The Quick Read: The two loans test different things. Asset depletion tests the borrower’s balance sheet, and DSCR tests the rental property’s income. Most rental buyers fit DSCR, while asset-rich, income-light buyers fit asset depletion when the rent is thin or the buyer wants to hold title personally.
- DSCR (debt service coverage ratio) divides the property’s monthly rent by its monthly payment. A ratio of 1.00x means break-even.
- Asset depletion converts eligible assets into monthly income, which then runs through a debt-to-income (DTI) test.
- For an investment property, Lendmire’s network offers asset depletion at up to 65% loan-to-value (LTV) on a purchase, subject to underwriting.
- Rent does not count on the asset-depletion path, so a low-rent property does not hurt the file.
- DSCR files usually hold title in an LLC, depending on program guidelines. Asset-depletion files are consumer mortgages, typically in your own name.
Here is the honest sorting. DSCR is for investors whose property pays for itself. Asset depletion is for borrowers with large balances and little documented income, who want the loan to rest on their savings rather than the lease. A retiree, a business seller, or someone living off a portfolio often fits that second description.
Lendmire is a broker. It does not lend. It arranges both kinds of loans through select lenders in its wholesale network, so the comparison below is meant to help you choose, not to steer you.
Side-by-Side
The asset-depletion column shows the program parameters Lendmire’s network uses for investment property. The DSCR column shows published industry norms, which vary by lender. Every item is subject to underwriting.
| Factor | Asset depletion (network program) | DSCR (published industry norms) |
|---|---|---|
| Review basis | Eligible assets converted to income | Property rent versus its monthly payment |
| Personal income docs | Not the basis; assets are documented | Not the basis; credit and reserves reviewed |
| Main test | DTI on derived income | Coverage ratio; 1.00x is a common benchmark |
| Property types | Investment property at 65% LTV on a purchase | Non-owner-occupied rentals, often 1-4 units and more |
| Entity vesting | Typically the individual borrower | Commonly an LLC, per program terms |
| Rent’s role | Not counted | Central to the file |
| Asset statements | 120 days old, plus one within 45 days | Reserves verified; terms vary |
| Reserves | No published reserve months | Often required; amount varies |
| Scaling | Each loan adds to DTI and draws on the same assets | Each file stands on its own rent, program-dependent |
How Each One Does the Math
Both methods are non-QM, meaning they sit outside the standard agency rules for documenting income. Neither is a no-documentation loan. Each one documents something different.
Asset depletion, step by step
Across the wholesale network, the asset depletion path works in five steps. It is one of two asset-based paths, and a borrower is reviewed on one path at a time.
1. The lender totals your eligible assets and applies a haircut to each type. On this path, cash and certificates of deposit count at 100%, securities at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%. 2. The lender divides the usable total by 60 months. The result is your monthly qualifying income. 3. That income carries the full housing payment and your other debts through the DTI test. 4. The lender reviews statements that are at least 120 days old at application, plus a recent one within 45 days. 5. You keep the assets. You do not have to sell anything to qualify.
Some assets are not eligible on this path. These include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units. Cryptocurrency, precious metals, and collectibles are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
There are minimums too. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They must also never fall below $250,000 in liquid assets when asset depletion is your only income. Loan amounts on this path run from $125,000 to $3,500,000. A first-time investor needs a 700 credit score, and other borrowers follow the lender’s score and loan-amount matrix. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Here is the illustrative math. Say you hold $1,500,000 in securities and $300,000 in cash. The securities count at 80%, which is $1,200,000. The cash counts at 100%, which is $300,000. That makes $1,500,000 usable, and dividing by 60 months gives $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the DTI test. The lender’s own calculation governs.
If you also have documented income, such as a pension, asset income can supplement it up to a 45% DTI. In that case the minimum-assets rule is waived.
One caution matters for rental buyers. The separate asset qualifier path, which uses assets to cover the entire loan with no income documented, is built for primary residences and second homes. It does not apply to an investment property.
DSCR, step by step
DSCR is simpler to describe. The lender divides eligible monthly rent by PITIA, which is principal, interest, taxes, insurance, and any association dues. A result above 1.00x means the rent exceeds the payment. A result of 1.00x is break-even, and below 1.00x means the rent falls short.
Rent comes from an in-place lease or a market-rent estimate. Most files include an appraisal with a rent schedule. Single-family appraisals use Form 1007 for the rent schedule, and 2-4 unit properties use Form 1025. Your W-2s and traditional personal-income documentation is not the basis for qualifying. The lender still reviews your credit, reserves, entity, property, and title.
DSCR leverage, credit, and reserve requirements differ from lender to lender and shift with the coverage ratio. Ask for the specific program’s grid before you compare. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
When Asset Depletion Is the Better Fit
Asset depletion fits when your balances are large and your documented income is small. Rental income does not help your file, and it does not hurt it either. These are the situations where it tends to win.
- The rent is thin relative to the price. A higher-priced home in a good neighborhood may rent for less than its payment would suggest. DSCR can drop below 1.00x on that kind of property. Asset depletion ignores the rent, so the property is judged on value and your assets.
- Your income is not on paper. Retirees, sellers of a business, and recipients of an inheritance or settlement often have large balances and little documented income. For some of these funds, seasoning is excused on the depletion path. That applies to sale-of-business, inheritance, and legal-settlement money.
- You want to hold title personally. A consumer mortgage is typically written to an individual. If you do not want an LLC, this path avoids that question.
- You want to avoid selling assets. You do not have to liquidate investments or take a taxable distribution to qualify, because the lender counts the balance rather than requiring a sale. Tax treatment varies; consult a qualified professional before relying on any deduction.
- You have only one or two rentals planned. The DTI stacking problem stays manageable at that size.
The tradeoffs are real. Asset depletion is stricter on leverage for an investment property, at up to 65% LTV on a purchase or rate-and-term refinance. Cash-out on an investment property tops out at 60%. Cash-out proceeds never count as qualifying assets. The haircuts also shrink your usable total, because the lender subtracts your down payment, closing costs, and any reserves before it divides. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Each additional asset-depletion loan adds a payment to your DTI. It also draws on the same asset pool. A borrower planning four or five rentals will often hit that wall first.
When DSCR Is the Better Fit
DSCR fits when the property carries itself. It also fits when you want the rental kept separate from your personal finances.
- The rent covers the payment with room to spare. A duplex or small multifamily with strong rent relative to its price tends to clear the benchmark comfortably. That strength can work in your favor on terms.
- You are building a portfolio. DSCR files stand on each property’s rent, and the borrower’s balance sheet is less central. That is program-dependent, but it is why portfolio investors lean this way.
- You want an entity. DSCR loans are commonly closed in an LLC, subject to lender program eligibility. Asset depletion typically is not.
- Your assets are modest. Asset depletion has hard minimums. If you fall under them, DSCR may be your only route.
- You have documented income but do not want it used. DSCR keeps your personal income out of the qualifying math. The lender still reviews your credit and reserves.
DSCR has its own limits. A property with thin rent can fall below 1.00x. Programs below 1.00 coverage are available through select lenders in the network, but the LTV and terms adjust. A short-term rental may qualify on projected rental income rather than a lease, depending on the program.
DSCR is also not a way around scrutiny. Lenders still look at credit, reserves, valuation, title, and insurance. Lendmire’s complete DSCR loans guide walks through those files in more depth.
A Side-by-Side Scenario
Consider an Indiana buyer with a large securities portfolio and a duplex in mind. The numbers below are modeled assumptions, not market data.
If the duplex rents so that coverage clears roughly 1.2x, DSCR is the natural fit. The rent carries the loan, and the buyer’s portfolio stays untouched except for the down payment and any required reserves.
Now say the buyer wants a pricier single-family rental, and the rent leaves coverage below 1.00x. A DSCR file here may need lower leverage, different terms, or a program built for sub-1.00 coverage, all subject to lender guidelines. Asset depletion removes rent from the test. The $1,500,000 usable-asset example above would clear the minimum-assets rule, and the DTI test would decide the outcome. The buyer would borrow at up to 65% LTV on an investment-property purchase.
The decision comes down to which side is stronger, the property or the borrower. When both are strong, many investors choose DSCR to preserve their DTI for future purchases.
Why the Occupancy Gate Decides Everything
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 federal rule that exempts business-purpose credit from consumer-mortgage requirements is in CFPB Regulation Z, section 1026.3. The same section exempts credit extended to organizations rather than people.
An asset-depletion loan is built the other way. It is a consumer mortgage, so consumer disclosure rules apply to it. DSCR loans are exempt from those disclosure rules.
That is why the two products behave differently on entity vesting, documentation, and DTI. Whether a particular lender treats a given rental file as consumer or business credit is that lender’s determination, made at underwriting. Your Lendmire loan officer can tell you which lane a program uses before you apply.
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 Changes in Indiana
The program figures do not change by state. Lendmire’s consumer mortgage lending is licensed in 16 states, and Indiana is one of them. Your state mostly changes the property-side costs.
Property tax is the one worth knowing. Indiana’s Department of Local Government Finance fact sheet describes circuit-breaker caps of 1% of gross assessed value for homesteads, 2% for other residential property, and 3% for nonresidential property. The caps limit the bill without changing the local tax rate. The fact sheet is older, so confirm the current caps with the county before you underwrite a deal.
A rental generally does not qualify for the homestead tier. That matters for both loans. Taxes are part of PITIA, so they sit in the DSCR denominator and weigh on coverage. In asset depletion, they sit in the housing payment that your derived income has to carry.
Anyone who buys a property in Indiana should price taxes at the rental tier, not the homestead tier a seller may have enjoyed.
What to Have Ready
The two paths ask for different paperwork.
- For asset depletion: Account statements that meet the 120-day and 45-day windows, proof of the source of funds, a credit profile, and a housing history. The program looks for 0x30x12, and one 30-day late in the last twelve months is considered case by case. A housing event needs 4 years of seasoning, and multiple bankruptcies are not eligible.
- For DSCR: The lease or a rent estimate, entity documents if you are using an LLC, an appraisal with a rent schedule, proof of reserves, and your credit profile.
The statement requirements are the reason asset depletion is not a no-documentation loan. It simply replaces income paperwork with asset paperwork.
For borrowers weighing a third route, Lendmire’s piece Asset Depletion vs Bank Statement Loan for a Home vs a Rental covers the alternative for people who document income through deposits.
The Verdict
Pick DSCR when the property pays for itself, when you want an LLC, or when you are scaling a portfolio. Pick asset depletion when your savings are large, your documented income is small, and the rent is thin or beside the point. For a typical Indiana rental with healthy rent relative to its price, DSCR is the more common fit. For a pricey rental owned by a retiree or a business seller, asset depletion is often the stronger answer.
Neither choice is permanent. The same buyer can use one loan for this purchase and the other for the next. Eligibility on either side depends on the lender’s guidelines, your credit, and the property.
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.
Frequently Asked Questions
Can I use asset depletion to buy a rental in Indiana?
Yes, through select programs. In Lendmire’s network, the asset depletion path covers investment property at up to 65% LTV on a purchase and 60% on a cash-out. The asset qualifier path does not cover investment property. Both are subject to underwriting. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Does asset depletion require me to sell my investments?
No. The lender counts your eligible balances at their haircut values and divides by 60 months. You keep the assets. The lender will review your statements, and the amount that counts depends on the account type.
Can I combine asset depletion with my other income?
Yes, in some cases. Asset-derived income can supplement documented income up to a 45% DTI. When it supplements, the minimum-assets rule is waived. The lender’s calculation governs.
Does DSCR ignore my credit and finances?
No. DSCR qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The lender still reviews credit, reserves, the entity, the property, and title. Thresholds vary by lender.
What if my rent does not cover the payment?
You have options. Select DSCR lenders in the network offer programs below 1.00 coverage, with adjusted LTV and terms. Asset depletion ignores rent, so it can work if your assets meet the program minimums. Both are subject to underwriting.
Lendmire’s asset-based mortgage in Indiana page presents the program for Indiana 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, section 1026.3
2. Indiana DLGF circuit breaker fact sheet
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 Qualifier vs Asset Depletion for an Heir · Asset Depletion Income Formula and Haircuts · Can a First-Time Investor Use Asset Depletion to Buy a Rental?
Guides: Asset-Based Mortgage in Indiana
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.