The Quick Read: The best program for your situation depends on which of two paths your file fits: assets that cover the whole loan, or assets converted into monthly income. Vested retirement balances can support either path, and they stay invested because the lender counts them without requiring a withdrawal. Cash-out is where the paths split sharply, and that split decides most files.
- On the asset qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older, subject to underwriting.
- On the asset depletion path, retirement accounts count at 70% at any age, and cash-out leverage tops out at 60%.
- Cash-out proceeds never count as qualifying assets.
- Privately held company stock is not an eligible asset on either path.
- Assets are fully documented with statements. The program skips traditional personal-income documentation, pay stubs and employment verification, not underwriting.
Lendmire is a mortgage broker, not a lender. It places these files through select lenders in its wholesale network, so the program a borrower lands in depends on the scenario rather than on a single company’s menu.
What Is an Asset-Based Cash-Out Refinance?
An asset-based cash-out refinance replaces your current mortgage with a larger one and pays you the difference, while verified assets stand in for employment income. The borrower is usually cash-heavy and income-light: a retiree, someone who sold a business, an early-retired professional, or a household living off a portfolio.
Think of two pools of money. The portfolio qualifies you. The home’s equity is what you borrow against. Those pools must stay separate, and that separation shapes every rule below.
This is a consumer mortgage on a principal residence or second home. The depletion path also reaches investment property, where the loan is business-purpose. Programs vary and every file is underwritten individually, so treat the figures here as ceilings and floors rather than offers. Lendmire’s asset-based mortgage programs cover both paths in more detail.
How Does Underwriting Treat Retirement Accounts, Step by Step?
Underwriting treats vested retirement accounts as countable assets, applies a percentage credit, checks that the statements are seasoned, and then tests either the loan amount or a derived income. The sequence is the same on both paths until the last step.
1. Choose the path. A borrower is qualified on one path at a time. Figures from the two paths never blend.
2. Document the accounts. Statements are the core evidence. Federal ability-to-repay rules allow a lender to rely on income, assets, or both, and the rule counts vested retirement amounts among the assets a lender may consider. It excludes the value of the home securing the loan.
3. Apply the credit percentage. Each asset class counts at a share of its balance.
4. Test seasoning. Recent deposits get scrutiny, so older balances are cleaner.
5. Run the test. The qualifier path asks whether usable assets cover the whole loan. The depletion path asks whether derived income carries the housing payment and other debts.
Third-party records are the standard evidence, and the CFPB’s ability-to-repay interpretations name retirement accounts as an example of an account those records can document. In practice that means clean, complete retirement statements.
Path One: Do Assets Cover the Whole Loan?
On the asset qualifier path, eligible assets after the credit percentages must equal or exceed the entire loan amount, and no employment or income is documented. Loans run up to $4,000,000, subject to underwriting.
The credit percentages work like this:
| Asset | Share that counts |
|---|---|
| Brokerage accounts | 100% |
| Certificates of deposit | 100% |
| Money market and savings | 100% |
| 401(k) or IRA, under 59½ | 90% |
| 401(k) or IRA, 59½ or older | 100% |
Accounts combine. Here is an illustration only; the lender’s own calculation governs. Take an $800,000 loan. A borrower holds $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 and is reviewed on assets alone.
Leverage on this path reaches up to 80% on a purchase and 75% on a refinance. Whether cash-out proceeds are allowed here, and at what leverage, is set by the lender and is not published. Anyone promising a qualifier-path cash-out figure is guessing. Reserves are not required at or below 75% loan-to-value; above that, the lender sets them.
Seasoning is 60 days, with two months of statements for each qualifying account. The credit floor is 600, and the housing history standard is no late payments in the last twelve months, with one 30-day late considered case by case.
Path Two: Can Assets Become Income?
On the asset depletion path, usable assets are divided by 60 months to create monthly qualifying income, and that income must carry the full housing payment and other debts through the debt-to-income test. This is the path built for cash-out.
The haircuts here are heavier:
| Asset | Share that counts |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Retirement accounts, any age | 70% |
| Real-estate equity | 60% |
An illustration, again subject to the lender’s calculation: $1,500,000 in securities counts at 80%, or $1,200,000. Add $300,000 in cash at 100%. Usable assets total $1,500,000. Divided by 60 months, that produces $25,000 of monthly qualifying income, which then has to carry the housing payment and other debts.
Leverage on a principal residence or second home reaches up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. On an investment property the ceilings are 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Loan amounts run from $125,000 to $3,500,000.
Other requirements on this path:
- Qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is the only income source.
- 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 follows the lender’s matrix. A first-time investor needs 700. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning.
- Asset income may also supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Which Path Fits Which Borrower?
The qualifier path fits a borrower whose liquid balances nearly match the loan, usually on a purchase or refinance. The depletion path fits a borrower who wants cash out and has larger balances relative to income. It is a genuine toss-up for a borrower in the middle.
| Borrower profile | Likely fit | Main tradeoff |
|---|---|---|
| Balances roughly equal to the loan | Asset qualifier | Cash-out terms are lender-set |
| Large portfolio, modest loan | Asset depletion | Heavier haircuts; 60% cash-out leverage |
| Documented income plus portfolio | Depletion as a supplement | Debt-to-income capped at 45% |
| Equity-rich, little liquid cash | Neither works well | Equity does not qualify the borrower |
That last row matters. A borrower whose wealth sits mostly in home equity usually cannot use this product, since the subject property’s value does not count toward qualifying. If your wealth sits in a rental portfolio that produces strong rent, a DSCR cash-out, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, is a different tool and may fit better.
Does Using Retirement Accounts Trigger a Withdrawal?
No. The accounts are counted, not liquidated. The haircut is a modeling convention, not a withdrawal. Borrowing against a home is a different event from distributing money from an IRA or 401(k).
That matters because early distributions carry a cost: the IRS applies a 10% additional tax on distributions taken before age 59½ unless an exception applies, on top of regular income tax. Tax treatment varies; consult a qualified professional.
Where Does the General Rule Break?
Several edge cases change the answer, and they are worth checking before an application.
Privately held company stock. It 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 haircuts.
Crypto, metals and collectibles. 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.
Ineligible depletion-path accounts. 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 do not count.
Double-counting. The same dollars cannot both qualify the loan and arrive as cash-out. Cash-out proceeds never count as qualifying assets.
Business-purpose proceeds. On an investment property under the depletion path, the loan is business-purpose. Proceeds should go to the investment business, with records kept.
What Does “Best” Actually Mean Here?
The best program is the one whose rules match your statements, property, credit and leverage need. No single lender wins for every file, which is why shopping through a broker matters.
A broker sees many programs and can match the scenario to them. These are the questions that sort programs:
- Does the program allow cash-out on your path, and at what leverage?
- How does it credit retirement accounts, and does age change the percentage?
- Which property types and occupancies are eligible?
- What statement seasoning does it require?
- Does it set reserves, and where?
The lenders that write this product vary on each point. Across a wholesale network, a few will accept a case that a stricter lender declines, and the reverse is equally true. Lendmire’s role is to read your documents first, then place the file with the programs that fit.
What Should You Prepare Before Applying?
A clean file starts with complete statements and a clear story for any large recent deposit.
- Two months of statements for each qualifying account on the qualifier path.
- Statements at least 120 days old plus one within 45 days on the depletion path.
- Proof of the source for any large deposit.
- Current mortgage and property insurance documents for the refinance.
- Your age, since it changes the retirement percentage on the qualifier path.
Common reasons files get trimmed include ineligible accounts, assets that fall short after haircuts, large unexplained deposits, and holdings that are not liquid. Moving funds into one regulated account early, and letting them season, can help address several of these issues.
Key Terms Defined
Asset qualifier path: A structure where eligible assets must equal or exceed the entire loan, with no income documented.
Asset depletion path: A structure that divides usable assets by 60 months to create monthly qualifying income.
Haircut: The share of an account’s balance that a program does not count.
Seasoning: How long funds have sat in an account before they can be used.
Vested balance: The portion of a retirement account that belongs to you outright.
Debt-to-income ratio: Monthly debts divided by monthly qualifying income.
Frequently Asked Questions
Can I use my 401(k) or IRA to qualify?
Yes, vested balances count on both paths. On the qualifier path they count at 90% under 59½ and 100% at 59½ or older. On the depletion path they count at 70% at any age. Both are subject to underwriting.
Do I have to sell investments or withdraw from the account?
No. The accounts stay invested, and the lender counts the balance without a distribution. The statements document the assets, and underwriting reviews them.
Does the program require no documentation?
No. Every file is fully underwritten and the assets are documented with statements. What the program skips are tax returns, pay stubs and employment verification.
Can a paid-off home or second home use this?
Principal residences and second homes are eligible on both paths, and cash-out leverage on the depletion path is up to 60%, subject to underwriting. A paid-off home changes the starting point, not the asset rules.
Does private company stock count if I’m a founder?
No. Privately held company stock is not an eligible asset on either path. Founders qualify through seasoned proceeds from a sale or buyout, cash, public securities and retirement accounts.
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. Reach the team at 828-256-2183.
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.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
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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 § 1026.43
2. CFPB ability-to-repay interpretations
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 With Little Equity · Best Asset-Based Cash-Out Refinance Program in Retirement Without a Regular Paycheck · Can You Get Approved for an Asset-Based Cash-Out Refinance Using Retirement Accounts?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.