The Quick Read: An asset-based cash-out refinance lets a borrower pull equity from a property while qualifying on documented assets instead of paychecks, and the lenders that write it sit in a wholesale network reached through a broker, not on one bank’s shelf, so the right fit depends on the property, the path, and how the proceeds will be used.
- Two paths exist. One drives lender review on assets alone, and the other turns assets into a monthly qualifying income.
- On a principal residence or second home, the asset depletion path allows up to 60% loan-to-value on a cash-out refinance, subject to underwriting.
- On the depletion path, cash accounts count at 100%, securities at 80%, retirement accounts at 70% and real-estate equity at 60%, while privately held company stock is not an eligible asset on either path.
- Whether cash can fund a business is decided by the lender’s use-of-proceeds rules, so confirm that before applying.
What Does Asset-Based Mean in a Cash-Out Refinance?
Asset-based means the lender looks at what you own in documented accounts, not at what you earn. The property secures the loan, and your statements show you can carry it. Lendmire is a mortgage broker, not a lender. It places these files with select lenders in its wholesale network, and each lender underwrites its own loans.
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference. A rate-and-term refinance changes the loan terms without extracting extra cash. That difference matters here because cash-out carries tighter leverage limits on every path.
The reader this fits is cash-heavy and income-light. Think of a founder who sold a company, a retiree living on a portfolio, or a household that received an inheritance or settlement. Balances are large, and documented income is not.
Naming a bank is not the starting point, because the product differs from a bank’s usual offering. A large bank’s business loan or line typically leans on business financials and often asks for a personal guarantee. An asset-based mortgage leans on your statements and the property. Those are different tools for different borrowers. A broker that shops several wholesale lenders can match your balances and goals to the program that reads them best.
Key Terms Defined
Asset qualifier path: The program route where eligible assets, after credit percentages, must equal or exceed the entire loan amount, with no employment or income documented.
Asset depletion path: The route where usable assets divided by 60 months become a monthly qualifying income that runs through the debt-to-income test.
Usable assets: The share of each account balance the program counts toward qualifying. The part that does not count is the haircut.
Seasoning: The time funds must have sat in an account, shown by statements, before they count.
Cash-out refinance: A new, larger loan that pays off the old one and delivers the difference to the borrower.
Business-purpose loan: Credit used primarily for a business or investment purpose rather than personal, family or household use.
Which Path Fits: Assets Cover the Loan, or Assets Become Income?
The qualifier path fits a borrower whose assets exceed the whole loan. The depletion path fits a borrower whose assets are large but whose loan is larger than the assets can cover outright. A borrower is qualified on one path at a time, and the figures for the two paths never blend.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How it qualifies | Assets cover the entire loan | Assets ÷ 60 months = income |
| Income documented | None | Derived income, DTI tested |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Leverage, primary or second home | 80% purchase, 75% refinance | 80% purchase or rate-and-term, 60% cash-out |
| Leverage, investment property | Not published | 65% purchase or rate-and-term, 60% cash-out |
| Seasoning | 60 days, two months of statements | Statements 120 days old plus one within 45 days |
Every figure above is a ceiling or floor on select programs, not an offer, and all of it is subject to underwriting.
Notice the gap in the qualifier column. Whether cash-out proceeds are allowed on that path, and at what leverage, is set by each lender and is not published. A broker confirms it per file. That is why the depletion path is usually the one discussed for cash-out refinances.
How Underwriting Treats the File, Step by Step
Underwriting is full, not skipped. The program drops tax returns, pay stubs and employment verification, but it documents your assets with statements. The review runs in this order.
1. Purpose and property. The lender confirms the occupancy type, the property and the stated use of the money.
2. Asset documentation. On the qualifier path, you provide two months of statements for each qualifying account and 60 days of seasoning. On the depletion path, statements must be at least 120 days old at application, plus the most recent one within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning on the depletion path.
3. Credit percentages. Each account counts at its program percentage. Adding those usable amounts gives the number that matters.
4. Path test. The qualifier path asks whether usable assets equal or exceed the loan. The depletion path asks whether the derived monthly income carries the housing payment and other debts.
5. Credit and housing history. The minimum score is 600 on the qualifier path. The depletion path follows the lender’s matrix, and a first-time investor on that path needs 700. Housing history is reviewed at 0x30x12, and one 30-day late in the last twelve months is considered case by case.
6. Minimums. The depletion path generally needs qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when asset depletion is the only income source. When asset-derived income only supplements documented income, up to a 45% debt-to-income ratio, that minimum-assets rule is waived.
7. Appraisal and loan structure. The appraisal sets the value used for leverage, and the lender applies the cap for your occupancy type.
One rule trips people up. Cash-out proceeds never count as qualifying assets on the depletion path. You cannot borrow money and then count it as a reserve.
What Counts, and at What Percentage
Each path counts accounts differently, so name the path before you quote a figure. Here is what counts, as the share of the balance.
Qualifier path: brokerage accounts, certificates of deposit, money market and savings all count at 100%. Retirement accounts such as a 401(k) or IRA count at 90% under age 59½ and 100% at 59½ or older. Accounts combine.
Depletion path: cash accounts and certificates of deposit count at 100%. Securities count at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Not eligible on the depletion path: custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, privately held stock, stock options, non-vested restricted stock units and funds from non-regulated financial companies.
Two worked illustrations show the arithmetic. They are illustrative only, and the lender’s own calculation governs.
Qualifier path. Take an $800,000 loan. A borrower holds $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) under 59½ (90% counts, so $270,000) and $200,000 in savings (100% counts, so $200,000). That adds up to $800,000 of usable assets, which covers the loan and is reviewed on assets alone.
Depletion path. A borrower holds $1,500,000 in securities (80% counts, so $1,200,000) plus $300,000 in cash (100% counts, so $300,000). That is $1,500,000 of usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test.
If the same borrower also has documented income, asset-derived income can supplement it up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Can the Cash Fund a Business Expansion?
Sometimes, but this is the question to settle first, not last. The use-of-proceeds rule is set by the lender and the program, and a program built for a principal residence or second home is a consumer mortgage. TRID disclosures apply to it.
Purpose is the deciding idea. Credit extended primarily for a business, commercial or agricultural purpose is treated differently from consumer credit, as the CFPB’s Truth in Lending examination procedures lay out. The test is the primary purpose of the loan. The ABA Banking Journal notes that an LLC guarantor does not change that result for a loan made to an individual for personal purposes.
Property type also matters. On the depletion path, investment property carries 65% leverage on a purchase or rate-and-term refinance and 60% on a cash-out, and the loan is business-purpose. A practitioner summary from Doss Law treats credit to acquire, improve or maintain non-owner-occupied rental property as business purpose. It also gives a cash-out refinance of a rental to pay personal income taxes as a consumer-purpose example. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
So the practical picture splits two ways. If you are borrowing against a home you live in, ask the broker whether any lender in the network accepts a business-expansion use for that file before you apply. If you are borrowing against an investment property on the depletion path, the business-purpose character is part of the program, but the lender still reviews how you plan to use the funds. Rental owners who qualify on rent coverage instead of assets use a different loan type, with its own rules.
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.
Where the General Rule Breaks
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 conversion, cash, public securities and retirement accounts at their percentages. On the depletion path, sale-of-business funds are excused from the seasoning rule.
Crypto, precious metals and collectibles. None of these is 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 and borrowed money. Business accounts beyond your ownership share and pledged or borrowed funds are not published as eligible either. A business account balance counts only to the extent you own the business.
Retirement accounts and age. On the qualifier path, a 401(k) or IRA counts at 90% under 59½ and 100% after. On the depletion path, retirement accounts count at 70% at any age. The same balance can therefore carry different weight on each path.
Credit events. Multiple bankruptcies are not eligible. On the depletion path, a housing event needs 4 years of seasoning.
Reserves. The qualifier path requires none at or below 75% loan-to-value, and above that the lender sets them. The depletion path publishes no reserve months.
Choosing a Lender Without Picking a Name
The best program for your situation depends on your property type, your balances, your credit profile, your leverage need and your documentation. Ranking lenders by name does not help, because the lenders that write this product differ by path, by occupancy type and by how they treat cash-out. A broker that shops multiple wholesale lenders can match the scenario to the program.
Questions worth asking any broker or loan officer:
- Which path does my file fit, and which assets count at what percentage?
- Does the program allow cash-out on this occupancy type, and at what leverage?
- Is a business-expansion use of proceeds acceptable to the lender that would review the file?
- How do my statements meet the seasoning rules, and does any account need to be moved or converted first?
- Do I meet the credit, housing-history and minimum-asset requirements on that path?
Sellers of a business or recipients of a settlement should bring statements for the cash balance rather than for the stock or the claim itself. Cash with a documented source is what these programs read most cleanly.
Risks and When Not to Use It
Pulling cash out raises the loan balance on your property. That is the central tradeoff. On the depletion path, derived income has to carry the larger housing payment, so a larger draw can fail a file that a smaller draw would clear. Sizing the draw to the expansion budget is part of the decision.
Cash-out is also the wrong tool when the expansion cannot carry the added obligation on its own. If the new business income would have to cover the loan, a business loan built on business financials may be the better match. A line of credit or equipment financing may also suit a smaller need, since those do not put a home or investment property at risk in the same way.
Finally, a cash-out refinance puts your property behind a larger loan. If the expansion underperforms, the property is still the collateral. Test the plan against a slow first year before you commit.
Frequently Asked Questions
Can I use privately held company stock as an asset?
If you are a founder or shareholder, the documented route is a sale or conversion into a seasoned cash balance. Cash, public securities and retirement accounts then count at their program percentages.
How much can I borrow on a cash-out refinance without income documentation?
On the depletion path, it is up to 60% loan-to-value on a cash-out refinance of a principal residence, second home or investment property, subject to underwriting. Loan amounts run from $125,000 to $3,500,000, with qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan. On the qualifier path, the cash-out limit is set by the lender and is not published.
Are tax returns, pay stubs and employment verification required?
Not on the qualifier path, where the assets cover the loan and no income is documented. On the depletion path, derived income from assets runs through the debt-to-income test, though the program still does not rely on paychecks. Every file is fully underwritten, and your assets are documented with statements.
Do cash-out proceeds count as qualifying assets?
No. The assets that qualify you have to be in place and seasoned before the loan funds.
Can a first-time investor use the program?
On the depletion path, a first-time investor needs a 700 credit score. The qualifier path has a 600 minimum score. In both cases, approval is never promised and every file is reviewed individually. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Your 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. The asset-based mortgage program page walks through both paths in more detail. Lendmire’s consumer mortgage lending is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. All figures here are ceilings and floors on select programs, subject to underwriting, and not a commitment to lend.
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 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.
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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 TILA examination procedures
2. ABA Banking Journal: LLC guarantor and the business-purpose exemption
3. Doss Law: Business Purpose Exemption Simplified
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 on a Condo · Asset-Based Cash-Out Refinance vs Bank Statement Cash-Out Refinance for Retirees · How Lenders Underwrite an Asset-Based Cash-Out Refinance to Fund a Business Expansion
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.