The Quick Read: Yes, a Colorado rental purchase can qualify on assets, but only on the asset depletion path, where usable assets divided by 60 months become qualifying income, investment-property leverage tops out at 65% on a purchase, and the lender tests you through debt-to-income rather than testing the rent. All of it is subject to underwriting through select lenders.
- Path: Investment property runs only on the asset depletion path. The asset qualifier path, which covers the whole loan with assets alone, is for principal residences and second homes.
- Leverage: On the depletion path, an investment property goes up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out refinance.
- Entry ticket: Qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when assets are your only income.
- The alternative: If the rent covers the full monthly obligation, a DSCR loan often fits a rental better, because it tests the property instead of you.
Which Path Covers a Rental?
Only the asset depletion path covers a rental. This program has two paths, and a borrower is reviewed on one at a time. The asset qualifier path asks whether your eligible assets equal or exceed the entire loan. It documents no income, but it applies to principal residences and second homes.
The asset depletion path works differently. It turns a slice of your portfolio into monthly income. That income then carries the housing payment and your other debts through the debt-to-income test. Lendmire’s consumer mortgage business is licensed in 16 states, Colorado among them. These program figures do not change by state, so a Colorado borrower sees the same numbers as anyone else, subject to underwriting.
Here is the part many readers miss. The asset depletion path tests you. It does not test the house. A rental that cash flows beautifully gets no extra credit from this program. A rental that barely breaks even does not hurt you either, as long as your assets produce enough income.
How Does the Math Work?
The lender adds up your usable assets, divides by 60 months, and treats the result as monthly income. “Usable” means each account counts at a set percentage of its balance, not at full value. That percentage depends on the asset type.
Run the numbers on one illustrative profile. Say you hold $1,500,000 in securities, which count at 80%, so $1,200,000 is usable. You also hold $300,000 in cash, which counts at 100%. Your usable assets total $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income must then carry the new housing payment and every other monthly debt through the debt-to-income test. This is illustrative arithmetic, and the lender’s own calculation governs.
Two practical points follow:
- Money spent at closing leaves your accounts. Your down payment and closing costs come out of the same pool you are counting. Across our wholesale network, borrowers do best when they plan around the balances that remain after closing, then confirm treatment with the lender.
- Assets can supplement income. If you still earn documented income, asset-derived income may supplement it up to a 45% debt-to-income ratio. In that case the minimum-assets rule is waived.
Which Assets Count, and at What Percentage?
Cash and CDs count in full, while securities, retirement accounts and real-estate equity count at a discount. This table applies only to the asset depletion path, which is the one a rental uses.
| Asset type | Share that counts | Notes |
|---|---|---|
| Cash accounts | 100% | Statements required |
| Certificates of deposit | 100% | Statements required |
| Securities | 80% | Stocks, bonds, funds |
| Retirement accounts | 70% | Any age |
| Real-estate equity | 60% | Reduced value |
Several asset types are not eligible on this path. They include 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, meaning shares of a closely held company, is not eligible on either path. A founder’s route is a sale or buyout converted into a seasoned cash balance.
Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible either. The documented route is converting them to a seasoned cash balance in a regulated account, with the lender reviewing the source. Business accounts count only for your ownership share, and only after that same review.
Retirement accounts deserve a note. They count at 70% on the depletion path at any age. On the qualifier path they count at 90% under age 59½ and 100% after, but that path does not cover rentals. Keep the two tables apart in your head.
What Leverage, Credit and Paperwork Should You Expect?
Expect low leverage, a lender-matrix credit review, and aged statements. These are ceilings and floors, never offers, and each file is underwritten individually.
- Leverage on an investment property, depletion path: up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance. Cash-out proceeds never count as qualifying assets.
- Loan size, depletion path: $125,000 to $3,500,000.
- Credit: the lender’s score and loan-amount matrix governs. A first-time investor on this path needs a 700 score.
- Housing history: 0x30x12 is the target. One 30-day late in the last twelve months gets considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning.
- Statements: each account’s statement must be at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
The assets are fully documented here. Skipping income documentation never means skipping documentation: there are no traditional personal-income documentation, pay stubs or employment verification, but there are statements.
One broker observation. Loans on this path tend to stall on account structure, not on the math. Joint accounts, trust accounts and recently moved money each draw questions. Consolidating and documenting before you apply tends to help the file.
Does the Rent Count Toward Your Income?
It depends on the program, and you should not assume it does. The asset depletion calculation above uses your assets, not the property’s rent. Whether a given lender also credits some of the subject property’s rent is program-dependent, so ask before you build a plan around it.
The safer way to run this strategy is to assume the rent does not help your qualification. If it does, that is a bonus. If it does not, your file still works.
Asset Depletion or DSCR for a Colorado Rental?
Pick by how well the rent covers the property. A DSCR loan divides monthly rent by the full monthly obligation: principal, interest, taxes, insurance and any HOA dues. If the result clears the program’s floor, the property carries itself, and your portfolio shows up as reserves instead of income.
| Factor | Asset depletion | DSCR |
|---|---|---|
| What gets tested | Your assets and DTI | The property’s rent |
| Role of your portfolio | Becomes imputed income | Shows up as reserves |
| Rent must cover payment? | No | Yes, to the program’s floor |
| LLC ownership | Depends on program | Often workable per program terms |
| Best fit | Thin-rent or high-priced rentals | Properties that cash flow |
Programs below 1.00 coverage are available through select lenders in the network, but leverage and terms adjust to match. So a rental that rents a little short is not automatically an asset depletion case.
The rule of thumb is simple. A retiree with strong rent and a modest portfolio is usually a DSCR borrower. A retiree with a large portfolio and a rental that barely covers is usually an asset depletion borrower. Across the lenders we work with, DSCR is typically the more scalable structure once you own several rentals, because each loan stands on its own property. Asset depletion is a personal calculation, so every new loan adds to your own debt load.
If your rental is a vacation property, 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.
Who Should Use This, and Who Should Skip It?
Asset depletion suits people whose balances are large and whose documented income is small. Four profiles come up often.
- The retiree. Decades of savings sit in brokerage and cash accounts, and Social Security does not carry a purchase. Depletion turns the portfolio into income without selling a share.
- The business seller. Sale proceeds are fresh, large and excused from the 120-day seasoning rule. Income from the old business is gone, though.
- The inheritor or settlement recipient. The same seasoning relief applies, and the lender reviews the source of funds.
- The early-retired professional. The paychecks stopped, the portfolio did not.
Skip it if most of your wealth sits in real estate, since equity counts at only 60%. Skip it if your liquid assets fall short of the minimum, or if your credit is thin. And if your rental covers its own payment with room to spare, do the DSCR math first.
One Occupancy Rule That Changes the Loan
Occupancy decides which kind of loan you are getting. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
The federal rules for business-purpose credit treat a non-owner-occupied rental as business purpose. That presumption is lost if you expect to occupy the property more than 14 days in the coming year. Asset depletion on a rental or other non-owner-occupied property is business-purpose lending, so be straight with the lender about how you will actually use the property. The ability-to-repay rule that governs owner-occupied loans lets a lender consider assets other than the property itself, which is why the property’s own value never counts toward your assets.
Tax treatment varies; consult a qualified professional before relying on any deduction.
Key Terms Defined
Asset depletion: a way to qualify by converting eligible assets into imputed monthly income. It is not the same as depreciation, a tax concept for writing off a building’s cost over time.
Asset qualifier path: a path where eligible assets equal or exceed the entire loan and no income is documented. It covers principal residences and second homes.
Seasoning: the time funds must sit in an account, or the age of the statements, before a lender counts them.
Debt-to-income (DTI): your monthly debts divided by your monthly qualifying income.
Haircut: the discount a lender applies to an asset’s balance. Securities, for example, count at 80%, so the haircut is 20%.
DSCR: debt service coverage ratio, meaning monthly rent divided by the full monthly obligation on the property.
Vesting: how title is held, whether personally or through an entity such as an LLC.
Frequently Asked Questions
Do I have to sell my investments to qualify?
No. Assets are counted as imputed income and are not liquidated. Your money stays invested. The lender needs seasoned statements showing the balances, and what you spend on the down payment and closing costs leaves the pool.
Can I use my 401(k) or IRA on a Colorado rental?
Yes, on the asset depletion path, where retirement accounts count at 70% at any age. Taxes and penalties do not apply merely because the lender counts the balance, since nothing is withdrawn. Whether you withdraw for the down payment is a separate decision for a tax professional.
Can I buy the rental in an LLC?
It depends on the program. Asset depletion is a personal calculation, so LLC vesting varies by lender. DSCR loans are often workable for LLC ownership, subject to program terms. Many investors who want an entity use DSCR for that reason.
What if I already own rentals?
Existing mortgages and debts run through the debt-to-income test, so they reduce your room. How much depends on the lender’s calculation and your full profile. This is one reason investors with growing portfolios often move to DSCR.
Is there a minimum asset level?
Yes. On the asset depletion path, qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan, and never below $250,000 liquid when asset depletion is your only income source. A first-time investor also needs a 700 score. 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. You can reach the team at 828-256-2183 or request a quote.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in Colorado page presents the program for Colorado borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB — Regulation Z, Section 1026.3 (exempt transactions)
2. Cornell Legal Information Institute — 12 CFR 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Buy a Second Home in Alabama on Assets Instead of Income? · How Colorado Second-Home Buyers Qualify on Investments Instead of Income · Can You Buy a Second Home in Colorado on Assets Instead of Income?
Guides: Asset-Based Mortgage in Colorado
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.