The Quick Read: Usually not, when your parents will live in the home as their residence, because an asset-based mortgage is a consumer loan that requires the occupancy you declare to be true, and the borrower must be the person who lives there as a principal residence or second home, or else the deal works to a different program. The program does have workable routes for families. They depend on who the borrower is and who lives in the house.
- A home your parents live in is not your principal residence or your second home, so it does not fit those two occupancy types when you are the borrower.
- If a parent is the borrower and lives in the home, that parent’s own assets can qualify the loan, subject to underwriting.
- If you want the home as a rental that a parent occupies, the file is investment property. Lenders treat a related-party tenant very differently from one to the next.
- The asset qualifier path and the asset depletion path have different leverage and asset rules, so pick the path before you pick the house.
- Moving a parent in after closing, against what you signed, is misrepresentation. It is not a loophole.
This is general education about how these files are structured, not advice on your situation. Lendmire is a broker. It arranges asset-based mortgages through select lenders in its network, and every file is underwritten individually.
Why the Occupancy Question Decides Everything
Occupancy is the first thing a loan file declares and the last thing a lender forgives. An asset-based mortgage is built for borrowers with large balances and little documented income: retirees, people who sold a business, heirs, households living on a portfolio. It finances a principal residence or a second home. On the asset depletion path it can also finance an investment property.
Principal residence means you live there. The borrower signs that statement, and the appraisal, insurance and title work are checked against it.
Second home means you use it as your own. It is not a house for someone else to live in full time.
That leaves a gap for the child who wants to buy a house for a parent. Across the wholesale network, this is the point where files stall. The borrower has the assets and the parent needs the house, but neither occupancy box is true as written.
A Washington address does not change this. The program figures stay the same in every state where Lendmire’s consumer lending operates, and Washington is one of the 16. What changes by state is local context such as title practice and property costs. It does not change what the loan program allows.
Two Paths, and You Qualify on One at a Time
The asset qualifier path covers the whole loan amount with eligible assets. No employment or income is documented. The lender’s ability-to-repay review rests on the assets.
The asset depletion path turns eligible assets into a monthly qualifying income. Usable assets divided by 60 months gives that income, and it then carries the housing payment and other debts through the debt-to-income test.
A borrower is qualified on one path at a time. The figures never blend. This table keeps the two straight.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| Core test | Assets cover the entire loan | Assets divided by 60 months = income |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum score | Lender’s matrix |
| Seasoning | 60 days, two months of statements per account | Statements 120+ days old, plus one within 45 days |
| Investment property | Not offered | Yes, with lower leverage |
Leverage is where occupancy shows up in the numbers. On the qualifier path, loans on a principal residence or second home go up to 80% loan-to-value on a purchase and 75% on a refinance. On the depletion path, a principal residence or second home goes up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. All of these are ceilings under select programs and subject to underwriting. They are not offers.
Which Structures Can Work for a Parent’s Home
The honest answer is that it depends on who signs, who owns and who sleeps there. Here are the four common setups.
| Setup | How the file is classified | What to watch |
|---|---|---|
| Parent is the borrower and lives there | Principal residence, parent’s assets | Parent must meet the credit and asset tests alone |
| You buy and live there with your parent | Principal residence, your assets | You must actually occupy it |
| You buy, parent lives there | Investment property, depletion path only | Related-party tenant review varies by lender |
| You buy a second home your parent uses | Second home | Parent use cannot replace your own use |
The parent as borrower
This is the cleanest route when the parent has the assets. A retired parent with brokerage accounts, certificates of deposit and savings may qualify on those balances alone, without documenting employment or income. The file is a normal principal residence purchase on the parent’s own statements.
The parent’s credit still gets reviewed. The 600 minimum score on the qualifier path is a floor, not a promise. It is no substitute for credit approval.
You can help in ways that keep the file clean. You can pay closing costs from your own funds, subject to the lender’s source-of-funds review. You can hold a share of title where the lender allows it. Ask how title will be vested before you sign a contract, and talk to a Washington title or real estate attorney about the family side of that choice.
You buy and live there too
If you move into the home with your parent, you are the occupant. The home can be your principal residence, and your assets can qualify the loan. The parent is a member of your household. This is real occupancy, not a paper arrangement, so expect the lender to treat it as one.
You buy it as a rental, and your parent rents it
This is the gray zone. If you do not live there, the home is an investment property, and an asset-based mortgage can finance one only on the depletion path. Leverage drops to 65% on a purchase and 60% on a cash-out. A first-time investor on that path needs a 700 score.
Whether a parent can be the tenant is a program-by-program decision. Some programs accept a related-party tenant with extra proof. Others exclude family outright. Expect an executed lease at market rent and a bank trail that shows the parent paying from their own funds. Even that package does not guarantee a given lender will accept the arrangement.
If you intend for the parent to live there rent-free, or at a token rent, do not take the investment property route. A discounted arrangement misdescribes the property.
Whose Assets Count, and How Much
Your assets, your spouse’s joint accounts and a parent’s accounts do not interchange. Only the borrower’s eligible assets qualify the borrower’s loan. Here is what counts.
On the asset qualifier path, brokerage accounts, certificates of deposit, money market and savings count at 100%. A 401(k) or IRA counts at 90% if you are under age 59½ and 100% at 59½ or older. Accounts combine.
An illustrative example: an $800,000 loan, with $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) under 59½ (90% counts, so $270,000) and $200,000 in savings (100% counts, so $200,000). That is $800,000 of usable assets, and the loan is reviewed on assets alone, subject to underwriting.
On the asset depletion path, the haircuts are steeper. 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%.
Another illustration: $1,500,000 in securities (80% counts, so $1,200,000) plus $300,000 in cash (100% counts, so $300,000) is $1,500,000 usable. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test. The lender’s own calculation governs.
The depletion path has minimum assets. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, you also need no less than $250,000 liquid.
What does not count
Several asset types are 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 to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
The gift problem
Family buyers often ask about a parent moving money to a child. The program parameters do not publish a rule that treats a parent’s transfer as an eligible asset. Practically, money that lands in your account right before application is a seasoning and source question. Qualifier-path accounts need 60 days of seasoning and two months of statements. The depletion path wants statements at least 120 days old plus the most recent one within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning, but a gift is not on that list.
Plan the transfer early, keep the paper trail, and ask the loan officer how a particular lender treats it before the money moves.
Why Not Just Use a Rental Investor Loan?
The assumption behind this question is common: if the asset-based mortgage does not fit, use a DSCR loan, since it has no personal income documentation. 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.
That business-purpose character is the whole point. Federal rules exempt credit extended primarily for a business or commercial purpose, as CFPB Regulation Z describes. The regulation also says there is no precise test for what counts as personal, family or household credit. A loan taken so a parent can live in a home as a family housing arrangement reads as personal. A DSCR loan is the wrong tool.
DSCR programs across the wholesale network also bar the borrower and the borrower’s family from living in the property for the life of the loan. The non-occupancy affidavit covers family. An LLC does not change that, and a lease to the parent does not override a program that prohibits family occupants. Where a related-party tenant is allowed at all, the lender counts the lower of the lease and the appraiser’s market rent, so a family discount lowers the coverage ratio and an above-market lease earns nothing extra.
DSCR belongs on true rentals. Some lenders in the network offer programs below 1.00 coverage, but loan-to-value and terms adjust. That is a rental-property decision, not a workaround for family housing. Lendmire’s complete DSCR loans guide covers how those files are built.
Where Investors Get It Wrong
Mistake one: the lease fix. A lease to your mother does not turn her residence into a rental. If the program forbids family occupants, the signed paper changes nothing.
Mistake two: the entity fix. Closing in an LLC does not convert an owner-occupied situation into an investor one. Entity borrowing on DSCR files is available only subject to lender program eligibility, and it does not change who lives in the house.
Mistake three: move her in later. If you declare a home as an investment property or your own residence and then place a parent in it against those terms, that is misrepresentation. The timing does not matter.
Mistake four: assuming family rules match everywhere. The definition of family varies by program. One may mean spouse and dependents. Another may reach parents, siblings and cousins.
Mistake five: leaning on the wrong asset. A parent’s savings cannot qualify your loan. Plan whose name is on each account before you pick a path.
Mistake six: ignoring taxes. Tax treatment varies; consult a qualified professional.
The Investor Decision: Which Tool for Which Goal
Run the decision in this order.
1. Decide who lives in the home. If a parent is the permanent occupant, the parent should be the borrower or you should be a co-occupant. Everything else follows from that answer.
2. Decide whose assets carry the loan. If the parent has the balances, the asset qualifier path may cover the loan outright on the parent’s own accounts. If you have them, you need to be the occupant or the investor.
3. Pick the path. Qualifier if eligible assets cover the whole loan. Depletion if the assets are better used as monthly income, or if the property is an investment.
4. Check leverage. A principal residence purchase can reach 80% on either path. An investment property on the depletion path stops at 65% on a purchase. That gap is a real down-payment difference, so price it before you commit.
5. Season the assets. Move funds early. Keep statements. Do not liquidate crypto the week before application.
6. Keep DSCR for true rentals. An investor can use asset-based financing for the family home and keep DSCR for the properties that actually rent to unrelated tenants.
If a parent cannot qualify alone and you are not moving in, conventional agency guidelines have their own treatment for that situation. It is based on the borrower’s own income, not on property cash flow or assets. It is a different product with different rules, and it falls outside what an asset-based file can do.
Key Terms Defined
Asset qualifier path: The route where eligible assets, after the credit percentages, must equal or exceed the entire loan amount, with no employment or income documented.
Asset depletion path: The route where usable assets divided by 60 months become monthly qualifying income that runs through the debt-to-income test.
Related-party tenant: A renter who is family or otherwise connected to the borrower, which some programs accept with extra proof and others exclude.
Seasoning: The length of time funds have sat in an account, shown by statements, before the lender counts them.
Non-occupancy affidavit: The signed statement on a rental-property loan that the borrower and family will not live in the home.
Frequently Asked Questions
Can my parents be co-borrowers on a loan I use for their home?
It depends on the lender and on who occupies the home. If a parent lives there, the home is the parent’s residence, and the parent’s own assets and credit are reviewed. Assets are counted per borrower, and each borrower’s accounts must meet the seasoning rules. Ask a loan officer how a mixed-borrower file would be structured before you apply.
Can I use my retirement account to buy the home?
Yes, within limits. On the asset qualifier path a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. On the depletion path retirement accounts count at 70% at any age. Eligibility is subject to underwriting.
Does an asset-based mortgage mean no credit check?
No. Credit is reviewed on both paths. The qualifier path has a 600 minimum score, and the depletion path follows the lender’s matrix. Housing history is reviewed too, and a recent housing event needs seasoning on the depletion path.
Can my parent pay me rent and live in an investment property I own?
Only if the program accepts a related-party tenant, and only if the home is an investment property with a documented market-rent lease and a payment trail from the parent’s own funds. Some programs exclude family tenants entirely. A discounted rent also lowers the rent counted if the file runs on rental coverage.
Do the program figures change because the home is in Washington?
No. Leverage, asset credit and seasoning are the same for a Washington purchase as anywhere else the program is available. Lendmire’s consumer lending covers Washington among 16 states. Local title practice and property costs are context for the deal, not program parameters.
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. Start with whose name goes on the loan, because in a family purchase that single decision drives every other part of the file.
Lendmire’s asset-based mortgage in Washington page presents the program for Washington 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, Section 1026.3 (exempt transactions)
2. eCFR – Supplement I to Part 1026 (official interpretations of Regulation Z)
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 a Margin Balance Is Treated on an Asset Depletion Mortgage · Asset Depletion Mortgage vs HELOC on a Paid-Off Home · What Counts as an Asset Statement for a Mortgage?
Guides: Asset-Based Mortgage in Washington
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.