The Quick Read: Asset-based financing is reviewed around the balances in your accounts, bank statement financing is reviewed around the deposits flowing through them, and on a property worth under $150,000 the loan-size floor, not the documentation style, often decides which route is possible at all.
- Asset-based fits a borrower with large balances and little documented income, such as a retiree, a business seller or an inheritance recipient.
- Bank statement fits a self-employed borrower whose deposits are strong but whose tax returns understate the cash flow.
- Asset-based programs in our wholesale network have loan-amount floors and leverage limits that a low-value property can run into before assets ever matter.
- Bank statement programs are usually described with their own minimum loan sizes and minimum property values, which vary widely by lender.
- Both are fully underwritten. Neither one skips the review.
Who Each Option Is Really For
Pick asset-based if your wealth sits in accounts and your paycheck does not. Pick bank statement if your income is real, recurring and visible in deposits. That is the whole split: balance sheet versus cash flow.
Asset-based financing, as we place it through select lenders in our wholesale network, runs on two paths. On the asset qualifier path, your eligible assets must equal or exceed the entire loan amount. No employment or income is documented, which means no traditional personal-income documentation, pay stubs or employment verification. On the asset depletion path, eligible assets are divided by 60 months to produce a qualifying monthly income. That income then runs through the debt-to-income test. You are qualified on one path at a time, never a blend.
Bank statement financing, as the industry generally describes it, builds income from 12 or 24 months of personal or business statements. The underwriter averages eligible deposits, strips out transfers between your own accounts and one-time deposits, and applies an expense factor to business-account deposits. Your debts, including the new loan, are then tested against that income.
The catch for this topic is the property value. Because it is under $150,000, the order of questions changes: first ask whether the loan size the property supports clears the program’s floor, and only then which documentation style fits. The sections below walk through that check.
Side-by-Side
The asset-based column reflects the guidelines of select programs in our network. The bank statement column shows published industry norms, which differ from lender to lender.
| Factor | Asset-Based (our network) | Bank Statement (industry norms) |
|---|---|---|
| Review basis | Account balances, or assets turned into income | Average of eligible monthly deposits |
| Documentation | Asset statements; no traditional personal-income documentation or pay stubs | 12 or 24 months of statements |
| Test applied | Assets cover the loan, or debt-to-income on derived income | Debt-to-income on deposit-based income |
| Property use | Qualifier: primary or second home. Depletion: adds investment | Primary, second home or investment |
| Entity vesting | Set by program; confirm before applying | Often individual; varies by program |
| Cash-out leverage | Depletion: 60%. Qualifier: set by lender, not published | Lender-specific |
| Loan-size floor | Depletion: $125,000. Qualifier: no floor published | Lender-specific; ask for the minimum |
| Reserves | Qualifier: none at or below 75% LTV. Depletion: none published | Lender-specific |
| Seasoning | Qualifier: 60 days. Depletion: statements 120 days old plus one within 45 days | Statement history of 12 or 24 months |
Two rows deserve a second look. The loan-size floor matters most on a low-value property. The cash-out leverage row matters second, because a cap near 60% on a small value produces a small loan.
Key Terms Defined
Cash-out refinance: a new loan that pays off your current mortgage and gives you the leftover equity as cash.
LTV (loan-to-value): the loan amount divided by the property’s appraised value, shown as a percentage.
Asset qualifier path: the route where eligible assets must cover the entire loan, with no income documented.
Asset depletion path: the route where usable assets divided by 60 months become your monthly qualifying income.
Expense factor: the percentage a bank statement underwriter subtracts from business deposits to estimate what you actually keep.
Loan floor: the smallest loan amount a program will write, set by the lender, not by the property.
When Asset-Based Is the Better Fit
Asset-based wins when your balances are large and your documented income is thin or irregular. Typical borrowers are retirees living off a portfolio, people who sold a business, recipients of an inheritance or settlement, and early-retired professionals.
Here is how the credit works. On the qualifier path, brokerage accounts, certificates of deposit, money market and savings all count at 100%. Retirement accounts count at 90% if you are under 59½ and 100% once you reach 59½. On the depletion path, cash and certificates of deposit count at 100%, securities at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%. The qualifier path has a published credit floor of 600, subject to underwriting, and its cash-out leverage is set by the lender and not published.
Depletion arithmetic is simple. Say you hold securities that count at 80% and cash that counts at 100%, and together they total $1,500,000 of usable assets. Divide by 60 months and you get $25,000 of monthly qualifying income, which then carries the housing payment and other debts through the debt-to-income test. That is an illustration; the lender’s own calculation governs.
Asset-based also fits when bank statements would mislead. A retiree’s deposits are mostly transfers between their own accounts, which a bank statement underwriter screens out. A recent business seller may have a spike of proceeds and nothing before it. For those borrowers the asset path reads the file correctly.
Investment property is available only on the depletion path, which also covers primary and second homes. On that path the cash-out ceiling is 60% for all three property types, and an investment-property loan is business-purpose. Business-purpose financing is not a free pass, though. The federal business-purpose exemption covers credit for a business or commercial purpose, and a law-firm compliance paper cautions that business purpose does not mean compliance-exempt. Expect a real review either way. Details are on our asset-based mortgage programs page.
Two cautions apply to the sub-$150,000 case. The depletion path starts at $125,000, so a property that supports only a smaller loan at 60% cash-out falls short of the floor. And depletion requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance, never below $250,000 liquid when depletion is your only income source. A small loan does not shrink that second requirement much. This path is built for large balances against a modest property, not the reverse. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
When Bank Statement Is the Better Fit
Bank statement wins when your income is real and ongoing but does not show up cleanly on tax returns. The classic borrower is self-employed, with strong deposits, many write-offs and no pile of liquid assets to count.
The mechanics differ from asset-based in ways that matter. An underwriter totals eligible deposits across 12 or 24 months, removes transfers and one-time deposits, then reduces business-account deposits by an expense factor. The factor is lender-specific, and some lenders will adjust it with a letter from your CPA. Your debts and the new loan then go against that income in a debt-to-income test.
That structure helps in three situations.
- Strong deposits, modest savings: asset-based does nothing for you if your balances are thin, while deposits count for you here.
- A small or unstabilized property: the property’s rent barely enters a bank statement calculation, though value, occupancy and appraisal still apply. A low-value or vacant property can still be reviewed on your deposits.
- One borrower-based review across property types: industry descriptions say bank statement loans can be written on a primary home, a second home or an investment property, while asset-based investment-property financing is limited to the depletion path.
It also has a weakness. Every new loan stacks onto your personal debt-to-income ratio. An investor adding financed properties can hit that limit even with excellent deposits. Deposits are verified line by line, so this is not a documentation shortcut.
On low values, bank statement programs have loan floors and minimum property values of their own, and they vary widely. We cannot give you a single figure that holds across lenders. Ask any lender for the program’s minimum loan and minimum value before you spend money on an appraisal.
The Under-$150,000 Problem
On a low-value property, the loan floor usually fails before the documentation does. A modest equity percentage on a small value turns into a small loan. Small loans then run into fixed costs and program minimums.
Work through it in three steps.
1. Start with value and leverage. Take your expected value and apply the cash-out ceiling. On the asset depletion path, that ceiling is 60% for an investment property, a principal residence or a second home. The result is the largest new loan the property can support.
2. Subtract what you owe. Your payoff comes out of that new loan first. Cash to you is only what remains.
3. Compare the new loan to the floor. The depletion path starts at $125,000. On a value under $150,000, a 60% cash-out loan lands below that floor. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
So on the depletion path, a cash-out loan against a property under $150,000 does not fit the program’s published range. The qualifier path has a different problem: whether it allows cash-out proceeds, and at what leverage, is set by the lender and is not published, so a cash-out figure there would be a guess. What is published is the 75% ceiling on a refinance, subject to underwriting.
If you own the property free and clear, step two disappears and more of the new loan reaches you. That helps the cash-out amount but does not change the floor.
Cash-out proceeds also never count as qualifying assets on the depletion path. You cannot pull cash out and then use it to qualify for the same loan.
What to Do If the Loan Falls Below the Floor
Small files have options, and the right one depends on your situation.
- Ask a bank statement lender for its minimum loan and value. Floors vary by program. If your deposits are strong, a lender with low-balance guidelines may write the file, subject to underwriting.
- Consider a HELOC or second lien instead. A line of credit against the equity leaves your first mortgage alone, and it avoids the fixed costs of a full refinance on a small amount.
- Check whether a purchase-money structure fits. If you are buying rather than refinancing, the asset qualifier path allows up to 80% on a purchase, which changes the math.
- Look at rent-based financing for a rental. Business-purpose rental loans, known as DSCR loans, test whether the property’s rent covers its payment. They suit a rent-stable property and do not depend on your personal income or assets. Floors apply there too.
Finally, run the economics. Fixed closing costs weigh heavily on a small cash-out amount. If the cash you receive is modest, ask a broker to compare the full terms of each option before you commit to any of them.
Which Path Fits Which Situation
| Your situation | Likely route |
|---|---|
| Large liquid balances, little documented income | Asset-based |
| Self-employed with strong deposits, thin savings | Bank statement |
| Retiree whose deposits are mostly transfers | Asset-based |
| Property value well under the program floor | Smaller-loan option or HELOC |
| Investment property, financed on assets | Asset depletion path |
| Many financed properties already | Rent-based loan or asset-based |
Documents for Each Path
For asset-based on the qualifier path, expect two months of statements for every qualifying account and 60 days of seasoning. On the depletion path, expect statements at least 120 days old at application, plus the most recent statement within 45 days. Funds from the sale of a business, an inheritance or a legal settlement are excused from that seasoning.
For bank statement, expect 12 or 24 months of personal or business statements, along with an explanation of large or unusual deposits. A CPA letter may help if you want to support a lower expense factor.
Some assets do not count on any path we place. Privately held company stock is not an eligible asset on either path. A founder’s route is documented liquid assets: seasoned sale proceeds, cash, public securities and retirement accounts at their counted percentages. Cryptocurrency, precious metals, collectibles, pledged funds and borrowed funds are also not published as eligible. Converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender, is the documented route.
A Balanced Verdict
Neither option is the better one in the abstract. The better program for your situation depends on where your strength sits, in your accounts or in your deposits, and on whether your property supports a loan big enough to clear the floor.
If your wealth is in balances and your income is light, asset-based fits, and the depletion path is the one that reaches an investment property. If your income is strong and visible in deposits, bank statement fits, and its loan-size floors are worth asking about before you proceed. On a property under $150,000, check the floor first, because a file that misses it does not reach underwriting.
The asset-based program is available through select lenders in our network across 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. All terms are subject to underwriting, and none of the figures here is an offer.
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. You can reach the team at 828-256-2183.
Frequently Asked Questions
Can I qualify under both options at once?
A single loan is underwritten on one basis at a time. On the asset side, you are qualified on either the qualifier path or the depletion path, never a blend. A broker can run your file against both an asset-based program and a bank statement program, then compare which one fits your documents and leverage, subject to each lender’s guidelines.
Does my home equity count as an asset?
It counts only on the asset depletion path, where real-estate equity counts at 60%. The other depletion categories count at higher percentages: cash and certificates of deposit at 100%, securities at 80% and retirement accounts at 70%. Equity is not listed among the qualifier path’s eligible assets.
I own shares in a private company. Do they count?
No. If you sell or are bought out, the documented route is the seasoned cash proceeds, which count at 100% as cash. Sale-of-business funds are excused from the depletion path’s statement-age requirement.
Do my cash-out proceeds count toward qualifying?
No. On the depletion path, cash-out proceeds never count as qualifying assets. You qualify on assets you already hold, separate from the loan you are applying for.
What if the loan I can get is below the program’s minimum?
Then that program is not a fit, and the file should move to another option. The asset depletion path starts at $125,000. Bank statement lenders set their own minimums, so ask each one directly. A HELOC, a second lien or a rent-based loan may suit a small amount better, depending on your property and goals.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Regulation Z § 1026.3, business-purpose exemption (CFPB)
2. Beware of “Business Purpose”
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 Lenders Underwrite an Asset-Based Cash-Out Refinance at 60% Loan-to-Value · Best Asset-Based Cash-Out Refinance Program After Your Home Value Jumps · Asset-Based Cash-Out Refinance vs Bank Statement Cash-Out Refinance for Retirees
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.