The Quick Read: A lender picks the path by testing whether eligible assets cover the entire loan or whether assets must be converted into monthly income to carry the payment. A borrower is qualified on one path at a time, subject to underwriting and select programs in Lendmire’s network.
- Asset qualifier path: eligible assets, after credit percentages, must equal or exceed the whole loan amount. No employment or income is documented.
- Asset depletion path: usable assets divided by 60 months become qualifying income, which then runs through the debt-to-income test.
- Leverage differs: the qualifier path allows up to 80% on a purchase and 75% on a refinance; the depletion path allows 80% on a purchase of a principal residence or second home.
- Documentation stays: the assets are fully documented on both paths. “No income documentation” never means “no documentation.”
- Alabama changes nothing: the program figures are the same in every state. Alabama is one of the 16 states where Lendmire arranges consumer mortgages.
Why Does the Choice Come Up on an Alabama File?
The choice comes up because the borrower has large balances and little documented income. Picture a retiree selling a business in Mobile, an early-retired engineer in Huntsville, or a household in Birmingham living off a portfolio. Pay stubs and traditional personal-income documentation undersells these files. Assets tell the real story.
Alabama itself adds no special rule here. The mechanics are identical in Gulf Shores and in Madison. State facts like property taxes, insurance and local prices shape the budget, but they are context, not program parameters. What the lender decides is which of two tests the file passes more cleanly.
Both paths are for consumer-purpose loans on a principal residence or second home. Investment property is allowed only on the depletion path, at lower leverage. Rental purchases that are true business-purpose deals usually belong in a DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers that lane.
Key Terms Defined
Asset qualifier: a path where eligible assets, after credit percentages, must cover the entire loan amount. No income or employment is documented.
Asset depletion: a path that divides usable assets by 60 months to create a monthly qualifying income. That income goes through the debt-to-income test.
Haircut: the share of an account balance that does not count. A 70% credit on a retirement account means a 30% haircut.
Seasoning: how long funds have sat in an account, shown by statements. Seasoning is how the lender knows the money is really yours.
Debt-to-income (DTI): monthly debts, including the new housing payment, divided by monthly qualifying income.
Usable assets: the balance left after applying credit percentages and removing anything ineligible.
On labels. Lenders use “asset qualifier” and “asset depletion” loosely, and some treat them as synonyms. Across the wholesale network, the useful definition is by what the guideline measures: coverage of the whole loan, or income for a ratio test. Ask which one a program means before comparing anything.
How Does Underwriting Treat Each Path, Step by Step?
Underwriting runs the same opening steps on both paths, then splits at the test. The split is the whole decision. Everything before it is inventory.
1. Set occupancy and purpose. Principal residence and second home work on both paths. Investment property works only on the depletion path.
2. List every account. Checking, savings, brokerage, certificates of deposit, money market, retirement and private stock each carry their own treatment.
3. Apply the percentages for the path. The two paths use different tables. They are never blended.
4. Check seasoning and statements. Documents must match the path, covered below.
5. Run the path’s test. Qualifier: do usable assets equal or exceed the loan? Depletion: does usable assets ÷ 60 produce income that carries the payment and other debts?
6. Compare against overlays. Credit, leverage, loan size and occupancy get checked last.
The lender’s own calculation governs. Everything below is illustrative and subject to underwriting.
The qualifier test
On this path the assets must equal or exceed the entire loan amount. Brokerage, certificates of deposit, money market and savings count at 100%. A 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. Accounts combine.
Run an illustration. An $800,000 loan with $330,000 in brokerage accounts (100% = $330,000), $300,000 in a 401(k) under 59½ (90% = $270,000) and $200,000 in savings (100% = $200,000) counts $800,000 of usable assets. It is reviewed on assets alone, through select programs and subject to underwriting.
Because no income is documented, there is no DTI to fail. The lender’s ability-to-repay review rests on the assets. Reserves are typically none at or below 75% loan-to-value; above that, the lender sets them.
The depletion test
On this path the haircuts are different. Cash accounts and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Take $1,500,000 in securities (80% = $1,200,000) plus $300,000 in cash (100% = $300,000). That is $1,500,000 usable, divided by 60 months, or $25,000 of monthly qualifying income. That income must then carry the housing payment and other debts through the debt-to-income test.
Depletion asks for minimum assets: typically the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when depletion is the only income source. Asset-derived income may also supplement documented income, such as a pension or Social Security, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
How Does a Lender Actually Choose?
The lender picks the path where the file has the fewest weak points. Three file facts drive it: debt load, asset mix, and loan size relative to assets.
| Factor | Qualifier path | Depletion path |
|---|---|---|
| What is tested | Assets cover the whole loan | Assets ÷ 60 carries the payment |
| DTI test | None (no income documented) | Yes |
| Purchase leverage | Up to 80% | Up to 80% (residence, second home) |
| Refinance leverage | Up to 75% | Up to 80% rate-and-term, 60% cash-out |
| Investment property | Not offered | Up to 65% purchase, 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | Lender’s matrix |
Depletion usually wins when debts are light, the pool is large relative to the payment, or the borrower also has documented income that the derived income can supplement. The ratio test is easy to clear, and the loan can be sized on income.
Qualifier usually wins when debts are heavy. A borrower with large existing obligations can fail the DTI test on depletion even with seven figures in the bank. Qualifier skips that test entirely. The tradeoff is that the pool must cover the whole loan, and retirement balances under 59½ count at 90%.
Neither wins when the pool is mostly assets that don’t count. That leads to the next section.
What Counts as an Eligible Asset?
Cash, certificates of deposit and brokerage balances do most of the work. Cryptocurrency, precious metals, collectibles, business accounts beyond the borrower’s ownership share, 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.
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. Lendmire’s piece How to Use Deferred Compensation in an Asset Depletion Mortgage File covers that one in detail.
Do not count the same dollar twice. Funds used for the down payment and closing costs cannot also be counted as post-closing assets. This is the most common sizing error on a first pass. A purchase lowers the usable pool, so the timing of the down payment affects which path works.
Cash-out proceeds never count as qualifying assets on the depletion path.
What Documents and Seasoning Does Each Path Want?
Both paths document the assets. Only the seasoning clocks differ.
On the qualifier path, expect 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, statements must be 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.
Large deposits get questions. A transfer between your own accounts is easy to document. A deposit from an unknown source is not. Consolidating accounts shortly before application can break the seasoning trail, while money that stays put gives lenders a clean paper history.
Credit works the same way across both. The qualifier path publishes a 600 minimum. The depletion path follows the lender’s score and loan-amount matrix, and a first-time investor on that path needs 700. Housing history is 0x30x12, with one 30-day late in the last twelve months considered case by case. Multiple bankruptcies are not eligible. A housing event needs 4 years of seasoning on the depletion path.
Three Illustrative Files
All figures below are modeled, not program terms, and the lender’s calculation governs.
Depletion wins. A retiree has $1,500,000 in securities and cash, light debts and a modest purchase on a second home on the Gulf Coast. Usable assets of $1,500,000 produce $25,000 of monthly qualifying income. The ratio test is comfortable. Qualifier would require the pool to cover the entire loan, which also works here, but depletion offers 80% on a purchase without needing the pool to match the loan.
Qualifier wins. A borrower in Birmingham has $800,000 in usable assets and a loan of $800,000, but carries large monthly debts. Depletion converts the pool to income that cannot absorb the new payment plus the old debts. Qualifier skips the DTI test and passes on asset coverage alone.
Neither fits. A borrower holds mostly cryptocurrency and a private business interest. Very little counts at a stated percentage. The documented fix is to convert some holdings to a seasoned cash balance first, then reassess. That takes planning, not a different form.
Where Does the General Rule Break?
Four edge cases break the simple picture.
Investment property. Only the depletion path touches it, at 65% on a purchase or rate-and-term refinance and 60% on a cash-out. A true rental purchase often belongs on DSCR instead. DSCR programs are for non-owner-occupied investment properties, and because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The Federal Register preamble to the ability-to-repay rule treats investment-purpose loans as business-purpose. Some select lenders in the network offer sub-1.00 DSCR programs, but leverage and terms adjust. Many borrowers use asset-based qualification for the residence and DSCR for the rentals.
Mixed income. If the borrower has a pension or Social Security, depletion can supplement it up to a 45% DTI, and the minimum-assets rule is waived. Qualifier has no income to combine.
Large loans. Qualifier reaches $4,000,000. Depletion tops out at $3,500,000 with a $125,000 floor. A loan above $3,500,000 on assets can only run on qualifier.
Retirement accounts at different ages. On qualifier, a 401(k) counts at 90% under 59½ and 100% after. On depletion, it counts at 70% at any age. The same account can look very different on each path.
The legal basis explains why both paths exist. The CFPB’s ability-to-repay rule lets a lender base its repayment finding on income, on assets other than the financed dwelling, or on both. Depletion turns assets into imputed income. The loan is still a consumer mortgage and is underwritten individually.
What Should the Investor Do in Practice?
Pick the path before you move money. Move money after.
Practitioners across the wholesale network see the same pattern. Files stall when the borrower has already shifted funds, closed an account, or paid down a position without thinking about seasoning. Fresh statements for every account, a clear source for any large deposit, and a list of debts with balances make the lender’s choice easier. If the pool is large and debts are light, depletion usually fits. If debts are heavy, qualifier is the better first look.
Run both tests on paper. Compare leverage, the credit figure each path needs, and how much of the pool survives the haircuts. Pick the one that clears with room to spare. If neither does, convert eligible holdings to seasoned cash and revisit.
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 the network, subject to underwriting and not a commitment to lend. Lendmire’s piece How a Jumbo Lender Sizes a Loan on Asset Depletion for a Retiree shows the sizing side.
Frequently Asked Questions
Can I use both paths on the same loan?
No. A borrower is qualified on one path at a time. The two tables of credit percentages and leverage are never blended, so a file is tested on qualifier or on depletion, not a mix.
Does asset depletion mean I have to sell my investments?
No. The calculation is on paper and the assets stay where they are. The lender uses statements to confirm balances and seasoning, and asks about large transfers.
Is this no-documentation lending?
No. The qualifier path does not document employment or income in the usual way, but the assets are fully documented with statements and seasoning on both paths. Credit is also reviewed.
Which path allows a larger loan?
Qualifier reaches $4,000,000, and depletion runs from $125,000 to $3,500,000. Both are ceilings, subject to underwriting, not offers.
Do Alabama borrowers get different program terms?
No. The figures are the same in every state where Lendmire arranges consumer mortgages, and Alabama is one of 16. Local taxes, insurance and prices affect the budget, not the guideline.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire presents its asset-based mortgage program for Alabama 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. Federal Register, Ability-to-Repay and Qualified Mortgage Standards
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 Asset Depletion Income Is Calculated From Your Portfolio · How Big Can an Asset Depletion Jumbo Loan Be? · How an Asset Depletion Mortgage Works
Guides: Asset-Based Mortgage in Alabama
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.