The Quick Read: Yes, on select asset depletion programs, a Colorado principal residence or second home can be cashed out at up to 60% loan-to-value, provided the eligible assets in your accounts, after haircuts, produce enough monthly qualifying income, and the cash-out proceeds themselves never count toward those assets, subject to underwriting. The program figures are the same in Colorado as anywhere else. Colorado is simply one of the 16 states where Lendmire does consumer mortgage lending.
- Asset depletion converts usable assets into monthly income by dividing them by 60 months. That income then runs through the debt-to-income test.
- Cash-out leverage on this path is 60% on a principal residence, a second home or an investment property, through select programs.
- Home equity in the property you are refinancing does not count as a qualifying asset. The assets have to sit in other accounts.
- The other path, asset qualifier, covers the whole loan with assets alone. Whether it permits cash-out is set by each lender and is not published.
Two Paths, and You Are on One at a Time
Asset-based mortgages come in two forms, and mixing them up causes most of the bad advice on this topic. The brokerage places both through select lenders in its wholesale network. A borrower is reviewed on one path per loan, never a blend.
The asset qualifier path requires eligible assets, after the credit percentages below, to equal or exceed the entire loan amount. No employment or income is documented. The asset depletion path takes usable assets, applies haircuts, divides by 60 months, and treats the result as monthly income. That income has to carry the full housing payment and your other debts through the debt-to-income test.
The cash-out question lands very differently on each. On the depletion path, the leverage limits are published and cash-out is clearly in the menu. On the qualifier path, the refinance ceiling is 75%, but whether cash-out proceeds are allowed, and at what leverage, is the lender’s call. Most files that come in asking about cash-out end up on the depletion path for that reason.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How you qualify | Assets cover whole loan | Assets become monthly income |
| Income documented | None | Derived income, DTI test |
| Refinance leverage | Up to 75% | 60% cash-out |
| Cash-out rules | Set by lender, not published | 60% on all occupancies |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
Why Cash-Out Is a Different Question Than a Purchase
A purchase or a rate-and-term refinance leaves your balance roughly where it was. A cash-out raises the balance and lowers your equity cushion, so lenders cut the leverage. On the depletion path, a principal residence or second home can go up to 80% on a purchase or rate-and-term refinance, but only 60% on a cash-out. An investment property tops out at 65% on a purchase or rate-and-term refinance and 60% on a cash-out.
The step down matters for planning. A Colorado homeowner with a long-held mountain or Front Range home and a large balance of equity may expect to pull out most of it. At 60% loan-to-value, that homeowner is limited to a smaller share of the home’s value, including whatever is paid off on the existing loan. That is the first number to run before anything else.
There is a second wrinkle. Cash-out proceeds never count as qualifying assets on this path. You cannot pull cash out of the house and then count it as the asset that qualifies you for the loan. Some online calculators treat net proceeds as extra assets. The programs in the network do not.
Which Assets Count on the Depletion Path
Only the share of each balance that counts is used, and it depends on the account type. Here is how the depletion path treats the main categories, subject to underwriting.
| 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 (not the home being refinanced) | 60% |
The real-estate equity row refers to equity held outside the property you are refinancing. The equity in the subject home itself never counts, and neither do the cash-out proceeds drawn from it.
Several categories are not eligible at all on this path: 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, pledged or borrowed funds, and business accounts beyond your ownership share are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account. The lender then reviews where the money came from. Never plan around these holdings counting at a percentage.
The qualifier path uses a different table. Brokerage accounts, certificates of deposit, money market and savings count at 100%. A 401(k) or IRA counts at 90% if you are under 59½ and 100% once you reach 59½. Accounts combine.
The Math, Run Once
Say you hold $1,500,000 in securities and $300,000 in cash, and you want to cash out a home on the depletion path.
Securities count at 80%, which is $1,200,000. Cash counts at 100%, which is $300,000. Usable assets total $1,500,000. Divided by 60 months, that gives $25,000 of monthly qualifying income.
That income then has to carry the new housing payment and your other debts through the debt-to-income test. A larger cash-out lifts the payment and tightens the ratio. The loan size is therefore limited both by 60% leverage and by what the derived income can support. Whichever limit is lower governs. This is illustrative, and the lender’s own calculation controls. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Two program minimums also apply on the depletion path. 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 you have documented income as well, asset-derived income can supplement it up to a 45% debt-to-income ratio, and in that case the minimum-assets rule is waived.
For the qualifier path the example looks different. An $800,000 loan with $330,000 in brokerage accounts (100%), $300,000 in a 401(k) while under 59½ (90%, so $270,000) and $200,000 in savings (100%) counts $800,000 of usable assets. That covers the loan on assets alone. It is a refinance picture at best, since cash-out terms on this path are not published.
Seasoning, Statements and Credit
The assets are documented on both paths. No income documentation never means no documentation.
On the depletion path, 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. On the qualifier path, funds need 60 days of seasoning and two months of statements for each qualifying account.
Credit rules differ slightly. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix, and a first-time investor on that path needs a 700. Housing history is 0x30x12, with a single 30-day late in the last twelve months considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path. None of these are promises of approval.
Why Home Equity Cannot Be Your Qualifying Asset
Federal ability-to-repay rules require a lender to consider your income or assets, other than the value of the dwelling that secures the loan. The lender must also verify what it relies on, using reliable third-party records.
That is why a cash-out refinance cannot qualify on the equity in the very home you are refinancing. The qualifying assets sit elsewhere, such as bank, brokerage or retirement accounts. It is also why statements for every counted account are part of the file.
Is a Rental in Colorado Better Handled as a DSCR Loan?
Usually, yes. 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.
DSCR tests the house, dividing rent by the full housing payment. If a Colorado rental covers itself on rent, a cash-out on a DSCR basis often fits more cleanly. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, and does not depend on your personal debt-to-income ratio. If the rent falls short, select lenders in the network offer programs below 1.00 coverage, with leverage and terms adjusted accordingly.
Asset depletion on an investment property still exists, at 60% on a cash-out. It tends to fit when the property cannot support itself, the portfolio is deep and your personal income is thin. Lendmire’s complete DSCR loans guide walks through that choice for rental owners.
Colorado Considerations
The program figures do not change by state, so the percentages above apply to a Denver condo, a Colorado Springs home or a mountain second home alike. What changes is the property: appraisals, title and local insurance can all shift the file.
Second homes are a common Colorado use case, and they sit on the same 60% cash-out limit as a principal residence on the depletion path. 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. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
If Cash-Out Is Not Available on Your File
When the numbers do not work or the lender’s matrix says no, there are three realistic alternatives.
1. Rate-and-term refinance. On the depletion path, a principal residence or second home can go up to 80%. This only restructures the existing loan and pays out no cash.
2. A different qualification path. If you have deposit history from a business, a bank statement program documents income with deposits. If the property is a rental, DSCR is reviewed on the property’s income.
3. A smaller cash-out. Lowering the amount reduces the payment and the debt-to-income pressure, and it can bring a borderline file back into range.
What Derails These Files
Most problems are documentation problems.
- Stale statements. On the depletion path, statements must be 120 days old at application, plus one within 45 days.
- Ineligible accounts. Custodial, escrow, foreign and deferred-compensation balances drop out, which shrinks the usable pool.
- Recently moved funds. Large deposits need a documented source, and unexplained transfers draw questions.
- Counting the house. The equity in the subject property cannot be a qualifying asset, and neither can the cash-out proceeds.
- Wrong path. A borrower who needs cash-out but starts on the qualifier path often has to switch, because cash-out terms there are not published.
Key Terms Defined
Asset depletion: a method that converts usable assets into monthly qualifying income by dividing them by 60 months.
Asset qualifier: a path in which eligible assets must cover the entire loan amount and no income is documented.
Haircut: the share of an account balance that does not count toward qualifying, which varies by asset type.
Debt-to-income ratio: monthly debts, including the new housing payment, divided by monthly qualifying income.
Cash-out refinance: a new, larger mortgage that pays off the old one and returns the difference as cash.
Seasoning: the length of time funds must have been in an account, shown by statements.
Frequently Asked Questions
Can I cash out on an asset depletion refinance?
Yes, through select programs on the depletion path. Leverage is capped at 60% on a cash-out for a principal residence, a second home or an investment property. Your eligible assets after haircuts must produce enough monthly income to carry the new payment, subject to underwriting.
Do cash-out proceeds count as assets?
No. On the depletion path, proceeds never count as qualifying assets. The assets that qualify you have to be in accounts outside the home, and the equity in the home itself does not count either.
Can retirement accounts be used?
Yes, on both paths. The depletion path counts retirement accounts at 70% at any age. The qualifier path counts them at 90% under 59½ and 100% at 59½ or older, and accounts combine.
Does it work on a second home in Colorado?
Yes. A second home sits in the same leverage tier as a principal residence on the depletion path: 80% on a purchase or rate-and-term refinance and 60% on a cash-out.
What if I am turned down for cash-out?
Ask which path the lender reviewed, then consider a rate-and-term refinance, a smaller cash-out, or a different program. A bank statement program fits borrowers who document income with deposits, and DSCR fits rental properties that cover their own payment.
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. Call 828-256-2183 or request a quote at Lendmire’s quote page.
Colorado borrowers with large balances and little documented income usually find the cash-out answer comes down to the 60% ceiling and which accounts sit outside the house.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
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 traditional personal-income documentation, 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. Cornell Legal Information Institute, 12 CFR 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Asset Depletion vs DSCR for a North Carolina Rental Purchase · Can Two Colorado Retirees Buy a Home Together on an Asset Qualifier Mortgage? · Can You Get an Asset Depletion Loan While Paying Alimony?
Guides: Asset-Based Mortgage in Colorado
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.