The Quick Read: Yes, but only on one of the two asset-based paths, and only with a lower loan-to-value ceiling than a purchase. On the asset depletion path, cash-out is capped at 60% loan-to-value on a principal residence, second home, or investment property, subject to underwriting. Cash-out proceeds never count as qualifying assets. On the asset qualifier path, cash-out terms are set by the lender and are not published.
- Asset depletion path: 60% loan-to-value on a cash-out, against 80% on a purchase or rate-and-term refinance (principal residence or second home).
- Investment property on that path tops out at 65% and 60%, but a rental usually fits a DSCR loan better.
- Usable assets divided by 60 months become your qualifying income.
- Statements must be seasoned, and the assets are fully documented.
- California borrowers see the same program figures as everyone else, subject to lender guidelines and credit approval.
Programs change, and every file is underwritten individually. Nothing here is a commitment to lend.
Which Path Are You Actually On?
Two different products share the “asset-based” label, and a borrower is qualified on one at a time.
The asset qualifier path looks at whether eligible assets, after credit percentages, equal or exceed the entire loan amount. No employment or income is documented. Leverage runs up to 80% on a purchase and 75% on a refinance for a principal residence or second home, through select programs. Whether cash-out proceeds are allowed here, and at what leverage, is the lender’s call. It is not something to promise a borrower.
The asset depletion path converts usable assets into monthly income, dividing by 60 months. That income carries the full housing payment and other debts through a debt-to-income test. This is the path with a published cash-out ceiling.
Across Lendmire’s wholesale network, most programs that allow cash-out under an asset structure sit on the depletion side. Plenty of lenders restrict cash-out entirely, which is why a quick web search turns up contradictory answers. Some pages say yes, some say no. Both can be right, because they describe different programs.
What Leverage Applies to a Cash-Out?
On the depletion path, a cash-out refinance on a principal residence or second home goes up to 60% loan-to-value. A rate-and-term refinance on the same home goes to 80%. Investment property runs 65% on a purchase or rate-and-term and 60% on a cash-out.
| Transaction (depletion path) | Primary / second home | Investment property |
|---|---|---|
| Purchase | Up to 80% | Up to 65% |
| Rate-and-term refinance | Up to 80% | Up to 65% |
| Cash-out refinance | Up to 60% | Up to 60% |
Loan amounts on this path run from $125,000 to $3,500,000, through select programs. California’s higher-priced homes can press against that ceiling, so check the loan size early.
Here’s the catch. A 60% ceiling means the home needs substantial equity before cash-out is even workable. Picture a California owner whose house is worth well above the loan balance but whose existing loan already sits near 55% of value. Only a thin slice of equity is available. A rate-and-term refinance at 80% leaves more room, but that is not cash-out.
How Assets Become Income on the Depletion Path
Usable assets, after haircuts, are divided by 60 months. The result is monthly qualifying income, and it must carry the housing payment and other debts.
Haircuts on this path are:
| 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% |
Here is the sanctioned illustration. Say $1,500,000 sits in securities (80% counts, so $1,200,000) plus $300,000 in cash (100%). Usable assets are $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then has to carry the new housing payment and other debts through the debt-to-income test. The lender’s own calculation governs.
Three more rules shape the file:
- Minimum qualified assets are the lesser of $1,000,000 or 1.25 times the loan balance, and never below $250,000 liquid when asset depletion is the only income source.
- Asset income may supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived in that case.
- Cash-out proceeds never count toward qualifying assets. This breaks the circular idea of borrowing against the house to prove you can afford the house.
Nothing is sold. The portfolio stays invested. It is a qualifying calculation, not a liquidation.
Why Do Sources Disagree About Cash-Out?
Because “asset depletion” is not one product. Agency-style asset-as-income rules are a separate world. As a practitioner summary notes, asset use under Freddie Mac applies to a one-to-two unit primary residence or second home, and the transaction generally has to be a purchase or a no-cash-out refinance. Non-QM asset programs, the ones placed through select lenders in Lendmire’s network, are a different product with different calculations.
So when one page says no cash-out and another says yes, the difference is usually program type. Add occupancy to that: some programs exclude investment property altogether, while the depletion path described here allows it at lower leverage.
Honestly, for a pure cash-out question, the program label matters less than a few specifics. Which path is it? What is the occupancy? What is the loan-to-value after the new loan? Those three answers decide most files.
What Lenders Review on a Cash-Out File
Expect a full review, not a shortcut. The asset side and the property side both get documented.
- Statements: on the depletion path, statements at least 120 days old at application, plus the most recent within 45 days. Funds from sale of a business, an inheritance, or a legal settlement are excused from that seasoning.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account.
- Credit: the qualifier path has a 600 floor. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700.
- Housing history: 0x30x12, with one 30-day late in the last twelve months considered case by case. A housing event needs four years of seasoning on the depletion path.
- Appraisal and housing expense: the home is valued, and taxes, insurance, and any HOA dues count in the payment.
Documenting no income never means documenting nothing. The assets are verified on both paths with statements, and there is no traditional personal-income documentation, such as pay stubs or employment verification. Because this is a consumer mortgage on a residence, it carries consumer disclosure requirements.
Reserves differ by path. The qualifier path requires none at or below 75% loan-to-value, and above that the lender sets them. The depletion path has no published reserve months. Even so, the minimum-assets test already forces a large cushion.
Which Assets Don’t Count?
On the depletion path, these are not eligible: 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.
Crypto, 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. Never assume they count at some percentage.
California Considerations Worth Raising
Program figures don’t change by state. Prices do, and so does one piece of California law worth knowing about.
Purchase-money loans on a California home are generally non-recourse, and refinancing generally removes that protection. A California real estate law practitioner reads the statute to say that on a cash-out refinance, the new cash-out portion is the part exposed to a deficiency. That commentary is dated, and Bills.com offers a consumer-level overview of purchase-money status. Treat both as general information, not legal advice, and ask a California attorney how it applies to your loan.
The practical point: cash-out changes your legal position, not just your balance. If the old loan was a purchase-money loan, think about that before you refinance.
Rental or Residence? The Decision That Flips the Tool
If the California home is your residence or second home, asset depletion is a workable lane. If it is a rental, the question changes.
Asset depletion tests the person. DSCR tests the house. Asset depletion carries debt-to-income limits and personal vesting, while DSCR allows entity ownership, subject to program terms. Business-purpose loans on non-owner-occupied rentals sit outside the consumer framework, which is why federal Regulation Z treats that credit differently from a loan on your own home.
A DSCR cash-out generally is not available on a primary residence. And the cash-out has to be documented as business use. For a rental with weak rent coverage, a post-refinance ratio can slip below 1.00. Select lenders in the network offer sub-1.00 programs, but leverage and terms adjust. If the number only works by reaching, that is a signal to rethink the property, not the loan type.
The flip point is simple. If you hold a large portfolio and the home is where you live, asset depletion at 60% may fit. If the home produces rent, start with a DSCR structure.
Cash-Out Alternatives to Weigh
| Option | Best when | Tradeoff |
|---|---|---|
| Depletion cash-out | Large portfolio, low documented income | 60% ceiling limits equity access |
| Rate-and-term | You want to restructure, not extract | No new cash |
| DSCR cash-out | Home is a rental with solid coverage | Not for primary residences |
| Portfolio draw | Short-term need | Forces selling invested assets |
Each fits a different borrower. None is universally better.
Why These Files Stall
- Wrong path. The borrower is reviewed on assets, then asks for cash-out the lender doesn’t offer.
- Equity too thin. A 60% ceiling leaves less room than owners expect.
- Ineligible assets. Crypto or business accounts that never get converted to seasoned cash.
- Fresh deposits. Statements that miss the seasoning window.
- Proceeds counted as assets. They can’t be.
Key Terms Defined
Asset qualifier path: the structure where eligible assets must cover the entire loan amount.
Asset depletion path: the structure that divides usable assets by 60 months into qualifying income.
Haircut: the share of an account’s balance that a lender discounts.
Seasoning: how long funds or statements must have existed before the application.
Cash-out refinance: a new loan larger than the payoff, with the difference paid to the borrower.
Frequently Asked Questions
Does a paid-off California home count as cash-out?
Typically, yes. Taking money out of a home with no mortgage is generally treated as cash-out, so the 60% ceiling on the depletion path would likely apply. Confirm how a specific lender classifies it.
Do I have to sell my investments?
No. Nothing is liquidated. The assets are documented and run through a qualifying calculation, and they stay invested.
Can retirement accounts count?
Yes. On the depletion path they count at 70% at any age. On the qualifier path, they count at 90% under age 59½ and 100% at 59½ or older, subject to underwriting.
Can I use the cash to reinvest?
Cash-out proceeds can’t count as qualifying assets on the depletion path. How you use the money is a separate decision, and for rental purchases a DSCR loan is usually the cleaner tool.
Does this work for a second home or investment property?
A second home follows the same leverage as a primary residence. An investment property is allowed only on the depletion path, at 65% on a purchase or rate-and-term 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 programs based on your statements, the property, credit profile, leverage, and your goals. Reach the team at 828-256-2183 or through the quote form.
Lendmire’s asset-based mortgage in California page presents the program for California borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
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References
1. Gus Sancho: Freddie Mac asset depletion
2. Bay Area Real Estate Lawyers: California anti-deficiency
3. Bills.com: California recourse loans
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 Michigan Rental Property on Asset Depletion Income? · Can You Buy Out an Ex-Spouse With an Asset Qualifier Refinance? · Can You Get an Asset Depletion Loan While Paying Alimony?
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.