The Quick Read: Yes, on the asset depletion path, through select programs in Lendmire’s network, a cash-out refinance on an Alabama principal residence or second home is available up to 60% loan-to-value, subject to underwriting. Cash-out proceeds never count as qualifying assets, and the asset qualifier path leaves cash-out to the lender. Alabama adds no program rule of its own.
- Asset depletion turns usable assets into monthly income (usable assets divided by 60 months), then tests that income against the new payment.
- Cash-out leverage is 60% on a principal residence, second home or investment property on the depletion path.
- Rate-and-term refinances go higher: 80% on a primary or second home, 65% on an investment property.
- A “cash-out” that only pays off liens is classed as rate-and-term.
- Figures are ceilings, not offers, and every file is underwritten individually.
What Does Asset Depletion Actually Do?
Asset depletion is an income calculation. It is not a property type and it is not a loan purpose. The lender takes your eligible balances, applies a haircut to each asset type, and divides the total by 60 months. The result is imputed monthly income that runs through the debt-to-income test. Nothing is sold. Nothing is pledged. The accounts stay where they are.
Across the wholesale network, two paths exist, and a borrower sits on one at a time:
- Asset qualifier path: eligible assets must equal or exceed the entire loan amount. No employment or income is documented.
- Asset depletion path: assets become income, and that income must carry the full housing payment and other debts.
Name the path every time you quote a number. Blending the two tables can cause problems before a file reaches a lender.
Can You Take Cash Out on Each Path?
Cash-out is a program decision, not a universal yes or no. On the depletion path, it is allowed at a lower ceiling. On the qualifier path, the lender sets whether cash-out proceeds are permitted and at what leverage, and that is not published. Treat any single-number answer for the qualifier path as a guess.
| Transaction | Depletion path: primary or second home | Depletion path: investment property |
|---|---|---|
| Purchase | Up to 80% | Up to 65% |
| Rate-and-term refinance | Up to 80% | Up to 65% |
| Cash-out refinance | Up to 60% | Up to 60% |
On the qualifier path, a refinance on a principal residence or second home runs up to 75% loan-to-value. Whether cash comes back on that path depends on the lender.
Market surveys differ here. Some lender program sheets say cash-out is excluded entirely on their asset products. Others say cash-out proceeds can count as assets. The network answer is narrower: on the depletion path, cash-out is allowed through select programs, and the proceeds never count as qualifying assets, subject to underwriting.
That split is why you will read both “no” and “yes” online. Both can be true of different programs.
What Counts as an Eligible Asset?
Haircuts decide how much of a balance carries into the calculation. They differ by path.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% (cash accounts) |
| Certificates of deposit | 100% | 100% |
| Brokerage accounts / securities | 100% | 80% |
| Private stock | Not listed | 75% |
| Retirement accounts | 90% under 59½, 100% at 59½ or older | 70% at any age |
| Real-estate equity | Not listed | 60% |
Not eligible 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 into a seasoned cash balance in a regulated account, with the source reviewed by the lender.
How Does Cash-Out Change the Asset Math?
Cash-out changes the leverage ceiling and the seasoning clock. It does not change the income calculation, and it does not feed the asset pool. This is where most surprises land. Borrowers assume the cash they pull out can be counted as reserves or as eligible assets. On the depletion path, it cannot.
The asset pool also shrinks before you divide. Closing costs and any required funds come out of the balances first. So the usable number is smaller than the statement total.
Run through one sanctioned shape. An investor holds $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. That is $1,500,000 usable, and 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. The lender’s own calculation governs, and this is illustration only.
Two eligibility floors also apply on this path. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. And when asset depletion is the only income source, at least $250,000 must be liquid. Asset-derived income may also supplement documented income up to a 45% debt-to-income ratio, and when it does, the minimum-assets rule is waived. Loan amounts on this path run from $125,000 to $3,500,000.
Worked Scenario: An Alabama Retiree
Consider a retiree in Alabama who owns a principal residence outright and holds most wealth in brokerage accounts. The goal is cash for a home renovation without selling securities.
1. Classify the request. If the retiree takes cash back, it is a cash-out. The ceiling on the depletion path is 60% of value.
2. Total the assets. Securities count at 80%, cash at 100%, and any IRA at 70%.
3. Subtract what the transaction consumes. Closing costs and required funds come out of the pool.
4. Divide by 60 months. That is the monthly qualifying income.
5. Run debt-to-income. The new housing payment and existing debts must fit.
6. Check the property side. An appraisal sets value. Cash-out leverage caps the amount.
If step 6 leaves too little cash, the options are a smaller request or a rate-and-term refinance at the higher 80% ceiling. A rate-and-term returns no cash, but it can restructure the debt. Whether that fits depends on the goal.
Does Alabama Change Anything?
No. The program figures do not change by state. Alabama is one of the 16 states where Lendmire’s consumer mortgage lending is licensed, so an Alabama borrower can be matched to these programs, subject to underwriting. State facts like taxes, insurance and local prices are context for the budget. They are not program parameters.
One distinction trips up Alabama landlords. An Alabama rental refinanced for business purposes is often a different kind of loan. Under Reg Z § 1026.3, credit to acquire, improve or maintain non-owner-occupied rental property is deemed business-purpose, and the eCFR text exempts credit made to a non-natural person such as an LLC. Those loans usually run on rental income, which is a different product. The asset-based mortgage described here is a consumer loan.
Why Not Just Sell the Investments?
Borrowers cash out instead of selling for three practical reasons: to avoid triggering a taxable sale, to keep the portfolio invested, and to keep liquid reserves intact. Tax treatment varies; consult a qualified professional before relying on any outcome.
The trade-offs are real:
- A market drop shrinks the qualifying assets. The same portfolio supports less income after a decline.
- A larger loan balance means a larger obligation, with income that is derived rather than earned.
- Refinancing replaces the existing loan terms.
A cash-out is worth running only if the use of funds clearly justifies the larger balance.
Key Terms Defined
- Asset depletion: a method that divides eligible assets by 60 months to create monthly qualifying income.
- Asset qualifier: a path where eligible assets must equal or exceed the entire loan, with no income documented.
- Cash-out refinance: a refinance that returns cash above what pays off existing liens.
- Rate-and-term refinance: a refinance that only pays off existing liens and may change the loan terms.
- Haircut: the share of an account balance the lender leaves out of the calculation.
- Seasoning: how long funds have sat in an account, or how long you have owned the property.
If the Answer Is No: Your Alternatives
Several outcomes can come back. Each has a fix.
| Outcome | What to try |
|---|---|
| Cash-out ceiling too low for the amount | Shrink the request to fit 60% |
| Assets fall short of the minimums | Add eligible assets or supplement with documented income |
| Qualifier path won’t allow cash-out | Move to the depletion path |
| Borrower deposits income, not assets | A bank statement program, which documents income with deposits |
| Rental property whose rent carries the payment | A DSCR loan, which tests the house rather than the person |
Lendmire’s complete DSCR loans guide covers the rental-side alternative. And if the home came through an estate, Lendmire’s article Can an Asset-Rich Retiree Cash-Out Refinance an Inherited Home? covers that setup.
Documentation Checklist
The assets are documented. “No income documentation” never means no documentation.
- 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. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
- Titling and ownership proof for each account, including any trust or joint holdings.
- Credit: a 600 minimum score on the qualifier path. The depletion path follows the lender’s matrix, and a first-time investor there needs 700. Housing history is 0x30x12, and a housing event needs 4 years of seasoning on the depletion path.
Programs change, and each file is underwritten individually.
Frequently Asked Questions
Can I use the cash I pull out as reserves or assets?
No on the depletion path. Cash-out proceeds never count as qualifying assets. The pool is built from your existing seasoned balances, reduced by what the transaction consumes.
How much equity can I take out of an Alabama home?
On the depletion path, up to 60% loan-to-value on a cash-out, through select programs and subject to underwriting. The qualifier path leaves cash-out leverage to the lender, so no figure is published.
Does a cash-out refinance always put money in my pocket?
No. A refinance that only pays off existing liens is classed as rate-and-term, not cash-out. Rate-and-term ceilings are higher, at 80% on a primary or second home on the depletion path.
Does my retirement account count?
Yes, at a haircut. On the depletion path it counts at 70% at any age. On the qualifier path it counts at 90% under 59½ and 100% at 59½ or older.
Is asset depletion consumer lending or business lending?
It is a consumer mortgage for principal residences and second homes, and the depletion path can also cover investment property. A creditor must consider and verify income or assets, which is why assets are documented even when income is not.
Next Step
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 financing through select lenders in its wholesale network. This is not a commitment to lend.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
Lendmire’s asset-based mortgage in Alabama page presents the program for Alabama borrowers.
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
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 Asset Depletion Jumbo Loan · Do Cash-Out Proceeds Count as Assets on an Asset Depletion Refinance? · Maxed-Out Jumbo vs Super Jumbo Loan for a Retiree on Asset Depletion
Guides: Asset-Based Mortgage in Alabama
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.