The Quick Read: The right program for raising a down payment without selling anything is the one that matches how you hold your wealth. On the asset depletion path, your portfolio is converted into qualifying income, a cash-out refinance taps property equity at up to 60% loan-to-value, and the proceeds become your down payment, subject to underwriting.
- Two paths exist. The asset qualifier path uses assets to cover the whole loan. The asset depletion path turns assets into monthly income. You are qualified on one path at a time.
- Cash-out leverage is clearest on the depletion path: up to 60% on a cash-out refinance of a principal residence, second home or investment property.
- Proceeds never count as qualifying assets. The cash-out funds the down payment, but it does not enlarge the pool that qualifies you.
- No traditional personal-income documentation, pay stubs or employment verification are required on these programs. Every file is still fully underwritten, and your assets are documented with statements.
- The best program depends on your situation: what you hold, which property you are borrowing against, your credit profile and the leverage you need.
What Does Asset-Based Mean When You Want a Down Payment?
Asset-based means the lender reviews your file on what you own instead of what you earn on a paycheck. That helps if your balances are large and your documented income is small. Retirees, business sellers, people who received an inheritance or settlement, and early-retired professionals fit this picture.
The phrase causes confusion because it gets used three ways. You can qualify with assets, pledge assets as collateral, or borrow against assets through a line of credit. This article covers the first one. Your assets prove you can repay the loan, and the loan itself is a mortgage secured by the property.
Lendmire is a mortgage broker. It arranges these loans through select lenders in its wholesale network, and those lenders review and approve each file. Lendmire’s asset-based mortgage programs are available through consumer mortgage licensing in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
No single lender is the best choice for every borrower. The program that fits you depends on your property, credit, assets and leverage need. A broker shops several lenders and matches the file to the program, instead of forcing it into one lender’s box.
Key Terms Defined
Cash-out refinance: a new, larger mortgage that pays off your current one and hands you the difference in cash.
Asset qualifier path: the route where your eligible assets, after credit percentages, equal or exceed the entire loan, and no income is documented.
Asset depletion path: the route where eligible assets are divided by 60 months to create a monthly qualifying income that runs through the debt-to-income test.
Debt-to-income test: the check that compares your monthly debts, including the new housing payment, against your qualifying income.
Haircut: the share of an asset’s balance a lender will not count, such as the 20% knocked off securities on the depletion path.
Seasoning: how long funds have sat in an account before the lender will count them.
Loan-to-value (LTV): the loan amount as a percentage of the property’s appraised value.
How Does a Cash-Out Refinance Become a Down Payment?
A cash-out refinance replaces your current mortgage with a bigger one, and you keep the difference. This consumer guide on using home equity describes it the same way and notes that the larger loan raises your payment. That is the whole trade: you give up some equity and take on more debt, and you keep the asset instead of selling it.
For a down payment, the money moves in a set order:
1. You pick the property with equity to borrow against.
2. An appraisal sets its value, which caps the new loan through the leverage limit.
3. The new loan pays off the old one, along with closing costs and any prepaid items.
4. What remains is net cash. It lands in your account.
5. You document that cash as the down payment on the next purchase.
Net cash is smaller than the headline loan amount. Payoff and costs come out first, so size the loan around the cash you actually need to land.
Equity is not a down payment until it sits in your account. A lender buying your next property wants to see the cash arrive and trace where it came from.
Which Path Fits You: Assets Cover the Loan, or Assets Become Income?
Pick the path first. Everything else follows from it. Never blend the two sets of figures.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How assets are used | Cover the entire loan | Divided by 60 months into income |
| Income documented | None | Derived from assets |
| Purchase leverage | Up to 80% LTV | See leverage below |
| Refinance leverage | Up to 75% LTV | See leverage below |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Cash-out | Set by lender, not published | Up to 60% LTV |
The qualifier path’s 80% purchase and 75% refinance limits apply to a principal residence or second home. The lender sets whether cash-out proceeds are allowed on this path and at what leverage. That figure is not published, so don’t plan around it.
The depletion path gives a clear cash-out number. On a principal residence or second home, leverage runs up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Investment property is eligible only on this path, and the loan is business-purpose.
All of these figures are ceilings, not offers, and they are available through select programs, subject to underwriting.
How Does Underwriting Treat Your Assets, Step by Step?
Underwriting follows the same logic on both paths. It just ends in a different test. The steps below show the order.
Step 1: The lender counts what you hold. Each account gets a credit percentage, covered in the next section. Accounts combine.
Step 2: The lender checks seasoning. On the qualifier path, funds need 60 days of seasoning and two months of statements per qualifying account. On the depletion path, statements must be at least 120 days old at application, plus a recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning on the depletion path.
Step 3: The lender applies the path’s test. On the qualifier path, usable assets must equal or exceed the whole loan. On the depletion path, usable assets divided by 60 months become income, and that income must carry the housing payment and other debts.
Step 4: The lender reviews credit and housing history. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix, so ask for the matrix instead of a single number. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, though one 30-day late in the last twelve months is considered case by case. A housing event needs 4 years of seasoning on the depletion path, and multiple bankruptcies are not eligible.
Step 5: The lender reviews the property. The appraisal sets value, and the value caps the loan.
Step 6: The lender checks reserves. The qualifier path requires none at or below 75% LTV. Above that, the lender sets them. The depletion path publishes no reserve months. Final terms follow a full review of property, leverage, and credit. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Reading this list, you might think the process is loose. It isn’t. Paperwork shifts from pay stubs to statements, and the review is as thorough as any other mortgage.
What Does the Math Look Like?
These examples are illustrative, and the lender’s own calculation governs.
Qualifier path. Say you want 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. It matches the loan, so you qualify on assets alone.
Depletion path. Say 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 carries the housing payment and your other debts through the debt-to-income test.
The depletion path has a minimum-asset rule. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They also can’t fall below $250,000 liquid when asset depletion is your only income source. If asset income only supplements documented income, the minimum-assets rule is waived, and total debt-to-income can run up to 45%.
Cash-out proceeds never count as qualifying assets. You can’t borrow against a property, count the cash, and use it to qualify again. Funds you spend on the down payment and closing also leave your pool, so count what remains after they are spent.
What Counts as an Asset, and What Doesn’t?
Each path credits assets differently. The table shows the share of each balance that counts.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash accounts (savings, money market) | 100% | 100% |
| 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% |
Some assets are 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. Privately held stock is not eligible on either path.
Cryptocurrency, precious metals, collectibles, business accounts beyond your ownership share, 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.
Notice the gap between paths. The same brokerage account is worth 100% on one and 80% on the other. That difference can decide which path fits.
Where Does the General Rule Break?
The steps above describe the normal file. Several situations bend them.
A prepayment penalty on the old loan. If the mortgage you are paying off carries a prepayment penalty and the payoff falls inside the penalty window, the penalty applies. A refinance triggers it the same way a sale does. Read your existing note before you plan the cash-out. Penalties come out of your net cash.
A property you bought recently. Many programs want seasoning on title before they allow a cash-out. The required period differs from program to program, so a broker who sees several guidelines can save you from applying to the wrong one. A recently purchased property may fit better on a different program.
A short-term rental as collateral. Cash-out leverage tends to be lower on short-term rental collateral. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
A founder’s or shareholder’s stock. Privately held company stock is not an eligible asset on either path. If your wealth sits in a company you own, the route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at their haircuts.
Using the same assets twice. Money you qualify with is not money you can also spend on the down payment without shrinking the pool. Run the numbers on what remains after the purchase, not before.
A rental that can carry itself. If the property you want to buy is a rental that covers its own payment, a rental-income loan may suit it better than an asset-based one. Programs below a 1.00 coverage ratio are available through select lenders in the network, though leverage and terms adjust. The asset-based route is for borrowers whose strength is their balance sheet, not the property’s rent.
Two properties, two tests. The property you cash out and the property you buy are separate loans. Each is reviewed on its own. Strong numbers on one do not rescue the other.
How Does This Compare With Selling or Borrowing Another Way?
The alternatives trade control for convenience. Each gets the same job done differently.
| Option | How it works | What you give up |
|---|---|---|
| Asset-based cash-out refinance | New mortgage replaces the old one | Equity, plus a larger payment |
| Home equity loan or line | Second lien behind your first mortgage | A second payment; its own rules |
| Portfolio-backed line | Borrow against securities | Collateral can be called |
| Selling the asset | Convert holdings to cash | The asset, its income, and a taxable sale |
A cash-out refinance replaces the whole first mortgage, while a home equity loan sits behind it. If your current first mortgage is already well suited to your situation, a second lien keeps it in place. If that mortgage is not worth keeping, a cash-out lets you restructure everything at once.
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.
Borrowing costs matter here too. A law-firm summary of CFPB research found that cash-out refinances take a larger share of all refinances when borrowing costs rise, and the researchers called the trend worth monitoring. That data covers consumer borrowers, not investors. The lesson still applies: pulling equity without a plan adds risk.
How Do You Pick the Best Program for Your Situation?
Start with the profile. The best fit follows from what you hold and what you need.
| Your situation | Likely fit |
|---|---|
| Assets cover the whole loan, no documented income | Asset qualifier path |
| Large portfolio, need maximum cash from a property | Asset depletion path, cash-out up to 60% LTV |
| Buying an investment property with portfolio income | Depletion path, up to 65% on a purchase |
| Wealth sits in a private company | Convert to liquid, seasoned assets first |
| Property rent covers its own payment | A rental-income loan may fit better |
Then run a few checks before you apply:
- Total your usable assets on each path and see which clears.
- Confirm the leverage cap on the property you are borrowing against.
- Check your existing note for a prepayment penalty.
- Estimate net cash after payoff and costs, then compare it to the down payment you need.
- Confirm your credit sits at the program’s floor, with room to spare.
A broker’s edge is breadth. Across the wholesale network, lenders differ on overlays and credit matrices. The program that works for you depends on the combination of property type, credit profile, leverage need and documentation. The strictest overlays want cleaner files. Looser ones adjust the terms to match.
Finally, ask whether you need cash-out at all. If your assets are liquid and you have no appetite for a larger mortgage, the cleaner answer may be using a portion of them directly and keeping the property loan untouched. Cash-out earns its place when you want your portfolio to stay invested and your property to keep working.
Frequently Asked Questions
Can I use a cash-out refinance as my down payment on another property?
Yes, in most cases the net cash can serve as a down payment, as long as the lender can trace where it came from. The cash must arrive in your account and be documented. It does not count as a qualifying asset on the asset-based program, so your assets must carry the qualification on their own. Each loan is underwritten separately, subject to lender guidelines.
Does my private company stock count?
No. The route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at their haircuts. Plan the conversion before you apply.
Which path allows cash-out?
The asset depletion path publishes a cash-out figure: up to 60% LTV on a principal residence, second home or investment property. On the asset qualifier path, whether cash-out is allowed and at what leverage is set by the lender and not published. Ask your broker which lender in the network allows what on your file. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Is this a no-documentation loan?
No. You provide no traditional personal-income documentation, pay stubs or employment verification, but every file is fully underwritten. Your assets are documented with statements, and the program reviews credit, the property and the source of funds.
Can I use retirement accounts?
Yes, at a reduced credit. On the qualifier path, retirement balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. Both are subject to underwriting.
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. This is not a commitment to lend, and every program is subject to lender guidelines and underwriting.
An equity position that stays in place while your portfolio keeps growing is a strong foundation for the next purchase, provided the cash-out is sized to need rather than to the ceiling.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages for self-employed and high-net-worth borrowers are arranged through wholesale lenders on primary residences, second homes and investment properties; every file is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the mechanics of pulling equity out of a rental property, see 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. Consumer guide on using home equity (Consumer Financial Protection Bureau)
2. Law-firm summary of CFPB research on cash-out refinancing
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 to Fund a Business Expansion · Best Asset-Based Cash-Out Refinance Program With an Interest-Only Payment Period · Best Asset-Based Cash-Out Refinance Program That Appraises Low
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.