The Quick Read: It depends on the home’s appraised value and the cash-out leverage ceiling, not on the size of your portfolio, and on the asset depletion path that ceiling is typically 60% of value on a principal residence, second home or investment property, subject to underwriting. Your assets decide whether you qualify. They do not decide how much cash you receive.
- The ceiling is set by value. Maximum new loan equals appraised value times the cash-out leverage limit. Your cash is that loan minus the payoff of existing liens and costs.
- Two paths, never blended. The asset qualifier path covers the whole loan with assets. The asset depletion path turns assets into monthly income.
- Cash-out is tighter than purchase. On the depletion path, a purchase or rate-and-term refinance on a principal residence or second home reaches 80%. A cash-out stops at 60%.
- Proceeds never count. Cash-out money cannot be used as qualifying assets or reserves.
- California adds one legal wrinkle. Cash-out can change how anti-deficiency protection applies, so talk to counsel before you borrow.
Why Your Portfolio Doesn’t Set the Number
Large balances feel like they should unlock large cash-outs. They do not. A lender asks two separate questions. The first is whether the property supports the new loan. The second is whether you can carry the payment. Assets answer the second question only.
Think of two ceilings. The equity ceiling comes from appraised value, the leverage cap and what you still owe. The qualifying ceiling comes from whether your usable assets, or the income they convert into, support the loan. The lower of the two controls. For most California homeowners with sizable equity and sizable savings, the equity ceiling binds first. A very large portfolio does not lift it.
The cash-out limit varies by program, and some lenders restrict or exclude cash-out on asset-based products altogether. Across the wholesale network Lendmire works with, the pattern is consistent. Purchase and rate-and-term refinances get the most leverage, and cash-out gets the least. For the wider picture on how the lowest-leverage products behave, Lendmire’s complete DSCR loans guide covers the investor side of the same tradeoff.
What Does Asset Depletion Mean Here?
Asset depletion is a way to measure income. It is not a withdrawal plan, and you keep your accounts. The lender totals your eligible balances and applies a percentage to each account type. It then divides the result by 60 months to get monthly qualifying income. That income runs through a debt-to-income test alongside the housing payment and your other debts.
Banking regulators describe the method in neutral terms. The OCC calls asset dissipation underwriting an alternative process for assessing and documenting an applicant’s ability to repay. The divisor and the percentages are each lender’s own policy, which is why programs differ.
Lendmire is a broker. It places these files with select lenders in its network, and the lender’s own calculation governs on every file.
Two Paths, One at a Time
A borrower is reviewed on one path at a time. Mixing them is the most common planning mistake.
| Feature | Asset qualifier path | Asset depletion path |
|---|---|---|
| How assets are used | Cover the entire loan amount | Convert to monthly income |
| Income documented | None | Derived income, DTI test |
| Typical purchase leverage | Up to 80% | Up to 80% (65% on investment property) |
| Typical refinance leverage | Up to 75% | Up to 80% rate-and-term |
| Cash-out leverage | Set by lender, not published | Typically 60% |
| Loan size | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit floor | 600 minimum | Lender’s matrix |
Every leverage figure here is a typical ceiling through select programs, subject to underwriting. None is an offer.
The Cash-Out Formula, Step by Step
Start with appraised value and apply the cash-out leverage cap. That gives the maximum new loan. Subtract the payoff of your existing mortgage and any other liens. What remains is gross cash. Subtract closing costs and any required escrows to reach net cash.
Run the shape of it in percentages. Assume a principal residence on the asset depletion path with a 60% cash-out cap. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
- Low balance. Your existing mortgage equals about 40% of appraised value. The ceiling leaves roughly 20% of value as gross cash before costs.
- Moderate balance. Your payoff equals about 55% of value. Only about 5% of value is left before costs.
- High balance. Your payoff exceeds 60% of value. There is no cash-out room at all, even with a very large portfolio.
The last case surprises people most. A homeowner with $3,000,000 in securities and a mortgage near 65% of value cannot take cash out on this path. The assets would qualify them for the loan, but the leverage cap leaves no equity to release. A rate-and-term refinance at the higher 80% ceiling could still be on the table, and it pays off the existing loan without releasing cash.
When the Income Test Binds Instead
Sometimes the second ceiling comes first. That happens when your equity is deep but your asset pool is modest relative to the new loan.
Use the sanctioned shape. Say you hold $1,500,000 in securities and $300,000 in cash. Securities count at 80%, so $1,500,000 of securities contributes $1,200,000. Add $300,000 in cash at 100%, and usable assets come to $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income.
That income must carry the new housing payment and every other debt through the debt-to-income test. A bigger cash-out loan means a bigger payment. At some loan size, the income runs out before the equity does. The lender’s own calculation governs where that point falls.
There are also minimum asset rules on this path. Qualified assets must be 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. If asset income only supplements documented income, it can count up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
So which ceiling binds depends on your balance sheet:
- Equity-rich, asset-rich: the leverage cap usually binds.
- Equity-rich, assets modest: the income test usually binds.
- Little equity, large assets: the leverage cap binds hard, and you may be better off looking at rate-and-term or at a different property.
Which Accounts Count, and at What Percentage
How much of a balance counts depends on the path and the account type.
| Account type | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% (cash accounts) |
| Certificates of deposit | 100% | 100% |
| Brokerage accounts | 100% | 80% (securities) |
| Private stock | Not listed | 75% |
| 401(k) and IRA | 90% under 59½, 100% after | 70% at any age |
| Real-estate equity | Not listed | 60% |
Several holdings do not count on the depletion path. These include custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
The equity you are refinancing is the collateral. Cash-out proceeds never count as qualifying assets or reserves, so the new money cannot be used to qualify for the loan that created it.
Seasoning and Statements
“No income documentation” never means “no documentation.” The assets are documented on both paths.
- 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.
Reserves differ by path too. The qualifier path requires none at or below 75% loan-to-value, and above that the lender sets them. The depletion path publishes no reserve months.
What an Experienced Broker Sees Across These Files
Across the wholesale network, the files that run into trouble are rarely short on assets. They usually fall into three patterns. Some borrowers assume the pool sizes the cash and discover the equity ceiling at appraisal. Others hold most of their wealth in accounts that count at a low percentage or not at all, so usable assets come in far below the gross balance. And some are quietly planning to use the cash-out proceeds as reserves, which the guidelines do not allow.
The practical habit that saves the most rework is sorting your accounts by eligibility before anyone orders an appraisal. A borrower who knows the usable total, the likely path and the leverage ceiling can predict the outcome with reasonable confidence.
The Investor Decision: Primary Home or Rental?
This is where investors split, and the right choice depends on which property holds the equity.
A cash-out against your own home runs on the asset depletion path, with a 60% ceiling in the typical program. A cash-out against a rental you own is a different product. Rental financing is a business-purpose loan that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, and it does not use your personal assets as income. If the rental carries the deeper equity and rents cover the debt comfortably, a cash-out on the rental may be the cleaner route and can leave your home untouched. Lendmire’s piece Can a Homeowner Take Cash Out on a Jumbo Refinance? covers how larger balances change that comparison.
If you are using the cash for down payments on more rentals, the question is not just how much cash you can pull. It is also whether the new debt on your home leaves your documented ratios healthy enough for the next purchase. Pulling the maximum is not always the right amount.
The flip point is simple. If your equity is concentrated in a rental and the rents cover the debt, lean toward the rental route. If your equity sits in your residence and your assets are large but your income is thin, the depletion path on the residence is usually the practical lane.
Alternatives for an Asset-Rich Borrower
| Option | What it does | Main tradeoff |
|---|---|---|
| Asset depletion cash-out | New first mortgage, cash released | Lower leverage cap, replaces existing loan |
| Home equity line (that product’s rules) | Second lien, draw as needed | Terms are set by the line issuer |
| Selling assets | No new debt | May trigger gains and shrinks the portfolio |
| Rental cash-out | Releases equity from the rental | Business-purpose loan, separate qualification |
The California Wrinkle: Anti-Deficiency Protection
California has no state-level cap on cash-out. The same program ceilings apply here as anywhere. What California does add is a legal consideration.
California law, under the anti-deficiency statute known as CCP §580b, generally bars deficiency judgments on certain purchase-money loans. Courts have treated refinancing differently. A State Bar of California committee proposal explains that case law had held the protection lost on refinance and proposed extending it. A UC Law SF journal article argues the protection applies to purchase-money mortgages, not to cash-out refinance mortgages.
The general takeaway is that the cash-out portion is where protection is most at risk. The statute covers an owner-occupied dwelling of up to four units and does not generally reach investor-owned rentals. These sources are dated and legal rules shift, so a California attorney is the right person to confirm how this applies to your loan.
What Lowers Your Number
Several things pull the figure down from the headline ceiling:
1. Appraisal shortfall. Value comes in under your estimate, and the ceiling falls with it.
2. Existing liens. Second mortgages and other liens come out of the proceeds.
3. Path choice. The qualifier path lets assets cover the loan, but cash-out leverage on it is not published and the lender decides it.
4. Account eligibility. Holdings that count at a low percentage shrink the usable pool and the derived income.
5. Credit and housing history. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on that path needs 700, and housing history of 0x30x12 is the baseline, with one 30-day late considered case by case. A housing event needs 4 years of seasoning on the depletion path.
6. Loan size. The depletion path runs from $125,000 to $3,500,000, so a very small or very large new loan may sit outside it.
Proceeds themselves cost something to hold. A larger new loan with new terms replaces your existing one, so compare what you gain against what you give up on the old mortgage before committing.
Key Terms Defined
Asset depletion: a method that converts eligible assets into monthly qualifying income by dividing usable balances by 60 months.
Asset qualifier: a path where eligible assets, after credit percentages, equal or exceed the entire loan and no income is documented.
Cash-out refinance: a new mortgage larger than the existing payoff, with the difference released to the borrower.
Haircut: the share of an account balance a lender will not count, such as the 20% reduction on securities.
Seasoning: how long funds have been in an account, shown through statements.
Debt-to-income ratio: monthly debts, including the new housing payment, compared with monthly qualifying income.
Frequently Asked Questions
Does a bigger portfolio let me take out more cash?
No. A larger pool helps you qualify for a larger loan, but the cash-out ceiling comes from appraised value and the program’s leverage cap. On the asset depletion path that cap is typically 60% for cash-out, subject to underwriting.
Do I have to sell my investments or retirement accounts?
No. The calculation is a qualifying convention, and your accounts stay intact. The lender documents them through statements, and on the depletion path retirement accounts count at 70% at any age.
Can the cash-out money count as my reserves or assets?
No. Cash-out proceeds never count as qualifying assets on the depletion path. Reserves must come from other seasoned funds, and the qualifier path sets none at or below 75% loan-to-value.
Can I use this on a rental property I own in California?
Yes, in a limited way. The depletion path allows investment property at up to 60% on a cash-out. A rental held for business purposes may fit better under rental financing, which looks at the property’s rent coverage instead of your personal assets.
Is a California cash-out different from one in another state?
The program figures are the same. California’s difference is legal, not financial: cash-out can change how anti-deficiency protection applies, so confirm the effect with a California attorney before you borrow.
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. For a related read, see Lendmire’s piece Can an Equity-Rich Homeowner Take a Large Cash-Out Refinance?. In a state where equity is often the biggest asset a household owns, the leverage ceiling, not the brokerage balance, is the number to plan around.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. State Bar of California proposal (BLS-2012-04)
3. UC Law SF Hastings Business Law Journal article
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 Much Do You Need in Assets for an Asset Depletion Loan? · How an Asset Depletion Mortgage Works · How Big Can an Asset Depletion Jumbo Loan Be?
Guides: Asset-Based Mortgage in California
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.