The Quick Read: A loss on your tax return does not stop you from pulling cash out of a home, because asset-based programs review your file on what you own instead of what the return reports. Through select programs in Lendmire’s network, the lender counts your documented savings, brokerage accounts and retirement funds, either as covering the loan outright or as converted monthly income. Both paths are subject to underwriting, and cash-out leverage is lower than on a purchase.
- Two paths, one at a time. The asset qualifier path covers the whole loan with eligible assets. The asset depletion path turns usable assets into monthly income, using a 60-month divisor.
- Cash-out is tighter. On the asset depletion path, cash-out tops out at 60% loan-to-value on a principal residence, second home or investment property. The asset qualifier path’s cash-out terms are set by the lender and are not published.
- Your documents change. You provide no traditional personal-income documentation, pay stubs or employment verification. You do provide asset statements, a credit report, an appraisal and the usual property paperwork.
- Cash-out proceeds never count. The money you pull out cannot be used to qualify yourself.
Why a Tax-Return Loss Breaks Standard Underwriting
Standard underwriting starts with the bottom line of your return. If depreciation, interest, repairs, a business loss or heavy write-offs push that line below zero, your qualifying income can drop to nothing. It does not matter that you hold seven figures in brokerage and savings accounts.
That is a common trap for retirees, business sellers, early-retired professionals and anyone living off a portfolio. Your balances are large and your documented income is small or negative. A return measures taxable income after deductions. It does not measure what you could pay a lender from the assets you hold.
Asset-based mortgage programs fix that mismatch. They read your statements, not your return. Lendmire is a broker, so it does not lend. It places these files with select lenders in its network, and those lenders underwrite every file individually. The page for asset-based mortgage programs covers the program family in more detail.
Consumer mortgage lending at Lendmire is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
How the Two Paths Treat a Loss on Your Return
The distinction that matters most is how each path handles income. Pick the path first, then run the numbers.
The asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. A loss on the return does not enter the file, because the file never asks about income. The lender’s ability-to-repay review rests on the assets themselves.
The asset depletion path. The lender takes your usable assets and divides them by 60 months. That figure becomes your monthly qualifying income. It then carries the housing payment and your other debts through a debt-to-income test. The loss on your return still does not drive the result, because you qualify on derived income instead.
One caution applies when you also have documented income. On the depletion path, asset income may supplement it, up to a 45% debt-to-income ratio. At that point the lender looks at your documented income, and a loss may count against you. If the loss is the problem, a file that is reviewed on assets alone is the cleaner route.
You are qualified on one path at a time. The tables and percentages below never blend.
| Feature | Asset qualifier path | Asset depletion path |
|---|---|---|
| How you qualify | Assets cover the whole loan | Assets ÷ 60 months = income |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Properties | Principal residence, second home | Plus investment property |
| Credit | 600 minimum score | The lender’s matrix |
| Income documented | None | Derived from assets |
Asset-Based Cash-Out Refinance Requirements, Path by Path
Cash-out limits are the biggest difference between a purchase and a refinance, and between the asset-based paths. Every figure here is a ceiling, never an offer, and it is subject to underwriting.
Cash-out on the asset depletion path
Cash-out refinance leverage runs up to 60% loan-to-value on a principal residence or second home. On an investment property, the cash-out ceiling is also 60%. Rate-and-term refinances and purchases get more room: up to 80% on a principal residence or second home, and up to 65% on an investment property.
Minimums also apply. You need qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is your only income source, you need at least $250,000 in liquid assets. If asset income supplements documented income, the minimum-assets rule is waived.
Credit on this path follows the lender’s matrix, with one stated exception: a first-time investor needs a 700 score. Housing history is expected to run 0x30x12. One 30-day late in the last twelve months gets looked at case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning.
Cash-out on the asset qualifier path
Here the plain answer is that it depends on the lender. Qualifier-path leverage on a refinance reaches 75% on a principal residence or second home, but whether cash-out proceeds are allowed, and at what leverage, is set by the lender. That detail is not published, so confirm it for your file before you plan around it.
Reserves are the second qualifier-path item. None are required at or below 75% loan-to-value. Above that, the lender sets them.
Why cash-out proceeds never count
The money you take out is borrowed, so it cannot help you qualify. Many borrowers try to count the proceeds twice. They use the cash to build the asset balance that supports the loan. The lender removes it. Size the loan on the assets you already hold.
Which Assets Count and at What Percentage
The credit percentage is the share of each balance the lender counts. The paths use different lists, so match the right one to your situation.
- Brokerage accounts, certificates of deposit, money market and savings count at 100%.
- A 401(k) or IRA counts at 90% if you are under 59½. At 59½ or older, it counts at 100%.
- Accounts combine toward the loan amount.
Several assets are not eligible 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.
Cryptocurrency, precious metals, collectibles, business accounts beyond your ownership share, and pledged or borrowed funds are not published as eligible on either path. If you hold them, the documented route is converting them to a seasoned cash balance in a regulated account. The lender reviews the source of that cash.
Worked Examples
These examples use the program’s percentages and the 60-month divisor. The lender’s own calculation governs.
Qualifier path. Picture a borrower seeking an $800,000 loan on a principal residence. The borrower holds $330,000 in brokerage accounts, which count at 100%, so $330,000. A 401(k) of $300,000, with the borrower under 59½, counts at 90%, which is $270,000. Savings of $200,000 count at 100%, so $200,000. Usable assets total $800,000, which equals the loan. The file is reviewed on assets alone, subject to underwriting, with no income documented and no tax return in play.
Depletion path. The depletion path uses its own list of percentages, separate from the qualifier path’s. Say you hold $1,500,000 in securities and $300,000 in cash. On this path, securities count at 80%, which is $1,200,000, and 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 your other debts through the debt-to-income test.
Notice what is missing from both examples: a line for your return. A loss on it never enters the math.
Seasoning and Statements
Asset files are documented files. The assets are proven with statements, not skipped.
On the asset qualifier path, funds need 60 days of seasoning. The lender asks for two months of statements for each qualifying account.
The asset depletion path uses a different timeline. Statements must be at least 120 days old at application, and you also need the most recent statement dated within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning.
Moving money around right before applying is the common way to complicate a file. If you just transferred funds between accounts, expect the lender to ask where they came from.
Where the General Rule Breaks
Privately held company stock
Privately held company stock is not an eligible asset on either path. The route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at their credit percentages.
Investment property
Investment property is available only on the asset depletion path. There, the loan is business-purpose. Credit to acquire, improve or maintain a non-owner-occupied rental is generally treated as business-purpose under Regulation Z’s business-purpose exemption. A primary residence or second home is a consumer loan.
The line can blur if you plan to live in the property. Doss Law’s business-purpose guide notes that more than 14 days of expected personal use triggers the consumer-loan analysis. If you will occupy it, expect it to be treated as a consumer file.
Retirement under 59½
The two paths treat retirement money differently. On the qualifier path, a 401(k) or IRA counts at 90% under 59½ and at 100% from 59½ on. On the depletion path, retirement counts at 70% at any age. If most of your wealth sits in retirement accounts, the qualifier path may count more of it.
Loans above the published range
The qualifier path stops at $4,000,000. The depletion path stops at $3,500,000. Larger requests are outside these programs.
Choosing Among the Alternatives
Asset-based programs are not the only answer to a loss on a return. Other programs have their own rules, and each fits a different borrower.
| Program | Reviewed around | Fits |
|---|---|---|
| Asset-based (this program) | Statements for your assets | Cash-rich, income-light |
| Bank statement loans | Deposits as income | Self-employed with cash flow |
| DSCR loans | Rent covering the payment | Rental investors |
| Full-doc conventional | Tax return income | Steady, positive income |
Those other programs follow their own rules and are described here only for contrast. A bank statement loan documents income through deposits. If your business deposits are strong but your return shows a loss, that route may fit better than assets. Lendmire’s piece Bank Statement Cash-Out Refinance Requirements When Your Tax Returns Show a Loss walks through that alternative. DSCR is business-purpose rental financing for investment properties.
What the Decision Looks Like in Practice
Start with your statements. Add up what you hold in each class, then apply the percentages from the path you are testing.
If the usable total covers the loan on its own, the qualifier path is the first one to price. If it does not, divide your depletion-path usable assets by 60 months. Check whether that income can carry the payment and your other debts.
Then sort the leverage question. If you need cash out, plan on 60% loan-to-value or less on the depletion path. If you are weighing the qualifier path for cash-out, confirm the lender’s terms first.
Across Lendmire’s network, the files that move smoothly are the ones where the borrower arrives with statements gathered and the asset sources explained. Files with fresh transfers, unexplained deposits or a lot of ineligible holdings slow down and shrink. Gather your documents before you apply, and decide which path your balances actually fit.
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 route where eligible assets, after credit percentages, equal or exceed the whole loan amount.
Asset depletion path: The route where usable assets divided by 60 months become monthly qualifying income.
Credit percentage (haircut): The share of an account balance that the lender counts toward qualifying.
Seasoning: The length of time funds have sat in your account, shown on statements.
Loan-to-value (LTV): The loan amount as a percentage of the property’s appraised value.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Frequently Asked Questions
Do I need to provide my tax returns for an asset-based cash-out refinance?
No traditional personal-income documentation, pay stubs or employment verification are required. The file is still underwritten, though. You provide asset statements, a credit report, an appraisal and the usual property documents. A loss on the return does not drive the outcome, but the lender’s review is not skipped.
Can privately held company stock count toward qualifying?
No. If you are a founder or shareholder, the route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities, and retirement accounts at their credit percentages.
How much cash can I take out?
On the asset depletion path, cash-out refinances reach up to 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting. The qualifier path’s cash-out terms are set by the lender and are not published. Cash-out proceeds never count as qualifying assets.
Can I use this on a rental property?
Yes, but only on the asset depletion path, where investment property is available through select programs. Leverage is lower, with cash-out up to 60% loan-to-value. A first-time investor needs a 700 score. If you plan to live in the property, it is treated as a consumer loan instead. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What if most of my wealth is in retirement accounts?
Compare the paths. The asset qualifier path counts a 401(k) or IRA at 90% under 59½ and 100% after. The depletion path counts retirement accounts at 70% at any age. Balances matter, but the lender’s own calculation governs.
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 reviewed individually; this is not a commitment to lend.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 §1026.3, business-purpose exemption
2. Doss Law, business-purpose exemption guide
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 to Qualify and Apply for an Asset-Based Cash-Out Refinance With Tax Return Losses · Asset-Based Cash-Out Refinance vs Bank Statement Cash-Out Refinance for Retirees · Asset-Based Cash-Out Refinance Requirements With Only Six Months of Reserves
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- 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.