The Quick Read: It depends on the path and the property, and on a rental the answer is usually no. On the asset depletion path, a cash-out refinance is allowed on a principal residence or second home at up to 60% loan-to-value, and an investment property also tops out at 60% on a cash-out, subject to underwriting. Cash-out proceeds never count as qualifying assets.
- Asset depletion is a way of qualifying, not one loan with one rule set.
- On the depletion path, cash-out is capped at 60% on a principal residence, second home, or investment property.
- On the asset qualifier path, cash-out terms are set by the lender and not published.
- Cash you pull out cannot be used to meet the asset test.
- A rental investor who wants equity out is usually better matched to a DSCR cash-out refinance.
Here is the part that trips people up. You read “no cash-out” on one lender’s page and “yes” on another’s. Both can be true, because the term covers two different ways of qualifying.
What Asset Depletion Actually Means
Asset depletion is a qualifying method. The lender looks at your balances instead of your paycheck. It counts what is usable, applies a discount to anything that can fall in value, and turns the total into a monthly income number.
Two paths exist, and you are qualified on one at a time. Mixing them is the fastest way to misread a guideline.
The asset qualifier path. Your eligible assets must equal or exceed the entire loan amount. No employment or income is documented. Brokerage accounts, certificates of deposit, money market and savings all count at 100%. Retirement accounts count at 90% if you are under 59½ and 100% at 59½ or older, subject to underwriting. Loans run up to $4,000,000.
The asset depletion path. Eligible assets are discounted, then divided by 60 months to produce monthly qualifying income. That income has to carry the housing payment and your other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000.
Here is the shape of the depletion math, offered as illustration only. Say you hold $1,500,000 in securities, counted at 80%, which is $1,200,000. Add $300,000 in cash at 100%. That is $1,500,000 usable. Divide by 60 months and you get $25,000 of monthly qualifying income, which must then carry the housing payment and other debts. The lender’s own calculation governs.
Nothing here requires you to sell or withdraw. The formula is a qualifying model, not a spending schedule. The assets are still documented, though. “No income documentation” never means “no documentation.”
Why Cash-Out Is the Sticking Point
Cash-out is harder to approve because the lender is lending against the same property for more than the payoff. Add a personal-income substitute to that, and the underwriting gets conservative fast.
A refinance counts as cash-out when the new loan is bigger than the payoff and you receive the difference. A small bump still counts. A property you own free and clear is treated as cash-out too, because there is no payoff to measure against. Lenders do set a limited cash-out threshold that lets a tiny amount of cash back be labeled rate-and-term. That line is lender-specific, so ask before you assume.
Market surveys of published non-QM guidelines show a consistent pattern: many programs allow purchase and rate-and-term only, and cash-out is often excluded or held to lower leverage. That is the origin of the “no” answers you see. Across our wholesale network, the cash-out question gets answered by path:
| Path | Cash-out leverage | Property types |
|---|---|---|
| Asset qualifier | Set by lender, not published | Principal residence, second home |
| Asset depletion | 60% on cash-out | Principal residence, second home, investment property |
| Depletion, non-cash-out | 80% residence or second home; 65% investment | Purchase or rate-and-term |
On the qualifier path, the refinance ceiling is 75% for a principal residence or second home. Whether cash-out proceeds are allowed there, and at what leverage, is decided by the lender. Never assume a figure. All of this is through select programs and subject to underwriting.
The Business-Purpose Line for Rentals
This is the one place the regulatory frame matters, so it gets one short paragraph. Investor loans are designed for non-owner-occupied investment properties. Because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending summary lists business-purpose credit as an exempt transaction.
Asset depletion is a substitute for personal income. That fits a consumer, owner-occupied file naturally. A rental loan is decided on what the property earns, not on what you personally hold.
Sizing Your Cash-Out
Two limits decide how much you can take, and the smaller one wins.
Equity headroom. On the depletion path, 60% is the ceiling on a cash-out. If your current loan already sits near that, there is little or nothing left to pull. Appraised value drives this, so the same house can support different amounts in different appraisals.
Payment capacity. A larger loan means a larger housing payment. On the depletion path, that payment has to fit inside the derived income through the debt-to-income test. Take the illustration above: the $25,000 of monthly qualifying income has to carry the new, bigger obligation plus every other debt. Pull out too much and the ratio breaks before the equity does.
On the qualifier path, the logic is different. The eligible assets must cover the entire new loan, so a bigger cash-out raises the bar you have to clear on the asset side. Try this with the sanctioned example: an $800,000 loan supported by $330,000 in brokerage (100%), $300,000 in a 401(k) under 59½ (90%, counted as $270,000) and $200,000 in savings (100%) counts $800,000 of usable assets. Raise the loan by a dollar and you need a dollar more in counted assets.
Assets, Reserves, and Cash-Out Proceeds
The cash you pull out cannot be used to qualify yourself. On the depletion path, cash-out proceeds never count as qualifying assets. That catches people who plan to refinance, then count the proceeds toward the asset total on the same file.
What counts on the depletion path: cash accounts and certificates of deposit at 100%, securities at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%. 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.
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.
Seasoning matters too. The depletion path wants statements at least 120 days old plus a recent statement, with the exact recency requirement varying by file and lender. Funds from a business sale, inheritance or legal settlement are excused from that depletion seasoning.
Credit has a floor, too. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700.
What Happens on a Rental
For a rental, the first question is which loan the property actually fits. The depletion path does list investment property, at 65% on a purchase or rate-and-term and 60% on a cash-out. So it is not shut out. It is simply a narrower, lower-leverage door.
The qualifier path, by contrast, covers principal residences and second homes. A pure investment cash-out does not live there.
Here is the practitioner read. Many investors who are asset-rich and income-light end up better served by the rental product built for this job. A DSCR cash-out reviews the property’s rent against the full monthly obligation. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal balances show up for closing funds and reserves, not for earnings. Lendmire’s complete DSCR loans guide walks through how that review works.
Typical DSCR cash-out files from select wholesale-network programs run around 75% LTV on standard rentals, with roughly six months of seasoning, subject to underwriting. Programs below 1.00 coverage are available through select lenders in the network, but leverage and terms adjust. A DSCR file can fall apart over seasoning, appraised rent or property eligibility. It is rarely your net worth that sinks it. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
An all-cash buyer may sometimes skip some of the seasoning wait through delayed financing, though not the value cap.
If Asset Depletion Won’t Cash You Out
If your file does not fit, you have options. None is perfect, so match the tool to the goal.
| Option | Best fit | Tradeoff |
|---|---|---|
| DSCR cash-out | Rental property, equity to redeploy | Qualification is reviewed on rent; prepayment penalty common |
| Depletion path at 60% | Residence or second home, high assets | Lower leverage; payment must fit the income test |
| Bank statement program | Self-employed with deposit history | Income shown by deposits, not assets |
| Home equity line | Smaller draw, keep first loan | Smaller lender pool, lower limits on rentals |
A prepayment penalty is common on DSCR loans, so a quick re-refinance has a cost. Plan the hold before you pull equity.
For a retiree weighing whether to pull equity at all, Lendmire’s piece Should an Asset-Rich Retiree Use a Cash-Out Refinance to Invest? covers the decision from the borrower’s side.
Strategy and Risks
Why borrow against a property instead of selling investments? Selling can trigger a taxable event and takes capital out of the market. Borrowing keeps the portfolio working. 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.
The risks are real, though. A larger payment is permanent, while portfolio gains are not. On the depletion path, a market drop shrinks the discounted asset pool, and that lowers your derived income. A payment that fit last year can look tight after a downturn.
The honest toss-up for many borrowers is whether to take the lower-leverage cash-out now or restructure into a rental product later. If the property is a rental, the second usually wins. If it is your home, the 60% depletion cash-out may be the cleaner fit.
Key Terms Defined
Asset depletion: a method that converts eligible asset balances into monthly qualifying income.
Asset qualifier: a path where eligible assets must equal or exceed the whole loan, with no income documented.
Haircut: the share of an asset’s value a lender discounts because it can fall or is hard to access.
Cash-out refinance: a refinance where the new loan exceeds the payoff and you receive the difference.
Seasoning: how long funds or ownership must be in place before a lender counts them.
DSCR: debt service coverage ratio, which compares a property’s rent to its full monthly obligation.
Questions to Ask Before You Apply
- Which path will my file run on, qualifier or depletion?
- Is cash-out allowed on that path for my occupancy?
- What is the maximum leverage for a cash-out on my property type?
- Does a small amount of cash back still count as limited cash-out?
- Which of my accounts count, and at what percentage?
- Is this a rental that belongs on a DSCR file instead?
Frequently Asked Questions
Do I have to sell my investments to do a cash-out on an asset depletion loan?
No. The formula is a qualifying model, not a withdrawal schedule. Your portfolio stays invested. The funds do have to be accessible and documented, with the required statements and seasoning.
Does my paid-off home count as a cash-out?
Yes. With no existing loan to pay off, any loan proceeds paid to you are treated as cash-out. On the asset depletion path, that means the 60% cash-out ceiling applies on a principal residence, second home or investment property, subject to underwriting. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Can cash-out proceeds count toward my assets or reserves?
No. On the asset depletion path, cash-out proceeds never count as qualifying assets. Plan your asset test around balances you already hold.
Can I use asset depletion to cash out of a rental?
Sometimes, but at a lower ceiling. The depletion path allows investment property at 60% on a cash-out. Most rental investors do better with a DSCR cash-out, which reviews the property’s rent instead of your assets.
Why do some lenders say yes and others say no?
Asset depletion is a qualifying method, so each lender sets its own rules for purpose and occupancy. Market surveys of published programs show many exclude cash-out. Across a wholesale network, the answer depends on the path.
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. Consumer lending is licensed in 16 states, and every file is underwritten individually. This is not a commitment to lend.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
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.
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References
1. CFPB – TILA summary (Reg Z §1026.3 exemptions)
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 an Asset Depletion Jumbo Loan Works · Retirement Account Withdrawals vs Asset Depletion for a Jumbo Loan · Maxed-Out Jumbo vs Super Jumbo Loan for a Retiree on Asset Depletion
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.