The Quick Read: It depends on which of two paths you use. On the asset qualifier path, your eligible assets must cover the entire loan, which can reach $4,000,000 at up to 80% loan-to-value on a purchase. On the asset depletion path, your assets are divided by 60 months into qualifying income, and loans run from $125,000 to $3,500,000. Both paths are subject to underwriting, and a borrower is qualified on one path at a time.
- Qualifier path: usable assets must equal or exceed the whole loan, and no employment or income is documented.
- Depletion path: usable assets divided by 60 months become monthly income that must carry the housing payment and your other debts.
- Second-home leverage: up to 80% on a purchase on either path, with refinance limits that differ by path.
- Your number shrinks when assets are discounted, when closing funds come out of the pool, or when you plan to rent the home.
Which Path Fits Your Balance Sheet?
The qualifier path fits a borrower whose liquid balances are large compared with the loan. The depletion path fits a borrower who needs the assets to act as income. Both serve people with big balances and little documented income, such as retirees, business sellers, and households living on a portfolio.
Here is how the two paths differ on an Alabama second home, through select programs in Lendmire’s wholesale network.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How you qualify | Assets cover the entire loan | Assets ÷ 60 months = income |
| Income documented | None | Derived income, tested against debts |
| Second-home purchase | Up to 80% LTV | Up to 80% LTV |
| Refinance | Up to 75% LTV | 80% rate-and-term, 60% cash-out |
| Loan size | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | The lender’s matrix |
Every figure above is a ceiling or floor, not an offer. Programs change, and each file is underwritten individually.
One point matters for assets. Neither path skips documentation of what you own. Your accounts are verified and seasoned. What goes undocumented on the qualifier path is employment and income.
What Counts as an Asset, and at What Value?
Not every dollar counts at face value. The program applies a credit percentage to each account type, and that percentage sets your real borrowing capacity.
On the qualifier path, the share of each balance that counts looks like this:
- Brokerage, certificates of deposit, money market and savings: 100%.
- 401(k) and IRA balances: 90% under age 59½ and 100% at 59½ or older.
- Accounts combine, so several balances can add up to one qualifying total.
On the depletion path, the haircuts are steeper:
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
The depletion path does not accept custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, or non-vested restricted stock units. Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds 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.
How the Qualifier Path Sets Your Maximum
On the qualifier path, your maximum is the smaller of two numbers: your usable assets and the leverage limit on the property. Add up what counts after the credit percentages. If that total equals or exceeds the loan, the loan is reviewed on assets alone, subject to underwriting.
Run an illustrative example. A borrower wants an $800,000 loan. She holds $330,000 in brokerage accounts, which count at 100%, or $330,000. She holds $300,000 in a 401(k) and is under 59½, so it counts at 90%, or $270,000. She holds $200,000 in savings, which counts at 100%, or $200,000. Her usable assets total $800,000, which matches the loan, so she is reviewed on assets alone.
Now change one detail. If she were over 59½, her 401(k) would count in full and her capacity would rise. That is why age matters on this path.
The loan also has to fit the property. On a second-home purchase, the lender caps the loan at up to 80% of value. A refinance of a second home caps at up to 75%. The lender’s own calculation governs how your down payment and closing funds are treated. The practical rule is to plan on the cash you use to buy not counting a second time toward the loan.
Seasoning applies as well. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. Fresh deposits from an unclear source slow a file down or reduce what counts.
Reserves are simple here. None are required at or below 75% loan-to-value. Above that level, the lender sets them. Whether cash-out proceeds are allowed on this path is the lender’s decision and is not published, so do not plan around it.
How the Depletion Path Sets Your Maximum
On the depletion path, your maximum comes from a monthly income figure and what that income can carry. The lender discounts your assets, adds them up, and divides by 60 months. The result is qualifying income, and it runs through the debt-to-income test with the full housing payment and your other debts.
Here is the sanctioned example. A borrower holds $1,500,000 in securities, which count at 80%, or $1,200,000. He also holds $300,000 in cash, which counts at 100%, or $300,000. Usable assets total $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts, and the lender’s calculation governs the final answer.
The loan size that income supports depends on your other debts and on the payment. The payment includes principal, interest, taxes, insurance, and any HOA dues. A bigger property tax or insurance load shrinks the loan the same income can carry. On an Alabama coastal or condo purchase, those line items deserve a hard look before you commit to a price.
The depletion path has its own entry tests:
- Qualified assets must reach at least the lesser of $1,000,000 or 1.25 times the loan balance.
- When assets are your only income source, liquid assets can never fall below $250,000.
- Statements must be at least 120 days old at application, plus one statement within 45 days.
- Sale-of-business, inheritance, and legal-settlement funds are excused from that seasoning.
Asset income can also supplement documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. That helps a borrower with modest pension or consulting income who wants a larger loan.
Credit follows the lender’s score and loan-amount matrix. A housing history of 0x30x12 is standard, and one 30-day late in the past twelve months is considered case by case. A housing event needs four years of seasoning on this path. Multiple bankruptcies are not eligible.
Which Path Gives You the Bigger Loan?
Use the qualifier path if your balances are mostly cash, brokerage, and savings and you want the loan covered outright. Use the depletion path if your assets are strong but the loan is large compared with them, or if retirement accounts carry most of your wealth.
Here is the trade-off. The qualifier path asks for assets equal to the whole loan, which is a high bar but a simple one. The depletion path asks for far less than the whole loan in assets, but the income it creates has to pass a debt test. A borrower with $1,500,000 in usable assets could not qualify for a loan of that size on the depletion path alone without the income carrying the payment. The same borrower could borrow up to that amount on the qualifier path.
Retirement-heavy borrowers should compare both. On the qualifier path, a 401(k) counts at 90% under 59½ and 100% after. On the depletion path, it counts at 70% at any age. The qualifier path is usually kinder to retirement balances, and the depletion path is kinder to borrowers whose assets fall short of the loan.
Neither path is free of cost to your plans. A borrower who uses most of a portfolio to qualify keeps less cushion for the property’s surprises. An Alabama second home carries insurance, upkeep, and storm risk. Qualifying and affording are different questions.
Is It Really a Second Home?
An asset-based mortgage on a second home is a consumer loan, so the home has to be one you actually use. If you buy the property mainly to rent it out, the lender treats it as an investment property. That changes the program, the leverage, and often the path.
Investment property is available only on the depletion path. Leverage there is up to 65% on a purchase or rate-and-term refinance, and up to 60% on a cash-out refinance. A first-time investor on that path needs a 700 credit score. Those numbers sit well below the 80% available on a second-home purchase, so the occupancy label directly changes how much you can borrow. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Federal rules draw the line in a similar place. The CFPB’s Regulation Z provision on exempt credit says an owner who expects to occupy a property more than 14 days in the coming year cannot treat it as non-owner-occupied. Compliance Alliance summarizes that the exemptions turn on occupancy, purpose, and unit count. A beach house you use for a month is a second home, whatever you call it.
Rental-first buyers usually belong in a different product. DSCR loans are designed for non-owner-occupied investment properties, and they qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers that route. The asset-based mortgage on this page is the consumer path for a home you plan to use yourself.
Do not read this as a loophole in either direction. Buying under a second-home plan and later turning the home into a rental creates problems. Lenders verify occupancy, and a misstatement is a loan defect.
Alabama Second-Home Details That Move the Number
Alabama second homes tend to cluster on the Gulf Coast and around lakes and mountain areas. Each brings its own cost lines. Program figures do not change by state, but your payment does.
On the Gulf Coast, insurance and flood coverage can change what a given loan costs you each month. That matters most on the depletion path, where the payment sits inside the debt test. It matters less on the qualifier path, where no income is documented and the lender’s review rests on your assets. Condo-heavy markets add HOA dues and project rules, so check the condo’s eligibility early.
Gulf Shores is a good example of a seasonal market. AirDNA’s Gulf Shores overview shows a strong summer-driven rental market with a large swing between peak and low months. If you hope to offset costs by renting the home in off-weeks, remember that personal-use second homes do not qualify on rental income. 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.
Lendmire’s consumer mortgage lending is licensed in 16 states, Alabama among them. The loan is a consumer mortgage, so consumer disclosure rules apply.
What Shrinks Your Borrowing Number
Several things quietly reduce capacity between the first estimate and the final file:
- Haircuts: a $1,000,000 securities account counts as $800,000 on the depletion path.
- Market moves: statements are reviewed as they stand, and a portfolio drop before the file is complete lowers what counts.
- Closing funds: cash you spend on the purchase is not available to count again.
- Debts: an existing primary-home mortgage and other obligations reduce what derived income can carry on the depletion path.
- Seasoning gaps: large recent deposits from a source the lender cannot trace may not count.
- Property costs: higher taxes, insurance, and HOA dues eat into the payment the income must support.
Across the wholesale network, the files that run into trouble are rarely the ones with too little wealth. They are usually the ones where the wealth sits in an ineligible form, such as crypto or a business account, or where the balances were moved just before application. Converting and seasoning assets early prevents most of those problems.
Retirees have their own questions about age thresholds and drawing from retirement accounts.
Key Terms Defined
Asset qualifier path: qualification on eligible assets that equal or exceed the entire loan, with no income documented.
Asset depletion path: qualification where usable assets divided by 60 months become monthly income for the debt-to-income test.
Credit percentage (haircut): the share of each account balance that counts toward qualifying, which varies by asset type.
Seasoning: the length of time funds must sit in an account, shown by statements, before they count.
Debt-to-income ratio: your monthly debts, including the new housing payment, divided by your monthly qualifying income.
Second home: a property you use personally as a secondary residence, as opposed to one bought mainly to rent.
Frequently Asked Questions
Can I use retirement accounts to qualify for an Alabama second home?
Yes, on both paths, but they count differently. On the qualifier path, a 401(k) or IRA counts at 90% under 59½ and 100% at 59½ or older. On the depletion path, retirement accounts count at 70% at any age. You are not required to withdraw the money, though the lender reviews the statements. Eligibility is subject to underwriting.
Do I need a minimum amount of assets?
It depends on the path. On the qualifier path, the usable total must cover the entire loan. On the depletion path, qualified assets must reach at least the lesser of $1,000,000 or 1.25 times the loan balance, and never less than $250,000 liquid when assets are your only income source. If asset income supplements documented income, the minimum-assets rule is waived.
Can I count rental income from the second home?
Not on a home you use personally. An asset-based mortgage on a second home is reviewed on your assets, not on what the property might earn. If the plan is to rent the property, it becomes an investment property, which is available only on the depletion path at lower leverage. A rental-first purchase usually fits a DSCR loan better.
What credit score do I need?
The qualifier path publishes a 600 minimum. The depletion path follows the lender’s score and loan-amount matrix, and a first-time investor on that path needs 700. A housing history of 0x30x12 is standard. Higher scores generally open more options. Final eligibility is subject to underwriting.
Does the asset-based mortgage mean no documentation?
No. Your assets are fully documented on both paths, with two months of statements per account on the qualifier path and seasoned statements on the depletion path. What goes undocumented on the qualifier path is employment and income, and the loan is not approved on assets alone until underwriting is complete.
Where to Go From Here
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 request a quote.
On an Alabama second home, the number that decides your ceiling is rarely the loan limit. It is how much of your portfolio the lender counts and how you plan to use the house.
Lendmire’s asset-based mortgage in Alabama page presents the program for Alabama borrowers.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB, Regulation Z § 1026.3
2. Compliance Alliance, Regulation Z and Investment Properties
3. AirDNA’s Gulf Shores overview
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Jumbo Loan Asset Depletion Rules Work for a Second Home · Asset Qualifier Mortgage vs Bank Statement Mortgage · Is an Asset-Based Mortgage Reported to Credit Bureaus Like Any Other Mortgage?
Guides: Asset-Based Mortgage in Alabama
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.