The Quick Read: A founder can use an asset-based mortgage to pull cash out before a liquidity event only when the qualifying assets already sit in documented, seasoned accounts, since privately held company stock is not an eligible asset on either path, subject to underwriting.
- The loan is reviewed on assets you already hold in statements, not on what the company might be worth later.
- Two paths exist: the asset qualifier path, where assets cover the whole loan, and the asset depletion path, where assets are turned into monthly qualifying income.
- On the depletion path, cash-out leverage tops out at 60% on a principal residence, second home or investment property, and cash-out proceeds never count as qualifying assets.
- A tender offer, secondary sale or acquisition changes the picture once the cash lands in a regulated account and is documented.
- The loan is fully underwritten. It needs no traditional personal-income documentation, pay stubs or employment verification, but it does need account statements.
A founder before an exit often looks odd on paper. The ownership stake may be worth millions, yet the bank account is modest and the salary is small or zero. Traditional underwriting reads income and cash. It does not read a valuation.
This article explains how an asset-based cash-out refinance treats that profile, step by step. It also covers the structures, the edge cases and the sequencing decision around the event.
What Does “Asset-Based” Mean for a Founder?
Asset-based means the borrower is reviewed on documented liquid assets instead of employment income. Across Lendmire’s wholesale network, asset-based mortgage programs come in two forms, and a borrower is reviewed on one path at a time.
The asset qualifier path. Eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. The lender reviews the assets and the borrower’s ability to repay from them. Loans run up to $4,000,000, with leverage up to 80% on a purchase and 75% on a refinance of a principal residence or second home. Whether cash-out is allowed on this path, and at what leverage, is set by the lender and is not published. Treat any cash-out on this path as a question for the lender, not an assumption.
The asset depletion path. Eligible assets, after haircuts, are divided by 60 months. That becomes monthly qualifying income. It must carry the full housing payment and other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000.
Leverage on this path depends on the transaction and the property:
- Principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- Investment property: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
For a founder who wants cash out, the depletion path is the one with a published cash-out ceiling. The qualifier path is the one that needs the least income logic. Both are placed through select lenders, and every figure here is a ceiling or floor, never an offer.
Why Doesn’t Company Equity Count Before an Exit?
Private company equity is not an eligible asset on either path, because it cannot be sold, documented as cash or valued by a statement. Underwriters need balances they can verify. A paper valuation is an estimate.
A liquidity event is the point where ownership turns into cash or tradable shares. Common triggers are an acquisition, an IPO, a secondary sale or a tender offer. Before one of these happens, the stake is real under your grant but cannot be pulled into a file.
None of it counts: privately held company stock is not an eligible asset on either path. The same holds for non-vested restricted stock units and stock options on the depletion path. Founders and shareholders go the documented route. That means seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts, each at its credit percentage.
The SEC explains that lockup agreements bar insiders, including employees and large shareholders, from selling for a set period after an IPO, and that most last 180 days. Shares you cannot sell yet are a poor foundation for a loan file. Put the question to the lender before counting any restricted shares. The cleaner path is shares that are free to sell, or the cash after a sale.
What Are the Asset-Based Cash-Out Refinance Requirements for a Founder?
The requirements fall into leverage, assets, seasoning, credit and property. They differ by path, so the table names the path in every row.
| Requirement | Asset qualifier path | Asset depletion path |
|---|---|---|
| What qualifies you | Assets cover the entire loan | Assets ÷ 60 months = income |
| Loan amount | Up to $4,000,000 | $125,000 to $3,500,000 |
| Cash-out leverage | Lender-set, not published | 60% on all property types |
| Asset seasoning | 60 days, two statements per account | Statements 120 days old plus one within 45 days |
| Minimum assets | Assets must cover the loan | Lesser of $1,000,000 or 1.25x the loan |
| Credit | 600 minimum score | The lender’s matrix |
| Reserves | None at or below 75% LTV | No published reserve months |
A few more rules apply on the depletion path. Qualified assets can never fall below $250,000 liquid when depletion is the only income source. Asset-derived income can also supplement documented income up to a 45% debt-to-income ratio. When it does, the minimum-assets rule is waived.
Credit and housing history matter on both paths:
- Housing history is 0x30x12. One 30-day late in the last twelve months is considered case by case.
- Multiple bankruptcies are not eligible.
- A housing event needs four years of seasoning on the depletion path.
- A first-time investor on the depletion path needs a 700 score.
Most programs across the network read the same way. Strong assets do not offset a thin credit file, and a clean credit file does not offset thin assets. These are guideline ranges, subject to underwriting and not a commitment to lend.
Which Assets Count, and at What Percentage?
Each program credits a share of the balance, and the share depends on the path. The table keeps the two paths apart.
| Asset | Qualifier path credit | Depletion path credit |
|---|---|---|
| Brokerage accounts | 100% | 80% (securities) |
| Certificates of deposit | 100% | 100% |
| Money market and savings | 100% | 100% (cash accounts) |
| Retirement (401(k), IRA) | 90% under 59½, 100% at 59½ or older | 70% at any age |
| Real-estate equity | Not published | 60% |
Several asset types are not eligible on the depletion path:
- Custodial accounts
- Deferred compensation
- Escrow accounts
- Foreign funds
- Cash on hand
- Stock options
- Non-vested restricted stock units
- Funds from non-regulated financial companies
Cryptocurrency, precious metals, collectibles, business accounts beyond your ownership share, 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 lender reviewing the source.
Retirement accounts deserve a founder’s attention. They are often the only large liquid balance an early-stage founder has. On the qualifier path they count at 90% under age 59½ and at 100% from 59½ on. On the depletion path they count at 70% at any age.
What Does the Math Look Like for a Founder?
Both examples are illustrative, and the lender’s own calculation governs.
Qualifier path. Picture a founder seeking an $800,000 loan. The accounts are $330,000 in brokerage (100% counts, so $330,000), $300,000 in a 401(k) at age 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. The loan is reviewed on assets alone, with no income documented.
Depletion path. Say a founder holds $1,500,000 in securities and $300,000 in cash. Securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000. Usable assets come to $1,500,000. Divide by 60 months and the monthly qualifying income is $25,000. That income then carries the housing payment and other debts through the debt-to-income test.
The depletion path also has a minimum-assets test. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. A cash-out refinance on this path is capped at 60% leverage, and the cash you pull out never joins the qualifying pile. That matters for a founder. You cannot refinance, then use the proceeds to qualify for the refinance. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
When Should a Founder Apply: Before, During or After the Event?
Timing is the main decision. The three windows work differently.
Before the event. Only assets you already hold count. Savings, brokerage balances and retirement accounts must fit the path and be seasoned. If those balances are thin, an asset-based file will not work yet. Some founders in this position look at a rent-based route when the property is a rental. Lendmire’s piece Can a Founder Use a Super Jumbo DSCR Cash-Out Before a Liquidity Event? covers that option. It is reviewed on the property’s income, not on personal assets.
During the event. A pending deal is not an asset. An acquisition that has been announced or signed but not closed cannot support a file. Neither can a tender offer that has not paid. If a deal falls through, the file has nothing behind it. For that reason, do not build a plan around proceeds that have not arrived.
After the event. Once proceeds land in a regulated account, the picture changes. On the qualifier path, 60 days of seasoning and two months of statements per qualifying account apply. On the depletion path, sale-of-business funds are excused from the 120-day statement requirement. Cash from a tender offer or secondary sale should be documented the same way, with the source of the funds visible. Founders in this window often compare a cash-out with a rate-and-term refinance.
One working rule: if the exit is close, the stronger file is usually the one that waits for seasoned cash. If the exit is far off, the file depends on what you already hold.
Where Does the General Rule Break?
Several edge cases change the answer.
Shares still under a lock-up. These are not a clean asset. Lenders in the network treat the question individually, so ask before relying on them. Cash from selling them is straightforward.
Investment property. An asset-based loan on an investment property runs only on the depletion path, at 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Because it is a business-purpose loan, it is reviewed differently from a standard owner-occupied mortgage. Federal rules treat investment-purpose loans as business-purpose loans. A principal residence or second home is a consumer mortgage.
Use of proceeds. Keep personal spending and business funding separate and documented. 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.
A founder who is also a first-time investor. The 700 score on the depletion path applies to an investment purchase or refinance. A founder with a first rental should check that number before building the file.
Crypto-heavy balances. A founder who holds mostly digital assets has to convert them to seasoned cash in a regulated account first. The program does not count them directly.
Not a fit. If your liquid assets fall below the minimums above, no amount of company equity changes the answer today. The honest move is to wait for the event, use a different structure or borrow less.
Key Terms Defined
Asset qualifier path: The program path where eligible assets, after credit percentages, must cover the entire loan with no income documented.
Asset depletion path: The program path that divides usable assets by 60 months to create monthly qualifying income.
Liquidity event: The moment ownership in a private company turns into cash or tradable shares, such as an acquisition, IPO, secondary sale or tender offer.
Seasoning: The period assets must sit in an account, supported by statements, before a lender counts them.
Lock-up: A contract that bars insiders from selling shares for a set period after an IPO.
Haircut: The share of an asset’s balance a program does not count when it calculates qualifying assets.
Frequently Asked Questions
Does my startup equity count toward an asset-based mortgage?
No. Privately held company stock is not an eligible asset on either path. Non-vested restricted stock units and stock options are also excluded on the depletion path. The route is converting equity to seasoned cash or eligible securities through a sale or tender offer. Subject to underwriting.
Can the cash I pull out count as reserves or qualifying assets?
On the depletion path, cash-out proceeds never count as qualifying assets. On the qualifier path, reserves are not required at or below 75% loan-to-value, and above that the lender sets them. Check the lender’s treatment of proceeds before planning around them.
Do I need tax returns or pay stubs?
No. The program asks for no traditional personal-income documentation, pay stubs or employment verification. Every file is still fully underwritten, and the assets are documented with account statements. Credit, housing history and the property are all reviewed.
Which path fits a founder with a large retirement account?
It depends on the loan size and the rest of your balances. The qualifier path counts a 401(k) or IRA at 90% under age 59½ and 100% from 59½ on, but your assets must cover the whole loan. The depletion path counts retirement accounts at 70%, then turns the total into income. Compare both files on your actual statements.
Should a founder wait until after the event to apply?
If balances today are thin, waiting for seasoned proceeds is usually the stronger plan. If you already hold enough eligible assets, an earlier file may work. Proceeds that have not arrived cannot support either path.
Where to Go From Here
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. Lendmire is a mortgage broker, and 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. Programs change, and every file is underwritten individually.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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. Kubera, Liquidity Event guide
2. SEC Investor.gov, Lockup Agreements
3. Federal Register, Ability-to-Repay and Qualified Mortgage Standards Final Rule
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Cash Can a New Mexico Homeowner Take Out on an Asset Depletion Refinance? · Can You Get an Asset-Based Mortgage on a Tennessee Condo? · Asset Seasoning Rules for a Colorado Asset-Based Mortgage
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.