The Quick Read: A lender picks the path by testing which one the file clears more cleanly. Either your assets cover the entire loan (the qualifier path), or your assets are converted into income that passes a debt-to-income test (the depletion path). Occupancy, loan size, existing debts, and the mix of accounts usually settle it. You are qualified on one path at a time, and the program figures do not change by state.
- Assets that equal or exceed the whole loan point to the qualifier path, where no employment or income is documented.
- An investment property can only go through the depletion path.
- Heavy existing debt tends to favor the qualifier path, because no debt-to-income test is run.
- Retirement accounts and securities count for more on the qualifier path, so the account mix matters.
Lendmire is a mortgage broker. It arranges these loans through select lenders in its network, and each file is underwritten individually. This guide walks through how the choice gets made and where it breaks down. It is written for a Washington borrower with large balances and modest documented income. Think retirees, business sellers, and anyone living off a portfolio.
Two Paths, One Pile of Assets
Both paths start with the same raw material: your statements. They differ in what the lender does with the balances.
On the asset qualifier path, the lender adds up your eligible assets after applying credit percentages. If the total equals or exceeds the entire loan amount, the file is reviewed on assets alone. No employment or income is documented. The lender still reviews your credit, the property, and your housing history.
On the asset depletion path, the lender discounts each account by a set percentage. It then divides the usable total by 60 months. The result is a monthly qualifying income. That income has to carry the new housing payment and your other debts through the debt-to-income test.
Think of it as two different questions. The qualifier asks, “Is there enough here to cover the loan?” The depletion path asks, “Does this pile throw off enough income to carry the payments?” Same statements, different test.
One note on language. Lenders do not use these labels the same way. Some treat the two terms as one method. Some separate them by the divisor. Others separate them by whether a debt-to-income test is run at all. On this program, the second and third framings both apply. The qualifier path runs no income test and has no divisor. The depletion path uses a 60-month divisor and a debt-to-income test. When you compare lenders, ask what the guideline actually tests, not what the page calls it.
Key Terms Defined
Asset qualifier path: The path where eligible assets, after credit percentages, must equal or exceed the entire loan amount.
Asset depletion path: The path where usable assets divided by 60 months become a monthly qualifying income.
Haircut: The discount a lender applies to an account because its balance may not be fully available or stable.
Debt-to-income ratio (DTI): Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Seasoning: How long funds must sit in your accounts, shown by dated statements, before they count.
Loan-to-value (LTV): The loan amount as a percentage of the property’s value or price.
The Decision Sequence a Lender Follows
No rule book spells this out. What follows is the typical order Lendmire sees across the wholesale network. Treat it as market practice, not a regulation.
1. Occupancy. Is the property a principal residence, a second home, or an investment property? An investment property goes to the depletion path, because the qualifier path covers principal residences and second homes.
2. Loan size against the asset pool. On the qualifier path, usable assets must equal or exceed the whole loan. If the loan is bigger than the pool, that path is out.
3. Account mix. The two paths credit accounts differently. Retirement money counts at 90% under age 59½ and 100% at 59½ or older on the qualifier path. It counts at 70% at any age on the depletion path. Securities count at 100% as brokerage accounts on the qualifier path and at 80% on the depletion path.
4. Existing debts. Large car, card, or mortgage payments eat into depletion income fast. The qualifier path runs no DTI, so debt load matters less there.
5. Credit. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on the depletion path needs a 700 score.
6. Leverage needs. Compare the loan-to-value you want with what each path allows (see the table below).
7. Documentation fit. Do your statements meet the seasoning rules for that path? If the funds are too new, the path may not be available yet.
8. Pick the cleaner file. A broker will often run both and structure the application around the stronger one. Lenders that handle these files typically do the same.
If more than one path works, the tie usually breaks on leverage, then on how much liquidity you want left over.
Side by Side
| Factor | Asset qualifier | Asset depletion |
|---|---|---|
| What is tested | Usable assets vs. entire loan | Assets ÷ 60 months, then DTI |
| Income documented | None | Derived income; may supplement real income |
| Property types | Primary and second home | Primary, second home, investment |
| Purchase leverage | Up to 80% (primary/second) | Up to 80% primary/second; 65% investment |
| Refinance leverage | Up to 75% (primary/second) | Rate-and-term as purchase; 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | Lender’s matrix |
| Statements | Two months per account, 60-day seasoning | 120 days old plus one within 45 days |
All figures are ceilings and floors through select programs, subject to underwriting. They are not offers. Cash-out on the qualifier path is set by the lender and not published, so no figure is stated here.
What Counts, and How Much
Qualifier path, share of balance that counts:
- Brokerage accounts, certificates of deposit, money market, and savings: 100%.
- 401(k) and IRA balances: 90% under age 59½, 100% at 59½ or older.
- Accounts combine.
Depletion path, share of balance that counts:
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 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. If deferred compensation is part of your picture, Lendmire’s piece How to Use Deferred Compensation in an Asset Depletion Mortgage File explains the options.
Cryptocurrency, precious metals, collectibles, business accounts beyond your 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. The lender then reviews where the money came from. Do not assume any of them count at a percentage.
The divisor also matters more than most borrowers expect. As an independent worked example shows, the same net assets produce noticeably different monthly income under different divisors. On this program the divisor is 60 months. The program sets it. You do not choose it, and it does not follow your loan term.
Three Files Run Through Both Paths
These examples are illustrative. The lender’s own calculation governs, and every file is underwritten individually.
The same accounts, two answers. Picture a borrower buying a principal residence with an $800,000 loan. She holds $330,000 in brokerage accounts, $300,000 in a 401(k) while under age 59½, and $200,000 in savings.
On the qualifier path, the brokerage counts at 100%, which is $330,000. The 401(k) counts at 90%, which is $270,000. The savings count at 100%, which is $200,000. Total usable assets are $800,000. That equals the loan, so she is reviewed on assets alone, subject to underwriting.
Now run the same accounts through the depletion path. The brokerage counts as securities at 80%, which is $264,000. The 401(k) counts at 70%, which is $210,000. Savings count at 100%, which is $200,000. Usable assets total $674,000. That is below the lesser of $1,000,000 or 1.25 times the loan, so the minimum-assets test fails. The qualifier path is the clear pick. This is a common reason the qualifier wins: retirement money and securities are credited more generously.
The portfolio that needs to become income. Picture a retiree with $1,500,000 in securities and $300,000 in cash. The securities count at 80%, which is $1,200,000. The cash counts at 100%, which is $300,000. Usable assets are $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the DTI test.
This file passes the minimum-assets rule, since $1,500,000 clears the $1,000,000 minimum the rule requires on a loan of this size. The depletion path also fits if the buyer wants a loan larger than the $1,800,000 those same balances would cover on the qualifier path. The qualifier cannot stretch that far, because its test is the whole loan against usable assets. The depletion path can, if the DTI works. This is a genuine trade-off: more reach on the depletion path, more testing too.
The mixed-income borrower. Say you draw a pension or Social Security and also hold a mid-sized portfolio. Asset-derived income can supplement documented income up to a 45% debt-to-income ratio. When assets supplement income this way, the minimum-assets rule is waived. A borrower in this spot often finds the depletion path fits better, because the qualifier path ignores documented income entirely. That is a useful reason to bring pension and benefit letters to the first conversation.
What Changes on a Washington File?
Very little in the program itself. The leverage tiers, credit percentages, seasoning rules, and loan limits are the same for a Washington borrower. Lendmire’s consumer mortgage lending is licensed in 16 states, and Washington is one of them. Loans are placed through select lenders in the network, subject to underwriting.
What does change is your own situation. Local prices and property types affect how big a loan you need. That loan size feeds the first screen in the decision sequence: does your pool cover the loan, or does it need to become income?
Ownership deserves an early conversation if you are married or hold accounts jointly. A lender reviews whose name is on each account and whether you have clear access to the funds. Raise it with your broker before you pull statements. It is a review point on any file, not something unique to Washington.
This is a consumer mortgage, so the usual consumer loan disclosures apply. That is a difference from business-purpose investor loans, covered below.
Why Files Move From One Path to the Other
Files shift paths for a handful of recurring reasons:
- The DTI runs too high on depletion. Moving to the qualifier path removes that test, if the assets cover the loan.
- The pool is too thin for the qualifier. Usable assets fall short of the loan, so the deal works to depletion if it clears the minimums.
- Seasoning trips one path. Statements that are too new or too few can block one path while the other still works. A depletion file, for example, needs statements at least 120 days old plus one within 45 days.
- Credit lands between the tiers. The qualifier has a 600 floor. A depletion file follows the lender’s matrix, and a first-time investor there needs 700.
- Leverage targets. An investment property tops out at 65% on a purchase and 60% on a cash-out refinance on the depletion path. Someone who wanted more leverage may need to rethink the property or the plan.
Moving a file between paths is usually a restructure. The lender reviews it fresh under the other path’s guidelines. Cash-out proceeds never count as qualifying assets, which closes one loophole people sometimes try.
Where the Rules Come From
You do not need to read regulations to use either path, but the structure has a root. The federal ability-to-repay rule says a lender must make a reasonable, good-faith decision that you can repay. Regulation Z § 1026.43 allows that decision to rest on income, on assets other than the home securing the loan, or on both. Lenders must verify what they rely on with reliable third-party records, which is why statements are the core documents.
That rule is why two structures exist. One turns assets into income and runs a debt-to-income test. The other leans on the assets themselves. A third-party diligence review in an SEC-filed exhibit describes the asset-only structure in similar terms. It notes that such lenders do not calculate DTI. They require substantial asset reserves instead and weigh the other ability-to-repay factors.
The practical point: assets are documented on both paths. Skipping income documentation never means skipping documentation.
When Neither Path Is the Right Tool
If you are buying a rental and the rent covers the payment, both asset paths may be unnecessary. 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. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines.
Asset-based loans fit a different borrower: someone with large balances who wants a home, or an investment property where the rent does not carry the payment. Lendmire’s complete DSCR loans guide lays out when the rent-based route fits better. Programs below a 1.00 coverage ratio are available through select lenders in the network, though leverage and terms adjust.
Pledging assets to qualify can also leave you with less liquidity. Keep enough outside the qualifying pool for repairs, the down payment, and a cushion. Tax treatment varies; consult a qualified professional before relying on any deduction.
Questions to Ask Your Loan Officer
- Which path does my file clear more cleanly, and why?
- How does each path credit my retirement accounts and securities?
- What is the minimum-assets test on the depletion path for my loan size?
- Do my statements meet the seasoning rules for each path?
- If the file does not fit, can it be restructured onto the other path?
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.
Frequently Asked Questions
Are asset qualifier and asset depletion the same thing?
Not on this program. The qualifier path tests whether usable assets equal or exceed the entire loan, with no income documented. The depletion path divides usable assets by 60 months and runs the result through a debt-to-income test. Lenders sometimes use the names interchangeably, so ask what the guideline tests.
Do I have to sell my investments to qualify?
No. The assets stay where they are. The lender counts balances, applies the percentages, and reviews your statements. The funds must be unrestricted and not borrowed, gifted, or pledged elsewhere. Subject to underwriting.
Can I use both paths on one loan?
No. You are qualified on one path at a time, and the two credit tables are never blended. The lender can review your file under either path, but the loan closes on one. The one exception is supplementing documented income with asset-derived income, which stays inside the depletion path.
Which path suits a retiree better?
It depends on the numbers. A retiree with a large 401(k) and brokerage account often does better on the qualifier path, since retirement money counts at 90% to 100% there and 70% on depletion. A retiree who needs a larger loan than their pool covers, or who also draws pension income, may fit depletion better.
Can I buy an investment property with either path?
Only the depletion path covers investment property, at up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. If the rent covers the payment on a rental purchase, a DSCR loan may be a simpler fit.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in Washington page presents the program for Washington borrowers.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Asset depletion loan worked example
2. Regulation Z § 1026.43 (Consumer Financial Protection Bureau)
3. SEC ABS-15G third-party diligence exhibit
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 Qualifier vs Asset Depletion for a Cash-Out Refinance · How to Document an Asset Qualifier Mortgage · Asset Qualifier Mortgage vs Bank Statement Mortgage
Guides: Asset-Based Mortgage in Washington
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.