The Quick Read: Usually when the retiree holds a large pool of liquid assets, documents little reportable income, and is buying a home to live in, because a conventional lender then has no paycheck to divide the payment against while an asset-based file does. Conventional still wins when pension, Social Security and distributions clear the debt-to-income test on their own.
- Asset qualifier path: eligible assets must cover the entire loan, and no income is documented.
- Asset depletion path: usable assets divided by 60 months become qualifying income, which then runs through the debt-to-income test.
- A borrower is qualified on one path at a time, subject to underwriting.
- The assets stay in the accounts. Nothing is sold.
- A pure rental purchase usually belongs in a DSCR file, not an asset-based mortgage.
Virginia is a reader persona here, not a rule change. The program figures below are the same in every state where the consumer program is offered, and Virginia is one of the 16 states where Lendmire’s consumer lending is licensed. Lendmire is the broker. Select lenders in its network review each file.
The Short Answer: A Decision Rule
Pick asset-based qualification when documented income fails the debt-to-income test but the portfolio is large. Pick conventional when documented income clears.
Picture a retired couple in the Richmond suburbs. Social Security and a small pension are modest. The brokerage and savings accounts are large. A conventional lender counts the income, divides the payment into it, and the ratio fails. The wealth never enters the math. That is the exact gap asset-based programs fill.
Now reverse it. A retiree with a healthy pension, Social Security and steady required distributions often clears conventional without any special structure. Extra documentation on an asset-based file buys nothing there.
Here is the quick split:
- Choose asset-based if: income is thin on paper, balances are large, and the property is a primary residence or second home.
- Choose conventional if: documented retirement income carries the payment with room to spare.
- Choose DSCR if: the property is a rental and the rent can cover the full monthly obligation.
How Does a Portfolio Become Qualifying Income?
It happens on one of two paths, and the paths never blend.
The asset qualifier path is the simpler one. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. The lender’s ability-to-repay review rests on the assets.
The asset depletion path converts assets into income. Usable assets, after haircuts, are divided by 60 months. The result is monthly qualifying income. That income must carry the housing payment and other debts through the debt-to-income test.
Two illustrations, using the network’s percentages. Both are illustrative, and the lender’s own calculation governs.
Qualifier path: an $800,000 loan with $330,000 in brokerage accounts (100% = $330,000), $300,000 in a 401(k) under 59½ (90% = $270,000) and $200,000 in savings (100% = $200,000) counts $800,000 of usable assets and is reviewed on assets alone.
Depletion path: $1,500,000 in securities (80% = $1,200,000) plus $300,000 in cash (100% = $300,000) is $1,500,000 usable. Divided by 60 months, that is $25,000 of monthly qualifying income, which then carries the housing payment and other debts through the debt-to-income test.
The divisor matters. Across the wholesale network, most programs use a 60-month divisor on this product, and a longer divisor would shrink the same pile into a much smaller income.
Which Assets Count, and How Much?
The two paths treat the same account differently. Name the path every time you read a percentage.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | Cash accounts 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage / securities | 100% | 80% |
| Private stock | Not listed | 75% |
| 401(k) / IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Real-estate equity | Not listed | 60% |
Not eligible on the depletion path: custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, and funds from non-regulated financial companies.
Crypto, precious metals, collectibles, and borrowed or pledged 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.
Retirees feel the retirement-account line most. The qualifier path is kinder: a 401(k) counts at 90% under 59½ and 100% after. The depletion path takes 70% regardless of age. For a retiree over 59½ with most of the wealth in an IRA, the qualifier path can be far friendlier, if the loan is small enough for the assets to cover it whole.
How a Conventional Lender Sees the Same Retiree
A conventional file asks for income, then divides the payment into it. Retirement income counts when it is documented and likely to continue. Portfolio wealth that does not produce documented income does not count.
Agency rules do have a narrow asset route. A mortgage-insurer training deck on assets as a basis for repayment describes Fannie Mae’s version: the assets must be employment-related, such as retirement accounts or lump-sum distributions, and checking and savings are generally not eligible unless funded from such a source. That is the agency’s rule, not this program’s. It is narrower than what non-QM asset programs allow.
The reason asset-based files exist on consumer loans is that the federal ability-to-repay rule lets a lender rely on assets. The CFPB’s compliance guide says a creditor must consider current or reasonably expected income or assets other than the dwelling that secures the loan, and must verify them with reasonably reliable third-party records. Assets can stand in for a paycheck. They still get documented.
Three Hypothetical Retiree Files
These are modeled profiles, not market data.
| Profile | Likely fit | Why |
|---|---|---|
| Strong pension plus Social Security, modest savings | Conventional | Income clears the ratio without conversion |
| Large brokerage and cash, little income, loan under the asset total | Asset qualifier | Assets cover the whole loan |
| Large portfolio, loan bigger than usable assets, some income | Asset depletion | Derived income supplements or replaces |
Take the second profile. A retiree sells a business and holds seasoned brokerage and savings balances. The loan is smaller than the usable total. The qualifier path asks for no income documentation at all, only the assets. On a purchase, leverage goes up to 80% on a principal residence or second home, subject to underwriting.
Take the third. The borrower’s usable assets cannot cover the loan outright, so the file runs on the depletion path. Leverage on a principal residence or second home goes up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Asset-derived income may also supplement documented income up to a 45% debt-to-income ratio, and when it supplements, the minimum-assets rule is waived.
When Conventional Still Wins
Stay conventional when documented income clears the test. The asset-based file asks for more statements, tighter seasoning and leverage limits that vary by path. If a retiree already is reviewed on pension, Social Security and distributions, the extra structure adds friction and no benefit.
Conventional also tends to win when the loan is large relative to what the depletion math can produce. Check the minimums. On the depletion path, qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is the only income source. A retiree under those floors does not fit that path.
Use the qualifier path for a loan up to $4,000,000. Use the depletion path for loans from $125,000 to $3,500,000. Both are ceilings and floors, not offers.
Does It Cost More Than Selling Assets?
Compare the structure, not a sticker price. Selling investments to fund a purchase can trigger capital gains, or ordinary income on retirement withdrawals, and it removes that money from future growth. An asset-based mortgage leaves the portfolio in place. The tradeoff is carrying a loan against it. Which is cheaper depends on cost basis, account type and the borrower’s plans. Tax treatment varies; consult a qualified professional before relying on any outcome.
The Rental Property Exception
A retiree who wants to buy a rental should usually look at DSCR rather than at either of these. 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. A DSCR file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers that path.
The regulatory line sits in the loan’s purpose. Under Regulation Z’s business-purpose exemption, credit extended primarily for a business or commercial purpose falls outside the consumer rules. Purpose is a facts-and-circumstances call, not a label. A beach house the retiree will actually use is a personal-purpose purchase, so the asset-based consumer route is the one that applies.
Asset-based mortgages can include investment property on the depletion path only, at up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Each added loan still runs through personal debt-to-income. DSCR files generally do not, which is why they scale better for someone adding properties.
Many retirees use both: DSCR for cash-flowing rentals, an asset-based file for a personal home. The same assets cannot be double-counted, so sequencing matters.
Key Terms Defined
Asset qualifier path: Qualifying on assets alone, where usable assets must equal or exceed the whole loan.
Asset depletion path: Converting usable assets to monthly income by dividing by 60 months, then running the debt-to-income test.
Haircut: The share of an account’s balance that is not counted, because the asset is volatile or penalty-bearing.
Seasoning: The time funds must sit in an account before they count.
Debt-to-income ratio: Monthly debts, including the new housing payment, divided by monthly qualifying income.
DSCR: The rent a property earns divided by its full monthly obligation, used on business-purpose rental loans.
Failure Points on These Files
Most problems are documentation, not math.
- Seasoning. 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. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning. A deposit that moved last month is a question mark. Lendmire’s piece Bank Statement vs Conventional Mortgage When Deposits Shifted Recently covers a related problem.
- Wrong asset class. Crypto, metals and business accounts are not published as eligible. Convert and season them first.
- Committed funds. Money needed for the down payment and closing costs cannot be counted twice. Count what remains.
- Credit. The qualifier path’s floor is 600. The depletion path follows the lender’s matrix, and a first-time investor there needs 700. Housing history is 0x30x12, with one 30-day late in the last twelve months considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
- Reserves. The qualifier path requires none at or below 75% loan-to-value, and above that the lender sets them. The depletion path publishes no reserve months.
- Market drawdown. Securities swing in value. A statement that is 120 days old on the depletion path may not match today’s balance.
These are not no-documentation loans. The assets are fully documented on both paths. What changes is that income is not.
A Practical Checklist
1. Pull the most recent statements for every account you plan to count, with two months of history for each.
2. Sort the assets into the path you expect, using the percentages above.
3. Subtract the down payment, closing costs and any funds you need to hold back.
4. Decide whether the loan is smaller than the usable total (qualifier path) or needs income conversion (depletion path).
5. Confirm the property is a home you will occupy, or a second home. Rental buyers should compare DSCR.
6. Expect TRID disclosures, because this is a consumer mortgage.
Program details are subject to underwriting and change. Figures here are typical ranges through select programs in the network, not a commitment to lend.
Frequently Asked Questions
Do I have to sell my investments to qualify?
No. The assets stay in the accounts on both paths. The lender reviews statements, applies the credit percentages, and either compares the total to the loan or converts it to income. Funds you commit to the down payment and closing costs are removed from the count first.
Can a Virginia retiree use this for a second home?
Yes, subject to underwriting. Principal residences and second homes both fit the program, with up to 80% leverage on a purchase on either path (and 75% on a refinance on the qualifier path). Virginia taxes, insurance and local prices are context for your budget, not program rules. The parameters do not change by state. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Is a 401(k) or IRA worth counting?
Yes, but the path changes the value. On the qualifier path, retirement balances count at 90% under 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. A retiree with mostly retirement money often does better on the qualifier path when the loan is within reach.
Can I use asset depletion to buy a rental?
It is possible on the depletion path, at up to 65% on an investment-property purchase, but it runs through personal debt-to-income and is usually a poorer fit than DSCR. A rental that covers its payment generally belongs in a DSCR file, which qualifies primarily on property rent, subject to lender guidelines. For a very large portfolio paired with a thin-rent rental, asset depletion can be the stronger choice.
Does a large loan need a second appraisal?
It can, since loans on the qualifier path go up to $4,000,000 and appraisal requirements rise with loan size.
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’s asset-based mortgage in Virginia page presents the program for Virginia borrowers.
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. Enact MI training deck: Assets as a Basis for Repayment
2. CFPB ATR/QM Small Entity Compliance Guide
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 Depletion vs Bank Statement HELOC for a Retiree · Does a Retiree Using Asset Depletion Need a Super Jumbo Loan? · How a Margin Balance Is Treated on an Asset Depletion Mortgage
Guides: Asset-Based Mortgage in Virginia
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.