The Quick Read: An asset-based mortgage is a real loan that is reviewed around savings and investments, and you repay it over time. A home equity investment (HEI) is a contract, not a loan. An investor advances cash against your home and takes a share of its future value. The first suits retirees with large balances who can carry a mortgage payment. The second suits retirees whose home is their main asset and whose monthly cash flow is the constraint.
- Asset-based mortgages come in two paths. One counts your assets against the whole loan. The other turns assets into monthly qualifying income.
- An HEI looks mainly at home value and equity, not income or assets.
- The mortgage leaves all future appreciation with you. An HEI gives an outside investor a share.
- Retirees with rentals held in an LLC often find an HEI unavailable on those properties. Business-purpose rental financing is DSCR territory, covered in Lendmire’s complete DSCR loans guide.
Side-by-Side
The table shows Lendmire’s network guidelines on the left. The right column shows published industry norms for HEIs, which vary by provider. Every figure is subject to underwriting and a lender’s own review.
| Factor | Asset-Based Mortgage | Home Equity Investment |
|---|---|---|
| Review basis | Assets, or assets turned into income | Home value and equity |
| Documentation | Asset statements, appraisal, credit; no income papers on qualifier path | Appraisal, title, existing mortgage details |
| Property types | Primary and second home; investment on depletion path | Usually owner-occupied homes |
| Entity vesting | Consumer loan to the individual | LLC-owned property often excluded |
| Repayment structure | Standard mortgage repaid over its term | One settlement at term end, sale or buyout |
| Reserve expectations | None at or below 75% LTV on qualifier path | Keep taxes, insurance, first mortgage current |
| Who keeps appreciation | The borrower | Shared with the investor |
| Term | Tied to the mortgage | Fixed term, often 10 to 30 years |
How an Asset-Based Mortgage Works for Retirees
Across the wholesale network Lendmire works with, a retiree is qualified on one of two paths, never both at once. Lendmire is the broker here. Select lenders review and approve the file.
The asset qualifier path asks one thing: do your eligible assets equal or exceed the entire loan amount? No employment or income is documented. Brokerage accounts, certificates of deposit, money market and savings count at 100%. Retirement accounts count at 90% if you are under 59½ and 100% at 59½ or older. Accounts combine.
Here is an illustration. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts), $300,000 in a 401(k) while under 59½ (90% counts, or $270,000), and $200,000 in savings (100% counts). That is $800,000 of usable assets, so the loan is reviewed on assets alone. The lender’s own calculation governs.
Leverage on this path runs up to 80% loan-to-value (LTV, the loan as a share of the home’s value) on a purchase and 75% on a refinance of a principal residence or second home. Loans go up to $4,000,000. Credit minimum is 600. Statements need 60 days of seasoning, with two months of statements for each qualifying account. Reserves are not required at or below 75% LTV. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The asset depletion path converts assets into income. The lender takes usable assets, divides by 60 months, and runs that figure through a debt-to-income test. Cash and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Take $1,500,000 in securities (80% counts, or $1,200,000) plus $300,000 in cash (100% counts). That is $1,500,000 usable, divided by 60 months, for $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts.
On this path, loans run $125,000 to $3,500,000. Credit follows the lender’s matrix. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when asset depletion is your only income. Statements must be at least 120 days old at application, plus a recent one within 45 days.
Asset-derived income can also supplement documented income, up to a 45% debt-to-income ratio. Then the minimum-assets rule is waived.
Can an Asset-Based Mortgage Get You Cash?
Yes, on the depletion path. Cash-out leverage there is up to 60% LTV on a principal residence or second home. Investment property also tops out at 60% on a cash-out. Cash-out proceeds never count as qualifying assets. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
On the qualifier path, cash-out terms are set by the lender and are not published. Do not plan around a specific figure there.
Assets are documented on both paths. “No income documentation” never means “no documentation.”
Some asset types are not published as eligible on either path. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds fall here. The documented route is converting them into a seasoned cash balance in a regulated account, with the source reviewed by the lender. Funds from custodial accounts, deferred compensation, escrow, foreign accounts, stock options and unvested restricted stock units are also excluded on the depletion path.
Credit still matters. Market surveys of HEI providers report credit floors near 500, per CNBC Select. The asset qualifier path starts at 600. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. A single 30-day late in the last twelve months is considered case by case, and multiple bankruptcies are not eligible.
How a Home Equity Investment Works
An HEI advances you a lump sum in exchange for a share of your home’s future value. The investor records a lien. There is typically no monthly payment. You settle through a sale, a refinance or a buyout, and CNBC Select reports that terms commonly run 10 to 30 years.
The federal consumer regulator’s Issue Spotlight on home equity contracts is the clearest neutral read on these products. It found they are often more expensive than traditional home-secured financing, even if the home loses value. It also found that settlement can require a single large payment, sometimes in the hundreds of thousands of dollars. Homeowners who cannot pay may be forced to sell or face foreclosure. Roughly 90% or more of customers had a first mortgage ahead of the contract. Some consumers reported trouble refinancing that first mortgage because the contract sat behind it.
Qualification leans on equity and appraised value. Income verification is minimal because there are no payments to support. You still maintain the home, pay taxes and insurance, and keep the first mortgage current.
Is an HEI a Loan? Nobody Has Settled That
Providers say an HEI is not a loan. In the same month it published the spotlight, the regulator filed an amicus brief arguing that the specific product in one lawsuit is a residential mortgage loan. A Mayer Brown analysis notes that its consumer advisory and spotlight focus on education and do not take a position on that question. The advisory warned that these companies may not give standard loan disclosures or do ability-to-repay underwriting. They may also include arbitration clauses.
Consumer advocates at the National Consumer Law Center argue HEIs work like home equity loans and reverse mortgages and deserve the same protections. That is an advocacy position, not a ruling. Treat the legal status as open, and read your contract with that in mind.
When an Asset-Based Mortgage Is the Better Fit
It is the stronger choice in these situations.
- You have big balances and thin documented income. A retiree living on a portfolio, a business sale or an inheritance often fails a paycheck-style income test. Assets can do the qualifying instead.
- You want to keep all the appreciation. No outside investor shares in the home’s future value.
- You are buying, not just tapping. A purchase or refinance of a primary home or second home fits both paths. An HEI is built around cash against a home you already own.
- You can handle a payment. If your portfolio comfortably supports one, a mortgage has a known structure and an end date.
- You want to keep the portfolio invested. You borrow against assets instead of selling them. The tradeoff is that the lender documents and seasons those assets.
The costs are real. You need substantial assets. You need seasoned statements. You take on debt with a monthly obligation, and the underwriting is individual. Programs change.
When a Home Equity Investment Is the Better Fit
An HEI earns a look in these situations.
- Your home is most of your wealth. You are equity-rich and asset-light, so you cannot meet either asset path’s balance tests.
- Monthly cash flow is the binding limit. No monthly payment can matter on a fixed income.
- Your credit is damaged. Market surveys report lower credit floors than a mortgage requires, though provider rules vary.
- You expect to sell or settle on a known horizon. A planned downsize or a home you expect to sell lines up with a settlement event.
Here is the catch. The settlement is a single large obligation. If you have no sale planned, you need a refinance, a buyout or cash on hand when the term ends. A first-mortgage refinance may be harder with an HEI lien behind it. The regulator found that cost is often higher than traditional financing, and appreciation is shared with an outside investor.
Compare with a reverse mortgage too. Per the regulator’s comparison, reported by HousingWire, reverse mortgages generally let you stay in the home until you die or move out. An HEI term ends on a fixed date.
Rentals, LLCs and Which Property You Are Tapping
The deciding question is often which property you are tapping.
For your own residence, both options can apply. For a rental held in an LLC, HEI providers commonly list LLC ownership as an exclusion, and many want owner-occupied homes. On the asset depletion path, an investment property is eligible at lower leverage: 65% on a purchase or rate-and-term refinance, and 60% on a cash-out.
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.
Key Terms Defined
Asset qualifier path: the route where eligible assets must equal or exceed the entire loan amount, with no income documented.
Asset depletion path: the route where usable assets divided by 60 months become qualifying monthly income.
Home equity investment (HEI): a contract where an investor advances cash and takes a share of the home’s future value at settlement.
Settlement: the point an HEI comes due, through a sale, refinance or buyout.
Loan-to-value (LTV): the loan amount as a percentage of the home’s appraised value.
Seasoning: the length of time funds must sit in an account before a lender counts them.
Debt-to-income: monthly debts compared with monthly qualifying income.
The Balanced Verdict
Choose the asset-based mortgage if you hold substantial, documentable balances and can carry a monthly obligation. It keeps appreciation with you and has a conventional structure.
Choose an HEI only after pricing it against the mortgage, if your home is your main asset and a payment is the obstacle. Plan for the settlement before you sign.
Some retirees fit neither. Plenty fit a reverse mortgage, a home equity line, a downsize or doing nothing. Ask each provider how the total cost is figured, what ends the contract and what happens to your heirs.
Frequently Asked Questions
Can I use both an asset-based mortgage and an HEI?
They can overlap, but it is a difficult sequence. An HEI records a lien that may interfere with a later refinance. Lendmire’s network is reviewed around one asset path at a time, and any existing lien is reviewed during underwriting.
Do retirement accounts count toward an asset-based mortgage?
Yes, with limits. On the qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age.
Does an asset-based mortgage need income documentation?
Not on the qualifier path, where no employment or income is documented. On the depletion path, assets become qualifying income that runs through the debt-to-income test. Assets are documented on both paths.
Is an HEI the same as a reverse mortgage?
No. A reverse mortgage generally lets you stay until you die or move out. An HEI has a fixed term and settles on a sale, refinance or buyout.
Where is Lendmire’s asset-based mortgage available?
Lendmire’s consumer mortgage lending covers 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Programs are placed through select lenders, subject to underwriting.
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. Reach the team at 828-256-2183.
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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References
1. CNBC Select on home equity sharing
2. CFPB Issue Spotlight: Home Equity Contracts
3. Mayer Brown analysis of the federal regulator’s home equity contract actions
4. National Consumer Law Center Issue Brief on shared equity
5. HousingWire on home equity contracts and reverse mortgage features
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can Equity in a Rental Property Help You Qualify for an Asset-Based Mortgage? · Does an Asset-Based Mortgage Require Reserves After Closing? · Can You Get an Asset-Based Mortgage on a Home in Another State?
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.