The Quick Read: It depends on how you will use the house: a lake house you mainly plan to enjoy yourself can be bought as a second home on an asset-based mortgage through select programs, subject to underwriting, while a house you plan to run as a rental usually belongs on a DSCR loan instead. DSCR stands for debt service coverage ratio, and it checks whether the property’s rent covers its payment.
- An asset qualifier mortgage is reviewed around verified liquid assets, not on a paycheck or tax-return income.
- A second-home lake house is the natural fit, and eligible assets must cover the whole loan amount on that path.
- A rental lake house is better served by DSCR, which tests the property instead of you.
- Rent from the lake house generally cannot help you qualify on a second-home loan.
- Rules on short-term rentals, deed covenants, and lake associations can undercut the rent number on any rental plan.
How an Asset Qualifier Mortgage Works
Asset-based lending comes in two paths, and a borrower is qualified on one path at a time. The asset qualifier path covers the entire loan with eligible assets and documents no employment or income. The asset depletion path turns assets into a monthly qualifying income, which then runs through the debt-to-income test.
On the qualifier path, your eligible assets, after the credit percentages below, must equal or exceed the whole loan amount. The lender then looks at credit, the property, and the file as a whole. Assets are documented in full, so this is a no-income-documentation loan, never a no-documentation loan.
On the depletion path, usable assets are divided by 60 months to produce a qualifying income. Debt-to-income (DTI) is the share of your monthly income that goes to debts, including the new housing payment. The derived income must carry the full housing payment and your other debts through that test.
Both paths are non-QM products, meaning they sit outside the standard agency box and are placed through select lenders in Lendmire’s wholesale network. These are consumer mortgages for people who buy a home to live in or enjoy. Across that network, the people who use them are usually retirees, business sellers, heirs, and households living off a portfolio.
Lendmire’s consumer lending is licensed in 16 states, and Michigan is one of them. The program figures below do not change by state. Every figure is a ceiling or floor from select programs, subject to underwriting, never an offer.
Which Assets Count, and How Much
Most borrowers underestimate how differently the two paths treat the same account. The qualifier path is more generous, and it asks for more: the assets must cover the whole loan.
| Asset type | 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% |
| 401(k) and IRA | 90% under age 59½, 100% at 59½ or older | 70% at any age |
| Real-estate equity | Not listed | 60% |
Accounts combine on both paths. Several things 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.
Crypto, precious metals, collectibles, pledged funds, and borrowed funds are not published as eligible on either path. The documented route is to convert them into a seasoned cash balance in a regulated account. The lender then reviews the source of those funds.
Seasoning is the length of time money must sit in an account before it counts. On the qualifier path, you need 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 one statement dated within 45 days. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that depletion-path seasoning.
Does a Lake House Count as a Second Home?
It counts when you will genuinely use it as a personal getaway and it fits the property screens below. A second home on the asset qualifier path allows up to 80% loan-to-value (LTV) on a purchase and 75% on a refinance. The loan can reach $4,000,000 on that path. Credit starts at a 600 minimum score, and housing history is expected to run 0x30x12, though one 30-day late in the last twelve months is considered case by case.
On the qualifier path, no reserves are required at or below 75% LTV, and above that the lender sets them. A purchase at 80% therefore usually comes with a reserve requirement. For how reserves work, see Lendmire’s piece Do You Have to Liquidate Assets to Reserve an Asset Qualifier Mortgage?.
On the depletion path, a second home allows up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Loans run from $125,000 to $3,500,000, and the credit floor follows the lender’s matrix. Cash-out proceeds never count as qualifying assets.
Use decides which product fits, and the table below shows the pattern.
| How you will use the lake house | Usual fit |
|---|---|
| Personal getaway, heavy family use | Asset qualifier or depletion, as a second home |
| Mostly rented, occasional owner stays | DSCR, as an investment property |
| Rented, and you want to qualify on assets | Depletion path, investment property terms |
| Former second home turning into a rental | Reclassified as an investment property |
Not Every Lake Property Is a Second Home
Lake property has screens that a suburban house never faces. Many lenders in the network look at whether the home is winterized and usable year-round, whether it sits on a public or private road, and whether emergency vehicles can reach it. Well and septic systems, seasonal cabins, and unusual waterfront construction can all draw closer review from the appraiser and the lender.
A lake cottage that is only habitable in summer may not fit second-home guidelines at all. Check the property type before you spend money on an appraisal. A purchase offer can wait while you confirm access and winterization, and an out-of-state buyer should treat that as a first step.
What Changes When the Lake House Is a Rental
A rental plan changes the loan. Rent from the lake house generally cannot be used to qualify on a second-home loan, so an asset-based second-home file has to stand on your assets alone. If the house is meant to cash-flow, the better question is whether the property can carry itself.
That is the DSCR question. 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. Federal rules on consumer credit also draw this line, and they treat owner-occupied rental property differently depending on unit count. A single-family lake house you will stay in is not safely a business-purpose loan.
Lendmire’s complete DSCR loans guide walks through how the ratio works. On most files, rent must cover the full monthly obligation. Select lenders in the network will go below that level, and in those cases leverage and terms adjust. Your personal DTI is not part of the test.
The tradeoff is leverage and flexibility. Investment terms replace second-home terms, which are usually more generous. A DSCR borrower also cannot treat the house as a personal summer place. Across the network, occasional owner stays are tolerated in limited amounts, but a cottage you plan to occupy all season is a second home, not a DSCR property.
Occupancy must never be misstated on an application. Lenders check it, and a loan written as a second home but used as a full-time rental can create real problems later. Tax treatment varies by how the property is used and held; consult a qualified professional.
Short-Term Rental Income Is a Support Problem
Nightly rentals are harder to document than a standard lease. Appraisers use Fannie Mae’s Form 1007 and Form 1025 for long-term rent schedules and small income properties, and those forms were not built for nightly stays. A lender may therefore look at an appraiser’s short-term rental analysis, a property-management statement, bank deposits, or, on a purchase, a market projection from a data tool. Those sources support income. They do not replace the appraisal that establishes value.
A first-time short-term rental owner with no operating history is the scenario that most often struggles. Rent has no track record yet.
Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. Michigan has no statewide short-term rental license or ban, so local governments set the rules. Deed restrictions matter too. In Eager v. Peasley, a Michigan court held that short-term rentals violated a private-occupancy covenant, as Michigan law firm Lachman PLC explains. Lake associations can add their own limits. If the rental is not lawful, the rent number on a DSCR file is at risk.
A Worked Example: Assets Cover the Loan
The qualifier path is easiest to see with round numbers. These figures are illustrative, and the lender’s own calculation governs.
Say a buyer seeks an $800,000 loan on a second home and holds three kinds of accounts. The brokerage accounts hold $330,000, and at 100% they count for $330,000. A 401(k) holds $300,000, and because the buyer is under 59½, 90% counts for $270,000. Savings hold $200,000, and at 100% they count for $200,000.
Together that is $800,000 of usable assets, which equals the loan, so the file is reviewed on assets alone, subject to underwriting. No employment or income is documented. The 401(k) shows why age matters: at 59½ or older that same account would count at 100%.
Now run the depletion shape. A buyer holds $1,500,000 in securities and $300,000 in cash. Securities count at 80%, or $1,200,000, and cash counts at 100%, or $300,000. That is $1,500,000 of usable assets, divided by 60 months, for $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 depletion path also has asset minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is the only income source. Asset-derived income may also supplement documented income up to a 45% DTI, and the minimum-assets rule is waived in that case.
Funds are counted once. Cash you use for the down payment and closing costs is not also counted toward covering the loan.
What If You Want to Rent It and Qualify on Assets?
The depletion path does allow investment property, at lower leverage. It permits up to 65% LTV on a purchase or rate-and-term refinance and up to 60% on a cash-out refinance. A first-time investor on this path needs a 700 credit score. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
This works for a borrower who has plenty of assets and wants the personal-income test rather than a rent test. Expect to put down more cash than you would on a second-home loan. Rent still does not help you qualify. It simply sits on top of the file.
Compare that with DSCR, which tests the property instead of your assets. Many lake houses will not clear a rent test because seasonal rent can be uneven. That is one reason asset-rich investors sometimes pick the depletion path for the loan and treat rent as a bonus.
Choosing Between the Options
Each option answers a different question. Agency and bank programs are described below only by their own rules.
| Option | Question it answers | Fits a lake house when |
|---|---|---|
| Asset qualifier | Do your assets cover the loan? | Personal second home, large balances |
| Asset depletion | Do assets become enough income? | Second home or rental, lower leverage on rental |
| DSCR | Can the property carry itself? | Rental business, rent supports the payment |
| Bank statement | Do deposits show your income? | Self-employed borrower with business deposits |
| Conventional second home | Does your reported income qualify? | Steady W-2 or tax-return income |
A self-employed buyer with strong deposits but thin traditional personal-income documentation may prefer the bank-statement route. The short version is that the bank statement program is for borrowers who document income with deposits, while asset-based programs ignore income and look at balances.
The closest call is the buyer who wants a second home and might rent it out a few weeks a year. The second-home path is cleaner as long as the rent is a bonus rather than the plan. If the rent becomes the plan, the label and the loan should change with it.
Who Should Not Use This
An asset-based mortgage is a poor fit in several situations:
- Your assets are thin relative to the loan. Qualifier-path assets must cover the entire loan, and depletion-path minimums are steep.
- A conventional loan on reported income would be simpler. If your traditional personal-income documentation shows strong income, you do not need to qualify on assets.
- The cottage is a seasonal cabin with limited access or no winterization. It may not fit any second-home guideline.
- You need the rent to make the numbers work. That points to DSCR, not an asset qualifier.
- Your credit has a recent housing event or multiple bankruptcies. Multiple bankruptcies are not eligible, and on the depletion path a housing event needs 4 years of seasoning.
Common reasons these files stall are mismatched account ownership, statements that are too new, and funds that arrive from unclear sources. Gather two months of statements per account first. Then address any large deposits before you apply.
Key Terms Defined
Asset qualifier path: a loan program that qualifies you when eligible assets cover the entire loan amount, with no income documented.
Asset depletion path: a program that divides usable assets by 60 months to create a qualifying income, which then runs through the debt-to-income test.
Seasoning: the length of time funds must sit in an account before a lender counts them.
Debt-to-income (DTI): the share of monthly income that goes to debt payments, including the new housing payment.
DSCR: debt service coverage ratio, a test of whether a property’s rent covers its full monthly payment.
Non-QM: a mortgage that falls outside standard agency rules and is underwritten by its own guidelines.
Frequently Asked Questions
Can I use retirement funds for a Michigan lake house on this program?
Yes, on both paths, though they count at a discount. On the qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. You do not have to withdraw the money in either case, and the lender’s review governs.
Do I need a job to qualify?
No job is required on the qualifier path, because no employment or income is documented and the file rests on your assets. The depletion path converts assets into income, and when assets are your only income source you need at least $250,000 liquid. Credit, the property, and the full file still go through underwriting.
Can I rent out the lake house if I buy it as a second home?
Plan on personal use. Rent generally cannot help you qualify on a second-home loan, and a house bought as a second home should be used as one. If your plan is mostly rental, ask about DSCR or the depletion path on investment terms before you contract.
Do I need to sell my investments?
No. Assets are counted for qualification, not pledged as collateral and not liquidated, as long as the accounts meet seasoning and documentation rules. Cash for the down payment and closing costs still has to come from somewhere, and funds are counted once.
Can I buy a Michigan lake house if I live in another state?
Often yes, but the program must be offered where the loan is made. Lendmire’s consumer lending is licensed in 16 states, including Michigan, and eligibility is reviewed file by file. Access, winterization, and local rules on the property matter as much as where you live.
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. Call 828-256-2183 or request a quote to start. Programs change, and every file is underwritten individually, so nothing here is a commitment to lend.
Lendmire’s asset-based mortgage in Michigan page presents the program for Michigan 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. CFPB, Regulation Z §1026.3 (exemptions)
2. Fannie Mae, Selling Guide forms
3. BnBCalc, Michigan Short-Term Rental Regulation Guide
4. Lachman PLC, Can You Turn Your Michigan Lake House Into a Short-Term Rental?
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: What Counts as an Asset Statement for a Mortgage? · Asset Qualifier vs Asset Depletion for a Tech Employee · Joint vs Individual Accounts on an Asset Depletion Mortgage
Guides: Asset-Based Mortgage in Michigan
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.