The Quick Read: Asset depletion is reviewed against turning eligible assets into monthly income that runs through a debt-to-income test, while a DSCR loan is reviewed for the rental by comparing its rent to its own payment, so your choice depends on your assets, the rent, and how you want to hold title.
- Asset depletion is a consumer-style loan that tests you. DSCR is a business-purpose investor loan that tests the property.
- On Lendmire’s asset depletion path, an investment property is limited to 65% loan-to-value on a purchase, subject to underwriting.
- The asset qualifier path, where assets cover the whole loan, is built for homes you live in. It is not the route for a rental.
- Thin rent favors asset depletion. Strong rent and a wish to buy in an LLC favor DSCR.
- Neither loan is “no-doc.” Both verify your assets or the property’s income.
Here is the honest answer. DSCR (debt service coverage ratio) is the number you get when you divide a property’s monthly rent by its full monthly obligation: principal, interest, taxes, insurance, and any association dues. Asset depletion has no rent test at all. It divides your usable assets by 60 months to create a qualifying income, then checks that income against your debts. Asset depletion fits a cash-rich, income-light buyer, such as a retiree or someone who just sold a business, who is buying a property that rents poorly for its price. DSCR fits almost everyone else buying a rental that pays for itself. For a Michigan investor, the deciding questions are how strong the rent is, how much leverage you want, and whether you want the loan in your own name or an entity’s.
Side-by-Side
The DSCR column below reflects published industry norms. The asset depletion column reflects the guidelines of select programs in Lendmire’s wholesale network, subject to underwriting.
| Factor | Asset Depletion (investment property) | DSCR |
|---|---|---|
| What is tested | Your assets, converted to income | The property’s rent vs. its payment |
| Income documents | Statements for every counted account | Lease or market-rent schedule |
| Debt-to-income test | Yes, on the derived income | Not used |
| Typical vesting | Individual; entity use is program-dependent | Individual or LLC is common |
| Property types | Program-dependent | Non-owner-occupied rentals |
| Leverage | 65% purchase, 60% cash-out | Varies by program, score, coverage |
| Reserves | No published reserve months | Typically verified |
| Rent matters? | No | It is the whole test |
| Stacking effect | Each new loan adds to your DTI | Each property stands alone |
Two notes on that table. First, the leverage figures in the asset depletion column belong to that path on investment property only. Home-purchase figures are higher, and they do not apply to a rental. Second, DSCR leverage moves with the program, your credit score, and the coverage ratio, so put any DSCR quote beside the 65% figure rather than assuming either is better.
How Asset Depletion Works on a Rental
The asset depletion path divides usable assets by 60 months. The result is monthly qualifying income, and that income must carry the full housing payment and your other debts through the debt-to-income (DTI) test. DTI simply compares your monthly debts to your monthly income.
Not every dollar counts at full value. Lenders apply haircuts, which means only a share of each balance is credited. On this path, across Lendmire’s network, the credits run like this:
- Cash accounts and certificates of deposit count at 100%.
- Securities count at 80%.
- Private stock counts at 75%.
- Retirement accounts count at 70% at any age.
- Equity in a different property counts at 60%.
Take $1,500,000 in securities and $300,000 in cash. The securities count at 80%, or $1,200,000, and the cash counts 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 has to carry the housing payment and other debts. This is an illustration, and the lender’s own calculation governs.
Some assets do not count at all. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units are not eligible on this path. Cryptocurrency, precious metals, and collectibles are not published as eligible on either path either. The documented route is to convert them to a seasoned cash balance in a regulated account and let the lender review the source.
The entry bar is high. This path asks for qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is your only income, it also asks for at least $250,000 in liquid assets. Loan amounts run from $125,000 to $3,500,000. The credit floor follows the lender’s score and loan-amount matrix, and a first-time investor needs a 700 score. Statements must be at least 120 days old at application, plus one within 45 days. Nothing is sold or pledged. The calculation is a qualifying convention, not a withdrawal plan.
Key Terms Defined
Imputed income: Income the lender assigns to you by converting assets into a monthly figure, even though you are not receiving it.
Haircut: The share of an asset’s balance a lender refuses to count, to allow for market swings or access limits.
Seasoning: How long funds have sat in your account, shown by statements, before the lender will count them.
Vesting: How title is held on the property, such as in your own name or in an LLC.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly cost of owning the property.
How DSCR Works on the Same Purchase
A DSCR file starts with the rent. The lender uses the lease or an appraiser’s market-rent schedule, divides it by the full monthly obligation, and compares the result to the program’s floor. Many programs look for rent at or near the payment. Select lenders in the network also review coverage below 1.00, though leverage and terms adjust when they do. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
Your personal side still matters. The lender typically pulls credit, verifies reserves, and checks entity documents if you are buying in an LLC. Your liquid assets help with reserves, but they are never converted into income. Nobody asks for your pay stubs, though the file is far from empty.
Here is the practical split. Asset depletion measures how big your balance sheet is. DSCR measures how well one building performs. A Michigan duplex with strong rent can clear DSCR with your portfolio nowhere in the math. A pricey rental with weak rent can fail DSCR and still be fine under asset depletion.
Why the Two Files Look So Different
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, and consumer disclosure rules such as TRID do not apply to them. Asset depletion is a consumer mortgage, so those disclosures do apply, and the file is built the way a home loan is built.
That distinction explains the paperwork. The federal ability-to-repay rule lets a lender base its repayment finding on income, on assets, or on both. It excludes the value of the dwelling securing the loan, so equity in the very house you are buying cannot count. It also requires the lender to verify the assets it relies on with reasonably reliable third-party records, which in practice means account statements. The rule does not set the 60-month divisor or the haircuts. Those come from each lender’s guidelines. For examples of what counts, the official commentary, reproduced by BankersOnline, lists savings and checking funds, vested retirement balances, stocks, bonds, and certificates of deposit.
One caution runs the other way. The word “investment” on an application does not make a loan business-purpose by itself. Purpose and occupancy decide it, and a trade-association overview from America’s Credit Unions shows the exemption turns on how the credit is used. A personal-purpose cash-out dressed as a rental loan is the kind of misclassification that gets lenders and borrowers in trouble.
When Asset Depletion Is the Better Fit
Asset depletion wins in a narrow, real set of cases.
The rent is thin for the price. Picture a high-priced Michigan lakefront or luxury rental where rent covers only part of the payment. DSCR coverage may land well under 1.00. Asset depletion ignores rent, so a thin-rent property stops being a problem and becomes a DTI question.
Your assets are large and your documented income is small. Retirees, people who sold a business, and those living off a portfolio fit this profile. Inheritance and legal-settlement funds can be excused from the standard seasoning period on this path.
You want the loan in your own name. If you are not interested in an LLC, the consumer-style structure is a natural match.
You are mixing income sources. Asset-derived income can supplement documented income up to a 45% DTI, and when it supplements, the minimum-assets rule is waived. That is useful if you have a pension or part-time income that is not quite enough on its own.
The costs are real. The investment-property leverage ceiling is 65% on a purchase or rate-and-term refinance and 60% on a cash-out, subject to underwriting. Cash-out proceeds never count as qualifying assets. Some asset depletion programs do not allow cash-out at all. A housing event needs 4 years of seasoning on this path, and multiple bankruptcies are not eligible. Every additional property adds its payment to your DTI. That is why this route works for one or two purchases and gets harder as a portfolio grows.
Lendmire’s piece How an STR Investor Qualifies on Asset Depletion vs Rental Income covers a related case, where rent is variable and the asset route is the cleaner file.
When DSCR Is the Better Fit
DSCR is the better fit for most rental buyers, and the reasons are structural.
The rent supports the payment. If rent covers the full monthly obligation with room to spare, the property carries itself. Your portfolio never needs to enter the calculation, and you keep it invested.
You plan to buy more than one. DSCR lets each property stand on its own rent. Asset depletion stacks each new payment onto your DTI, and the ceiling arrives sooner than most buyers expect.
You want an LLC. DSCR loans are commonly closed in an LLC with a personal guaranty, subject to lender program eligibility. Asset depletion is underwritten like a consumer loan, so entity vesting is generally limited or program-dependent. Closing in the entity from the start also avoids the problem of moving a conventionally financed property into an LLC afterward, which can raise due-on-sale questions with the existing lender.
You want the lighter document stack. DSCR needs a lease or market-rent evidence, entity papers if applicable, and credit. Asset depletion needs full statements for every counted account and a DTI file.
DSCR has its own limits. A weak-rent property can fail the coverage test. Your personal credit still gets pulled. Reserves are still verified. And no-income-documentation does not mean no documentation. The honest summary: DSCR is easier when the property is good, and harder when it isn’t.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
What About the Asset Qualifier Path?
Lendmire’s network also has a second asset program, the asset qualifier path. Under it, eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. Loans go up to $4,000,000, with leverage up to 80% on a purchase and 75% on a refinance. Reserves are not required at or below 75% loan-to-value. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The catch for this reader: that path is built for principal residences and second homes. For a rental, the relevant asset program is depletion, not the qualifier path. If you also plan to buy a home to live in, the qualifier path might serve that purchase.
A borrower is qualified on one path at a time, and the two tables never blend. A common sequence is to use assets for the home and DSCR for the rentals.
A Quick Decision Screen
Run these questions in order.
1. Do you want to hold the rental in an LLC? If yes, DSCR usually leads, subject to lender program eligibility. 2. Does the rent comfortably cover the full monthly obligation? If yes, DSCR is probably the simpler file. 3. Is the rent thin but your assets deep? If yes, asset depletion deserves a serious look, at 65% leverage on a purchase. 4. Are you planning several purchases? DSCR scales better, because DTI stacks. 5. Do you also want cash out? Check that your specific program allows it, because some asset depletion programs do not. 6. Is your credit strong? Both paths need it, and first-time investors on the depletion path need 700.
If rent falls below 1.00 and you still prefer DSCR, select lenders in the network do review sub-1.00 coverage, with leverage and terms adjusting. A hybrid file, where assets support reserves and rent carries the payment, is another structure to ask about.
A practitioner point that surprises first-time buyers: the same portfolio often does double duty. It creates qualifying income, and it also funds the down payment and closing costs. Those dollars come out of the pool first, so the income figure shrinks after you subtract them. Run the math after the cash to close leaves the account, not before.
Common Misconceptions
- “Asset depletion means selling my investments.” It does not. The lender counts the assets toward a calculation and does not require liquidation.
- “Home equity counts.” Equity in the home you are buying does not. Equity in a different property can count on the depletion path, at 60%.
- “DSCR means no personal vetting.” Credit, reserves, and entity paperwork are still reviewed.
- “Both are the same kind of non-QM loan.” They share the family name. One tests you and the other tests the building.
- “Any investment loan is business-purpose.” Purpose, occupancy, and unit count decide it.
The Verdict
For most Michigan rental buyers, DSCR is the better tool, because the rent drives lender review and your assets stay invested. Asset depletion earns its place when the property’s rent is weak and your balance sheet is strong. It trades leverage and scalability for the ability to ignore rent entirely.
Treat it as a screening decision rather than a loyalty. Run the rent first. If coverage is comfortable, DSCR likely ends the conversation. If coverage fails and your assets clear the minimums, run depletion. Tax treatment varies; consult a qualified professional.
Lendmire’s consumer mortgage licensing covers 16 states, Michigan included, and the figures here are the same for a Michigan borrower as for any other. Program details change, every file is underwritten individually, and nothing here is a commitment to lend. Lendmire’s complete DSCR loans guide covers the rental side in more depth.
Frequently Asked Questions
Is asset depletion the same as a DSCR loan?
No. Asset depletion converts your assets into monthly income and tests it against your debts. DSCR ignores your income and tests whether the property’s rent covers its own payment. Both are non-QM products, but they answer different questions.
Can I use both on different purchases?
Yes, though only one path applies to a single loan. Many borrowers use assets for a home they live in and DSCR for rentals. Each file is reviewed separately under its own guidelines.
Do I need an LLC for a DSCR loan?
No. DSCR loans commonly allow individual or LLC vesting, depending on program guidelines. Asset depletion is a consumer-style loan, so entity vesting is limited or program-dependent.
Does asset depletion work on a Michigan rental purchase?
Through select programs, yes, on the depletion path only, at up to 65% leverage on a purchase and subject to underwriting. The asset qualifier path is for primary and second homes. Michigan is among the states where Lendmire’s consumer mortgage licensing applies. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
What if my rent is too low for DSCR?
Select lenders in the network review sub-1.00 coverage, with leverage and terms adjusting. Asset depletion is the other route, since it ignores rent. A hybrid file is a third option to raise with your broker.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in Michigan page presents the program for Michigan borrowers.
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. CFPB Regulation Z § 1026.43
4. America’s Credit Unions: Regulations on Business Loans
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 DSCR in a Trust or LLC for a Super Jumbo Luxury Rental · How to Qualify for a Bank Statement or Asset Depletion Loan as a Rental Investor · DSCR vs Asset Depletion Loan for a First-Time Airbnb Host in Retirement
Guides: Asset-Based Mortgage in Michigan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.