The Quick Read: Asset depletion tends to beat a conventional mortgage when your portfolio is large, your documented income is low, and the loan is for a home you will live in, because eligible assets can be turned into qualifying income while a conventional loan may fail the debt-to-income test. For a rental property, DSCR usually fits better, because it qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
- Asset depletion wins on a primary or second home when assets are big and paycheck-style income is thin.
- Conventional wins when pension, Social Security and required distributions already clear the income test.
- Rentals belong in a different lane. Retirement balances then work as reserves, not as income.
- Two asset paths exist, and you qualify on one at a time. Leverage and asset credit differ sharply between them.
- Texas adds a homestead wrinkle that affects cash-out loans on your own home but not on a rental.
Key Terms Defined
Debt-to-income ratio (DTI): the share of your monthly income that goes to your housing payment and other debts.
Asset qualifier path: a program in which eligible assets, after the credit percentages, must equal or exceed the whole loan. No employment or income is documented.
Asset depletion path: a program that converts eligible assets into monthly qualifying income, which then runs through the DTI test.
Haircut: the share of an account’s balance a lender refuses to count. A 30% haircut means 70 cents on the dollar counts.
Seasoning: how long funds must sit in your accounts before a lender will count them.
DSCR: debt service coverage ratio. It compares a rental’s monthly rent to its full monthly obligation.
What Does Asset Depletion Actually Do?
Asset depletion lets a lender look at what you own instead of what you earn. Nothing is sold, pledged or drained. The lender counts a share of your balances and either compares them to the loan or converts them into notional monthly income.
Through select programs in Lendmire’s wholesale network, there are two versions. Most files we place fit one or the other, and the two never blend.
On the asset qualifier path, eligible assets must cover the entire loan amount. No employment or income is documented. Loans run up to $4,000,000, subject to underwriting.
On the asset depletion path, usable assets are divided by 60 months. The result becomes monthly income, and that income must carry the housing payment and other debts through the DTI test. Loans run from $125,000 to $3,500,000.
Neither path means no documentation. Your statements are reviewed closely. Only the income paperwork goes away on the qualifier path, and on the depletion path it is replaced by asset math.
When Does a Conventional Mortgage Win?
Conventional wins when your documented income already clears the DTI test. A Texas retiree with a pension, Social Security and regular required distributions often fits that description. If the paperwork works, there is little reason to add a second qualification method.
Conventional can also win on simplicity. Your income documents carry the file, and your portfolio stays in the background. Pricing on asset-based products differs from conventional pricing, so compare full terms side by side before you decide. Nothing here quotes a price, because every file is priced individually.
The problem shows up with retirees whose portfolios are large but whose reported income is modest. Interest, dividends and distributions may be reported low on purpose. Conventional underwriting reads that as a weak income story, however much sits in the accounts.
When Does Asset Depletion Beat It?
Asset depletion beats conventional in four situations.
1. Low reported income, large portfolio. The balance sheet becomes the qualifying engine instead of the tax return.
2. A conventional file fails on DTI. Converting assets to income can change the ratio.
3. A cash purchase would drain you. You can keep your portfolio invested and still borrow.
4. You want to qualify personally. The loan is for a home you will live in, not a business.
The sanctioned math shows the mechanics. Say you hold $1,500,000 in securities, counted at 80%, which is $1,200,000. You also hold $300,000 in cash, counted at 100%. That is $1,500,000 of usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the DTI test. This is illustrative, and the lender’s own calculation governs.
Compare that with the qualifier path. An $800,000 loan with $330,000 in brokerage accounts (100%), $300,000 in a 401(k) under age 59½ (90%, or $270,000) and $200,000 in savings (100%) counts $800,000 of usable assets. It is reviewed on assets alone, subject to underwriting.
How Do the Two Programs Compare Head to Head?
The table below sets the asset depletion path against an income-based conventional loan. Agency-style conventional rules are described as those programs’ rules, not ours.
| Factor | Asset depletion path | Conventional (income-based) |
|---|---|---|
| Income treatment | Assets ÷ 60 months | Pay, pension, Social Security |
| Occupancy | Primary, second home, investment | Varies by program |
| Retirement accounts | Counted at 70% at any age | Usually income from distributions |
| Leverage (primary/second, purchase) | Up to 80% | Set by the conventional program |
| Cash-out (primary/second) | Up to 60% | Set by the conventional program |
| Documents | Asset statements, seasoned | Income and tax documents |
Fannie Mae offers a narrow version of asset-based qualifying. Its Selling Guide topic on employment-related assets limits it to purchases and limited cash-out refinances on principal residences and second homes. Investment properties are not eligible. Fannie Mae’s maximum LTV on that option is 70%, or 80% when the asset owner is at least 62 at closing. Any penalty that would apply to a full distribution is subtracted. That is Fannie Mae’s rule, not the rule of the programs described here.
The network figures differ. On the depletion path, investment property carries up to 65% LTV on a purchase or rate-and-term refinance and 60% on a cash-out. The agency option closes the door on investment property altogether. This is why a retiree comparing “conventional asset depletion” with a network program often finds the network program is the only one that reaches the property in mind.
How Do Different Assets Count?
Asset credit is where portfolios shrink on paper. Plan on haircuts, then check the math before you shop for a house.
On the asset qualifier path, brokerage accounts, certificates of deposit, money market and savings count at 100%. A 401(k) or IRA counts at 90% under age 59½ and at 100% from 59½ on. Accounts combine.
On the asset depletion path, 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%. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units are not eligible.
Age 59½ matters because early retirement withdrawals generally carry a 10% additional tax, per the IRS guidance on early withdrawals, so tax treatment varies and a qualified professional should review your situation. On the qualifier path, that age line moves your credit from 90% to 100%. On the depletion path, it changes nothing.
Cryptocurrency, precious metals, collectibles 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 source reviewed by the lender.
What Are the Seasoning and Credit Rules?
Seasoning is where recent moves can cost you. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants 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.
Credit follows each path’s own rules. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix for score and loan amount. A first-time investor on the depletion path needs 700.
Housing history is typically 0x30x12, although one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. A housing event needs 4 years of seasoning on the depletion path.
The depletion path also has asset minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never fall below $250,000 liquid when asset depletion is your only income source. If asset-derived income only supplements documented income, it can do so up to a 45% DTI, and the minimum-assets rule is waived.
Cash-out proceeds never count as qualifying assets. Reserves are not required on the qualifier path at or below 75% LTV, and above that the lender sets them. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Rentals Are a Different Lane
Asset depletion is a personal-income product, and a rental is a business decision. A retiree adding a duplex or fourplex is a natural DSCR borrower. 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.
The test is whether rent covers the full monthly obligation. Your portfolio still matters, but it shows up as reserves and proof of funds, not as income math. Programs below 1.00 coverage are available through select lenders in the network, with leverage and terms adjusted accordingly.
Vacancy lands harder on a retiree. With no paycheck behind the property, an empty month comes straight out of the portfolio. Reserves should run deeper than any published minimum suggests.
Some retirees use both tools. DSCR covers the cash-flowing rentals, while asset depletion fits a primary residence or second home. Asset depletion can also work for an investment property when rent is thin, subject to the 65% and 60% ceilings above. The complete DSCR loans guide covers the rental side in depth.
What Changes for a Texas Retiree?
Texas matters most for cash-out on your own home. A home-equity loan on a Texas homestead carries an 80% combined LTV cap, according to Refiguide’s Texas cash-out overview. The same source notes that an investment property you do not occupy is not a homestead, so those limits do not apply to it. Verify the details against the current Texas Constitution before you rely on any number.
For the asset-based program, the practical result is simple. On the depletion path, cash-out on a principal residence or second home tops out at 60%, which is tighter than the Texas homestead cap. The program ceiling is the one that binds. A DSCR cash-out on a non-homestead rental follows the investor program instead.
Lendmire’s consumer mortgage lending is licensed in 16 states, Texas among them. The program figures here do not change by state, and each file is reviewed individually.
Co-ownership deserves a conversation early. Assets generally need to sit in the borrower’s own name, and the lender decides how joint accounts are treated. If a spouse’s account carries part of the weight, raise it before you apply.
Three Texas Retiree Scenarios
Conventional wins. Picture a retired couple with a pension, Social Security and steady distributions. Their income clears the DTI test with room to spare. Asset depletion would add haircuts and a second set of statements for no benefit. They take the conventional route.
Asset depletion wins. Consider a retiree who sold a business and holds most of the proceeds in brokerage accounts and cash. Reported income is low because the money sits in investments. A conventional lender sees a thin income story. On the depletion path, the sale proceeds are excused from seasoning, the portfolio becomes monthly qualifying income, and the file clears on the program’s math, subject to underwriting.
A split wins. Run the numbers on a retiree who wants to buy a retirement home and add a rental. The home goes on an asset-based mortgage. The rental goes on DSCR, where rent coverage, not paycheck income, is the test. The portfolio shows up on the home loan as qualifying assets and on the rental as reserves.
How Do You Weigh Pricing Against the Alternatives?
Weigh the asset-based loan against what it replaces. The alternatives are paying cash, selling positions, or pulling retirement money early. Each costs something that never appears on a mortgage statement.
Selling positions can mean giving up growth you planned to keep. Early retirement withdrawals can trigger the tax described above. A cash purchase can leave you short of liquidity when a roof or a medical bill arrives.
Asset-based pricing differs from conventional pricing, and this page quotes none. The Loan Estimate on a consumer mortgage lays out the full terms. Compare it against your estimate of what liquidating would cost, and decide whether keeping the portfolio intact is worth the difference.
Honest limits belong in the decision too. Haircuts shrink your income figure relative to total assets, which caps how much you can borrow. A falling market can push balances toward the minimums. If your income already qualifies you conventionally, you can skip this path.
Documents to Gather
- Statements for every qualifying account, matching the seasoning rules for the path you choose.
- Evidence for any large deposit, including sale, inheritance or settlement paperwork.
- A plan to convert any ineligible assets, such as cryptocurrency, into a seasoned cash balance in a regulated account.
- Your credit information and housing history.
- The property details and a clear plan for how you will occupy it.
On very large loans, appraisal requirements can change.
Frequently Asked Questions
Do I have to sell my investments to qualify?
No. Nothing is sold, pledged or drained. The lender counts a share of your balances under the path’s percentages, and you keep the investments. Statements are reviewed, and the assets must meet the seasoning rules for the path.
Can IRA and 401(k) balances count?
Yes, at a discount. On the asset qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the asset depletion path, they count at 70% at any age. Both are subject to underwriting.
Can I refinance with asset depletion?
Yes. On the qualifier path, refinances reach 75% LTV on a principal residence or second home. On the depletion path, a rate-and-term refinance reaches 80% and a cash-out reaches 60% on those same properties. Investment property is limited to 65% and 60%. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
What if my portfolio drops mid-application?
Balances are reviewed as of the statements the lender uses, so a drop can shrink your usable assets and your qualifying income. Depletion-path minimums, including the $250,000 liquid floor, still apply. Keep a cushion above the minimum rather than building a file that clears by a thin margin.
Can I use asset depletion for a rental instead of DSCR?
You can on the depletion path, with investment property at 65% on a purchase and 60% on a cash-out. For most retirees buying rentals, DSCR is the better fit because it qualifies primarily on rental income covering the payment, subject to lender guidelines. Your portfolio then supports reserves rather than the income test.
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.
Texas retirees often find the real deciding factor is the property itself: a home you will live in points one direction, and a rental you will hold points the other.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide: Employment-Related Assets as Qualifying Income
2. IRS: Hardships, Early Withdrawals and Loans
3. Refiguide: Texas Cash-Out Refinance
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 Dissipation vs Asset Depletion Mortgage: Same Loan, Different Name? · Can You Get an Asset Depletion Mortgage After a Foreclosure or Short Sale? · Structured Settlement Payments vs Asset Depletion Income for a Mortgage
Guides: Asset-Based Mortgage in Texas
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.