The Quick Read: Lenders write a cash-out loan on a home you live in by qualifying you on your own assets, not on the property’s rent. Through select programs, either your assets cover the whole loan or they convert into monthly income. The right path depends on your balances, the property, and how much cash you need, subject to underwriting.
- Rent-coverage loans are built for rentals you do not live in. They do not apply to your own home.
- On the asset qualifier path, eligible assets must equal or exceed the entire loan, and no employment or income is documented.
- On the asset depletion path, usable assets divided by 60 months become qualifying income. Cash-out on a principal residence is typically capped at 60% loan-to-value.
- Privately held company stock is not an eligible asset on either path.
What Does Asset-Based Mean on a Home You Live In?
The phrase gets used for several different products, and mixing them up is a common source of confusion. Here is how a broker sorts them.
| Meaning | What gets judged | Fits your own home? |
|---|---|---|
| Rent coverage (DSCR) | The property’s rent | No |
| Asset qualifier | Your assets against the loan | Yes, per program |
| Asset depletion | Your assets turned into income | Yes, per program |
| Private collateral lending | The equity in the property | A separate product |
A DSCR loan, short for debt service coverage ratio loan, checks whether a rental’s income covers its monthly obligation. That test needs a tenant, so it cannot work on a house you occupy.
The two middle rows are what Lendmire arranges under its asset-based mortgage programs. Lendmire is a mortgage broker. It places these files with select lenders in its wholesale network and does not lend itself.
The last row is a different category. Private lenders sometimes make short-term loans that lean on the property’s equity. That is not the same thing as qualifying you on your balance sheet.
This article is written for a cash-heavy, income-light reader. Think of a retiree, someone who sold a business, an heir, or a household living off a portfolio. Your balances are large, but your documented income does not show it.
Key Terms Defined
Cash-out refinance: a new mortgage that pays off the old one and hands you the difference in cash.
Loan-to-value (LTV): the loan amount divided by the home’s appraised value, shown as a percentage.
Asset qualifier path: a way to qualify where your eligible assets, after the credit percentages, equal or exceed the entire loan amount.
Asset depletion path: a way to qualify where usable assets divided by 60 months become a monthly qualifying income.
Seasoning: the length of time money must sit in your accounts, backed by statements, before a lender counts it.
Principal residence: the home you live in as your main address. A second home is a different occupancy type.
Debt-to-income (DTI) test: the check that your housing payment and other debts fit inside your qualifying income.
Path One: Your Assets Cover the Whole Loan
The asset qualifier path is the simplest idea in this space. You show eligible assets worth at least the full loan amount. The lender does not document your employment or income. Subject to underwriting, the file rests on your assets.
Here is how accounts are counted on this path:
- Brokerage accounts, certificates of deposit, money market and savings count at 100%.
- Retirement balances in a 401(k) or IRA count at 90% if you are under age 59½, and at 100% once you reach 59½.
- Accounts combine, so you can stack several types.
Run an illustrative case. Say the loan is $800,000. You hold $330,000 in brokerage accounts (counted at 100%, so $330,000). You also hold $300,000 in a 401(k) while under 59½ (counted at 90%, so $270,000). Finally, you hold $200,000 in savings (counted at 100%, so $200,000). Together that is $800,000 of usable assets, and the file is reviewed on assets alone. The lender’s own calculation governs, so treat this as an illustration.
Other terms on this path, through select programs:
- Leverage: up to 80% LTV on a purchase and 75% LTV on a refinance of a principal residence or second home.
- Cash-out: whether cash-out proceeds are allowed, and at what leverage, is set by the lender and is not published. Ask your broker to confirm it for your scenario.
- Loan size: up to $4,000,000.
- Credit: a 600 minimum score. Housing history is typically 0x30x12, meaning no 30-day late payments in the last twelve months. One late is considered case by case. Multiple bankruptcies are not eligible.
- Seasoning: 60 days, with two months of statements for each qualifying account.
- Reserves: none required at or below 75% LTV. Above that, the lender sets them.
Path Two: Your Assets Become Income
The asset depletion path treats your portfolio as an income stream. The lender counts usable assets after the haircuts below, divides by 60 months, and runs the result through the debt-to-income test. That derived income must carry your full housing payment and your other debts.
Haircuts are the part of each balance that does not count. The shares below are what does count. On this path:
- Cash accounts and certificates of deposit count at 100%.
- Securities count at 80%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
Not eligible on this 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.
Walk through the math. Say you hold $1,500,000 in securities (counted at 80%, so $1,200,000) and $300,000 in cash (counted at 100%, so $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 other debts through the DTI test.
Here is what the path requires, subject to underwriting:
- Leverage on a principal residence or second home: up to 80% LTV on a purchase or rate-and-term refinance, and 60% LTV on a cash-out refinance.
- Leverage on an investment property: up to 65% LTV on a purchase or rate-and-term refinance, and 60% LTV on a cash-out refinance.
- Loan size: $125,000 to $3,500,000.
- Minimum assets: the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, never below $250,000 liquid.
- Blended income: asset-derived income can supplement documented income up to a 45% DTI. When it does, the minimum-assets rule is waived.
- Credit: the lender’s score and loan-amount matrix applies. A first-time investor needs a 700. A housing event needs 4 years of seasoning.
- 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. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Cash-out proceeds never count as qualifying assets on this path. You cannot pull cash out and then count it to qualify.
Both paths document your assets with statements. Neither is a no-documentation loan, and each file is fully underwritten. On the qualifier path you simply skip traditional personal-income documentation, pay stubs and employment verification.
Why a Home You Live In Changes the Process
Owning the home you live in puts the loan in a different legal category than a rental. 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.
Federal rules draw the line in a practical way. Under Regulation Z’s exemption for business-purpose credit, a rental you do not occupy is treated as business-purpose. If you expect to occupy the property more than 14 days in the coming year, it cannot be treated as non-owner-occupied.
So a cash-out loan on your own home is a consumer mortgage. That brings a fuller set of disclosures and a right-to-cancel window on most refinances of a principal dwelling. Under the federal rescission rule, funds are not disbursed until that window ends. A true rental loan has no such window.
Non-QM lenders still have to confirm you can repay. Scotsman Guide explains that non-QM loans sit outside the qualified-mortgage box but must still satisfy ability-to-repay requirements. Assets are one accepted way to show it. That is why the asset programs exist.
Step by Step: How Underwriting Treats the File
Here is the order a broker works through, from first call to a lender’s decision.
1. Classify occupancy. Everything else follows from it: the loan type, the disclosures, the leverage ceiling and the documents.
2. Choose the path. Do your eligible assets cover the whole loan, or do they work better as income? A borrower is qualified on one path at a time.
3. Document the assets. The lender reads statements, checks seasoning, and applies the percentages for each account type.
4. Review credit and housing history. Score, late payments, and any bankruptcy or housing event are checked against the program’s limits.
5. Order the property work. Appraisal, title, payoff, insurance and tax records are needed. No rent schedule is required, because rent is not what qualifies you.
6. Close as a consumer loan. Disclosures are delivered, the right-to-cancel window runs, and then funds are released.
Lender overlays vary at every step. A few lenders in the network ask for more than the program minimum, and the strictest overlays want deeper reserves or longer seasoning. That is why the same file can look different from one lender to the next.
What Does Not Count (Even If It Is Worth a Lot)
Privately held company stock is not an eligible asset on either path. That holds no matter how large the valuation is. The route is a sale or buyout converted to a seasoned cash balance. Once the proceeds sit in a regulated account, they count as cash.
Founders and shareholders often start here, so the answer is worth stating plainly. Build the file from what is eligible: seasoned proceeds from a sale or conversion, cash, public securities, and retirement accounts at their percentages.
Several other asset classes are not published as eligible on either path: cryptocurrency, precious metals, collectibles, business accounts beyond your ownership share, and pledged or borrowed funds. Converting them to a seasoned cash balance in a regulated account is the documented route, with the lender checking the source of funds.
Where the Rule Bends
A few edge cases come up often. Most are program rules rather than federal rules, so read each one carefully.
Living in one unit of a two-to-four-unit building. Federal rules are looser than many assume. Acquisition credit on an owner-occupied building of more than two units can still be business-purpose under Regulation Z. Even so, rent-coverage programs bar you from occupying any unit. That is a program condition, not a federal ban. If you live in a unit, the asset-based consumer route is the one to price.
A second home. On the asset paths, a second home is treated like a principal residence for leverage. For the right-to-cancel window, the difference matters. A consumer has only one principal dwelling, and a vacation home is not it.
Closing as a rental, then moving in. Skip it. An occupancy certification signed at closing is a statement about your intent. Moving in afterward turns that statement into a misrepresentation, with default risk. If you plan to live in the property, finance it as owner-occupied from the start.
Short-term rentals. Personal use of up to 14 days a year lines up with the federal 14-day line. Use beyond that pushes the property toward second-home or owner-occupied treatment. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
Pulling equity to buy a rental. Your home’s equity and a rental purchase are two separate files. Cash-out on your residence is a consumer mortgage that adds to your personal obligations. A rental loan placed later runs on the property’s income.
Cash-out on a rental you own, qualified on assets. On the asset depletion path, an investment property is also eligible, at up to 60% LTV on a cash-out refinance. That loan is business-purpose, and the 700 first-time-investor score applies. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Owner-operated commercial buildings. A building that houses your own business is a commercial product. It is outside both paths.
Which Path Fits You?
Start with one question: do your eligible assets equal or exceed the loan you want? If yes, the asset qualifier path is the natural first look. If no, or if you want the lender to see income, the asset depletion path usually fits.
Picture a retiree who sold a business and holds a large brokerage account, cash, and an IRA. They want to pull equity from a home they live in. The documented income is low, but the balances are high. The qualifier path asks whether usable assets cover the whole loan. The depletion path asks whether 60-month income carries the payment. The cash-out leverage is where they differ: the depletion path caps a principal-residence cash-out at 60% LTV, while the qualifier path’s cash-out terms are lender-set. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
A few alternatives deserve an honest look:
- Bank statement loans. These are for borrowers who document income through business or personal deposits. Scotsman Guide lists 12 to 24 months of statements as a common non-QM tool. If your deposits are strong, that route may fit better.
- Home equity lines. A HELOC follows the line lender’s own rules, not this program’s.
- Agency and full-documentation jumbo loans. These rely on the income those programs require. If your tax returns tell the story, they may work. If they do not, that is the gap the asset paths fill.
How to Find the Right Lenders for Your File
The lenders that write this depend on your situation: the property type, your credit profile, how much cash you need, and how your assets are held. No single lender suits every borrower. That is the reason to use a broker.
Lendmire shops its wholesale network and matches your scenario to the program. It does not name or rank lenders, because a ranking would ignore your file. What helps most is preparation.
Bring this to the first conversation:
- Two months of statements for each account you plan to use.
- A list of any assets that fall outside the eligible lists, such as private company shares or crypto.
- The loan amount you need and how much of it is cash-out.
- Your housing history for the last twelve months.
- Whether you will live in the home or hold it as a second home.
Ask your broker which path the file is set up on, what the lender’s overlays add, and how assets are being counted. Consumer mortgage lending through this program is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Every file is underwritten individually, and programs change.
Frequently Asked Questions
Can I use a DSCR loan to take cash out of my primary home?
No. A rent-coverage loan needs a non-owner-occupied rental, and your own home produces no rent for the test to measure. The owner-occupied route runs on your assets or your income, and it closes as a consumer mortgage. If your goal is to fund rentals, the home equity and the rental loans are separate files.
Do retirement accounts count toward qualifying?
Yes, through select programs. On the asset qualifier path, a 401(k) or IRA counts at 90% if you are under 59½ and at 100% from 59½ on. On the asset depletion path, retirement accounts count at 70% at any age. Each path’s percentages apply only to that path.
Does my privately held company stock count as an asset?
No. If you have sold or been bought out of the company, the proceeds count once they sit as a seasoned cash balance in a regulated account. Until then, build the file from cash, public securities and retirement accounts.
How much cash can I take out of a home I live in?
On the asset depletion path, cash-out on a principal residence or second home is typically capped at 60% LTV. On the asset qualifier path, cash-out terms are set by the lender and are not published, so your broker confirms them for your scenario. Cash-out proceeds never count as qualifying assets on the depletion path.
Is an asset-based loan the same as a no-documentation loan?
No. Every file is fully underwritten, and your assets are documented with statements. On the qualifier path you skip traditional personal-income documentation, pay stubs and employment verification. You still provide an appraisal, title work, credit, and seasoned account statements.
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.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each file is underwritten individually. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For how equity extraction works on an investment property, see 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 § 1026.3, Exempt transactions
2. eCFR, 12 CFR 1026.23, Right of rescission
3. Scotsman Guide, Helping borrowers fit the boxes by getting hands-on with non-QM
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 on an Inherited Property
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.