The Quick Read: The best program for your situation depends on which asset path your file uses, because only the asset depletion path has a published cash-out ceiling, set at 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting.
- Two paths exist. The asset qualifier path uses eligible assets to cover the entire loan. The asset depletion path turns assets into monthly income.
- Cash-out is clearest on the depletion path. It allows up to 60% loan-to-value on a cash-out refinance. On the qualifier path, the lender decides whether cash-out is allowed and at what leverage, so confirm it before you plan around it.
- The cash you pull out will not count as a qualifying asset. Your emergency fund and your qualifying assets are separate pools.
- A cash-out reprices the whole balance. Idle cash in a reserve carries a cost every month, so the fund should be sized on purpose.
- Details are subject to underwriting. Programs are placed through select lenders in Lendmire’s network, and approval is never assured.
An emergency fund is a plain goal. The route to it is not always plain when your documented income is thin. Retirees, business sellers, heirs and households living off a portfolio often hold large balances and show little on a tax return. A conventional underwriter reads that file as weak. An asset-based underwriter reads it as strong.
This article explains how the asset-based route works for a cash-out refinance. It covers where the rules bend and when borrowing against your home for a cushion is the wrong move. Lendmire is a mortgage broker, not a lender. It shops asset-based mortgage programs across a wholesale network and matches the file to the program that fits.
Key Terms Defined
Cash-out refinance: A new, larger mortgage that pays off the old one and returns the difference to you as cash, after costs.
Rate-and-term refinance: A new mortgage that replaces the old one without returning meaningful cash.
Asset qualifier path: A way to qualify in which eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
Asset depletion path: A way to qualify in which eligible assets, after haircuts, are divided by 60 months into a monthly qualifying income. That income must carry the housing payment and other debts.
Haircut: The share of an asset’s balance that the program does not count. A retirement account counted at 70% has a 30% haircut.
Emergency fund: Liquid cash held to cover living costs or property costs when income stops or a large repair hits.
What Does Asset-Based Mean Here?
Asset-based means the lender reviews your file on what you own instead of what you earn. Statements for those assets are fully documented, and every file is fully underwritten. You skip traditional personal-income documentation, pay stubs and employment verification. You do not skip paperwork.
The label gets used loosely. This article means the consumer mortgage version, on a principal residence or second home. An investment property is eligible only on the depletion path, where the loan is business-purpose. It does not mean business-asset lending, hard money or a rental-income loan. Rental-income financing is a different product. It is reviewed on the property’s rent covering the payment, subject to lender guidelines.
A borrower sits on one path at a time. Figures from the two paths never blend.
Which Path Fits Which Borrower?
Pick the path first, because it controls leverage, loan size and what a cash-out can look like.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How assets are used | Cover the entire loan amount | Divided by 60 months into income |
| Income documented | None | Derived income, run through debt-to-income |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Refinance leverage | Up to 75% on a refinance | 80% on rate-and-term; 60% on cash-out |
| Cash-out | Set by lender; not published | 60% loan-to-value |
| Investment property | Not covered here | 65% purchase or rate-and-term; 60% cash-out |
| Reserves | None at or below 75% loan-to-value | No published reserve months |
All figures are ceilings, not offers, and are subject to underwriting through select programs.
The qualifier path suits someone whose liquid balances exceed the whole mortgage. Picture a retired couple with a large brokerage account, savings and an IRA, and a modest balance left on their home. Their assets simply outrun the debt.
The depletion path suits someone whose assets are large but not large enough to cover the loan outright. The math then turns balances into income and tests the payment against it.
How Does the Cash-Out Work, Step by Step?
The steps follow a standard cash-out refinance, with an asset review layered on top.
1. Classify the transaction. A refinance that returns real cash beyond payoff and closing costs is a cash-out. It gets the cash-out leverage ceiling, not the rate-and-term one.
2. Choose the path. Pick the one that fits your balances and your goal. Confirm cash-out availability up front if you are on the qualifier path.
3. Document the assets. On the qualifier path, you need 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, statements must be 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 on the depletion path.
4. Appraisal sets value. The appraised value and the leverage ceiling set the maximum loan.
5. Size the loan. Payoff, costs and any prepayment charge on the old loan come out first. What remains is your cash. The leverage cap limits the loan, not your proceeds.
6. Underwriting. The lender reviews credit, housing history and the assets. The lender’s own calculation governs, and the arithmetic here is illustrative.
7. Funding. Proceeds go to you after the loan completes. Because the file is a consumer mortgage, standard consumer-loan disclosures apply.
A Worked Depletion Example
Run the shape the program uses. Say you hold $1,500,000 in securities and $300,000 in cash. Securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000. Usable assets total $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That figure must then carry the housing payment and your other debts through the debt-to-income test.
A qualifier-path example runs differently. An $800,000 loan could be matched with $330,000 in brokerage accounts, counted at 100%. Add $300,000 in a 401(k) held under age 59½, counted at 90%, which is $270,000. Add $200,000 in savings at 100%. Together that is $800,000 of usable assets, which covers the loan on assets alone.
The depletion path also has a minimum. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They must never fall below $250,000 liquid when asset depletion is your only income source. If the derived income only supplements documented income, up to a 45% debt-to-income ratio, the minimum-assets rule is waived.
Which Assets Count, and Which Do Not?
The two paths treat assets differently, so read the right column.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage accounts | 100% | Securities 80% |
| Cash, savings, money market | 100% | Cash 100% |
| Certificates of deposit | 100% | 100% |
| Retirement accounts | 90% under 59½; 100% at 59½ or older | 70% at any age |
| Real-estate equity | Not listed | 60% |
Several classes are not eligible on the depletion path. These are 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.
Privately held company stock is not an eligible asset on either path. Founders and shareholders should plan around that rule from the start. The route is documented liquid assets: seasoned proceeds from a sale or buyout, cash, public securities and retirement accounts at their haircuts.
Cryptocurrency, precious metals, collectibles and pledged or borrowed 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.
One rule matters most for this topic. Cash-out proceeds never count as qualifying assets on the depletion path. Borrowing against your home does not grow your qualifying pool. It converts equity into cash that sits outside the file’s asset test.
Is Cash-Out the Right Way to Fund an Emergency Fund?
Sometimes. A cash-out puts a lump sum in the bank at once. It also adds debt against your home for money you hope never to spend.
Here is the honest side-by-side.
| Option | Choose this if | Watch for |
|---|---|---|
| Asset-based cash-out refinance | You want a lump sum and cannot show income for a line of credit | The whole balance is repriced; costs apply |
| HELOC | You can document income and want a standby line | The lender may reduce or suspend an unused line under its terms |
| Staying in cash | You already hold enough liquid assets | Lower returns, but no new debt |
The CFPB’s mortgage report says cash-out refinances can raise foreclosure risk. The agency points to typically larger balances and to the way they turn unsecured debt into secured debt. It also says HELOCs tend to carry lower foreclosure risk. The report is aimed at owner-occupants, and it is a fair general caution for any borrower.
Why would an asset-based borrower still choose cash-out over a HELOC? Many HELOCs are income-tested, so a portfolio-funded household may not qualify. A lump sum also cannot be frozen or reduced after the loan completes. Those are real advantages, and they come with a real cost.
Here is the tension. Say your qualifying assets are your brokerage account and a retirement account, and you borrow against your home to build a cushion. You are now holding more debt against a home whose loan was approved on those same assets. If markets fall, both sides of that picture can move at once. Sometimes the better plan is to keep a slice of the existing liquid assets in cash and skip the cash-out. Compare both before you decide.
How Big Should the Fund Be?
Size the fund by months of expenses, not by how much equity the lender will release.
Start with your monthly obligations: mortgage, taxes, insurance, utilities, food and health costs. Multiply by the number of months of cover you want. Landlords tend to size reserves per property. One BiggerPockets contributor suggests about six months of expenses for each rental. Treat that as a landlord rule of thumb, and treat your own household figure as the target.
Then check the carrying cost. Cash out of a refinance sits inside a larger balance, and you pay on that balance every month. A fund that is bigger than you need becomes a monthly cost with no return. A cash-out also does not have to be maximum. Taking less than the ceiling keeps the loan smaller and the file cleaner.
Do not confuse your emergency fund with your lender’s reserves. On the qualifier path, no reserves are required at or below 75% loan-to-value, and above that the lender sets them. The depletion path publishes no reserve months. The cushion you build from proceeds is your own protection. It is not something the lender counts for the file.
Where the General Rule Breaks
Several edge cases change the answer.
Qualifier-path cash-out. The qualifier path lists leverage for purchase and refinance, but the lender decides whether cash-out proceeds are allowed and at what leverage. Do not assume the 75% refinance figure includes cash back. Ask first.
Investment property. Investment property is eligible only on the depletion path, with a loan treated as business-purpose. Cash-out on it tops out at 60%. A first-time investor on the depletion path needs a 700 credit score. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Private-company wealth. Privately held company stock is not an eligible asset on either path, so a business owner whose net worth is mostly closely held shares has no qualifying assets from those shares. The route is a sale or buyout that converts the proceeds to seasoned cash in a regulated account.
Credit and housing history. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix. Housing history of 0x30x12 is the standard, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
Small asset pools. A borrower with modest balances will not clear the depletion minimums. If your assets sit well under $250,000 liquid, this path is not built for you.
Prepayment charges. A penalty on your existing loan is paid at payoff and comes out of your cash, so your net can land lower than the ceiling suggests.
What Should You Document?
Gaps in paperwork cause most friction on these files, so assemble them before applying.
- Statements for every qualifying account: two months on the qualifier path, or the 120-day and 45-day set on the depletion path.
- A source record for any large recent deposit, such as a sale, inheritance or settlement.
- Proof of ownership for the property and your current mortgage payoff details.
- Retirement account statements showing your age-related percentage, plus any withdrawal limits.
- For a founder, the closing statement from a business sale, with funds landed in a regulated account.
Do not move money between accounts casually during the file. Every transfer needs an explanation.
Who This Does Not Fit
Skip this route if you have steady documented income and can get a HELOC cheaply. Skip it if your balances are mostly private-company stock, which is not eligible, or crypto and collectibles you have not converted to seasoned cash. Skip it if you want a cushion much larger than your actual risk. In each case, a simpler tool does the job at lower cost.
Frequently Asked Questions
Can cash-out proceeds count as qualifying assets?
No. On the depletion path, cash-out proceeds never count toward qualifying assets, so the cushion you build sits outside the file’s asset test. On the qualifier path, cash-out terms are set by the lender, so confirm the treatment before you apply. Plan on the proceeds being yours alone, not the lender’s reserve.
How much can I borrow on a cash-out?
On the asset depletion path, cash-out runs up to 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting. Loan amounts on that path run from $125,000 to $3,500,000. Payoff, costs and any prepayment charge come out of the loan before you receive cash, so your proceeds will be lower than the ceiling implies.
Is a HELOC better for an emergency fund?
Often yes, if you can qualify for one. The case for a cash-out is a borrower with strong assets and little documented income, who may not clear an income test. Compare both options with a broker before choosing. Tax treatment varies; consult a qualified professional.
Does my retirement account count?
Yes, at a haircut. On the qualifier path, a 401(k) or IRA counts at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. Accounts on the qualifier path combine toward the full loan amount.
Where is this program available?
Lendmire arranges consumer asset-based mortgages in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Availability, terms and approval are subject to lender guidelines.
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.
An emergency fund works best when it is sized to real expenses, and borrowing against a home for one is a decision worth making against the alternative of simply keeping some of your existing assets liquid.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each loan remains subject to lender underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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
2. BiggerPockets: how much do you keep as an emergency fund for rentals
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 on an Inherited Property
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.