived when it does.
Cash-out proceeds never count as qualifying assets, which closes the loop of refinancing one property to qualify for the next.
Does It Work for a Rental?
It can work, but investment property is the most conservative corner of the program.
For a California buyer, that leverage cap is the real issue. With high California price points, 65% leverage means a substantial down payment, and the assets used for that cash are no longer available to count toward qualifying income. In practice, a file that looks comfortable on paper can shrink fast once the down payment, closing costs and any reserves are pulled from the same pool. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
How the rental’s own income is treated varies by program and by lender, so confirm it before assuming that rent offsets the payment. A file should be built to qualify on assets alone, with any rent credit treated as a bonus.
Occupancy also decides whether the file is a rental at all. The CFPB’s commentary on occupancy treats a property you expect to occupy for more than 14 days in the coming year as something other than non-owner-occupied, and a beach house used a month a year is its own example. A California cabin you plan to use half the summer may belong in a second-home conversation.
Asset Depletion vs. DSCR: Choose by the File’s Strongest Element
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. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, and personal credit is still reviewed.
| Factor | Asset depletion | DSCR |
|---|---|---|
| Reviewed on | Borrower’s verified assets | Property’s rent vs. payment |
| Best fit | Strong balance sheet, thin rent | Strong rent, any income profile |
| Borrower type | Individual, since assets are personal | Often an entity, per program rules |
| Main cost | Assets tied up in the calculation | Coverage must clear the program floor |
The decision rule is simple. If the California rental cash-flows with room to spare, DSCR is usually the cleaner route, and your portfolio stays free for the down payment and reserves. If the property’s rent is thin against a high California price, or you want to hold title personally and your balance sheet is strong, asset depletion may bridge the gap. Some programs in the network allow rent to be layered in alongside assets, but that depends on the specific lender and file.
Select lenders in the network also offer DSCR programs below 1.00 coverage, with leverage and terms adjusting accordingly. That can be a better answer than pledging a portfolio when the rent is only slightly short.
Many investors with high coverage in other markets find that California rents rarely stretch far enough to clear a payment on a high purchase price. That fact is why the question comes up so often, and it is also why a stress test belongs in the plan. A Business Insider report on investor loans warns that easy-qualification products invite over-leverage and advises testing a deal with conservative rent, vacancy and cost assumptions.
Who This Fits (and Who It Doesn’t)
Asset depletion tends to suit a specific profile: retirees, someone who just sold a business, an inheritance or settlement recipient, an early-retired professional, or a household living on a portfolio. Their balances are large and their documented income is not.
It is a poor fit for the active investor who already owns several rentals with healthy coverage. That borrower gains little from pledging a portfolio when rent can qualify the loan. It is also a poor fit if the portfolio is mostly illiquid, since business accounts, restricted holdings and unseasoned funds drop out or count at a discount.
Consider a retiree with $2,000,000 in a brokerage account and no pension. That borrower may clear the asset minimums comfortably. The question is whether paying a 35% down payment on a California rental leaves enough in the account to support the income calculation. Running both versions, with and without the down payment, comes before shopping for the property. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Mistakes That Sink These Files
- Counting the down payment twice. Assets used for cash to close cannot also support qualifying income.
- Unseasoned funds. A large deposit within the seasoning window needs a documented source, unless it came from a business sale, inheritance or legal settlement.
- Assuming retirement accounts count fully. On the depletion path they count at 70% at any age.
- Treating asset depletion as a no-doc loan. Statements are required, and the lender verifies the assets it relies on.
- Ignoring the occupancy line. A property with personal use beyond the occupancy test belongs in a different program.
- Skipping the downside test. Portfolio values move after closing, and a rental that only works at peak balances is exposed.
Tax treatment varies; consult a qualified professional before relying on any tax assumption.
Key Terms Defined
Asset depletion: a qualifying method that turns usable assets into a monthly income figure by dividing them over a set number of months.
Asset qualifier path: a method where eligible assets must equal or exceed the whole loan, with no income documented.
Haircut: the share of an asset’s balance that does not count toward qualifying. Securities count at 80% on the depletion path, so a 20% haircut applies.
Seasoning: the length of time funds must sit in an account before they count.
DSCR: the ratio of a property’s rent to its monthly debt obligation, used to qualify a rental on its own income.
Frequently Asked Questions
Do I have to sell my investments to use asset depletion?
No. The assets stay in your accounts and are only counted. What changes is that the portion you use for the down payment and closing costs leaves the pool, so plan the calculation after those dollars are set aside.
Can retirement accounts count toward a California rental purchase?
Yes, on the depletion path they count at 70% at any age. On the assets-only qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% after, but that path is published for principal residences and second homes, not investment property.
Does home equity count?
Equity in other real estate counts at 60% on the depletion path, subject to underwriting. Equity in the property you are buying does not count toward your qualifying assets.
Can I buy the rental in an LLC?
It depends on the program. Asset-based programs lean toward individual borrowers because the assets are personal, while DSCR loans are commonly structured in an entity, subject to program terms. Confirm vesting rules before you sign a purchase contract.
Does California change the program figures?
The leverage, haircuts and credit rules do not change by state. California separately regulates who may lend or broker loans, but that affects the licensing of the parties, not how assets convert to income.
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. Reach the team at 828-256-2183 or request a quote. For the full picture of how property-income financing compares, see the complete DSCR loans guide.
In California, the deciding number is usually not your portfolio’s size but how much of it survives the down payment, so test that figure before you test any property.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in California page presents the program for California borrowers.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of traditional personal-income documentation, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB ATR/QM Small Entity Compliance Guide
2. CFPB Regulation Z commentary on occupancy
3. Business Insider via Yahoo Finance on investor loan risk
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Cash Out a Florida Home on an Asset Depletion Refinance? · Can You Buy a Home on an Inheritance Still in Probate? · How to Buy Before You Sell Using an Asset Qualifier Mortgage
Guides: Asset-Based Mortgage in California
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.