The Quick Read: The best program for tuition depends on your situation, but the structure that fits most tuition borrowers is the asset depletion path. It turns your documented savings and investments into monthly qualifying income, and it lets you take cash out of a principal residence or second home through select programs. Tuition is a personal use of money, so it fits a consumer-purpose mortgage on your home, not a business-purpose rental loan.
- Two paths exist: assets cover the whole loan (asset qualifier), or assets become monthly income (asset depletion).
- 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.
- Cash-out proceeds never count as qualifying assets.
- You skip traditional personal-income documentation, pay stubs and employment verification. You do not skip underwriting or asset statements.
- Privately held company stock is not an eligible asset on either path.
If you have large balances and little paycheck income, this guide shows which path fits, what counts, and how to prepare.
What Does an Asset-Based Cash-Out for Tuition Actually Mean?
It means refinancing a home you own into a larger loan, taking the difference as cash, and qualifying on your assets instead of your paycheck. Lendmire is a mortgage broker. It places these loans through select lenders in its wholesale network. Lenders approve, not the broker.
The typical borrower is a retiree, a business seller, someone with an inheritance or settlement, or a household living off a portfolio. Balances are big. Documented income is small. A parent or grandparent paying for a student often fits here.
Lendmire’s asset-based mortgage programs are consumer mortgages. They are written on a principal residence or second home. The depletion path also reaches investment property, where the loan is business-purpose. Consumer lending runs in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. A title or search that names another state is scope, not availability.
One thing to settle early. “Best” here is about fit. The right program depends on your assets, credit, property and leverage need. No single lender wins for everyone, which is why a broker shops several.
Why Tuition Fits a Home, Not a Rental Loan
Tuition is personal spending. That matters because of how the loans are classified.
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. Across our wholesale network, those programs expect cash-out proceeds to go back into the rental business. Tuition does not fit. Some outside sites claim DSCR cash-out has no use limits. We don’t place files on that assumption.
Regulators look at documentation of how proceeds are used, not just a checked box. The FDIC examination manual says a business-purpose box with no support of intended use may not be enough. An LLC does not change that.
So the clean route is a consumer asset-based mortgage on your home. Tuition is a normal use of funds there.
The Two Paths: Assets Cover the Loan, or Assets Become Income
You are qualified on one path at a time. Never blend their numbers.
| Factor | Asset Qualifier | Asset Depletion |
|---|---|---|
| How it qualifies | Assets cover the entire loan | Assets ÷ 60 months = income |
| Income documented | None | Derived income, DTI test |
| Purchase leverage | Up to 80% LTV | Up to 80% (65% investment) |
| Refinance leverage | Up to 75% LTV | 80% rate-and-term; 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | Lender’s matrix |
All figures are ceilings and floors, never offers, and they apply through select programs, subject to underwriting.
Asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan. The lender sets whether cash-out is allowed on this path and at what leverage, and it is not published. So for a cash-out aimed at tuition, the depletion path is the one with a stated cash-out ceiling.
Asset depletion path. On a principal residence or second home, cash-out goes up to 60% LTV. On an investment property, cash-out is also 60%. Your usable assets divided by 60 months become qualifying income. That income carries the full housing payment and other debts through the debt-to-income test. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Which Assets Count, and How Much
Each path counts your balances differently.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage / securities | 100% | 80% |
| Cash, savings, money market | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Retirement (401(k), IRA) | 90% under 59½; 100% after | 70% at any age |
| Real-estate equity | Not listed | 60% |
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 are not eligible.
Privately held company stock is not an eligible asset on either path. A founder’s route is documented liquid assets: seasoned proceeds from a sale or buyout, cash, public securities and retirement accounts at their percentages.
Cryptocurrency, precious metals, collectibles and pledged or borrowed funds 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.
The key rule for tuition: cash-out proceeds never count as qualifying assets. You can’t borrow the money and then count it to qualify for the same loan.
A Worked Example
The lender’s own calculation governs. These numbers show the mechanics.
Qualifier path. An $800,000 loan. You hold $330,000 in brokerage accounts (100% = $330,000), $300,000 in a 401(k) under 59½ (90% = $270,000) and $200,000 in savings (100% = $200,000). That counts $800,000 of usable assets, so the loan is reviewed on assets alone.
Depletion path. You hold $1,500,000 in securities (80% = $1,200,000) and $300,000 in cash (100% = $300,000). That is $1,500,000 usable. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test.
Which Path Fits Which Borrower?
The best program for your situation follows your profile.
- Retiree with a large portfolio. Depletion path, usually. Securities and retirement balances convert to income, and cash-out is available up to 60% LTV.
- Business seller. Sale proceeds sitting in a regulated account count as cash. Seasoning on sale-of-business funds is excused on the depletion path.
- Grandparent or parent paying a student’s bills. You are the borrower, and the loan is in your name. The student is not on it. Your assets and your home carry the file.
- Irregular or self-employed income. If you document income with deposits, a bank statement program may fit better.
What You Skip and What You Still Document
You skip traditional personal-income documentation, pay stubs and employment verification. You do not skip underwriting. Every file is fully underwritten, and your assets are documented with statements.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Depletion path: statements at least 120 days old at application, plus the most recent statement within 45 days. Inheritance, legal-settlement and sale-of-business funds are excused from that seasoning.
- Depletion minimums: qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. Never below $250,000 liquid if assets are your only income source. Asset income can also supplement documented income up to a 45% debt-to-income ratio, and the minimum is waived then.
- Credit: a 600 floor on the qualifier path. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, and multiple bankruptcies are not eligible.
This is not a stated-income loan. Nobody is taking your word for it.
Costs, Risks and When to Pause
The risks are real, and tuition is a poor reason to take them casually.
- Your home is the collateral. Missed payments put it at risk.
- Cash-out loans repay over many years. You are financing a bill that ends in four.
- Leverage ceilings limit the amount. At 60% LTV on the depletion path, you can only reach so much equity.
- Closing costs come out of proceeds. Plan the net, not the gross.
- One draw versus four bills. Cash sitting unused for years carries a cost. Size the loan to what you need.
- Financial aid. Rental property and cash in the bank are reportable on the FAFSA, the federal aid form. Debt secured against an asset lowers its reported net worth, but cash on hand counts the day you file. Per Saving for College, student-owned assets are assessed at 20% and parent assets at up to 5.64%. Timing matters, so ask the school’s aid office. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Tax treatment can depend on how the funds are used and how the property is held. Keep clear records and speak with a qualified tax professional before relying on any deduction.
Alternatives Worth Comparing
| Option | Fit |
|---|---|
| Asset depletion cash-out | Big assets, thin income, wants fixed structure |
| HELOC or home equity loan | Existing income, smaller draws |
| Rate-and-term refinance | Lower payment, no new cash |
| Student or parent loans | Smaller balances, no home collateral |
| Selling assets directly | May trigger taxes or market-timing loss |
Draw from grants, scholarships and savings first. A home-backed loan belongs after those.
How the Process Works
1. Gather statements for every account you plan to count.
2. Confirm seasoning on each account.
3. Choose the path: assets cover the loan, or assets become income.
4. Share the property, credit profile and leverage need with your broker.
5. The broker matches your file to a lender in the network.
6. The lender underwrites the file and sets final terms.
Key Terms Defined
Asset qualifier path: a program where eligible assets must equal or exceed the whole loan, with no income documented.
Asset depletion path: a program that divides usable assets by 60 months to create qualifying income.
Haircut: the share of an asset’s balance a lender discounts, so only the rest counts.
Seasoning: how long funds have sat in your account before they count.
Cash-out proceeds: money you receive at closing from the larger new loan.
Frequently Asked Questions
Can I use a cash-out refinance to pay tuition?
Yes, on a consumer mortgage against a principal residence or second home. A DSCR cash-out on a rental is a business-purpose loan, and tuition is personal. Use the asset-based consumer program instead, subject to underwriting.
Can I qualify with no income?
You can qualify without documenting employment or income. On the qualifier path, your assets alone cover the loan. On the depletion path, assets convert into monthly income. Either way, the file is fully underwritten and assets are documented with statements.
Does the cash count as an asset?
No. Cash-out proceeds never count as qualifying assets. Your existing, seasoned balances do the qualifying.
Can I pay a grandchild’s tuition?
Yes, if you are the borrower and you qualify on your own assets and home. The student is not on the loan. Plan around the leverage ceiling and your own repayment horizon.
Is this the same as a stated-income loan?
No. Stated-income loans took your word. These programs require statements, seasoning and full underwriting. You skip traditional personal-income documentation, pay stubs and employment verification, but not proof.
For borrowers qualifying on assets rather than income, Lendmire can help you compare asset-based mortgage options based on your statements, the property, credit profile, leverage and your goals.
A deeper walk-through of investment-property equity extraction lives in 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. FDIC Consumer Compliance Examination Manual, TILA
2. Saving for College, How to Shelter Assets on the FAFSA
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Asset-Based Cash-Out Refinance Program in Retirement Without a Regular Paycheck · Best Asset-Based Cash-Out Refinance Program When Your Income Is Lower Than Before · Best Asset-Based Cash-Out Refinance Program Using a Brokerage Account to Qualify
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.