The Quick Read: Approval depends on two separate tests: your assets must cover the loan or produce qualifying income under the program, and the building must pass the lender’s own project review, so a strong asset file can still be declined when the condo project is the problem. Asset-based mortgage programs judge you on statements, not on pay stubs. The building gets judged on its own merits.
- Your side of the test: the program looks at your assets, credit and leverage, with no traditional personal-income documentation, pay stubs or employment verification, subject to underwriting.
- The building’s side: a non-warrantable label describes the project, not you, and some lenders in the network decline certain buildings outright.
- The cash-out limit: on the asset depletion path, cash-out tops out at 60% of value on a principal residence, second home or investment property, through select programs.
- The trap: cash-out proceeds never count as qualifying assets, so you cannot use the new cash to qualify for the loan that creates it.
What “Non-Warrantable” Actually Means
A non-warrantable condo is a unit in a building that fails the project standards set by the big mortgage agencies. The label belongs to the building. It says nothing about your credit, your assets or what the unit could rent for.
The label comes from agency rules. Fannie Mae’s Selling Guide on ineligible projects lists the triggers. They include one owner holding too many units, more than 35% of the building in commercial or mixed-use space, and pending litigation over safety, structure or habitability. An association that earns more than 10% of its budgeted income from amenity or service businesses also trips it. So do unremedied critical repairs and an “Unavailable” status in the agency’s project-review tool.
Hotel-style operation is another trigger, which is why condotels sit in their own category. Fannie Mae’s project FAQ describes the condotel characteristics and notes that the “Unavailable” status applies regardless of review type.
Asset-based loans are not sold to those agencies. That is why a non-warrantable building is not an automatic dead end here. It is a narrower lane, and the building still has to clear whatever project review the individual lender runs.
How Asset-Based Approval Works on This Kind of Building
Approval is a two-part test. You pass the borrower test with assets, and the building passes the project test. A file fails if either side fails.
The borrower test is where Lendmire’s asset-based mortgage programs differ from a conventional loan. There are two paths, and you are qualified on one path at a time.
- The asset qualifier path: your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
- The asset depletion path: your eligible assets, after haircuts, are divided by 60 months. The result is a monthly qualifying income that must carry the housing payment and your other debts through the debt-to-income test.
The building test works the same way it does for any loan on a condo. The lender looks at the reason for the non-warrantable label, the association’s financial and structural health, and the unit’s use. Some lenders review a specific project and pre-vet buildings they like. Others decline whole categories, such as heavily investor-owned towers.
Across the programs we place files with, the same pattern repeats. The borrower’s assets are rarely what sinks a condo file. The project is, and it often surfaces only when the appraisal or the association paperwork comes back.
Which Path Allows Cash-Out, and at What Leverage?
Cash-out is clearest on the asset depletion path. The program allows up to 60% loan-to-value on a cash-out refinance, whether the property is a principal residence, a second home or an investment property. These are ceilings, not offers, and every file is underwritten individually.
The depletion path also has a loan range of $125,000 to $3,500,000. If the condo is an investment property, the depletion path is the one that applies, and the loan is business-purpose.
On the asset qualifier path, the program allows up to 75% loan-to-value on a refinance of a principal residence or second home. Whether cash-out proceeds are allowed on that path, and at what leverage, is set by the lender and is not published. Ask the question before you assume an answer.
Leverage on a condo can end up lower than these ceilings. A lender that accepts a non-warrantable building may tighten leverage on that building, so treat the program figures as the top of the range.
What Counts as an Asset, and How Much
Not every dollar in your accounts counts at full value. The credit percentages differ by path, so never blend the two tables.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage accounts | 100% | Securities at 80% |
| CDs, money market, savings | 100% | Cash and CDs at 100% |
| Retirement (401(k), IRA) | 90% under 59½; 100% at 59½+ | 70% at any age |
| Real-estate equity | Not listed | 60% |
Privately held company stock is not an eligible asset on either path. If you own a closely held business, the documented route is a sale or buyout converted into a seasoned cash balance.
The same goes for cryptocurrency, precious metals, collectibles and pledged or borrowed funds. None is published as eligible on either path. Convert them to cash in a regulated account and let the lender review the source.
Several other items are not eligible on the depletion path. They include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units.
Why Cash-Out Proceeds Cannot Qualify You
Cash-out proceeds never count as qualifying assets. The loan has to stand on the assets you already hold, which is also why the depletion path’s minimum-asset rule matters.
On the depletion path, qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never be below $250,000 in liquid assets when asset depletion is your only income source. If asset-derived income only supplements documented income, up to a 45% debt-to-income ratio, the minimum-assets rule is waived.
A Worked Example
These numbers show how the math runs. They are not an offer, and the lender’s own calculation governs.
Qualifier path. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000) and $200,000 in savings (100% counts, so $200,000). That is $800,000 of usable assets, which matches the loan, so the file is reviewed on assets alone, subject to underwriting.
Depletion path. Say you hold $1,500,000 in securities (80% counts, so $1,200,000) and $300,000 in cash (100% counts, so $300,000). That is $1,500,000 of usable assets. Divide by 60 months and you get $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.
The condo adds one more question that neither calculation answers: does this building clear the lender’s project review? Run the borrower math first, since it takes minutes. Then find out whether the lender will look at the building.
Which Building Problems Hurt Most?
The reason for the label matters more than the label itself. Not all non-warrantable buildings are equally hard to place.
| Building issue | Why a lender cares | What to ask |
|---|---|---|
| One owner holds many units | Concentration risk in dues and votes | Will you review this project? |
| Pending litigation | Safety or structural claims threaten value | What is the suit about? |
| Heavy commercial space | Association income depends on non-residential use | Is there a percentage cap? |
| Critical repairs | Large assessments may be coming | Are repairs funded or pending? |
| Hotel-style rentals | Transient use changes the collateral | Is cash-out allowed on this type? |
Investor concentration or presale timing is usually a milder problem than active safety litigation or structural repairs. Lender guidelines vary on how they treat each, and a pending lawsuit about habitability is a harder sell than a high-investor mix.
The label can also be wrong or temporary. A building may have been tagged non-warrantable on stale information, and owner mix, repairs and litigation all change over time. Ask the association for current documents before you assume the worst.
Asset-Based, DSCR or Bank Statement: Which Fits You?
The right program depends on how you actually make your money, so match the tool to your profile.
| Your profile | Likely best fit |
|---|---|
| Large balances, little documented income | Asset-based mortgage |
| Rent covers the payment on an investment condo | DSCR loan |
| Self-employed with strong deposits | Bank statement loan |
An asset-based loan is reviewed around what you hold. A DSCR loan is business-purpose rental financing, and it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. A bank statement loan suits borrowers who document income through deposits.
If you hold an investment condo that rents well, the rental-income route may fit better. Lendmire’s piece DSCR Cash-Out Refinance Requirements on a Non-Warrantable Condo covers that path. High association dues and special assessments sit in the payment base and cut coverage directly. If you are cash-heavy and rent-light, such as a retiree with a second-home condo, the asset route is the better lane.
Documents to Gather Before You Apply
The lender will want paperwork from two directions.
From you (asset side):
- Statements for each qualifying account. On the qualifier path that means 60 days of seasoning and two months of statements per account.
- On the depletion path, statements at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
- Credit information. The qualifier path has a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on the depletion path needs a 700. Housing history is 0x30x12, and one 30-day late in the last twelve months is considered case by case.
- Ownership and vesting details for the unit.
From the building (project side):
- The association’s budget and financial statements.
- The master insurance policy.
- The condo questionnaire.
- Disclosures of any litigation or special assessments.
Get the association documents in hand before the appraisal. A surprise at appraisal, after you have spent on fees, is the most expensive way to learn the building is a problem.
Why Files Get Declined or Restructured
A file usually falls into one of four buckets when it hits trouble.
1. The building is declined outright. Some lenders will not touch certain projects. Another lender in the network may review the same building.
2. Leverage drops. The lender accepts the project but lowers the loan-to-value on it. The cash you wanted shrinks.
3. The assets fall short. Haircuts shave your totals. Retirement funds count at 70% on the depletion path, and securities at 80%.
4. The label is the wrong problem. The building may be mislabeled, or the issue may cure with time.
If the file does not work, you have a few moves: wait for a cure, lower the cash-out amount, try a different lender, or switch to a rental-income path if the unit rents well. Lendmire’s piece Asset-Based Cash-Out Refinance Requirements on a Non-Warrantable Condo goes deeper on the documents.
Resale and Exit Risk
A non-warrantable building has a thinner buyer pool. Conventional buyers cannot use agency financing, so cash buyers and portfolio-loan buyers carry the market.
That affects your exit. If you pull cash out at high leverage and later need to sell or refinance again, the same label that narrowed your options narrows theirs. Plan your repayment around a thinner market rather than assuming the same liquidity as a standard condo.
Key Terms Defined
- Non-warrantable condo: a unit in a building that fails the agency project standards, which is a fault of the project and not the borrower.
- Cash-out refinance: a new loan that replaces your current mortgage and pays you the extra equity in cash.
- Asset qualifier path: qualifying when eligible assets equal or exceed the entire loan amount, with no employment or income documented.
- Asset depletion path: qualifying by dividing usable assets by 60 months to create monthly income that runs through the debt-to-income test.
- Seasoning: the time funds must sit in your account before the lender counts them.
- Condotel: a condo with hotel-style operation, such as rental pooling or transient use.
Frequently Asked Questions
Is a non-warrantable condo automatically ineligible for an asset-based loan?
No. The label describes the building, and asset-based loans are not sold to the agencies that created it. What decides the outcome is the reason for the label, the association’s financial health and the individual lender’s appetite for that project. Some buildings will be declined and others reviewed, subject to underwriting.
Can I use the cash I pull out to qualify?
No. Cash-out proceeds never count as qualifying assets on either path. The loan has to stand on the assets you already hold, documented with statements, before the new funds arrive.
Does my closely held company stock help?
No. The documented route is a sale or buyout that turns the shares into a seasoned cash balance. Public securities and retirement accounts count at their path-specific percentages.
What leverage can I expect on a cash-out?
On the depletion path, the ceiling is 60% loan-to-value on a cash-out refinance for a principal residence, second home or investment property. The qualifier path’s cash-out leverage is set by the lender and not published. A non-warrantable building may lead to lower leverage still, since every file is underwritten individually.
Would a DSCR loan work better for an investment condo?
It can, if the rent covers the full payment, including association dues. A DSCR loan is reviewed primarily on property-level rental income, subject to lender guidelines. An asset-based loan suits you when your balances are large and your documented income or rental coverage is not.
What to Do This Week
1. Ask the association why the building is labeled non-warrantable, and request the budget, financials, insurance and litigation disclosures.
2. Add up your eligible assets using the percentages for the path you would use.
3. Ask any lender early whether they review the specific building before you pay for an appraisal.
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. The asset-based program is offered through select lenders in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Programs change. This is not a commitment to lend.
For how equity extraction works on an investment 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.
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. Fannie Mae Selling Guide: Ineligible Projects
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 Lenders Without Full Income Documentation · Asset-Based Cash-Out Refinance Requirements for a Founder Before a Liquidity Event · Asset-Based Cash-Out Refinance Options With Limited Income
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.