The Quick Read: Yes, you can usually finance a second home in Texas with assets instead of income, as long as the home is for your own use and your documented assets are large enough, seasoned, and held in eligible accounts, through an asset-based mortgage placed with select lenders, subject to underwriting.
- Two paths exist. On the asset qualifier path, your eligible assets must cover the entire loan. On the asset depletion path, assets are converted into monthly qualifying income.
- You pick one path per loan. The two never blend, and their figures differ.
- You skip traditional personal-income documentation, pay stubs and employment verification. You do not skip documentation. Every asset is proven with statements.
- A rental changes the product. A home you will rent out is an investment property, which is a different conversation.
- Texas adds no special bar. Homestead rules matter mainly for your primary residence.
You are the reader this works for if your balances are large and your paycheck is small or gone. Think of a retiree living on a portfolio, someone who just sold a business, or a household that received an inheritance or settlement. Lenders can look at those borrowers and see wealth. A tax return often shows almost nothing.
Two Paths, and You Pick One
Across Lendmire’s wholesale network, asset-based qualifying comes in two forms. The first treats your assets as proof you can repay the whole loan. The second turns your assets into income, then runs the usual debt-to-income test. A borrower is qualified on one path at a time. Mixing the tables is a common mistake.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How it works | Eligible assets cover the entire loan | Usable assets ÷ 60 months = income |
| Income documented | None | Derived from assets |
| Second-home leverage | Up to 80% purchase, 75% refinance | Up to 80% purchase or rate-and-term, 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | The lender’s matrix |
| Seasoning | 60 days, two months of statements per account | Statements 120+ days old, plus one within 45 days |
All figures are ceilings and floors available through select programs, subject to underwriting. They are not offers. Qualifier-path cash-out terms are set by the lender and are not published, so do not plan around them.
The depletion path also has minimums. Your qualified assets must total 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 at least $250,000 in liquid funds. Cash-out proceeds never count as qualifying assets.
Which path fits you? If your balances comfortably exceed the loan, the qualifier path is cleaner. There is no income to calculate and no debt-to-income test on your documented income. If your balances are big but not loan-sized, the depletion path lets you stretch them into income. The depletion path can also supplement documented income, up to a 45% debt-to-income ratio. In that case the minimum-assets rule is waived.
Which Assets Count, and How Much of Each?
Not every dollar counts at face value. Lenders discount anything that can fall in value or that carries restrictions. The table shows the share of each balance that counts, by path.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash accounts (savings, money market) | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage accounts / securities | 100% | 80% |
| Private stock | Not published | 75% |
| 401(k) and IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Real-estate equity | Not published | 60% |
Accounts combine on the qualifier path. Brokerage and retirement balances you hold in different places can be added together.
Several assets are not eligible on the depletion path. These are 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 borrowed or pledged funds are not published as eligible on either path. Say so plainly: they do not count at some percentage. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Business accounts count only for your ownership share, and the same caution applies.
Two Worked Examples
These are illustrations of how the arithmetic runs. The lender’s own calculation governs.
Qualifier path. Say you want an $800,000 loan on a second home. You hold $330,000 in brokerage accounts, $300,000 in a 401(k), and $200,000 in savings. You are under 59½.
- Brokerage at 100% counts $330,000.
- The 401(k) at 90% counts $270,000.
- Savings at 100% counts $200,000.
That is $800,000 of usable assets against an $800,000 loan. It is reviewed on assets alone, subject to underwriting. Notice what the haircut did. The raw balances total $830,000, and the 401(k) discount trimmed it to exactly the loan. If you were 59½ or older, that account would count in full.
Depletion path. Now say you hold $1,500,000 in securities and $300,000 in cash.
- Securities at 80% count $1,200,000.
- Cash at 100% counts $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 new housing payment and your other debts through the debt-to-income test. Nothing is sold. Your portfolio stays invested.
Second Home or Rental? Decide Before You Shop
Your intended use sets the product. A home you will use yourself is a second home. A home you buy mainly to rent out is an investment property. Mixing the two up creates problems in underwriting.
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.
| Your plan | Typical product family |
|---|---|
| Personal-use second home, documented assets | Asset-based mortgage |
| Personal-use second home, self-employed with bank deposits | Bank statement program (documents income by deposits) |
| Rental property bought to earn income | DSCR (rent against the payment) |
| Investment property, assets large | Depletion path: up to 65% purchase, 60% cash-out |
The depletion path can finance an investment property, but at lower leverage than a second home. A first-time investor on that path needs a 700 credit score. The qualifier path is aimed at your principal residence or second home, not rentals. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
What the Lender Still Checks
This is not a paperwork-free loan. The mortgage on a home you occupy part of the year is consumer credit. Federal ability-to-repay rules require the lender to consider your income or assets, along with debts and a debt-to-income or residual-income measure. Assets are a legitimate basis. The same rule demands that whatever the lender relies on be verified, and the agency’s compliance guide says so directly.
So expect to provide:
- Statements for every qualifying account, covering the seasoning periods above
- A credit report and housing history (0x30x12 is the standard; one 30-day late in the last twelve months is considered case by case)
- A property appraisal
- Source documentation for any large recent deposit, such as sale proceeds or an inheritance
- The usual consumer-loan disclosures
Multiple bankruptcies are not eligible. On the depletion path, a housing event needs four years of seasoning. And never read “no income documentation” as “no credit check.” Credit still matters.
One bright spot: funds from a business sale, an inheritance, or a legal settlement are excused from the depletion path’s statement-age rule. That helps if the money just landed.
What Changes for a Texas Borrower?
Almost nothing in the loan itself. The program figures are the same in every state where the program runs, and consumer lending is licensed in 16 states, Texas among them. Texas matters in the surrounding facts.
Homestead rules. Texas law under Article XVI, Section 50 protects a primary residence from most forced sales and tightly governs home-equity liens, as the Texas A&M Real Estate Research Center explains. A second home you do not occupy as your homestead does not get that protection, according to Sandler Law Group’s overview. That affects creditor risk, not whether an asset-based loan is allowed. If you later move into the property and make it your homestead, the homestead rules would apply to it from then on. Ask your title company and attorney how.
Carrying costs. Property taxes, homeowners insurance, and any special-district assessments all feed the payment. On the depletion path, they feed the debt-to-income test too. These costs vary a great deal by county and by property. Get real quotes before you commit, because a Texas second home can look affordable until the full payment is added up.
What You Keep and What You Tie Up
You keep your portfolio. No assets are sold, and no capital gains are triggered by qualifying. That is the real appeal for a retiree with a large taxable account.
But the same assets are now spoken for. Funds used to qualify are not free to use as your down payment, closing costs, or a cushion. Plan the sequence. Decide what goes to the down payment first. Then count what is left for qualifying.
On the qualifier path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them. The depletion path publishes no reserve months. Neither fact means you should run lean. Stock balances can drop between application and closing, and that can pull a file below the line. (A market dip is the one thing no underwriter can fix.)
Think about the portfolio, too. If you lean on securities to qualify, you may hold more of them than you would otherwise. Ask whether the home still fits your plan if the market falls 20%.
Asset-Based Mortgage vs. Your Other Options
The right choice depends on what you own and what you need. Here is a short comparison. The other programs’ rules belong to them, not to this program.
| Option | Best for | Main trade-off |
|---|---|---|
| Asset-based mortgage | Big balances, thin documented income | Assets are tied up and discounted |
| Conventional full-doc loan | Steady W-2 or tax-return income | Income is what gets measured |
| HELOC on another property | Existing home equity, short horizon | Adds a lien and a variable balance |
| Paying cash | Maximum simplicity | Drains liquidity, no financing flexibility |
| Bank statement program | Self-employed, strong deposits | Documents income, not assets |
Lenders that use the conventional full-doc route look at tax-return income. For a borrower whose returns are reduced by write-offs or who has simply stopped working, that income can be low even when net worth is high. That gap is where asset-based qualifying fits.
The stronger play depends on timing. If your investments have large unrealized gains, borrowing against them through a mortgage beats selling. But if your portfolio is concentrated and volatile, paying part in cash and borrowing less may be the sounder choice. It is a genuine toss-up for many households, and it deserves a real look at the downside.
Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
Key Terms Defined
Asset qualifier path: The path where your eligible assets, after credit percentages, must equal or exceed the entire loan amount.
Asset depletion path: The path where eligible assets, after haircuts, are divided by 60 months to create monthly qualifying income.
Haircut: The share of an asset’s balance the lender does not count, because the asset can fall in value or carries limits.
Seasoning: The time money must sit in your account, shown by statements, before it counts.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly income.
Loan-to-value (LTV): The loan amount as a percentage of the property’s value.
Frequently Asked Questions
Do I have to sell my investments to qualify?
No. Qualifying does not sell or liquidate anything. The lender documents your balances and counts a share of them. You keep the investments, and they keep earning or fluctuating as before. Keep in mind that any funds you spend on the down payment or closing costs leave your qualifying total.
Can I use a 401(k) or IRA?
Yes, with a discount. On the qualifier path, 401(k) and IRA balances count at 90% if you are under 59½ and at 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. All of this is subject to underwriting and the program’s rules.
Does the loan check my credit?
Yes. The qualifier path has a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix, and a first-time investor there needs 700. Housing history matters too. Skipping traditional personal-income documentation does not mean skipping credit review.
Can I rent the home out later?
That depends on how the loan was written. A second-home loan assumes personal use. If you plan to rent the property from the start, it belongs in the investment-property category, where the depletion path allows lower leverage and rental-focused business-purpose loans are reviewed differently. Be honest about your plan at application, because occupancy affects the product and the underwriting.
Is this the same as a bank statement loan?
No. A bank statement program is for borrowers who document income through deposits, usually self-employed owners. An asset-based mortgage documents what you own instead. If you own a business and have large balances, a loan officer can compare both against your statements.
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 programs based on your statements, the property, credit profile, leverage, and your goals. Reach the team at 828-256-2183. Lendmire is a broker, so every file is placed with a lender in its network and reviewed on its own merits.
The same logic works in other states with different local rules.
In Texas, the biggest surprise is rarely the loan. It is the full carrying cost once taxes and insurance are added, so price the payment before you price the asset.
Lendmire’s asset-based mortgage in Texas page presents the program for Texas borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Investors who want the broader program framework can review how DSCR loans work.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB Regulation Z, Section 1026.43 (ability to repay)
2. CFPB Ability-to-Repay and Qualified Mortgage Compliance Guide
3. Texas A&M Real Estate Research Center, What to Know About Home Equity Loans in Texas
4. Sandler Law Group, Texas Homestead
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Refinance a Michigan Home on Assets When Your Income Stops? · How to Buy a Home After Selling Your Company Without Tax Returns · Can You Relocate to Florida and Buy a Home on Assets Before You Have Local Income?
Guides: Asset-Based Mortgage in Texas
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.