The Quick Read: The requirements come down to three checks: your assets must be eligible and documented with statements, the loan must stay inside the leverage ceiling for your path and property type, and the cash must go into a real business purpose the lender can review. Every file is fully underwritten. What changes is that no traditional personal-income documentation, pay stubs or employment verification are needed to qualify.
- Two paths. The asset qualifier path covers the whole loan with eligible assets. The asset depletion path turns assets into monthly qualifying income. A borrower is reviewed on one path at a time.
- Cash-out leverage. On the depletion path, cash-out tops out at 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting.
- Qualifier-path cash-out. The lender sets that limit and it is not published, so it has to be confirmed file by file.
- Eligible assets. Cash, CDs, securities, retirement accounts and brokerage balances count at set percentages. Privately held company stock is not an eligible asset on either path.
- The cash itself. The money pulled out in the refinance cannot be counted toward qualifying.
What Does “Asset-Based” Mean When the Goal Is Business Capital?
The term gets used for three different things, and mixing them up wastes weeks of research. Here it means one thing: qualifying for a mortgage on the strength of documented assets instead of documented income.
The first meaning is collateral-secured business lending, where a company pledges receivables, inventory or equipment. That is a business loan and has nothing to do with a mortgage file. The second is equity cash-out, where the property’s value sets the loan. The third is asset-based qualification: the borrower’s liquid balances, not pay stubs or tax returns, carry the approval.
Across the wholesale network, asset-based mortgage programs fall into the third group. The property still has to appraise and the loan still has to fit the leverage cap. But the question the lender asks about repayment is what the assets support. Lendmire arranges these files as a broker, through select lenders in its network, in the 16 states where its consumer mortgage lending is licensed. The full program is laid out on the asset-based mortgage program page.
This route suits a specific borrower. Think of a founder who sold a stake, a retiree living off a portfolio, or an owner whose taxable income is low on paper but whose balances are large. If the expansion is already underway and the books show strong deposits, a different program may fit better.
Key Terms Defined
- Cash-out refinance: a new mortgage larger than the existing balance, with the difference paid to the borrower after the old lien is cleared.
- Asset qualifier path: the route where eligible assets, after credit percentages, must equal or exceed the entire loan amount, and no income is documented.
- Asset depletion path: the route where usable assets divided by 60 months become monthly qualifying income, which then runs through the debt-to-income test.
- Haircut: the part of an asset’s balance that does not count. A retirement account counted at 70% has a 30% haircut.
- Seasoning: how long funds have sat in an account before they can be counted.
- Use of proceeds: what the borrower says the cash-out will pay for, and how the lender reviews that statement.
Which Path Fits a Business Owner?
Pick the path first, because the leverage, credit percentages and paperwork all follow from it. If your assets are at least as large as the whole loan, the qualifier path is the cleaner file. If your assets are large but fall short of the loan, the depletion path converts them into income instead.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How assets are used | Must cover the entire loan | Divided by 60 months into income |
| Income documented | None | Derived from assets; DTI test applies |
| Purchase leverage | Up to 80% LTV | Up to 80% (residence, second home) |
| Refinance leverage | Up to 75% LTV | 80% rate-and-term, 60% cash-out |
| Cash-out limit | Set by lender; not published | 60% (residence, second home, investment) |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Investment property | Not offered | 65% purchase/rate-and-term, 60% cash-out |
All figures are ceilings and floors, subject to underwriting, not offers.
The qualifier path publishes no cash-out ceiling. A borrower who needs the cash-out to be a large share of the new loan should plan on the depletion path, where 60% is the stated figure. Those who prefer the qualifier path should have the lender confirm cash-out terms before building a plan around it.
The Requirements, Step by Step
Here is how underwriting treats the file, in the order a processor works it.
1. Choose the path. The asset qualifier path or the asset depletion path. Not both, and the file is built around the choice.
2. Check leverage against the property. On the depletion path the cash-out ceiling is 60% on a principal residence, second home or investment property. A purchase or rate-and-term refinance on a principal residence or second home goes to 80% on that path. On an investment property it is 65%. On the qualifier path, a refinance goes to 75%.
3. List the assets and apply the percentages. On the qualifier path, brokerage accounts, CDs, money market and savings count at 100%. Retirement accounts (401(k) and IRA) count at 90% under age 59½ and 100% at 59½ or older. Accounts combine. On the depletion path, cash and CDs count at 100%, securities at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%.
4. Season the funds. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants statements at least 120 days old at application plus the most recent statement within 45 days. Proceeds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning.
5. Check the minimums. On the depletion path, qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. Where assets are the only income source, they must also be at least $250,000 in liquid form. Asset-derived income can also supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
6. Review credit. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
7. Confirm reserves. The qualifier path requires none at or below 75% loan-to-value. Above that, the lender sets them. The depletion path publishes no reserve months.
8. Document the use of proceeds. More on that below.
The percentages are where borrowers slip. Many add up raw balances and assume the total counts. The lender counts only the share that qualifies, and the gap between the two numbers is the haircut.
How Underwriting Treats the Expansion Cash
The assets qualify the loan. The expansion is a separate question about what the cash is for, and lenders review it as part of how the file is classified.
For a business owner, the practical point is simple. Expect to state the purpose plainly and expect to support it with paper: an equipment quote, a lease, a purchase agreement, or a budget. A clear plan and an organized document set give the reviewer fewer open questions.
The regulatory frame is short. Federal commentary lists a loan to expand a business, even one secured by the borrower’s home, as an example of business-purpose credit, as the CFPB’s official interpretation of Regulation Z explains. The ABA Banking Journal restates that the purpose of the proceeds, not the borrower or the collateral, is the key. The Compliance Alliance adds that the closer the credit is tied to the business, the more likely it reads as business purpose. How a particular file is classified and disclosed is the lender’s decision. On a principal residence or second home in this program, the loan is a consumer mortgage and TRID disclosures apply. Investment property on the depletion path is business-purpose.
Keep the proceeds business-only. A cash-out that is half expansion and half personal spending is harder to document and easier to question.
Structures and Variations
Qualifier path, borrower with large liquid balances. The simplest structure. The loan sits inside the leverage cap and assets cover the entire amount. No income file is built.
Depletion path, derived income carries the payment. Assets become income through the 60-month divisor, and the debt-to-income test then decides whether that income carries the new housing payment and other debts.
Depletion path on an investment property. Leverage is lower at 60% on a cash-out. A first-time investor needs a 700 score. This is business-purpose financing, which suits a rental owner pulling equity for an operating business.
Supplemental income. A borrower with some documented income can add asset-derived income up to the 45% debt-to-income ratio. The minimum-assets rule is waived in that case.
Business-purpose rental financing. If the plan is to qualify on a rental’s income and not on assets, that is DSCR, a different program. Lendmire’s piece on whether a super jumbo bank statement cash-out can fund a business expansion covers the larger-loan, deposit-based alternative.
Where the General Rule Breaks
Privately held company stock. A founder’s route is documented liquid assets: seasoned proceeds from a sale or buyout converted to a cash balance, plus cash, public securities and retirement accounts at their percentages. On the depletion path, sale-of-business proceeds are excused from the usual seasoning.
Cryptocurrency, precious metals and collectibles. These 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.
Business accounts. Balances beyond the borrower’s ownership share do not count.
Pledged or borrowed funds. They are not published as eligible, so do not plan around them.
Ineligible items on the depletion path. These include 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.
Moving money into the business too early. If you shift liquid balances into the company before statements are pulled, those balances drop out of the count. Pay for the expansion from the cash-out, not from the accounts being used to qualify.
Credit. No program promises approval.
Worked Examples
These examples use the program’s own percentages. The lender’s calculation governs.
Qualifier path. A borrower seeks an $800,000 loan. She holds $330,000 in brokerage accounts (100% = $330,000), $300,000 in a 401(k) while under 59½ (90% = $270,000) and $200,000 in savings (100% = $200,000). Those balances count as $800,000 of usable assets, which covers the loan, so she is reviewed on assets alone, subject to underwriting and the lender’s cash-out terms.
Depletion path. A borrower holds $1,500,000 in securities (80% = $1,200,000) and $300,000 in cash (100% = $300,000). Together that is $1,500,000 usable, and dividing by 60 months gives $25,000 of monthly qualifying income. This income then carries the housing payment and other debts through the debt-to-income test.
A stress test without dollars. Cash-out enlarges the loan, so the debt-to-income test is run on the larger payment. Ask whether that payment still fits if the expansion stalls and produces nothing for a year. The derived income does not depend on the business, which is the strength of this structure. The payment still has to be paid from somewhere. If the answer is the business, this is the wrong tool. If the answer is the portfolio, it may fit.
What the Investor Decision Looks Like in Practice
Start with the plan, not the loan. Know how much capital the expansion needs and what it returns before looking at what the property can supply.
Then run three checks in order. First, can assets cover the loan outright, or must they become income? Second, does the leverage ceiling leave enough cash after payoff and costs? Third, can the borrower carry the larger payment if the expansion underperforms? If any answer is no, a smaller draw or a different structure is usually the right call.
This is the wrong tool when the borrower has little in liquid assets, the expansion needs more than the ceiling allows, or the payment depends on the business doing well. Those borrowers are better served by a deposit-based program or a business loan.
For borrowers who do fit, assemble the package before applying. That means statements for each account covering the required periods, a clear note on the source of any large deposit, the purpose of the proceeds with supporting paper, and the property details.
Frequently Asked Questions
Can privately held company stock count as an asset?
If you own part of a company, the route is to convert a stake through a sale or buyout into a seasoned cash balance. Cash, public securities and retirement accounts still count at their stated percentages, subject to underwriting.
What is the maximum cash-out on the depletion path?
The ceiling is 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting. That is lower than the 80% available on a purchase or rate-and-term refinance on a principal residence or second home. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Does the qualifier path allow cash-out?
The lender sets whether cash-out is allowed and at what leverage, and that is not published. The 75% figure on the qualifier path applies to a refinance, not to cash-out. Confirm terms with the lender before building a plan around it.
Do I need tax returns or pay stubs?
No. The program requires no traditional personal-income documentation, pay stubs or employment verification. Every file is fully underwritten and the assets are documented with statements. Credit, property and purpose are all reviewed.
Can I use retirement accounts?
Yes, at a haircut. 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. Terms are subject to lender guidelines.
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. You can reach the team at 828-256-2183.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
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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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 official interpretation of § 1026.3
2. ABA Banking Journal, compliance Q&A on purpose of proceeds
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-Based Cash-Out Refinance Requirements After Selling a Business · Best Asset-Based Cash-Out Refinance Program With Minimal Cash Reserve Requirements · Best Asset-Based Cash-Out Refinance Program to Fund a New Construction Project
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.