The Quick Read: The best fit for a business expansion depends on how your wealth is held, because asset-based programs review your file on documented balances rather than paychecks, and the path you use sets how much cash you can pull from a home. Through select lenders in Lendmire’s wholesale network, the asset depletion path publishes a cash-out ceiling, while the asset qualifier path leaves cash-out to the lender.
- The asset qualifier path covers the whole loan with eligible assets and documents no employment or income, subject to underwriting.
- The asset depletion path turns usable assets into monthly income over 60 months, then tests that income against the housing payment and other debts.
- On the depletion path, cash-out tops out at 60% loan-to-value on a principal residence, second home or investment property.
- Cash-out proceeds never count as qualifying assets, so the money you pull cannot also prove you can borrow it.
- Privately held company stock is not an eligible asset on either path.
What Does Asset-Based Cash-Out Mean?
An asset-based mortgage is reviewed around what you own, not on what you earn. The lender reviews statements for your cash, securities and retirement accounts. It applies a credit percentage to each. It then asks whether those usable assets can carry the loan.
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference after payoff and closing costs. Put the two ideas together and you have a loan that taps home equity while qualifying on a portfolio. That fits a business owner who has sold a company, a retiree funding a family venture, or an investor whose tax returns show little income because of deductions.
Here is the catch. “Asset-based” has two meanings in this program, and they behave very differently. Mixing them up is a common mistake in this topic.
How Underwriting Treats It, Step by Step
Every file is fully underwritten. The assets are documented with statements. The difference is that you skip traditional personal-income documentation, pay stubs and employment verification on the qualifier path.
1. You pick the path. A borrower is reviewed on one path at a time, never a blend of the two.
2. The lender counts your assets. Each account type gets a credit percentage. The balance you see online is not the balance that counts.
3. The lender checks seasoning. Statements must show the money has been yours for a set period.
4. The lender sizes the loan. The loan cannot exceed the leverage ceiling for your path, property use and transaction type.
5. The property is appraised. Value sets the ceiling. Your assets set the qualification.
6. Payoff and costs come out first. What remains is your cash for the business. A cash-out loan never promises a set cash amount.
Lenders in the network do not underwrite your business plan. They underwrite you and the collateral. That is a relief if the business is young. It is also a warning, because nobody in the process is stress-testing your expansion for you.
Which Path Fits Your Expansion?
The asset qualifier path suits borrowers whose eligible assets, after the credit percentages, equal or exceed the entire loan. The asset depletion path suits borrowers with large assets who want the loan to rest on derived income. The right program for your situation is the one whose arithmetic you can actually meet.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| Core test | Usable assets ≥ whole loan | Assets ÷ 60 months = income |
| Income documented | None | Derived income, DTI test |
| Refinance leverage | Up to 75% on a refinance of a principal residence or second home | 60% on a cash-out of any property use |
| Cash-out ceiling | Set by the lender, not published | 60% on a cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum score | The lender’s matrix |
Read the cash-out row twice. If your expansion needs real equity from the home, the depletion path is the one with a published number. On the qualifier path, ask the broker to confirm with the lender whether cash-out is allowed on your file and at what leverage. All figures here are ceilings and floors, never offers, and are subject to underwriting.
Qualifier-path loans are written on a refinance at up to 75% loan-to-value on a principal residence or second home. Depletion-path refinances run up to 80% on a principal residence or second home when it is a rate-and-term refinance, and up to 65% on an investment property when it is a rate-and-term refinance. A business expansion is a cash-out, so the 60% figure is the one that matters.
What Counts, and What Doesn’t
The credit percentages decide how much of your balance helps. They differ by path, so never read one column as the other.
| Asset type | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% (cash accounts) |
| Certificates of deposit | 100% | 100% |
| Brokerage accounts / securities | 100% | 80% |
| Retirement accounts | 90% under 59½, 100% at 59½ or older | 70% at any age |
| Real-estate equity | Not listed | 60% |
Not eligible on the depletion path: 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. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. Privately held stock is not eligible on either path.
The documented route for ineligible assets is conversion. Sell or liquidate, move the cash into a regulated account, and let it season. The lender reviews the source of the funds.
Seasoning, Credit and Minimums
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. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning on the depletion path. For a founder who just sold a company, that exception matters.
The qualifier path has a published 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on the depletion path needs a 700 score. Housing history is 0x30x12, though one 30-day late in the last twelve months can be considered case by case. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
Depletion-path minimums are tougher. 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 asset income only supplements documented income, it can count up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Reserves are simple on the qualifier path: none are required at or below 75% loan-to-value on a refinance, and above that the lender sets them. The depletion path publishes no reserve months.
Two Worked Examples
These shapes are illustrative. The lender’s own calculation governs.
Qualifier path. Take an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000), and $200,000 in savings (100% counts, so $200,000). That is $800,000 of usable assets against an $800,000 loan. The file is reviewed on assets alone, subject to underwriting.
Depletion path. You hold $1,500,000 in securities (80% counts, so $1,200,000) and $300,000 in cash (100% counts, so $300,000). Usable assets total $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the debt-to-income test.
Notice what neither example contains: the cash-out. Proceeds from the refinance cannot count as qualifying assets. Plan your qualifying balances separately from the money you intend to spend.
Sizing the Draw Against the Expansion
Most expansions cost more and run longer than the plan says. Treat the cash-out as a one-time lump sum and size it with that in mind.
- Cover the full build, not only the launch. Include fit-out, inventory, hiring and the months before revenue arrives.
- Keep a cushion outside the loan. A new location can sit at break-even for a while. Your new housing payment does not wait.
- Remember payoff and costs come first. The cash that reaches the business is smaller than the equity slice.
- Stress-test the downside. If the business underperforms, the mortgage does not shrink. The home or investment property is the collateral.
Run this test before applying. If revenue from the expansion were zero for a full year, could your portfolio income still carry the loan? If the answer is no, take less cash or use a different tool.
Where the General Rule Breaks
Purpose matters. Most borrowers assume a loan for a business is a business loan. A cash-out secured by your home is a mortgage first, and lenders classify files by purpose. The CFPB’s rule on exempt transactions lists a loan to expand a business among its examples of business-purpose credit, even when secured by the borrower’s residence. It also says the creditor must look at the primary purpose of each transaction. How your file is classified is the lender’s call.
Documentation matters too. The FDIC’s compliance examination manual warns that a checked box stating a business purpose, with no documentation of intended use, may be insufficient evidence. Keep purchase agreements, invoices and a dedicated business account. A law-firm guide on the business-purpose exemption makes a related point: the purpose of a loan, not the property type, decides which consumer rules apply.
Investment property on the depletion path. That loan is business-purpose, and it carries a lower ceiling: 60% loan-to-value on a cash-out. Business-purpose rental financing for borrowers who qualify on rent is DSCR, a separate program.
Early retirement withdrawals. Under 59½, the qualifier path counts a retirement account at 90%. After that, 100%. The depletion path counts retirement at 70% at any age.
Founders holding private stock. The stock itself does not count. The proceeds from a sale or buyout do, once converted to cash and seasoned. That is covered in the FAQ.
Cash-Out Refinance vs. Other Ways to Fund the Business
| Option | How it works | Main watch-out |
|---|---|---|
| Asset-based cash-out refinance | One new first lien replaces the old loan | Home is collateral; payoff comes first |
| HELOC | Second lien; keeps your first mortgage in place | Often needs income documented |
| Business loan or line | Borrowed in the company’s name or yours | Lender reviews business financials |
| Asset-depletion purchase or refi | Assets become qualifying income | Minimum assets apply |
A HELOC keeps your existing first mortgage in place, which helps when that mortgage is already locked in. A cash-out refinance replaces it. Neither tool is better in general. The right one depends on your balance sheet, your existing mortgage and how long the expansion needs funding.
If your goal is a rental cash-out for a business purchase, Lendmire also covers a rental cash-out refinance for a capital call or business purchase.
Key Terms Defined
Asset qualifier path: The route where eligible assets, after credit percentages, must equal or exceed the entire loan.
Asset depletion path: The route that divides usable assets by 60 months to create qualifying monthly income.
Cash-out refinance: A new, larger mortgage that pays off the old one and gives you the leftover cash.
Seasoning: The time money has sat in your accounts before a lender counts it.
Haircut: The percentage by which a lender discounts an asset, such as counting securities at 80%.
Debt-to-income ratio: Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
How to Choose the Right Program
The best program for your situation is the one that matches how your wealth is held. Use this order:
1. List every account, its type and its balance.
2. Apply the credit percentages from both columns above.
3. Check whether usable assets cover the whole loan (qualifier) or whether depletion income carries the payment (depletion).
4. Confirm that your cash-out need fits the 60% ceiling if you are on the depletion path.
5. Check seasoning, credit and, on the depletion path, the minimum-assets rule.
Lendmire is a broker, not a lender. Its role is to shop the asset-based mortgage programs available through select lenders in its network and match your statements to the program that suits them. Consumer lending is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Programs change, and every file is underwritten individually.
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.
Frequently Asked Questions
Does privately held company stock count as an asset?
A founder’s route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at their credit percentages. On the depletion path, sale-of-business funds are excused from the usual seasoning, subject to underwriting.
Can I use the cash-out proceeds to qualify?
No. Cash-out proceeds never count as qualifying assets on the depletion path. Qualify on the balances you hold before closing. The refinance cash is for the business, not for the file.
Does the program review my business plan?
No. The review rests on your assets, credit, property and appraisal. That is also why a plan is worth writing for yourself. Nobody else in the process will test it.
Is this a no-documentation loan?
No. Every file is fully underwritten. You provide statements for each qualifying asset, a credit review and an appraisal. What you skip, on the qualifier path, is tax returns, pay stubs and employment verification.
What if my eligible assets fall short?
Combine accounts, since qualifier-path assets add together. Or convert ineligible holdings into seasoned cash in a regulated account. The depletion path may fit better if you can meet its minimum assets. Subject to underwriting, a broker can check both options against your statements.
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. Reach the team at 828-256-2183. Borrowers who gather statements first usually find the path choice obvious.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
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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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 – Regulation Z §1026.3 Exempt transactions
2. FDIC Consumer Compliance Examination Manual V-1 TILA
3. Doss Law – Business Purpose Exemption Simplified
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Cash Out a Texas Home on an Asset Depletion Refinance? · Can You Get a Texas Asset-Based Mortgage With No Job? · How to Document a Wire From a Sale Before an Asset-Based Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.