The Quick Read: Yes, but only on the asset depletion path, only through select programs, and with tighter leverage than you would get on a home you live in. Texas law does not block it, and the lender’s matrix decides the outcome. If the rent covers the payment, a DSCR loan may fit better.
- Investment property is eligible only on the asset depletion path, not the asset qualifier path.
- Leverage on an investment property is up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out, subject to underwriting.
- Eligible assets are discounted, then divided by 60 months to create qualifying income.
- A first-time investor on this path needs a 700 credit score.
- A DSCR loan is reviewed for the rental on its own rent instead, and many investors pair the two. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
What Does Asset Depletion Mean for a Rental Buyer?
Asset depletion turns your savings and investments into a monthly income figure for qualifying. The lender discounts eligible balances, adds them up, and divides by 60 months. Nothing is sold, withdrawn, or pledged. The result then runs through a debt-to-income test, which compares your monthly debts to that income.
Across Lendmire’s wholesale network, two asset-based paths exist, and you qualify 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 covers only principal residences and second homes. The asset depletion path is the one that reaches investment property.
So the plain answer for a Texas rental is the depletion path. These are consumer mortgages placed through select lenders in the network, and Lendmire arranges them as a broker rather than lending directly. Texas is among the 16 states where Lendmire’s consumer mortgage business is licensed.
How Is the Qualifying Income Calculated?
The math has four steps. Each lender’s own calculation governs, and the figures below are ceilings and floors, not offers.
1. List your eligible assets. Statements prove ownership and balance.
2. Apply the haircuts. Each asset class counts at a set share of its balance.
3. Divide usable assets by 60 months. That gives your monthly qualifying income.
4. Run the debt-to-income test. The new housing payment and your other debts must fit within that income.
Here is the sanctioned illustration. Say you hold $1,500,000 in securities, which count at 80%, or $1,200,000. You also hold $300,000 in cash, which counts at 100%. That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That figure then has to carry the new housing payment and every other monthly debt, including mortgages on rentals you already own.
Money you spend on the down payment and closing costs leaves the pool. Count your balances as they will stand after closing, not before. Cash-out proceeds from another property never count as qualifying assets.
What Counts as an Asset, and at What Percentage?
On the depletion path, most programs in the network discount everything but cash and certificates of deposit. Subject to underwriting, the typical treatment looks like this:
| Asset type | Share that counts |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts | 70% at any age |
| Real-estate equity | 60% |
Several things do not qualify 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.
Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds are not published as eligible on either path. The documented route is to convert them to cash in a regulated account. The balance then has to season, and the lender reviews where it came from.
What Do the Guidelines Require for an Investment Property?
For an investment property on the depletion path, these are the main figures through select programs, subject to underwriting:
- Leverage: up to 65% on a purchase or rate-and-term refinance, and up to 60% on a cash-out refinance.
- Loan amounts: $125,000 to $3,500,000.
- Minimum assets: the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is your only income source, you also need at least $250,000 in liquid assets.
- Credit: the lender’s score and loan-amount matrix applies. A first-time investor needs a 700.
- Housing history: 0x30x12 is the standard. One 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. A housing event such as a foreclosure needs 4 years of seasoning.
- Seasoning: statements must be 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 seasoning.
- Reserves: no reserve months are published for this path.
If you already have documented income, asset-derived income can supplement it up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
The assets are fully documented. “No income documentation” never means no documentation.
Compare that leverage with a home you live in. On a principal residence or second home, the same path allows up to 80% on a purchase and 60% on a cash-out. Rental collateral gets a lower ceiling because lenders price in the extra risk.
Does Texas Law Change Anything?
Not for the rental itself. The Texas protections people associate with home lending sit in the state constitution’s homestead provision. That provision covers a home you live in, and the text is available at Justia’s copy of the Texas Constitution. A Texas rental purchase carries no Texas-specific bar on asset depletion qualifying.
The homestead rules do matter if you plan to borrow against your own Texas home to fund a down payment. That is a homestead transaction with its own rules, not a rental rule. It is also a different tool from the asset depletion program here.
Federal treatment depends on how you will use the property. Credit to buy a non-owner-occupied rental is generally treated as business purpose under the CFPB’s Regulation Z commentary. The exception is an owner who expects to occupy the property for more than 14 days in the coming year.
That exception explains why a vacation home you plan to use often cannot be financed as a pure rental. It also explains why lenders ask about intended occupancy. If you will live in one unit of a small multifamily, you are in house-hacking territory. Compliance Alliance’s explainer says an owner-occupied purchase counts as business purpose only with more than two units. A two-unit owner-occupied purchase is a consumer loan, and the principal-residence leverage and rules above apply instead.
Asset Depletion or DSCR: Which Fits a Texas Rental?
The two tools answer different questions. Asset depletion asks whether your assets can support the loan as income. A DSCR loan asks whether the property’s rent can cover its own payment. DSCR loans are built for non-owner-occupied investment properties, and because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. For the full picture, see Lendmire’s complete DSCR loans guide.
| Factor | Asset depletion (investment property) | DSCR loan |
|---|---|---|
| What qualifies you | Usable assets divided by 60 months | The property’s rent against its payment |
| Your personal income | Derived from assets, run through a debt-to-income test | Not the qualifying test |
| Typical leverage | Up to 65% purchase, 60% cash-out | Set by the DSCR program and property |
| Existing debts | Count against your derived income | Generally do not drive qualification |
| Best fit | Asset-rich buyers whose rent is thin | Rents that comfortably cover the payment |
Think about which constraint you actually face. If your assets are large but a Texas rental’s rent barely covers its costs, asset depletion can carry the file. If the rent is strong, DSCR usually asks less of you. It does not shrink your asset pool, and it does not add a monthly obligation to your personal debt-to-income picture.
Programs below 1.00 coverage are available through select lenders in the network, but leverage and terms adjust. A weaker-rent property does not have to be forced into one path.
Three Investor Pictures
The retiree with a big portfolio. She holds seasoned securities and cash, takes no paycheck, and wants a Texas rental. Her assets, after haircuts, can produce a solid qualifying income. Her real constraint is the 65% leverage ceiling, so the down payment is the larger piece. If the rent is strong, she should compare a DSCR quote too. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
The investor who just sold a business. His proceeds may be excused from the usual seasoning, which is a real advantage on this path. The money still has to sit in a regulated account the lender can document. He should plan on a larger cash outlay and consider whether asset depletion or DSCR leaves more liquidity afterward.
The investor adding a third rental. Each existing mortgage adds to his personal debts, and the debt-to-income test counts them against his derived income. Asset depletion gets harder as the portfolio grows. This is the textbook case for moving the new rental to a DSCR loan, where the property’s rent drives lender review.
The Hybrid Play
Many investors do not choose one tool permanently. They may use asset depletion for a home they live in and DSCR for the rentals. Each loan then rests on a different qualification logic. Lendmire’s piece How an STR Investor Qualifies on Asset Depletion vs Rental Income walks through that tradeoff for vacation-style properties.
Sequence matters. A new asset-based loan adds a payment to your personal debt-to-income picture. That can affect the next file if it runs through a personal-income test. A DSCR loan on the next rental may avoid that issue.
Key Terms Defined
Asset depletion: a way of turning your eligible assets into a monthly qualifying income without selling them.
Haircut: the discount a lender applies to an asset, so only part of its balance counts.
Debt-to-income ratio (DTI): your monthly debts divided by your monthly qualifying income.
Seasoning: the length of time funds must sit in your account before a lender counts them.
DSCR (debt service coverage ratio): a property’s rent divided by its monthly obligations. Lenders use it to qualify an investment property on its own income.
Asset qualifier path: the option where eligible assets must equal or exceed the whole loan. It covers primary residences and second homes only.
Where This Goes Wrong
Most failed files fail on a few predictable points:
- Wrong occupancy. The qualifier path does not cover rentals. A rental buyer on the wrong path loses time.
- Ineligible assets. Stock options, unvested units, and cash on hand do not count on the depletion path. Check every account before you plan around it.
- Fresh deposits. Money that recently landed in an account may not meet the statement-age rules unless an exception applies.
- Ignoring the pool shrinkage. The down payment and closing costs come out first. That reduces your qualifying income.
- Existing debts. Mortgages on other rentals count against your derived income.
Retirement balances count at a discount without being withdrawn. Tax treatment varies; consult a qualified professional.
Pre-Application Checklist
1. Gather the most recent statement for every account you plan to use. 2. Pull statements that are at least 120 days old, plus one within the last 45 days. 3. List which accounts are cash, securities, private stock, retirement, or real-estate equity. 4. Move crypto or collectibles into a regulated cash account early so the funds can season. 5. Write down every monthly debt, including other mortgages. 6. Decide whether you will occupy the property for more than 14 days, because that changes its classification. 7. Estimate what you will hold after the down payment and closing costs.
Frequently Asked Questions
Do I have to sell my investments to use asset depletion?
No. Lenders count the eligible balance after haircuts and divide it by 60 months. Nothing is sold, withdrawn, or pledged. The assets are documented with statements, and the lender verifies them.
Can I buy the rental in an LLC?
It depends on the program. Asset depletion is a personal debt-to-income calculation tied to you as an individual, so expect a personal guaranty at minimum. Whether an LLC can hold title is a program question. DSCR loans are more commonly structured for entity ownership, subject to program terms.
Do retirement accounts count?
Yes, on the depletion path they count at 70% at any age. On the asset qualifier path they count at 90% under age 59½ and 100% after, but that path covers only principal residences and second homes.
Does home equity count?
Real-estate equity counts at 60% on the depletion path.
Can I use asset depletion to refinance a Texas rental?
Yes, through select programs. Leverage on an investment property is up to 65% on a rate-and-term refinance and 60% on a cash-out.
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. In Texas, the winning structure usually comes from matching the tool to the rent, not from forcing one tool onto every property.
Lendmire’s asset-based mortgage in Texas page presents the program for Texas 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. Justia – Texas Constitution, Article 16, Section 50
2. CFPB – Regulation Z commentary on business-purpose credit
3. Compliance Alliance – Regulation Z and investment properties
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 Asset Depletion Converts Savings Into Qualifying Income · How to Qualify for a Bank Statement or Asset Depletion Loan as a Rental Investor · How Asset Depletion Income Differs on a Primary Home vs Rental
Guides: Asset-Based Mortgage in Texas
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.