The Quick Read: It depends on the home’s equity, not the size of your portfolio: on the asset depletion path, a cash-out refinance is capped at 60% of the appraised value on a primary residence, second home or investment property, and from that you subtract your current payoff and closing costs, subject to underwriting. Your assets decide whether you qualify and for how large a loan. The loan-to-value cap decides how much equity can actually come out.
- Asset depletion path: the cash-out ceiling is 60% of value on a primary residence, a second home and an investment property alike.
- Asset qualifier path: refinances reach 75% on a primary residence or second home. The lender sets cash-out terms on this path and does not publish them, so confirm before you plan around a number.
- Cash-out proceeds never count as qualifying assets on the depletion path.
- Alabama adds one cost, a mortgage recordation tax on the new loan amount, which trims your net cash.
Key Terms Defined
Cash-out refinance: a new mortgage that pays off the old one and hands you the extra equity as cash.
Loan-to-value (LTV): the new loan divided by the home’s appraised value.
Asset qualifier path: qualifying on assets alone. Your eligible assets must cover the entire loan, and no employment or income is documented.
Asset depletion path: your eligible assets are converted into a monthly qualifying income, which then runs through the debt-to-income test.
Haircut: the discount a lender applies to an asset, so only a share of the balance counts.
Debt-to-income (DTI): your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Seasoning: how long funds must sit in an account, or how old the statements must be, before a lender counts them.
Which Path Fits You?
Pick the path before you pick a number, because the two use different rules. The asset qualifier path asks one question: do your eligible assets, after the percentages below, equal or exceed the whole loan? If yes, no employment or income is documented. The asset depletion path asks a different one: can your assets, turned into income, carry the full housing payment and your other debts?
A borrower is qualified on one path at a time. Never blend the two tables. (Brokers see this mistake constantly, and it produces numbers that match no program.)
Both paths document the assets. Statements, ownership and source of funds all get reviewed. What goes away is personal income documentation, not paperwork.
This fits a specific reader: a retiree, someone who sold a business, an heir, or a household living on a portfolio. Balances are large, and the traditional personal-income documentation shows little. Across the wholesale network, these are the files where assets do the work that pay stubs usually do.
How Much Cash Can an Alabama Homeowner Take Out? The Formula
Maximum cash equals appraised value times the cash-out LTV cap, minus your existing payoff, minus closing costs and prepaids. That is the whole calculation.
Run it in percentages. Say your payoff already equals 45% of the appraised value, and the cash-out cap is 60%. That leaves roughly 15% of the value before costs. Now say your payoff equals 55% of value. Only about 5% is left. A seven-figure portfolio changes neither number.
Here are the published ceilings on the depletion path, plus the qualifier path for comparison:
| Path and occupancy | Purchase or rate-and-term | Cash-out |
|---|---|---|
| Depletion, primary or second home | Up to 80% | Up to 60% |
| Depletion, investment property | Up to 65% | Up to 60% |
| Qualifier, primary or second home | 80% purchase, 75% refinance | Lender-set, not published |
These are ceilings subject to underwriting, not offers. Most files land below them once the appraisal, credit and property type come in.
Loan size matters too. The depletion path covers loans from $125,000 to $3,500,000. The qualifier path reaches $4,000,000. A cash-out refinance that would land outside the range for your path does not fit that path.
Any HELOC or second lien you want paid off comes out of proceeds the same way the first mortgage does. So the subtraction runs in order: first-lien payoff, second-lien payoff, costs, then you.
Why the Asset Pool Does Not Set the Cash-Out Amount
Assets answer a yes-or-no question about qualifying. Equity answers the how-much question. Picture two borrowers with identical portfolios. One owns a home with a small mortgage, and the other owns a home with a large one. They qualify the same way and walk away with very different checks.
Two tests must both pass on the depletion path. The new loan must sit inside the cash-out cap. The asset-derived income, plus any other documented income, must also support the larger payment under the debt-to-income test.
A common misunderstanding is that your home equity counts as one of your assets. It does not. Federal ability-to-repay language excludes the dwelling securing the loan from what a creditor relies on, and the CFPB’s Regulation Z text says so directly. Equity cannot be the asset that qualifies you for the loan that extracts it. Equity in a different property can count on the depletion path, at the 60% share shown below, subject to lender review.
The same logic means cash-out proceeds cannot be recycled. On the depletion path they never count as qualifying assets. You cannot pull cash out and then use it to fix a thin asset pool.
What Counts, and at What Value
The depletion path discounts each asset type before it counts. The table shows the share of the balance that counts:
| Asset on the depletion path | Counts at |
|---|---|
| Cash accounts | 100% |
| Certificates of deposit | 100% |
| Securities | 80% |
| Private stock | 75% |
| Retirement accounts, any age | 70% |
| Real-estate equity (other property) | 60% |
Some assets are not eligible on this path at all: 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.
The qualifier path credits assets differently. Brokerage accounts, CDs, money market and savings count at 100%. A 401(k) or IRA counts at 90% if you are under 59½ and 100% at 59½ or older. Accounts combine.
Cryptocurrency, precious metals, collectibles, borrowed funds and pledged funds are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Skip the shortcut of asking whether a coin wallet counts at some percentage. It does not.
Here is the arithmetic shape each path uses. It is illustrative, and the lender’s own calculation governs.
- Qualifier path: an $800,000 loan with $330,000 in brokerage accounts (100% = $330,000), $300,000 in a 401(k) under 59½ (90% = $270,000) and $200,000 in savings (100% = $200,000) counts $800,000 of usable assets. It is reviewed on assets alone.
- Depletion path: $1,500,000 in securities (80% = $1,200,000) plus $300,000 in cash (100% = $300,000) is $1,500,000 of usable assets. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the debt-to-income test.
The depletion path also has minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is your only income source. If asset income only supplements documented income, up to a 45% debt-to-income ratio, the minimum-assets rule is waived.
Seasoning rules differ as well. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants 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.
Which Limit Binds First?
The honest answer is whichever ceiling you hit first, and it is rarely the asset pool. Here is how the constraints compare on the depletion path:
| Constraint | It binds when | What it limits |
|---|---|---|
| Cash-out LTV cap | Payoff is already high | Equity you can pull |
| Derived income and DTI | New loan is large vs. assets | Size of the new loan |
| Minimum assets | Pool is below the floor | Whether you qualify |
| Loan range | Loan falls outside the range | Which path applies |
Think it through with a retiree holding a large brokerage account and a home with a modest mortgage. The cap leaves a healthy slice of equity. Income from the assets may then limit how large a loan the debt-to-income test supports. That is a real tension, and it is why the strongest files keep the new loan only as large as the cash needs require.
Flip the picture for someone whose payoff already sits near 55% of value. The cap, not the portfolio, ends the conversation. A bigger portfolio does not help. A fresh appraisal that comes in higher might.
What Can Shrink Your Cash-Out
Plenty of requests come back smaller than the formula promised. Here are the usual causes:
- The appraisal. The cap applies to the appraised value, not what you think the home is worth.
- Assets that do not count. Anything on the not-eligible list drops out of the pool before the math starts.
- Statement age. Statements that are too fresh, or missing the older one, delay a file.
- Credit. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on this path needs 700. Housing history runs 0x30x12, with one 30-day late in the last twelve months considered case by case. A housing event needs 4 years of seasoning, and multiple bankruptcies are not eligible. The qualifier path publishes a 600 minimum score.
- Closing costs. They come out of proceeds, so net cash is smaller than gross equity.
Alabama: One State Item That Trims Your Net
The program figures above do not change by state. We know of no Alabama rule that caps cash-out on these programs. The state-specific item is a closing cost.
Alabama’s mortgage recordation tax is $.15 per $100 of indebtedness, per the Alabama Department of Revenue. It applies to the new loan amount. So a larger cash-out loan carries a larger tax. Budget for it when you size the request, because it reduces what lands in your account.
Lendmire’s consumer mortgage business is licensed in 16 states, Alabama among them. It arranges asset-based mortgages through select lenders in its wholesale network. It is a broker, not the lender, and the lender reviews and approves each file individually.
Rental Owners: Asset Depletion or DSCR?
If the property is a rental, you have a second route worth pricing out. 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.
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal income and assets are not the test. If the rent covers the payment comfortably, DSCR often fits better. If it does not, asset depletion may work where DSCR cannot, because it looks at your balance sheet, not the lease. Some select lenders in the network also review sub-1.00 coverage, though leverage and terms adjust. The complete DSCR loans guide walks through that comparison.
On the depletion path, an investment property carries the same 60% cash-out ceiling as a primary residence. Purchases and rate-and-term refinances are tighter on a rental, at 65%. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
For bigger numbers, Lendmire’s breakdown of large cash-out refinances for equity-rich homeowners covers when large equity pulls make sense. If the new loan is large, jumbo loan limits and guidelines may also apply.
What to Do With the Cash
Your portfolio stays invested. Nothing is sold, and nothing is pledged as collateral. The depletion calculation is a qualifying convention, not a liquidation. That is the quiet advantage of this route: no forced sale of securities to raise the cash.
Common uses are paying off higher-cost debt, building reserves, or funding the down payment on a rental. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
One practical point. The more you borrow, the more the debt-to-income test pushes back. Taking only what you need keeps the file stronger.
Documents to Gather
Pull these together before you apply:
- Account statements for every qualifying account, matching your path’s seasoning rules.
- Your current mortgage statement, plus any HELOC statement.
- Proof of ownership of the accounts, including your share of any joint accounts.
- Paperwork showing the source of funds for large recent deposits, such as a business sale, inheritance or settlement.
- Homeowner details the appraiser and lender will need for the property.
Verification matters. Under the federal ability-to-repay text, assets need third-party records that provide reasonably reliable evidence. In practice that means statements, as the same Regulation Z section describes.
Frequently Asked Questions
Can I take cash out on the asset qualifier path?
The lender sets cash-out eligibility and leverage on that path and does not publish them. The published qualifier ceiling is 75% on a refinance of a primary residence or second home, but whether cash can come out is a file-level question. If you need a published cash-out figure, the depletion path gives one: 60%.
Do I have to sell my investments to qualify?
No. The assets are not sold and not pledged as collateral. They are counted, after the haircuts, to show you can carry the loan. Your portfolio stays invested while you borrow against the home.
Do cash-out proceeds count toward my qualifying assets?
No, not on the depletion path. Proceeds never count as qualifying assets, so you cannot use the cash you pull to strengthen the same file.
Can I use a 401(k) or IRA?
Yes, with a haircut. On the qualifier path, retirement balances count at 90% if you are under 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. Each path applies its own percentage, never both.
Does Alabama limit how much cash I can take out?
Not that we are aware of. The program ceilings are the same in every state. What Alabama adds is the mortgage recordation tax on the new loan amount, which reduces your net cash.
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.
Lendmire’s asset-based mortgage in Alabama page presents the program for Alabama borrowers.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB, Regulation Z § 1026.43
2. Alabama Department of Revenue, Recordation Tax
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 Down Payment Does an Asset Depletion Jumbo Loan Need? · Does an Asset Depletion Loan Require Any Income? · Asset Qualifier vs Asset Depletion for a Cash-Out Refinance
Guides: Asset-Based Mortgage in Alabama
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.