The Quick Read: No published asset-based program that Lendmire places files with lists a 529 plan as an eligible asset on either path, so no program counts it as liquid by name. The right program for your situation depends on whether your other documented assets cover the loan outright or need to be converted into income.
- Qualifier path: eligible assets must equal or exceed the entire loan, and no employment or income is documented.
- Depletion path: usable assets divided by 60 months become qualifying income that runs through the debt-to-income test.
- Cash-out leverage: the depletion path allows up to 60% on a cash-out refinance, subject to underwriting. The qualifier path’s cash-out terms are set by the lender and are not published.
- 529 plans: not a listed asset on either path, so plan around your brokerage, cash and retirement balances. Anything else is a conversation to have before you apply.
Many borrowers who hold a 529 are cash-heavy and income-light. They may be retirees, business sellers, or households living off a portfolio. For them, the question is practical: can that education account help me qualify? This article explains how underwriting treats assets, where a 529 fits, and what to do instead.
How Does an Asset-Based Cash-Out Refinance Work?
An asset-based refinance is reviewed around what you hold, not what you earn. Two paths exist through asset-based mortgage programs, and a borrower is qualified on one path at a time. Lendmire is a mortgage broker. It shops the scenario across select lenders in its network, and each lender underwrites and approves its own file.
The asset qualifier path. Eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. You need no traditional personal-income documentation, pay stubs or employment verification. Loans run up to $4,000,000, with leverage up to 75% on a refinance, subject to underwriting. Property type, leverage and credit profile all apply. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The asset depletion path. Eligible assets, after haircuts, are divided by 60 months. The result is a monthly qualifying income. That income must carry the housing payment and your other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000.
Both paths are fully underwritten. The assets are documented with statements. “No income documentation” never means “no documentation.”
Where Does a 529 Plan Fit?
A 529 plan is not on the list of eligible assets for either path. Treat it as unlikely to count, and do not build your file around it. Lendmire’s requirements piece on a 529 plan counted as liquid assets covers the documentation side in more detail.
The reasoning is easy to see. A 529 is a restricted-purpose account. Money pulled out for anything other than education triggers tax on the earnings and, usually, a 10% additional tax on that portion. IRS Publication 970 is the governing publication on those distributions. Whatever value an underwriter might assign is reduced by that cost. Ownership matters too. A grandparent-owned or child-owned account is a different case from one you own and can withdraw from at will.
For contrast only, agency mortgage rules are not asset-based program rules. The Fannie Mae Selling Guide Q&A on 529 plans treats a borrower-owned, revocable 529 as a possible source of funds. It requires the lender to net out fees, taxes and penalties first. That rule governs agency loans. It does not govern the programs described here.
The ideas still carry over as plain concepts: who owns the account, whether you can withdraw at will, and what it is worth after tax.
How Do Credit Percentages and Haircuts Work?
Each asset counts at a set share of its balance, and the shares differ by path. Never blend the two tables.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Brokerage accounts | 100% | Securities 80% |
| CDs, money market, savings | 100% | Cash and CDs 100% |
| 401(k) and IRA | 90% under 59½, 100% at 59½+ | 70% at any age |
| Real-estate equity | Not listed | 60% |
| 529 plan | Not listed | Not listed |
Accounts combine. Figures are ceilings and floors, never offers, and each file is underwritten individually.
Privately held company stock is not an eligible asset on either path. A founder’s route is documented liquid assets: seasoned proceeds from a sale or conversion, cash, public securities and retirement accounts at the percentages above.
Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are also not published as eligible on either path. The documented route for those is converting them into a seasoned cash balance in a regulated account. The lender then reviews the source of the funds.
What Does a Worked Example Look Like?
These figures are illustrative, and the lender’s own calculation governs.
Qualifier path. Take an $800,000 loan. The borrower holds $330,000 in brokerage accounts (100%, so $330,000), $300,000 in a 401(k) under 59½ (90%, so $270,000), and $200,000 in savings (100%, so $200,000). That counts $800,000 of usable assets. The file is reviewed on assets alone, subject to underwriting.
Now suppose the borrower also holds a 529. It adds nothing to this math, because it is not a listed asset. If the file only works with it, the file does not work.
Depletion path. Take $1,500,000 in securities (80%, so $1,200,000) plus $300,000 in cash (100%, so $300,000). That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test.
How Do Reserves and Cash-Out Proceeds Fit In?
On the qualifier path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them. The depletion path publishes no reserve months.
Cash-out proceeds never count as qualifying assets on the depletion path. You cannot borrow against the house and then count the cash toward qualifying. For a related angle, see Lendmire’s piece Best Asset-Based Cash-Out Refinance Program Without a Job and Relying on Liquid Assets.
Which Route Fits Which Borrower?
The best program for your situation depends on how your wealth is held.
| Profile | Likely fit |
|---|---|
| Large liquid balances that cover the whole loan | Qualifier path |
| Large portfolio, loan too big to cover with assets | Depletion path |
| Documented income plus a big portfolio | Depletion as a supplement, up to 45% debt-to-income |
| Seller of a business or recipient of an inheritance | Depletion path, with seasoning excused on those funds |
Leverage is the flip point. The depletion path caps cash-out at 60%. The qualifier path publishes no cash-out figure, so a broker has to ask lenders. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
If the goal is financing a rental property rather than qualifying on assets, business-purpose DSCR financing is a different product and a better fit.
Should You Liquidate or Retitle a 529 First?
Not before you talk to a broker and a tax professional. Moving money out of a 529 carries tax cost, and the 10% additional tax falls on the earnings portion. The IRS tax benefits for education information center lays out the exceptions for death, disability and scholarships. States differ too, and some recapture tax benefits.
A mortgage payment is not a qualified education expense. If your listed assets already cover the loan, leave the 529 alone. If they fall short, ask whether a different loan size or path closes the gap before you pay a tax cost. Tax treatment varies; consult a qualified professional.
Key Terms Defined
- Asset qualifier path: the route where eligible assets cover the entire loan and no income is documented.
- Asset depletion path: the route where usable assets divided by 60 months become qualifying income.
- Haircut: the share of a balance a lender does not count.
- Seasoning: how long funds have sat in your account.
- 529 plan: a tax-advantaged savings account meant for education costs.
What Documents Should You Prepare?
- Two months of statements for each qualifying account on the qualifier path, with 60 days of seasoning.
- On the depletion path, statements at least 120 days old plus the most recent one within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
- Credit around the 600 minimum on the qualifier path. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700.
- Depletion minimums: the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when assets are your only income source.
Consumer mortgage disclosures apply to these loans.
Common Mistakes
- Assuming a 529 counts at face value because it counts somewhere else.
- Confusing financial-aid reporting with lender treatment. They are separate systems.
- Counting a gifted or non-owner account.
- Counting cash-out proceeds as assets.
- Adding privately held stock to the total. It is not an eligible asset on either path, so founders should document a sale or conversion to seasoned cash instead.
Frequently Asked Questions
Does a 529 count as a liquid asset on these programs?
Not as a listed asset. Neither path names it. Plan around brokerage, cash, CD and retirement balances, and ask your broker early if it is a large part of your net worth.
Can I use a grandparent-owned 529?
Treat it as not usable. The borrower generally must own the account and be able to withdraw at will. Gifted funds also rarely satisfy asset requirements.
Do cash-out proceeds count toward qualifying?
No. On the depletion path, cash-out proceeds never count as qualifying assets.
Do I have to sell my investments?
No. The programs count balances at set percentages without requiring a sale, subject to underwriting.
What if my depletion income falls short?
Options include a lower loan amount, adding documented income, or switching to the qualifier path if your assets cover the loan. A broker can test each against 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. Reach the team at 828-256-2183.
A 529 may feel like part of your safety net, but on these programs the balances that carry the file are the ones lenders already name.
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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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 With Little Equity · Best Asset-Based Cash-Out Refinance Program Without a Job and Relying on Liquid Assets
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.