The Quick Read: An asset-based cash-out refinance can supply equity for a ground-up build, but it is a permanent mortgage on a finished property, not a construction loan, and the best program for your situation depends on which of two asset paths fits your balance sheet. Lendmire, a mortgage broker, arranges these loans through select lenders in its network. Funds arrive as one lump sum at closing, not in draws.
- The loan sits on a property you already own and that is already finished. It does not finance the unfinished build.
- The asset depletion path allows cash-out at up to 60% loan-to-value on a principal residence, a second home or an investment property, subject to underwriting.
- Qualification runs on documented assets, not tax returns, pay stubs or employment verification.
- Cash-out proceeds never count as qualifying assets, so plan the build budget around that.
What does an asset-based cash-out refinance do for a build?
It converts equity in a finished property into cash you can put toward land, site work or construction. The new loan pays off your existing mortgage, and what remains is wired to you. You then use that cash as the equity in a build or as the build budget itself.
The loan does not follow the project. A construction loan releases money in stages as work is inspected. This loan pays once, against a property that already exists and has a final appraised value. That difference drives every decision below.
Scotsman Guide describes ground-up financing as covering land acquisition, site preparation and vertical construction. It adds that these projects take more planning and coordination than a flip, and that lenders weigh the builder’s track record. None of that logic applies to a permanent refinance. This is why the cash-out is best understood as a funding source sitting next to the build, not the build loan.
The program here is Lendmire’s asset-based mortgage program. It is built for cash-heavy, income-light borrowers: retirees, people who sold a business, heirs, and households living on a portfolio. If that describes you, the program is designed around your balance sheet instead of your paycheck.
How does underwriting treat it, step by step?
Underwriting follows one of two paths, and you are qualified on one path at a time. Here is how a file moves.
1. Pick the path. On the asset qualifier path, eligible assets after the credit percentages must equal or exceed the entire loan amount. No employment or income is documented. On the asset depletion path, usable assets are divided by 60 months to produce a monthly qualifying income. That income must carry the housing payment and your other debts through the debt-to-income test.
2. Document the assets. Assets are fully documented with statements. The loan is fully underwritten. What you skip is the income paperwork: no traditional personal-income documentation, pay stubs or employment verification.
3. Check seasoning. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants statements 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 depletion-path seasoning.
4. Review credit and housing history. The qualifier path sets a 600 minimum score. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is 0x30x12, and one 30-day late in the last twelve months is considered case by case. All of this is subject to underwriting.
5. Appraise the finished property. The final appraised value of the collateral controls the proceeds. It does not matter what the new build might be worth, or what your budget says.
6. Pay off, cost out, wire. The old loan is paid off, costs are settled, and the balance goes to you.
A rental-based loan runs a different test. AirDNA explains the debt service coverage formula as net operating income divided by annual debt service. That test asks whether a property’s income carries its debt. An asset-based file asks whether your balance sheet does. If you are weighing both, keep the two tests separate in your head.
Which path fits: asset qualifier or asset depletion?
Choose the qualifier path when your eligible assets cover the whole loan. Choose the depletion path when you want to turn assets into income, or when the collateral is an investment property. A cash-out for a build leans toward depletion, because that is where a published cash-out leverage figure exists.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How you qualify | Assets cover the entire loan | Assets divided by 60 months become income |
| Cash-out leverage | Set by the lender, not published | 60% on a cash-out refinance |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Property types | Principal residence or second home | Also investment property |
| Credit | 600 minimum | Lender’s matrix |
Read the cash-out row carefully. On the qualifier path, whether cash-out is allowed, and at what leverage, is the lender’s call and is not published. Do not plan a build budget around a qualifier-path cash-out number until a lender confirms it for your file.
On the depletion path, the published figures are these. On a principal residence or second home, leverage reaches up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. For a build funded by cash-out, the 60% cash-out figure is the one that matters, subject to underwriting. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The depletion path also sets minimums. 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-derived income supplements documented income, it can be used up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Because the investment-property version is a business-purpose loan, it is reviewed differently from a standard owner-occupied mortgage.
Three ways to use the cash on a new build
The same cash-out can serve three different build plans. Each has a different risk profile.
| Route | How it works | Main drawback |
|---|---|---|
| Cash-out as the full budget | You build with the lump sum alone | Overruns come out of your pocket |
| Cash-out as equity | The cash is your equity in a separate construction loan | Two loans to line up and carry |
| Build first, refinance after | Short-term money builds; the cash-out follows on a finished property | The permanent loan must cover the build debt |
Route one is cleanest on paper and hardest on discipline. You hold all the money at once, and nothing releases it in stages. Route two is common for larger projects, since a construction lender decides how much of the work it will finance and often wants your equity in first. Construction financing is a separate product outside this program, so you would arrange it separately.
Route three needs the most planning. The permanent loan has to be large enough to pay off the construction balance and costs, and the finished property must appraise high enough to support that. Many investors who finance builds this way plan the take-out before they break ground.
One honest take: route one is the one most borrowers underestimate. A ground-up project rarely finishes at its first budget, and a lump sum has no built-in checkpoint. If you choose it, size a contingency before you size the loan.
Which assets count, and which do not?
Cash, certificates of deposit and brokerage accounts count most. Other holdings count at reduced percentages or not at all. Naming the path is essential, because the two tables differ.
On the qualifier path, the share of each balance that counts is:
- Brokerage accounts, certificates of deposit, money market and savings: 100%
- 401(k) and IRA balances: 90% under age 59½ and 100% at 59½ or older
- Mixed accounts: balances from different account types add together toward the loan amount, so a file can draw on several of these sources at once.
On the depletion path, the share that counts is:
- Cash accounts and certificates of deposit: 100%
- Securities: 80%
- Retirement accounts: 70% at any age
- Real-estate equity: 60%
A founder or shareholder qualifies through documented liquid assets instead. Privately held company stock is not an eligible asset on either path. The usual route is the seasoned proceeds from a sale or buyout, converted to a cash balance, along with cash, public securities and retirement accounts at their percentages.
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. Several other items 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.
Here is the illustrative arithmetic. The lender’s own calculation governs.
- Qualifier path: An $800,000 loan with $330,000 in brokerage accounts (100% counts as $330,000), $300,000 in a 401(k) under 59½ (90% counts as $270,000) and $200,000 in savings (100% counts as $200,000) comes to $800,000 of usable assets. That covers the loan on assets alone.
- Depletion path: $1,500,000 in securities (80% counts as $1,200,000) plus $300,000 in cash (100% counts as $300,000) is $1,500,000 of usable assets. Divided by 60 months, that is $25,000 of monthly qualifying income, which then carries the housing payment and other debts through the debt-to-income test.
Where the general rule breaks
The cleanest rule is that this loan funds a finished property. Several edge cases bend it.
A build in progress. An asset-based refinance expects a finished, habitable property. It cannot fund unfinished work. If you need money during the build, that belongs to a construction or bridge product.
Cash-out proceeds as qualifying assets. They never count. If you cash out on one loan and then apply for a second asset-based loan, that cash cannot be counted as assets for the second file. Sequence matters, so run the qualifying math before you spend or move the money.
Classification. Whether a payoff counts as a rate-and-term refinance or a cash-out is the lender’s reading. Paying off a construction or short-term loan with little cash back may be treated differently from a true cash-out, and the allowed leverage can change with it. Ask before you assume.
Owner-occupied or rental. The collateral is a principal residence or second home on either path, or an investment property on the depletion path only. The new build can be a different property from the one you refinance. What matters to the lender is the collateral on the refinance, not what you plan to build with the proceeds.
Sub-1.00 rental coverage. If you are comparing this route with a rental-based loan, some programs through select lenders in the network will review properties below 1.00 coverage, but leverage and terms adjust. That is a different program with a different test, so treat it as a comparison point, not a feature of the asset-based loan.
Housing events and credit. A housing event needs 4 years of seasoning on the depletion path. Multiple bankruptcies are not eligible. Approval is never promised, and a credit check is part of every file.
What makes a program the best fit for a build?
No single program is best for everyone. The program that fits depends on your assets, the collateral, your credit profile and how much cash you need. Lendmire shops multiple wholesale lenders and matches the scenario to the program, so the useful question is which fit criteria matter to you.
Use these as a screen:
- Path. Do your assets cover the loan outright, or do they need to become income?
- Leverage. On a cash-out refinance, how much cash do you need against the 60% depletion-path ceiling, and can the qualifier-path lender confirm any cash-out at all?
- Loan size. Does the amount land inside $4,000,000 on the qualifier path or $125,000 to $3,500,000 on the depletion path?
- Asset mix. Is too much of your wealth in private stock, crypto or other ineligible holdings?
- Seasoning. Are your statements old enough, or do recent deposits need explaining?
- Collateral. Is the property finished, and is it a residence, a second home or an investment property?
The figures above are ceilings and floors, not offers. Every file is underwritten on its own facts and is not a commitment to lend. Because this is a consumer mortgage, consumer mortgage disclosures apply.
Consumer mortgage lending for this program is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
What does the decision look like in practice?
Picture a retired founder who sold her company and holds the proceeds as seasoned cash and public securities. She owns a paid-down home and wants to build a second property. Her statements are old enough, and her assets are large relative to the loan. The depletion path fits: her assets convert to income, and a cash-out at up to 60% on her principal residence supplies the equity.
Now picture a borrower whose wealth is mostly shares of a privately held company. His documented eligible assets are thin, because that stock does not count on either path. Until he converts part of it to a seasoned cash balance, the file does not work. The honest answer for him is to restructure first, then apply.
A third borrower has strong assets but needs more cash than the leverage ceiling allows. Her options are a smaller build, a larger asset base, or a construction loan alongside the refinance. The cash-out is one piece, not the whole plan.
Key Terms Defined
Asset qualifier path: The route where eligible assets, after the credit percentages, equal or exceed the whole loan, with no income documented.
Asset depletion path: The route where usable assets divided by 60 months become a monthly qualifying income that runs through the debt-to-income test.
Cash-out refinance: A new, larger loan that pays off the old one and sends you the difference as cash.
Seasoning: The period funds must sit in an account, or statements must age, before a lender counts them.
Loan-to-value (LTV): The loan amount as a percentage of the property’s appraised value.
Debt-to-income ratio: Your monthly debts, including the new housing payment, as a share of qualifying monthly income.
Ground-up construction: Building a new structure from land or a cleared site, as opposed to renovating an existing one.
Frequently Asked Questions
Can an asset-based cash-out refinance pay for construction in draws?
No. The loan is a permanent mortgage that pays once, as a lump sum at closing, against a finished property. If you need staged funding, that is a separate product, and the cash-out can serve as your equity alongside it.
Which path allows a published cash-out figure?
The asset depletion path. It allows cash-out up to 60% on a principal residence, second home or investment property, subject to underwriting. On the qualifier path, cash-out and its leverage are set by the lender and are not published, so ask for confirmation before you plan around it. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Do cash-out proceeds count toward my qualifying assets?
No. Cash-out proceeds never count as qualifying assets. If you refinance and then apply for another asset-based loan, the cash from the first loan cannot be used to qualify the second. Plan the order of your transactions before you move money.
Does privately held company stock count if I own a business?
No. If you sold the company, the seasoned cash proceeds can count at 100%. Public securities, cash and retirement accounts count at their path percentages, subject to underwriting.
Do I need tax returns or pay stubs?
You do not need tax returns, pay stubs or employment verification. The file is still fully underwritten, and your assets are documented with statements. Credit is reviewed, and the lender’s own calculation governs.
Ready to See How the Numbers Fit?
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.
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.
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. Scotsman Guide: fix-and-flip and ground-up construction loans
2. AirDNA: Debt Service Coverage Ratio in Real Estate
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 Before Your ARM Resets
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.