The Quick Read: Usually when the eligible assets, after their credit percentages, equal or exceed the entire loan on a primary home or second home, because the qualifier path then documents no employment or income and skips the debt-to-income test, while the depletion path fits when assets must become income or the property is a rental. Both paths are available only through select programs, subject to underwriting. A borrower is qualified on one path at a time.
- Choose the qualifier path when usable assets cover the whole loan and the home is a primary residence or second home.
- Choose depletion when assets are large but must be turned into monthly income, or when other income needs to sit beside them.
- Rental purchases run on the depletion path or on a DSCR loan. The qualifier path does not cover investment property.
- Assets are documented on both paths. Skipping income paperwork never means skipping documentation.
Are the Two Paths Really Different Products?
Yes, and the difference is structural, not cosmetic. Some lenders use the two names as if they were interchangeable, so a borrower should always ask which test a given program actually runs.
On the asset qualifier path, the lender adds up eligible assets after applying a credit percentage to each account type. If that total equals or exceeds the entire loan amount, the borrower is reviewed on assets alone. No employment or income is documented.
On the asset depletion path, the lender applies haircuts to the assets and adds them up. It divides the usable total by 60 months to create a monthly qualifying income. That income must carry the full housing payment and other debts through the debt-to-income test. Nothing is sold or spent. The division is a calculation, and the money stays invested.
Across the wholesale network Lendmire works with, this split decides most files before any other detail does. One path asks whether the balance sheet covers the loan. The other asks whether the balance sheet can behave like a paycheck.
How the Credit Percentages Differ
The two paths count the same account differently. A borrower with the same portfolio can show a different usable total depending on the path.
| Factor | Asset Qualifier Path | Asset Depletion Path |
|---|---|---|
| What is tested | Assets cover the entire loan | Assets ÷ 60 months, then DTI |
| Income documented | None | Derived income only, unless supplementing |
| Purchase leverage | Up to 80% | Up to 80% (home); 65% (rental) |
| Refinance leverage | Up to 75% | 80% rate-and-term (home); 65% (rental) |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Brokerage and securities | 100% | 80% |
| Retirement accounts | 90% under 59½, 100% after | 70% at any age |
| Seasoning | 60 days, two statements | Statements 120+ days old, plus one within 45 days |
The retirement line is the biggest swing. A borrower aged 59½ or older counts a 401(k) or IRA at full value on the qualifier path. The same account counts at 70% on the depletion path. Brokerage balances show a similar gap, at 100% against 80%.
Here is the sanctioned qualifier example. Take an $800,000 loan. The borrower holds $330,000 in brokerage accounts (counted at 100%), $300,000 in a 401(k) while under 59½ (counted at 90%, or $270,000), and $200,000 in savings (100%). That is $800,000 of usable assets against an $800,000 loan, so the file is reviewed on assets alone.
The depletion example works differently. Say the borrower holds $1,500,000 in securities, which counts at 80% for $1,200,000, plus $300,000 in cash at 100%. That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income must then carry the housing payment and other debts. These figures are illustrative, and the lender’s own calculation governs.
When Does the Qualifier Path Win?
The qualifier path wins when assets can cover the entire loan and the borrower does not want income or debt ratios in the file at all. Several borrower profiles fit this shape.
- Heavy existing debts. A borrower with large car loans, other mortgages or support obligations avoids the debt-to-income test altogether.
- Retirement-heavy balance sheets. At 59½ or older, retirement accounts count at 100%, which tends to lift the usable total well above what depletion allows.
- Taxable-income problems. Self-employed or recently retired borrowers often show low documented income despite large balances.
- Large loans on a primary home or second home. The path reaches up to $4,000,000, above the depletion ceiling of $3,500,000.
- A lower credit floor. The qualifier path publishes a 600 minimum score, subject to underwriting.
Leverage matters too. The qualifier path allows up to 80% on a purchase and 75% on a refinance, for a principal residence or second home. At or below 75% loan-to-value, no reserves are required. Above that, the lender sets them. Whether cash-out proceeds are allowed on this path is the lender’s call and is not published.
The trade-off is real. Covering the whole loan with qualifying assets means a large share of the portfolio is committed on paper. A borrower who wants to keep a big liquid cushion outside the qualifying pool may find the arithmetic tight.
When Does Depletion Win Instead?
Depletion wins when the loan is larger than the usable assets, when other income should count, or when the property is a rental. That covers more situations than many borrowers expect.
- Large loans with a $1,000,000 minimum. Depletion requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. On big loans, that minimum can sit below the loan itself. The qualifier path never allows that.
- Supplementing documented income. Asset-derived income can add to documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. A retiree with a pension and Social Security can use this to close a gap.
- Cash-out refinances. Depletion publishes a 60% ceiling on a cash-out refinance, for a principal residence or second home. Cash-out proceeds never count as qualifying assets.
- Investment property. Depletion is the only asset-based path that reaches a rental, at up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out.
Depletion has its own floors. Where asset depletion is the only income source, the borrower needs at least $250,000 liquid. A first-time investor on this path needs a 700 score. Otherwise, the path follows the lender’s score and loan-amount matrix. Housing history is 0x30x12, and a housing event needs 4 years of seasoning.
What About Buying a Rental in New Mexico?
For a rental, the qualifier path is off the table and the real choice is depletion or a DSCR loan. The qualifier path covers principal residences and second homes only.
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. The borrower’s personal income and debt ratio are not the constraint.
That changes the question. If the rent covers the payment, DSCR is usually the natural fit, and the borrower’s portfolio stays untouched. If the rent is thin, programs below 1.00 coverage are available through select lenders in the network, but leverage and terms adjust. A borrower with deep seasoned assets and weak rent coverage can also price an asset depletion file at 65% on a purchase.
Depletion on a rental asks the borrower to carry the property through personal debt ratios. DSCR asks the property to carry itself. A borrower adding a third or fourth rental often finds the second approach scales better, because each new loan does not add to a personal debt ratio. The complete DSCR loans guide walks through how that qualification works.
How Does New Mexico Change the Picture?
New Mexico changes the context around the loan, not the program figures. The leverage, credit and seasoning numbers above do not vary by state. Lendmire’s consumer mortgage lending is licensed in New Mexico, among 16 states.
The buyers who tend to ask about asset-based paths here share a pattern. Some are retirees relocating with large brokerage and retirement balances. Others are second-home buyers or people who sold a business or out-of-state property and hold the proceeds in cash. All of them have large balances and little documented income.
Property type deserves its own conversation. Rural parcels, acreage and non-standard construction can raise separate questions about appraisal and eligibility. Those are property questions, not asset questions, so a borrower should raise them early.
Why Does the Federal Framework Allow This at All?
Federal ability-to-repay rules explicitly allow a lender to rest a repayment decision on assets instead of income. Under Regulation Z’s ability-to-repay provision, a creditor may base its determination on income, on assets other than the home securing the loan, or on both. The rule also requires verification using reasonably reliable third-party records, per the text of 12 CFR 1026.43.
That is why both paths document assets carefully. A borrower is skipping the income conversation, not the verification. Statements, seasoning and source reviews are the substitute for pay stubs and traditional personal-income documentation.
What Counts as an Asset, and What Does Not?
Brokerage accounts, certificates of deposit, money market and savings accounts are the core of the qualifier path. Retirement accounts count too, at the percentages shown above. Accounts combine into one total.
Depletion counts cash and certificates of deposit at 100%, securities at 80%, private stock at 75%, retirement accounts at 70% and real-estate equity at 60%. Several items are not eligible on that path:
- custodial accounts
- deferred compensation
- escrow accounts
- foreign funds
- cash on hand
- stock options
- non-vested restricted stock units
- 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 to convert them to a seasoned cash balance in a regulated account. The lender then reviews the source of the funds.
Seasoning shapes the timeline of preparation. 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 at application, plus the most recent one within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning on the depletion path.
A practical point follows from this. A borrower who just sold a business should move proceeds into a regulated account and leave them alone. Large unexplained deposits slow a file down, and a lender will ask for their source.
Key Terms Defined
Asset qualifier path: A way to qualify on assets alone, where eligible assets must equal or exceed the entire loan and no income is documented.
Asset depletion path: A way to turn usable assets into monthly qualifying income by dividing them by 60 months.
Credit percentage (haircut): The share of an account balance that counts toward qualifying, which varies by account type and path.
Seasoning: The length of time funds have sat in an account before they can be used to qualify.
Debt-to-income ratio: The share of monthly income that goes to the housing payment and other debts, which the depletion path tests and the qualifier path does not.
DSCR loan: A business-purpose investor loan that qualifies primarily on the property’s rental income covering its payment.
Which Path Fits Which Borrower?
Four short profiles show how the decision tends to land. All are hypothetical, and every file is underwritten individually.
Picture a retiree, 62, with $2.4 million across brokerage accounts and an IRA, buying a primary home in Santa Fe. If the usable total clears the loan, the qualifier path fits, since the IRA counts at 100% and no income is documented.
Consider a retired couple with a pension that covers part of their budget and a large portfolio. Depletion fits better, because the derived income can supplement the pension up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Say a business owner sells a company and wants a larger loan, above what the qualifier arithmetic would support. Depletion’s minimum of the lesser of $1,000,000 or 1.25 times the loan may be easier to meet, and sale-of-business funds are excused from the seasoning rule.
Run it for an investor buying a rental with strong rent coverage. DSCR usually fits best, and the portfolio stays out of the file. If rent coverage is weak, the investor weighs a sub-1.00 DSCR program, which carries adjusted leverage and terms, against depletion at 65% on a purchase.
The flip point is simple. If assets cover the whole loan and the property is a home, the qualifier path is usually cleaner. If they do not, or the property is a rental, another path usually fits better.
What Are the Risks and Trade-offs?
Both paths tie up liquidity on paper, even though nothing is sold. The qualifier path commits the full loan amount in eligible assets. The depletion path commits a large pool to produce income, and it still requires the borrower to pass a debt ratio.
Volatile assets add a second risk. A securities-heavy pool can shrink between application and final review, and a lower balance means a lower usable total. Borrowers who qualify with a thin margin should expect that shift.
Tax treatment varies, particularly for retirement accounts, so consult a qualified tax professional before moving funds.
Programs change, and every figure here is a ceiling or floor rather than an offer. Eligibility depends on credit, the property and the lender’s review.
Frequently Asked Questions
Can I use the asset qualifier path to buy a rental property?
No. Investment property runs on the asset depletion path, at up to 65% on a purchase, or on a DSCR loan, which qualifies primarily on the property’s rental income. Both are subject to lender guidelines.
Do I have to sell my investments for either path to work?
No. On the depletion path, the division by 60 months is only a calculation, and the money stays invested. On the qualifier path, the assets simply need to be there and documented. Neither path requires liquidating the accounts.
Is the qualifier path really income-free, or is something else documented?
Income and employment are not documented, but assets are. The lender reviews statements, seasoning and the source of funds. The ability-to-repay review rests on the assets, and a credit review still applies.
Why would anyone choose depletion if the qualifier counts accounts at a higher percentage?
Depletion can work when assets do not cover the whole loan. It also lets derived income supplement documented income up to a 45% debt-to-income ratio, and it publishes cash-out leverage. The qualifier path requires usable assets equal to the entire loan.
Does being in New Mexico change the figures?
No. The program figures are the same in every state where the loans are offered. New Mexico adds local property and market context, and Lendmire is licensed for consumer mortgage lending there. Final eligibility is set by the lender.
Next Steps
Start by listing every account, its type, its balance and how long the money has been there. Then run the qualifier test first, because it is the simpler one. If the total falls short, or the property is a rental, move to depletion or DSCR.
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 mortgage broker that arranges these loans through select lenders in its network, and nothing here is a commitment to lend.
Lendmire’s asset-based mortgage in New Mexico page presents the program for New Mexico borrowers.
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.
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References
1. CFPB Regulation Z § 1026.43, Ability-to-Repay
2. Cornell LII, 12 CFR 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Asset Depletion vs Bank Statements vs DSCR for a Post-Exit Buyer · How Big Can an Asset Qualifier Mortgage Be? · Does an Asset Depletion Loan Require Any Income?
Guides: Asset-Based Mortgage in New Mexico
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.