The Quick Read: An asset-based cash-out refinance can turn equity in a home you own into the down payment on another house, but only through the asset depletion path, where eligible savings and investments become qualifying income and the cash-out itself never counts toward the assets that qualify you.
- On the asset depletion path, cash-out refinances are available up to 60% loan-to-value on a principal residence, a second home or an investment property, subject to underwriting.
- On the asset qualifier path, eligible assets must cover the entire loan. That path allows up to 80% on a purchase and 75% on a refinance, and the lender sets its cash-out leverage without publishing it.
- Cash-out proceeds never count as qualifying assets on the depletion path, so the cash you pull out cannot also be the money that qualifies you.
- Privately held company stock is not an eligible asset on either path.
- The best program for your situation depends on your assets, credit profile, the property and how much cash you need.
What Is an Asset-Based Cash-Out Refinance, and Why Use It for a Down Payment?
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference. That difference can fund the down payment on a different house. The refinance buys nothing by itself. A second loan on the new house does the buying.
The asset-based version changes how you qualify. A standard mortgage asks for tax returns, pay stubs and employment verification. An asset-based mortgage asks for statements on the money you already hold. Every file is still fully underwritten, and the assets are documented. What you skip is the income paperwork, not the review.
This route suits a specific kind of borrower. Think of retirees, people who have sold a business, recipients of an inheritance or settlement, early-retired professionals, and households living off a portfolio. Their balances are large and their documented income is small. A conventional lender sees little income and says no. Lendmire’s asset-based mortgage programs are built for exactly that gap, and Lendmire arranges them as a broker through select lenders in its network.
Key Terms Defined
Cash-out refinance: a new mortgage larger than your old one, with the difference paid to you in cash.
Asset qualifier path: a program route where your eligible assets, after credit percentages, must equal or exceed the entire loan amount, and no employment or income is documented.
Asset depletion path: a program route where eligible assets, after haircuts, are divided by 60 months to produce a monthly qualifying income that runs through the debt-to-income test.
Haircut: the share of an asset’s balance a lender will not count. A haircut of 20% means 80% of the balance counts.
Seasoning: how long money has sat in your accounts, shown through statements, before a lender will rely on it.
Debt-to-income (DTI): your monthly debts divided by your monthly qualifying income.
Loan-to-value (LTV): the loan amount divided by the property’s appraised value.
How Does Underwriting Treat This, Step by Step?
Underwriting follows a fixed order, and each step affects the next. The sequence below describes how the depletion-path cash-out works. Final terms always come from the lender’s own review.
1. The file is classified. A refinance that pays you cash is a cash-out. That label sets the leverage limit. On the depletion path it is 60% for a principal residence, a second home or an investment property.
2. The property is appraised. The lender’s appraised value sets the ceiling, not your own estimate of what the house is worth.
3. Your assets are counted. Each account is reduced by its haircut. On the depletion path, cash accounts and certificates of deposit count at 100%, securities at 80% and retirement accounts at 70% at any age. Real-estate equity counts at 60% when it is held outside the property being refinanced, since the cash-out itself never counts.
4. Usable assets become income. The total is divided by 60 months. That monthly figure is your qualifying income.
5. The DTI test runs. The full housing payment and your other debts are measured against that derived income.
6. Minimums are checked. You need 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 source, you also need at least $250,000 in liquid assets.
7. Credit and housing history are reviewed. The lender’s score and loan-amount matrix applies. A first-time investor on this path needs a 700 score. The housing history standard is 0x30x12, and one 30-day late in the last twelve months is considered case by case.
Statements need to be clean and old enough. On the depletion path they must be at least 120 days old at application, plus the most recent statement within 45 days. Certain funds, such as a legal settlement or an inheritance, are excused from that seasoning.
Loan amounts on this path run from $125,000 to $3,500,000, subject to underwriting.
Which Path Fits Your Situation: Assets as the Loan or Assets as Income?
You qualify on one path at a time, never a blend of the two. The question is whether your assets are big enough to cover the whole loan or whether they work better as income.
| Factor | Asset Qualifier Path | Asset Depletion Path |
|---|---|---|
| How you qualify | Assets cover the entire loan | Assets divided by 60 months become income |
| Purchase leverage | Up to 80% | 80% principal/second home; 65% investment |
| Refinance leverage | Up to 75% | 80% rate-and-term; 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum score | Lender’s matrix |
| Seasoning | 60 days; two months of statements | Statements 120+ days old; one within 45 days |
| Cash-out | Set by lender, not published | 60% on all three occupancies |
The depletion path’s investment-property leverage is 65% on a purchase or rate-and-term refinance and 60% on a cash-out. The qualifier path covers principal residences and second homes. All figures are program ceilings and floors, never offers, and every one is subject to underwriting.
Here is the qualifier math. Say an $800,000 loan is backed by $330,000 in brokerage accounts (100% counts), $300,000 in a 401(k) held under age 59½ (90% counts, or $270,000) and $200,000 in savings (100% counts). That totals $800,000 of usable assets, which covers the loan on assets alone. At 59½ or older, the 401(k) counts at 100%. The lender’s own calculation governs.
The depletion math is different. Picture a couple holding $1,500,000 in securities and $300,000 in cash. The securities count at 80%, which is $1,200,000, and the cash counts at 100%, which is $300,000. That is $1,500,000 usable, divided by 60 months, for $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the DTI test.
What Makes a Program the Best Fit for a Down Payment?
The best program for your situation depends on six things: how a lender counts your assets, whether cash-out is available on the path you need, the loan-size range, the credit rules, the seasoning requirements, and the leverage limit on the property you are refinancing. Lendmire does not rank lenders. As a broker, it matches your scenario to the programs that write it.
| Criterion | What to Ask |
|---|---|
| Cash-out availability | Is it published on your path and property use? |
| Asset counting | Which of your accounts count, and at what percentage? |
| Loan size | Does the range fit your balance? |
| Credit | Does your score meet the lender’s matrix? |
| Seasoning | Are your statements old enough? |
| Leverage | Does the LTV cap leave enough cash to matter? |
Different lenders in a network set their own overlays on top of the program, which is why comparing matters. One lender may be more flexible on a specific asset type. Another may suit a larger loan. A broker that shops several wholesale lenders can see those differences before you apply. No program fits every borrower, and every file is underwritten individually.
Can the Cash-Out Proceeds Count as My Qualifying Assets?
No. Cash-out proceeds never count as qualifying assets on the depletion path. This is the circularity rule.
The logic is plain. If borrowed money counted as an asset, you could borrow against a house to prove you could borrow against the house. Lenders block that loop. The proceeds are debt. They are not your own savings.
Here is what that means in practice. Suppose you pull cash out of one house and then spend your own savings on the down payment for the next. Your usable assets just shrank, and so did your derived income. Suppose instead you use the proceeds for the down payment and leave your portfolio untouched. Your qualifying income stays intact, but you now carry a larger payment on the first house.
Pledged or borrowed funds are not published as eligible on either path. The proceeds are documented as the source of the down payment, not as a qualifying balance.
What Does the Two-Payment Picture Look Like?
Carrying two mortgages is the real stress test. After closing, you owe the larger payment on the refinanced house and a new payment on the house you bought. Your portfolio income must support both.
Take the couple above. Their $25,000 of derived monthly income is fixed by their assets. A larger cash-out raises the first payment, and a second house adds another. Each dollar of debt takes up part of that fixed income in the debt-to-income test on the asset depletion path. Tell your broker about the planned purchase before you apply, so the numbers are sized for both loans at once.
The test also leaves out costs. It does not account for repairs, vacancy or the cost of simply living in two homes. A file can pass underwriting and still feel tight month to month. Pulling less than the maximum cash is one way to leave room for those costs.
Where Do the General Rules Break Down?
A few situations don’t follow the standard path. Each one has a specific, program-based answer.
Privately held company stock. Privately held stock, meaning closely held company shares, is not an eligible asset on either path. It does not count at any percentage. The documented route is a sale or buyout that converts the shares to a seasoned cash balance. Funds from the sale of a business are excused from the depletion path’s statement seasoning.
Cryptocurrency, precious metals and collectibles. None of these are published as eligible on either path. Business accounts beyond your ownership share are not published as eligible either. The route is converting them to cash in a regulated account and letting the lender review the source.
Other ineligible depletion-path assets. The depletion path also excludes 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.
Retirement accounts and age. On the qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% after. On the depletion path it counts at 70% at any age. Those are different tables, so a retiree over 59½ may get a different result on each path.
Investment property. If the house you are refinancing is a rental, the depletion-path cash-out ceiling is the same 60% that applies to a principal residence or second home, and the loan is a business-purpose loan. The CFPB’s Truth in Lending summary lists business-purpose credit as exempt from consumer-credit rules, and the Federal Register’s ability-to-repay rule treats investment loans as business-purpose. The loan’s purpose controls, not the label on the property, as Compliance Alliance explains. Use the proceeds for your investing, not personal spending.
Housing events and credit. A housing event needs four years of seasoning on the depletion path. Multiple bankruptcies are not eligible. None of these items is a promise of approval.
What Else Could Fund the Next Down Payment?
Cash-out is one tool. Compare it against the others before committing.
| Option | What It Means | Main Tradeoff |
|---|---|---|
| Cash-out refinance | Larger loan on the old house | Bigger payment; resets the loan |
| HELOC or second lien | Credit line on the old house | Keeps first mortgage; availability varies |
| Selling assets | Liquidate part of the portfolio | Lowers your usable assets |
| Asset-based purchase loan | Qualify the new house on assets | Needs a larger down payment |
| Saving | Build cash over time | Takes the longest |
A home equity line keeps a good existing first mortgage intact, which can matter if your current loan is favorable. Selling investments can trigger gains and shrinks the very balance that qualifies you. 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.
What Should the Sequence Look Like?
The cash-out must fund before the purchase closes. Here is the order that keeps the file clean.
1. Size the cash-out first. Value times the LTV cap, minus the old payoff and closing costs, gives you net cash. Net cash, not the gross loan, is what you can spend.
2. Park the proceeds in a dedicated account. The next lender wants a documented, traceable down payment. A single account with a clear trail does that.
3. Keep the paperwork together. Save the settlement statement and the account statements so the money’s path from one house to the other is obvious.
4. Plan for a temporary overlap. You will carry the refinanced house’s larger payment while the new house is being set up.
5. Confirm the new loan’s path. The new house may be its own asset-based file. On the qualifier path, the cash-out proceeds cannot be counted among the assets that cover the loan.
Programs change, and every file is underwritten individually.
Frequently Asked Questions
Can privately held stock help me qualify for the down payment?
No. Privately held company stock is not an eligible asset on either path. A founder’s or shareholder’s route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at their haircuts.
Is the asset-based cash-out the same as a no-doc loan?
No. Every file is fully underwritten, and your assets are documented with statements. What you avoid is income paperwork, meaning tax returns, pay stubs and employment verification. The lender still reviews your credit, your housing history, the appraisal and your account statements.
Can I cash out on a rental, or only on my own home?
Either, on the depletion path, subject to underwriting. Cash-out refinances are available up to 60% on a principal residence, a second home or an investment property. The investment-property loan is a business-purpose loan, so the proceeds should go toward your investing activity.
Will the new house’s lender accept the cash-out as my down payment?
The proceeds can serve as the source of the down payment when they are documented and traceable. They cannot be counted as qualifying assets on an asset-based file. Keep the settlement statement and the account trail together.
Which program is best for me?
The best program depends on your assets, credit profile, the property and the leverage you need. A broker that shops several wholesale lenders can match the scenario to the right program rather than force it into one.
Next Step
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. Consumer mortgage lending is available in Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Lendmire is a broker and does not make credit decisions, and program details are subject to underwriting and not a commitment to lend.
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.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB Truth in Lending summary
2. Federal Register – Ability-to-Repay and Qualified Mortgage Standards
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Asset-Based Cash-Out Refinance Program Within a Year of Buying
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.