The Quick Read: The right program depends on whether your savings and investments can cover the whole new loan or must be converted into a monthly qualifying income. A small remaining balance gets paid off from the new loan, so the real question is how much leverage each path allows and how your assets are counted. Through select programs and subject to underwriting, Lendmire arranges both routes with lenders in its wholesale network.
- Assets cover the loan: on the asset qualifier path, eligible assets must equal or exceed the entire loan, and no employment or income is documented.
- Assets become income: on the asset depletion path, usable assets are divided by 60 months into a qualifying income that runs through the debt-to-income test.
- Cash-out is the tight spot: the depletion path caps a cash-out refinance at 60% loan-to-value. The qualifier path’s cash-out terms are set by the lender and not published.
- Not no-doc: you skip traditional personal-income documentation, pay stubs and employment verification, but the assets are fully documented with statements and the file is fully underwritten.
Why a Nearly Paid-Off Mortgage Changes the Question
A nearly paid-off mortgage means you own most of the home outright, but you may have little documented income. That is common for retirees, people who sold a business, and households living off a portfolio. A bank that wants pay stubs sees a weak file. An asset-based lender sees a strong one.
The new loan is a first lien that replaces the small balance. The old payoff comes out of the new loan amount, and you receive what is left. Asset-based underwriting changes how you qualify. It does not change the basic structure of a cash-out refinance.
This guide is written for consumer mortgages on a principal residence or second home. Investment property appears only on the depletion path. Lendmire’s asset-based mortgage programs are offered in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
Key Terms Defined
Cash-out refinance: a new mortgage larger than the old balance, with the difference paid to you.
Asset qualifier path: qualification on eligible assets alone, where counted assets must equal or exceed the whole loan.
Asset depletion path: a method that turns usable assets into monthly income by dividing them over 60 months.
Haircut: the share of an account’s balance a lender does not count, because the asset could lose value or carry a withdrawal penalty.
Seasoning: the time funds must sit in your accounts, shown by statements, before they count.
Debt-to-income (DTI): your monthly debts, including the new housing payment, compared with your monthly qualifying income.
What Does Asset-Based Mean for a Cash-Out Refinance?
Asset-based means the lender reviews your file on what you own instead of what you earn. Your statements replace tax returns, pay stubs and employment verification. The lender still pulls credit, orders an appraisal and reviews the property.
A borrower is qualified on one path at a time. Never mix the two sets of numbers. Figures from one path do not apply to the other.
The Two Paths Side by Side
Start here, because the path you fit decides everything else. Every figure below is a ceiling or floor, subject to underwriting, not an offer.
| Factor | Asset Qualifier | Asset Depletion |
|---|---|---|
| How assets work | Must cover the whole loan | Become monthly income |
| Income documented | None | Derived from assets |
| Purchase leverage | Up to 80% | Up to 80% (65% investment) |
| Refinance leverage | Up to 75% | Up to 80% rate-and-term |
| Cash-out leverage | Lender-set, unpublished | 60% |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | Lender’s matrix |
The depletion path’s 80% figure applies to a principal residence or second home on a purchase or rate-and-term refinance. On an investment property, the depletion path allows up to 65% on a purchase or rate-and-term refinance. A cash-out refinance on a principal residence, second home or investment property is capped at 60% on that path.
How Underwriting Treats Your File, Step by Step
Across the network, the process follows the same sequence on both paths.
1. Pick the path. If your countable assets exceed the whole loan, the qualifier path fits. If they do not, the depletion path may fit.
2. Collect statements. Qualifier-path files need two months of statements for each qualifying account. Depletion-path files need statements at least 120 days old plus the most recent statement within 45 days.
3. Apply the credit percentages or haircuts. Each asset type counts at a set share of its balance. The next two sections show those shares.
4. Pull credit. The qualifier path has a 600 minimum score. The depletion path follows the lender’s matrix. Housing history is typically 0x30x12, and one 30-day late in the last twelve months is considered case by case.
5. Appraise the home. The appraised value sets the maximum loan through the leverage cap.
6. Net out the payoff. The remaining mortgage balance is paid from the new loan, along with costs, before any cash reaches you.
This is a consumer mortgage, so the standard consumer loan disclosures apply.
Which Assets Count on the Qualifier Path?
The qualifier path counts most liquid accounts at full value. Brokerage accounts, certificates of deposit, money market accounts and savings count at 100%. Retirement accounts such as a 401(k) or IRA count at 90% if you are under 59½ and 100% at 59½ or older. Accounts combine.
Qualifying requires 60 days of seasoning. No reserves are required at or below 75% loan-to-value, and above that the lender sets them.
Here is an illustration, with the lender’s own calculation governing. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100%, so $330,000), $300,000 in a 401(k) while under 59½ (90%, so $270,000) and $200,000 in savings (100%, so $200,000). That counts $800,000 of usable assets. The assets cover the loan, so you could qualify on assets alone.
Which Assets Count on the Depletion Path?
The depletion path applies bigger haircuts, because it spreads assets into income. Cash accounts and certificates of deposit count at 100%. Securities count at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Not eligible on this path 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.
Here is the math, again as an illustration. Say you hold $1,500,000 in securities (80%, so $1,200,000) and $300,000 in cash (100%, so $300,000). Usable assets total $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income must carry the new housing payment and your other debts through the debt-to-income test.
Two minimums apply. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never fall below $250,000 liquid when depletion is your only income source. If you also have documented income, asset-derived income can supplement it up to a 45% debt-to-income ratio, and then the minimum-assets rule is waived.
What Does Not Count on Either Path?
Seasoned proceeds, cash, public securities and retirement accounts count at their stated percentages. On the depletion path, sale-of-business, inheritance and legal-settlement funds are excused from the seasoning requirement.
Cryptocurrency, precious metals, collectibles, pledged or borrowed funds, and business accounts beyond your ownership share are not published as eligible on either path. The documented route is to convert them into a seasoned cash balance in a regulated account, with the source reviewed by the lender.
On the depletion path, cash-out proceeds never count as qualifying assets. Plan for this. You cannot pull cash from the home and then use that cash to qualify for the same loan.
How Much Cash Can You Actually Get?
Less than the equity suggests. The depletion path’s 60% cash-out cap means the new loan cannot exceed 60% of appraised value. The payoff of your remaining balance comes out of that first, along with closing costs, and the rest is your cash. A nearly paid-off mortgage helps because the payoff is small. It does not raise the cap. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The qualifier path allows up to 75% loan-to-value on a refinance on a principal residence or second home. Whether cash-out proceeds are allowed on that path, and at what leverage, is set by each lender and is not published. Ask for that answer before you build a plan around it.
Many borrowers assume a paid-off home means more leverage. It does not. Lenders size the loan to value, not to your remaining balance.
Is Replacing a Nearly Finished Loan Worth It?
Sometimes. Replacing a nearly finished loan restarts your payoff clock on a larger balance. You also give up whatever favorable terms your old loan carries. Run a simple comparison before you apply: how much cash you need, what the new payment does to your monthly budget, and whether a second lien would meet the same need.
Alternatives exist, each with its own rules:
| Option | Effect on current loan | Main tradeoff |
|---|---|---|
| Asset-based cash-out refinance | Replaced by new first lien | Larger balance, new terms |
| Home equity loan or HELOC | Stays in place | Second lien, income review |
| Selling assets directly | Untouched | May trigger taxes or lost growth |
A home equity line typically relies on income review, which is what makes it hard for income-light borrowers. A cash-out refinance on assets can work where an income-based line does not. If your existing loan has terms you value and you need a modest amount, a second lien may serve you better.
Where the General Rule Breaks
Cash-out classification. How much cash you receive at closing affects whether a lender treats the loan as rate-and-term or cash-out, and the threshold varies by program. That matters because depletion-path leverage is 80% on a rate-and-term refinance of a principal residence and 60% on a cash-out.
Investment property. Investment property is eligible only on the depletion path, with lower leverage: 65% on a purchase or rate-and-term refinance and 60% on a cash-out. A first-time investor on this path needs a 700 score. Because the loan is for investment property, it is business-purpose, and federal rules treat credit for a non-owner-occupied rental as business-purpose lending. Lenders review it differently from a standard owner-occupied mortgage.
Credit events. Multiple bankruptcies are not eligible. A housing event such as a foreclosure needs four years of seasoning on the depletion path.
Recent purchase. If you bought the home recently with cash, the seasoning and sizing rules for a recently acquired property can limit what you receive. A long-held, nearly paid-off home rarely runs into this.
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, as IRS Publication 527 explains for rental use of proceeds.
Choosing Between the Paths in Practice
Lead with one question: do your countable assets equal or exceed the entire loan you want?
If yes, the qualifier path asks for the least. You document assets, not income, and the 600 score floor is the lowest in this program. The tradeoff is lender-set cash-out terms.
If no, the depletion path is the likelier fit. It accepts smaller asset balances relative to the loan amount because it turns assets into income. The tradeoffs are bigger haircuts, the debt-to-income test and the 60% cash-out cap. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Consider a retiree who sold a business and holds the proceeds in a brokerage account. That cash has aged on statements, counts at full value on the qualifier path, and may cover a modest loan outright. Now consider a household living off a large securities portfolio with a nearly paid-off home. The depletion path may fit better, because the portfolio produces a derived income that carries the new payment.
The best program for your situation depends on your assets, property type, credit profile, leverage need and documentation. Lenders in the network write these loans with different overlays. A broker that shops several wholesale lenders can match your file to the right program instead of forcing it into one.
What to Gather Before You Apply
- Two months of statements for every account you plan to use, or statements at least 120 days old plus the latest one if you fit the depletion path.
- A recent mortgage statement showing the payoff balance.
- Proof of source for any large deposit, especially from a sale of a business, an inheritance or a settlement.
- A list of any assets you hold in privately held stock, crypto or other ineligible forms, so the conversion to cash can be planned.
- Your credit history, housing payment history and any past housing events.
Who This Is Not For
If your income is steady and easy to document, a standard income-based refinance may cost less in terms and effort. If your wealth sits mostly in privately held stock, crypto or other ineligible forms, you will need to convert those to seasoned cash first. If you need more leverage than 60% on a depletion-path cash-out, this program will not provide it.
Frequently Asked Questions
Can I use cash-out proceeds to qualify for the same loan?
No. Qualifying assets must be documented separately in your accounts, and the lender reviews the source.
How is a small remaining balance handled?
The balance is paid off from the new loan at closing. Your cash is the new loan amount minus that payoff and costs. A small balance leaves more of the loan for you, but it does not raise the leverage cap.
Does asset-based mean no documentation?
No. You skip traditional personal-income documentation, pay stubs and employment verification. Your assets are documented with statements, and the file is fully underwritten.
Does my retirement account count in full?
It depends on the path. On the qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age.
What if most of my wealth is private company stock?
Privately held company stock is not an eligible asset on either path. The documented route is converting it through a sale or buyout into a seasoned cash balance. After that, cash, public securities and retirement accounts count at their stated percentages.
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 or through the quote page.
Every figure here is a ceiling or floor, subject to underwriting and through select programs, and none of it is a commitment to lend.
Investors weighing their equity options can start with 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 application is reviewed individually by the lender. 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
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 Buy Out a Co-Owner · Best Asset-Based Cash-Out Refinance Program to Pay Off a Second Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.