The Quick Read: An asset-based mortgage counts your documented portfolio instead of your paycheck, and it fits best when you will use the home yourself, while a vacation home bought to rent out usually is reviewed on its own rent through a debt service coverage ratio (DSCR) loan.
- On the asset qualifier path, your eligible assets must cover the entire loan amount. No employment or income is documented, subject to underwriting.
- On the asset depletion path, usable assets are divided by 60 months to create a monthly qualifying income. That income must carry the housing payment and your other debts.
- A borrower is reviewed on one path at a time. The two paths use different leverage limits, asset percentages and seasoning rules.
- “No income documents” never means “no documents.” Every qualifying account is verified, and the lender decides the final numbers.
What Does “Assets Instead of Income” Actually Mean?
It means the lender looks at what you own rather than what you earn each month. This is a non-QM approach, meaning the loan sits outside standard agency rules. It is a way of qualifying, not a type of property.
Your portfolio is not sold or pledged. The lender simply counts it, either as money that covers the loan or as a monthly income figure.
This suits a specific kind of buyer. Think of a retiree living on a portfolio, someone who just sold a business, an heir, or an early-retired professional. Their balances are large, but their traditional personal-income documentation shows little recurring income.
Across the wholesale network Lendmire places files with, these borrowers are the core audience. A standard paycheck-based review can understate their finances, because it measures cash flow and ignores net worth.
The first question is how you will use the property. That answer decides which loan applies, so settle it before you compare anything else.
Which Loan Fits How You’ll Use the Home?
Use drives everything. A home you will occupy for part of the year, with exclusive control and no rental pool, points to an asset-based consumer mortgage. A home you will rent out as an investment points to DSCR, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
| How you’ll use it | Usual path | What the lender looks at |
|---|---|---|
| Personal-use second home | Asset qualifier or depletion | Your documented assets |
| Rented most of the year | DSCR | Rent vs. full payment |
| Personal retreat, rented some weeks | Usually asset-based | Actual use, not the label |
| Investment home, assets as the income source | Asset depletion, select programs | Assets and debt-to-income |
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.
For a rental-driven vacation home, assets do not buy the property. The property’s income does the work. Your assets still matter, because they fund the down payment, closing costs and reserves.
Lenders classify a home by how it is actually used, not by what the borrower calls it. A second home generally means a single unit suitable for year-round use, where you keep exclusive control. Regular, platform-driven or managed renting turns the file into an investment property.
Conventional agency second-home rules also generally bar using rental income to qualify. That is why the label matters so much.
Misstating your intended use on an application creates serious legal exposure. It can also give the lender grounds to call the loan due. Buying as a second home to get softer terms while planning heavy rental is a bad trade.
Investors who want to see how rental qualification works can read the complete DSCR loans guide.
How Underwriting Treats Your Assets, Step by Step
Underwriting runs in a set order. The lender first decides the path, then counts assets at stated percentages, and last checks the loan against those totals. Here is each path, one at a time.
Path one: the asset qualifier
On this path, your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. Through select programs, leverage runs up to 80% on a purchase and 75% on a refinance, for a principal residence or second home. Loan amounts go up to $4,000,000.
Here is an illustration. You want an $800,000 loan. You hold $330,000 in brokerage accounts, which count at 100%. You hold $300,000 in a 401(k) and you are under 59½, so it counts at 90%, or $270,000. You also hold $200,000 in savings at 100%.
Your usable assets total $800,000. That equals the loan, so the file is reviewed on assets alone, subject to underwriting.
Reserves are not required at or below 75% loan-to-value (LTV). LTV is the loan amount as a share of the property’s value. Above that, the lender sets them. Cash-out terms on this path are set by the lender and are not published, so ask before assuming anything.
Path two: asset depletion
On this path, assets become income. The lender discounts each asset, adds up the usable total and divides it by 60 months. That monthly figure must carry the full housing payment and your other debts through the debt-to-income test.
Consider a portfolio with $1,500,000 in securities, which count at 80%, or $1,200,000. Add $300,000 in cash at 100%. Usable assets are $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income.
That income then absorbs the new payment, your current primary-home mortgage and any other debts. A large existing mortgage can use up much of the figure, so count it in from the start. The lender’s own calculation governs.
Leverage here depends on occupancy:
- Principal residence or second home: up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- Investment property: 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 amounts run from $125,000 to $3,500,000. Asset-derived income can also supplement documented income, up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Divisors and asset percentages differ from program to program. Some lenders use much longer periods than 60 months, and the period changes the outcome more than almost anything else. Always ask for the divisor before you compare offers.
What Counts and What Doesn’t
Each path counts the same account at a different percentage. Do not mix the two tables below.
Asset qualifier path: share of balance that counts.
| Asset | Counted at |
|---|---|
| Brokerage, CDs, money market, savings | 100% |
| 401(k) or IRA, under age 59½ | 90% |
| 401(k) or IRA, 59½ or older | 100% |
Accounts combine, so you can mix several to reach the loan amount.
Asset depletion path: share of balance that counts.
| Asset | Counted at |
|---|---|
| Cash accounts and CDs | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts (any age) | 70% |
| Real-estate equity | 60% |
Several items are not eligible on the depletion path:
- custodial accounts
- deferred compensation
- escrow accounts
- foreign funds
- cash on hand
- stock options
- non-vested restricted stock units
- funds from non-regulated financial companies
Cryptocurrency, precious metals, collectibles and pledged or borrowed 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, and the lender reviews the source.
This detail trips up concentrated investors. A portfolio that looks huge on paper can shrink fast once ineligible holdings come out.
Seasoning, Credit and Documents
Seasoning is how long money must sit in an account before it counts. It is a sourcing test, and it rules out last-minute deposits.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Depletion path: statements 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.
The assets are documented on both paths. Statements must prove ownership, value and how long the funds have been there.
On credit, the qualifier path has a 600 minimum score. The depletion path follows the lender’s matrix of score and loan amount. A first-time investor on the depletion path needs 700.
Housing history of 0x30x12 is the target. One 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning on the depletion path.
The depletion path also sets minimum assets. You need qualified assets of at least 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.
All of these are ceilings and floors for select programs, not offers. Every file is underwritten individually.
Where the General Rule Breaks
The rule above is clean. These edge cases are where files go sideways.
The occasionally rented second home. Some rental use is tolerated only if you keep exclusive control and the rent is not used to qualify. Once a platform or manager runs the bookings, the property is an investment.
Using a DSCR vacation home yourself. A DSCR property is non-owner-occupied. You cannot buy it as an investment and treat it as your own retreat. If you expect to retire there later, say so up front.
Short-term rentals and DSCR. Many DSCR lenders will not touch short-term rentals. Some accept only the long-term-rent equivalent or twelve months of platform history. A smaller group underwrites short-term income using projection tools. The appraiser’s long-term rent report is often well below short-term income, which can leave coverage thin.
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.
Coverage below 1.00x. Many programs look for rent that covers the full payment, which is roughly 1.00x coverage. Programs below 1.00 coverage are available through select lenders in the network, but LTV and terms adjust.
Luxury vacation markets. DSCR needs more rent as the loan balance climbs, and high-end vacation prices often outrun achievable rent. For a personal-use home in that range, the asset route often fits better.
The tax line is separate from the loan line. Tax treatment varies, and the IRS’s Publication 527 sets its own personal-use test of 14 days or 10% of rental days, whichever is greater, with maintenance days generally excluded per a tax-practitioner summary, so consult a qualified professional.
If your money came from a sale. Selling a business or a property changes how the funds are sourced. Lendmire’s piece How to Buy a Second Vacation Home on Post-Liquidity Event Assets covers that situation in more detail.
Can You Afford to Carry It?
Qualifying and affording are two different questions. A loan can clear underwriting and still stretch your portfolio.
Your assets are not sold when you qualify, so they keep compounding. But the same pile may also fund your down payment, closing costs and reserves. Those dollars are used twice, once as qualifying assets and once as cash out the door. Ask the lender whether funds set aside for the purchase come out before the count. Don’t assume they stay in.
Run a short self-check before you apply:
- Will the home represent a modest share or a big share of your net worth?
- After closing, how much liquid cash remains for repairs, insurance, taxes and association dues?
- If your portfolio dropped sharply, would the loan still fit?
- Do you have an exit plan if you stop using the property?
Compare the main funding routes too.
| Route | Best for | Main tradeoff |
|---|---|---|
| Asset-based mortgage | Asset-rich, income-light buyers | Documented assets, stricter terms |
| Selling assets | Buyers who want no loan | Gives up future growth |
| Securities-backed borrowing | Holders of large, liquid portfolios | Falling markets can force repayment |
| Home equity borrowing | Owners with large equity | Puts your main home at risk |
| DSCR loan | Rental-driven vacation homes | Property rent must carry the payment |
Key Terms Defined
Asset qualifier: a path where eligible assets must cover the whole loan and no income is documented.
Asset depletion: a path that turns usable assets into monthly income by dividing them by 60 months.
Haircut: the discount a lender applies to an asset, so only part of its balance counts.
Seasoning: the time funds must sit in an account before a lender counts them.
DSCR: the property’s rent divided by its full monthly payment, used to qualify rental properties.
Loan-to-value (LTV): the loan amount as a percentage of the property’s value.
Where Most Buyers Go Wrong
- Moving money before applying. Shifting funds between accounts breaks seasoning and sourcing trails. Talk to a broker first.
- Calling a rental a second home. Lenders review actual use, and a mismatch can sink the file or create legal risk later.
- Counting ineligible holdings. Crypto, stock options and foreign funds may not count at all.
- Ignoring the primary mortgage. On the depletion path, your current payments take up part of the qualifying income.
- Skipping the use question. Pull both long-term and short-term rent figures before you choose between DSCR and an asset-based loan.
A practical sequence works well. Decide your use, gather statements for every account, list your existing debts, then compare programs. Ask each lender for its divisor, asset percentages and seasoning rules in writing.
Frequently Asked Questions
Can I use a retirement account to buy a vacation home?
Often yes, as part of the count. 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 they count at 70% at any age. Nothing is withdrawn, and the lender’s calculation governs.
Does asset-based qualifying mean no documentation?
No. Only income documentation is skipped on the qualifier path. Statements for every qualifying account are still required, and the lender checks ownership, value and seasoning. Credit and the property are reviewed too.
Can I rent out a home I buy this way?
Only within limits. On a true second home, you keep exclusive control and rental income cannot be used to qualify. Regular or managed renting makes the home an investment property, which needs a different program. Misstating your plans on the application can create real problems.
Is this available everywhere?
Consumer mortgage lending through Lendmire is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Availability also depends on the lender, the property and your profile.
Which should I choose: asset qualifier or asset depletion?
Pick the qualifier path when your eligible assets can cover the whole loan. Choose depletion when you want assets to count as income, or when the property is an investment, which the qualifier path does not cover. The two cannot be blended on one file.
Where to Start
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. As a broker, Lendmire arranges financing through select lenders in its wholesale network, and every program is subject to underwriting and is not a commitment to lend.
For most buyers, the real decision is not which loan to take but what the home is for. Settle that first, and the right qualifying path usually follows.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. Reed Corp: Publication 527 summary
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 Get a HELOC With No Income by Qualifying on Assets? · Home Equity Investment vs Bank Statement HELOC for Asset-Rich Owners · How to Document an Assets-Only Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.