The Quick Read: An asset depletion mortgage qualifies you for a purchase or refinance by counting your savings and investments, while a HELOC is a credit line secured by your home’s equity, so one answers an income problem and the other answers a cash-access problem. Which one fits depends on whether your bottleneck is documented income or access to equity.
- An asset-based mortgage is a qualification method for a loan. A HELOC (home equity line of credit) is a revolving credit product.
- On a home with no mortgage, a HELOC would be the only lien, and the home is the collateral.
- Asset-based mortgages come in two paths: assets cover the whole loan, or assets are converted into monthly qualifying income.
- The two can work together, but the lender on the mortgage decides whether borrowed funds count.
Here is the honest answer. An asset depletion mortgage is for the borrower who has large balances, little documented income, and a property to buy or refinance. Retirees, people who sold a business, and households living on a portfolio fit this profile. A HELOC is for the owner of a paid-off home who wants flexible access to cash and is comfortable putting that home back on the line. These are not rivals in the usual sense. One finances a property using assets. The other borrows against a property you already own free and clear.
Side-by-Side
The table compares the asset-based mortgage as placed through select lenders in Lendmire’s wholesale network with a HELOC as described by published industry norms. Every program item is subject to underwriting, and the HELOC column reflects typical market practice, not any single lender’s terms.
| Factor | Asset Depletion Mortgage | HELOC (industry norms) |
|---|---|---|
| What it is | Qualification method for a mortgage | Revolving line secured by the home |
| Review basis | Eligible assets, or assets turned into income | Equity, credit, and income review |
| Documentation | Asset statements; income not documented on one path | Appraisal, credit, usually income |
| Property types | Primary, second home; investment on depletion path | Primary most common; rentals have fewer lenders |
| Entity vesting | Individual borrowers on a consumer loan | Individual ownership generally expected |
| Process | Full underwriting plus seasoned statements | Appraisal and credit review; varies by lender |
| Reserves | None at 75% LTV or less (qualifier path) | Lender-set; varies |
| Main risk | Assets tied up in the calculation | Home at risk; line can be frozen or cut |
Key Terms Defined
Asset qualifier path: The path where eligible assets, after credit percentages, must equal or exceed the entire loan amount, and no employment or income is documented.
Asset depletion path: The path where usable assets are divided by 60 months to create qualifying monthly income, which then runs through the debt-to-income test.
Debt-to-income (DTI): The share of monthly income that goes to housing and other debts.
Haircut: The discount applied to an asset type, so only part of the balance counts.
Seasoning: The period an asset must sit in your account, shown on statements, before the lender counts it.
Draw period: The stretch of a HELOC’s life when you can borrow up to your limit.
LTV (loan-to-value): The loan amount as a percentage of the property’s value.
When an Asset Depletion Mortgage Is the Better Fit
Choose this route when your problem is income, not equity. Your balances are large, your traditional personal-income documentation or pay records are thin, and you need a loan to buy or refinance a property. Across our wholesale network, this is the situation asset-based programs were built for.
Path one: assets cover the loan. On the asset qualifier path, your eligible assets, after credit percentages, must equal or exceed the whole loan amount. Brokerage accounts, certificates of deposit, money market and savings count at 100%. Retirement accounts count at 90% under age 59½ and 100% at 59½ or older. Accounts combine.
Here is the sanctioned illustration, subject to underwriting. An $800,000 loan is backed by $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). That is $800,000 of usable assets, and the loan is reviewed on assets alone. The lender’s own calculation governs.
Leverage on this path goes up to 80% LTV on a purchase and 75% on a refinance of a principal residence or second home. Loans run up to $4,000,000. The published credit floor is 600. Reserves are not required at or below 75% LTV, and above that the lender sets them. Whether cash-out is allowed on this path is the lender’s call and is not published, so do not plan around it. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Path two: assets become income. On the asset depletion path, usable assets divided by 60 months become monthly qualifying income. That income must carry the full housing payment and your other debts through the debt-to-income test. Cash accounts and certificates of deposit count at 100%, securities at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Take $1,500,000 in securities (80% counts, so $1,200,000) plus $300,000 in cash (100%). That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That figure then has to cover the housing payment and other debts, subject to underwriting.
Equity in the home you are financing cannot be counted as an asset on this path. Equity in other real estate can be, at the 60% haircut.
Leverage on the depletion path is higher for a home you live in or use as a second home, and lower for a rental. On a principal residence or second home it goes up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Cash-out proceeds never count as qualifying assets. Loans run from $125,000 to $3,500,000, and credit follows the lender’s matrix. A first-time investor on this path needs a 700 score.
The depletion path also has minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never be below $250,000 in liquid assets when asset depletion is your only income source. If asset income only supplements documented income, up to a 45% debt-to-income ratio, the minimum-assets rule is waived.
Seasoning and what does not count. The qualifier path wants 60 days of seasoning and two months of statements per 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.
Some assets are not eligible on the depletion path. These include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, privately held stock, stock options, non-vested restricted stock units, and funds from non-regulated financial companies. Cryptocurrency, 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.
Notice what this is not. It is not no documentation. Your assets are documented on both paths. Only personal income documentation drops away on the qualifier path.
If the property is a pure rental. Asset-based mortgages are consumer loans. If you are buying a rental and the property’s income can carry the payment, a business-purpose investor loan may fit better. The program qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide walks through that route.
When a HELOC Is the Better Fit
Choose a HELOC when your problem is access to cash, not qualification for a new loan. You own a home outright, you want flexible funds, and you can handle a new lien on the property.
The CFPB describes a HELOC as an open-end line that lets you borrow repeatedly against home equity. It defines equity as the home’s value minus what you owe. On a paid-off home, that means the whole value is available as equity, up to the lender’s limits. The CFPB gives 10 years as an example draw period.
Several things make a HELOC attractive here:
- You draw only what you need. There is no lump sum to take on day one.
- You are not buying anything. There is no new purchase to underwrite.
- Your portfolio stays untouched. Nothing in your accounts is counted or tied to the calculation.
- The home is the only collateral. There is no existing mortgage to refinance around.
The catches are real. The CFPB cautions that falling behind could cost you the home. Its HELOC booklet says lenders can generally freeze or reduce a line if the home’s value falls or your finances worsen. A line you counted on for a down payment can shrink at the wrong moment. The booklet also notes that renting out a home may be prohibited under a line’s terms, so check this before using a primary-residence HELOC if the property will become a rental.
Income review can be the wall. HELOC lenders typically review credit and income as well as equity. A retiree with big balances, huge equity, and little documented income can hit that wall. That is exactly where an asset-based mortgage can still work.
Rentals are a narrower lane. NerdWallet says a HELOC on an investment property is possible but offered by fewer lenders, with smaller lines than against a primary home. It reports typical credit scores of 620 or higher for a primary-home HELOC and 720 or higher for an investment-property HELOC. Those are market-survey figures, not network terms. For comparison, the network’s asset qualifier path publishes a 600 credit floor, and the depletion path follows the lender’s matrix. NerdWallet also says that after the draw period you can no longer borrow, and you repay principal and interest over a term typically running up to 20 years.
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.
For more on the retiree angle, see Lendmire’s piece HELOC vs Asset-Based Loan for a Retiree With a Paid-Off Home.
Can the Two Work Together?
Yes, with a caveat. A HELOC supplies cash, and a separate loan buys the property. The second lender decides whether borrowed funds are acceptable as a down payment or as reserves.
On the asset-based programs described here, borrowed and pledged funds are not published as eligible assets. A HELOC draw sitting in your account is borrowed money, and the lender will trace it. Ask before you draw. Lendmire’s piece First-Lien HELOC vs New Mortgage on a Paid-Off Home covers the lien side of this question.
Which Path Fits Which Profile
Run these three borrowers through the choice. All three are qualitative sketches.
- Large portfolio, modest equity. This borrower is retired, holds most wealth in brokerage and savings, and owns a smaller home. Assets cover most or all of a new loan, so the qualifier path or the depletion path fits. A HELOC would offer little because the equity is small.
- Large equity, thin portfolio. This borrower owns a valuable paid-off home but has few liquid assets. The depletion path’s $250,000 liquid minimum may not work. A HELOC is the more natural tool, if the lender’s credit and income review can be met.
- Both. This borrower has real balances and a paid-off home. The decision turns on the goal. A new purchase leans toward an asset-based mortgage. A flexible cash reserve leans toward a HELOC. Taking equity out through the depletion path’s cash-out refinance on a principal residence or second home tops out at 60% LTV, and proceeds can’t count as qualifying assets.
What to Protect During Underwriting
Asset-based files live and die on statements. A few habits help:
- Keep counted accounts where they are, with their full history.
- Avoid large transfers between accounts. Each move needs an explanation.
- Do not spend down balances you need for the coverage figure.
- Do not borrow against counted accounts.
- Do not open a HELOC and deposit the draw into a counted account without asking the lender first.
The Verdict
Pick the asset depletion mortgage when you need a loan and your assets are your income. Pick the HELOC when you already own the home, want flexible cash, and can accept the lien risk. Pick neither until you know whether the money is for a property purchase, a refinance, or a reserve.
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 places these loans in 16 states, subject to program availability, through select lenders in its wholesale network. Nothing here is a commitment to lend, and every file is underwritten individually.
Frequently Asked Questions
Is an asset depletion mortgage the same as a HELOC?
No. An asset depletion mortgage is a way to qualify for a purchase or refinance by counting assets. A HELOC is a revolving credit line secured by home equity. One decides what income or assets support a loan. The other decides how much equity you can borrow against.
Can I get a HELOC if I have large savings but little income?
Sometimes, but it depends on the lender. HELOC lenders typically review credit and income as well as equity, so thin documented income can limit the options. If income is the obstacle, an asset-based mortgage may be the better tool, subject to underwriting.
Do retirement accounts count toward qualifying?
Yes, with percentages. On the asset qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older. On the asset depletion path, retirement accounts count at 70% at any age. Both paths require statements, and the lender’s calculation governs.
Do I have to sell my investments?
No. The assets stay in your accounts. They are documented and counted, not liquidated. You should avoid spending them down or moving them around during underwriting, because the balances support the coverage figure.
Can I use asset depletion to refinance a paid-off home?
Yes, through select programs. On a principal residence or second home, the depletion path goes up to 80% LTV on a rate-and-term refinance and 60% LTV on a cash-out. The qualifier path goes up to 75% LTV on a refinance, with cash-out left to the lender. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
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. CFPB – What is a home equity line of credit (HELOC)?
2. CFPB – What you should know about home equity lines of credit (booklet)
3. NerdWallet – Can you get a HELOC on an investment property?
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 Asset Depletion Mortgage Eligible Assets Work for Rental Investors · Asset Depletion vs Bank Statement HELOC for the Self-Employed · Asset Depletion vs Bank Statement HELOC for an Owner Between Businesses
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.