The Quick Read: Not directly: cash-value life insurance is not on the published list of eligible assets for either asset-based path that Lendmire places through select lenders, so the policy’s value generally does not add to your usable assets unless it is first turned into a seasoned cash balance in a regulated account, and even then the lender reviews the source. The death benefit never counts on any path. Everything here is subject to underwriting, and the lender’s own calculation governs.
- Term life never counts, because it builds no cash value.
- Only the net cash surrender value is even a candidate, meaning cash value after surrender charges and policy loans.
- Borrowed money, including a policy loan, is not published as eligible on either path.
- Lenders and programs may treat insurance differently, so the program’s own guideline decides.
- On a DSCR rental loan, a policy is a reserves question, not an income question.
What Is an Asset Depletion Mortgage, and Where Does a Policy Fit?
An asset-based mortgage lets a borrower with large balances and thin documented income qualify on the balances. Across the wholesale network, two paths exist, and a borrower is qualified on one path at a time.
The first is the asset qualifier path. Your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. It covers purchases up to 80% loan-to-value (LTV, the loan as a share of the property’s value) and refinances up to 75%, on a principal residence or second home.
The second is the asset depletion path. Usable assets, after haircuts, are divided by 60 months to create a monthly qualifying income. That income then runs through the debt-to-income test (DTI, your monthly debts as a share of income). Both paths document the assets in full. Only the income documentation is replaced.
A cash-value policy sits awkwardly in both. It is real money on your personal balance sheet. But the published eligible lists name cash, savings, certificates of deposit, money market, brokerage and securities, private stock, retirement accounts and, on the depletion path, real-estate equity. Life insurance is not named on either list.
Does the Policy’s Cash Value Count?
Not as a stand-alone asset on the programs we place. The published lists simply do not include it, so a statement showing a large cash value does not raise your usable-asset total.
This is where a broker sees a gap between what borrowers assume and what lenders credit. A policy feels like savings, because you can borrow against it or surrender it for cash. A lender weighs something different: how easily the balance can be verified, valued and reached. Cash in a regulated account is simple on all three. A policy is not.
Treatment really does differ from program to program. Some non-QM programs elsewhere in the market list policy value as eligible, and others exclude it. That is why the question has no single national answer. Ask which assets the specific program accepts before you rely on any balance. Lendmire’s piece How Lenders Count Assets Toward an Asset Depletion Mortgage walks through the eligible categories side by side.
What Counts Is Net Cash Surrender Value, Not “Cash Value”
If any lender does credit a policy, the number that matters is net cash surrender value. NerdWallet defines cash surrender value as the cash value minus surrender charges, policy loans and prior withdrawals. The cash value line on your annual statement is therefore often higher than what you would actually receive.
Surrender charges explain much of the gap. Mutual of Omaha notes that these charges are typically highest in the first five to ten years of a policy, and in year one you may get little or nothing back. A young policy can look healthy on paper and still carry almost no usable value.
The tax code adds a wrinkle. In 26 U.S.C. § 7702, the statutory definition of cash surrender value ignores surrender charges and policy loans, while the net surrender value definition accounts for the charges but not the loans. Statement labels and statutory labels do not line up. Underwriters generally want the figure after both charges and loans, so use the lowest number on the page as your planning number.
Which Policies Even Qualify as a Candidate?
Only permanent policies qualify as a candidate, because only they build cash value. New York Life explains that the death benefit is not an asset and that only permanent policies such as whole life grow cash value you can access.
| Policy type | Builds cash value? | What to check |
|---|---|---|
| Term life | No | Nothing to count |
| Whole life | Yes | Surrender charge, loans |
| Universal life | Yes | Net value, loan balance |
| Variable or indexed universal | Yes | Statement net value |
| Annuity (a separate insurer product) | Separate product | Check it apart from any policy |
Annuities are a different instrument from life insurance. A program that lists one does not necessarily list the other, so each needs its own check. Neither appears on the published lists for the two paths above.
What About Borrowing Against the Policy?
A policy loan does not help an asset-based file, and it can hurt. Three reasons stand out.
First, outstanding loans reduce net cash surrender value, so every dollar borrowed shrinks the figure a lender would consider. Second, pledged or borrowed funds are not published as eligible on either path, so loan proceeds sitting in your checking account are not the clean seasoned cash they appear to be. Third, loans taken to pay premiums, with interest rolling into the balance, can erode value year after year. A policy loan can also reduce the death benefit, per Mutual of Omaha.
Cash-out proceeds are a similar trap on the depletion path. Proceeds from a cash-out refinance never count as qualifying assets there. Funds that originate as debt do not make you wealthier on the page.
Can You Convert the Policy Into Qualifying Assets?
Sometimes, but it is a real decision with real costs. For assets outside the published lists, such as cryptocurrency, precious metals or collectibles, the documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Policy value would follow the same logic, and the lender decides whether the source is acceptable.
Seasoning means the money has sat in the account long enough to be treated as yours. On the qualifier path that is 60 days, with two months of statements for each qualifying account. On the depletion path, statements must be at least 120 days old at application, plus one within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that depletion-path seasoning. Surrender proceeds are not on that list, so expect the clock to apply.
Then count the cost. Surrendering ends the policy. A withdrawal removes value. And surrender charges may take a large bite from a younger policy. Tax treatment varies; consult a qualified professional before surrendering anything. Treat this as a last resort, not a qualifying trick.
Fannie Mae offers a useful contrast. Its Selling Guide accepts net proceeds from a policy loan or surrender as a source of funds for down payment, closing costs and reserves on conforming loans. That is agency context only. It does not describe how asset-based programs in the network treat a policy.
A Quick Look at the Math
Asset-based qualifying math is simple, which is why a policy’s absence from the list matters. Here is the depletion-path shape with illustrative figures.
Say you hold $1,500,000 in securities, credited at 80% for $1,200,000, plus $300,000 in cash at 100%. That is $1,500,000 in usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income, which must then carry the housing payment and your other debts through the DTI test.
Now add a policy with a large cash value. Nothing changes, because it is not credited. The pool stays the same, the divisor stays the same and the income stays the same. Only converting that value into eligible, seasoned assets would change the result, at a cost the arithmetic does not show.
The same logic applies on the qualifier path. Brokerage, CDs, money market and savings count at 100%, and retirement balances at 90% under age 59½ and 100% after. They must cover the whole loan, up to $4,000,000. A policy adds nothing to that total unless converted.
Minimums matter too 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 depletion is the only income source. Loans range from $125,000 to $3,500,000. If a policy is the only thing pushing you over a threshold, you are likely under it.
Where Do DSCR Loans Come In?
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, not on your personal DTI. For the full picture, see Lendmire’s complete DSCR loans guide.
So on a DSCR file, cash-value life insurance is mainly a reserves question, meaning how much cash you hold after closing. Treatment is inconsistent from lender to lender, and a few lenders in the network may consider a policy while many will not. Ask first, and never assume.
Many investors ask whether they should use asset depletion for a rental instead. If the property’s rent can carry its own payment, a DSCR loan is usually the cleaner tool. If you want to buy a rental through the depletion path, an investment property tops out at 65% LTV on a purchase or rate-and-term refinance and 60% on a cash-out, subject to underwriting.
What Should You Do Before Moving Any Money?
Work backward from the file, not the policy. A practical sequence looks like this.
1. Decide which path fits. If your eligible assets can cover the whole loan, the qualifier path may fit. If you need your assets to produce income, the depletion path applies.
2. List what is clearly eligible. Add up cash, CDs, savings, money market, brokerage and securities, and retirement balances at their credited percentages.
3. Pull the policy statement. Find the cash value, surrender charge, outstanding loans and the policy owner. Ethos notes that your annual statement or the insurer’s portal typically shows these figures.
4. Check ownership. The policy should be in your name. Trust-owned or business-owned policies need a separate review, and the lender decides.
5. Ask before acting. Confirm with your broker whether any program in the network credits the policy before you take a loan or surrender anything. Moving money first can start a seasoning clock or create a borrowed-funds problem.
6. Check credit and history. The qualifier path’s published floor is a 600 credit score, and the depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
One more point from the desk: borrowers often find that the assets already clearly on the list are enough, and the policy was never needed. Run that count first.
Common Mistakes With Policies and Asset-Based Loans
Counting the face amount. The death benefit pays your beneficiaries after you die. It is not money you can reach while alive, so it does not count.
Using the statement’s cash value. That figure is before charges and loans. Net it down yourself before you plan around it.
Taking a policy loan to build a cash balance. Borrowed funds are not published as eligible, and the loan reduces the policy’s value too.
Assuming any asset must be sold. Not exactly. On asset depletion, you generally demonstrate the balance rather than liquidate it. The exception is an asset that is not on the eligible list, where conversion is the documented route.
Blending the two paths. The qualifier path and the depletion path use different credit percentages. A retirement account counts 90% or 100% on one and 70% on the other. Name the path every time you run a figure.
Key Terms Defined
Asset qualifier path: A path where eligible assets, after credit percentages, must equal or exceed the entire loan, with no income documented.
Asset depletion path: A path where usable assets are divided by 60 months to create monthly qualifying income that runs through the DTI test.
Cash surrender value: The cash you would receive if you ended a permanent policy, after surrender charges, loans and withdrawals.
Policy loan: A loan from the insurer against your cash value, which lowers the value a lender could consider.
Seasoning: The time money must sit in your accounts so the lender treats it as yours.
DSCR loan: A business-purpose rental loan that qualifies primarily on the property’s income covering its payment.
Frequently Asked Questions
Does term life insurance count toward an asset depletion mortgage?
No. Only permanent policies such as whole life or universal life accumulate value you can reach during your life, and even those are not on the published eligible lists for the paths described here.
Is an annuity treated the same as a life insurance policy?
No. An annuity is a separate product, and a program that lists one does not necessarily list the other. Neither is on the published eligible lists for either path in Lendmire’s network. If you hold one, ask your broker to check the specific program before you plan around it.
Can I take a policy loan and use it for my down payment or assets?
A policy loan is borrowed money, and borrowed or pledged funds are not published as eligible on either path. The loan also lowers your net cash surrender value. Speak with a broker before borrowing, because the move can weaken the file rather than help it.
Does a policy count on a DSCR loan?
It may matter as reserves rather than income, and treatment varies by lender. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Many lenders will not credit a policy at all, so confirm before relying on one.
What if my policy is owned by a trust or a business?
Ownership matters. A lender wants to see that the value is yours to access, and a trust-owned or business-owned policy needs separate review. Raise it early so the lender can say whether the file can proceed.
If You’re Qualifying on Assets Rather Than Income
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 is a broker that arranges financing through select lenders in its network, and consumer lending is available in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. All figures above are ceilings and floors, not offers, and they are subject to underwriting.
If a home sale is part of your plan, our article Can Home-Sale Proceeds Count in an Asset Depletion Mortgage? covers that separately.
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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
1. NerdWallet – Cash surrender value of life insurance
2. Mutual of Omaha – Cash value vs. cash surrender value
3. 26 U.S.C. § 7702 (Cornell Legal Information Institute)
4. New York Life – Is life insurance an asset?
5. Fannie Mae Selling Guide B3-4.3-19
6. Ethos – Cash surrender value of life insurance
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 a Georgia Widow Qualify for a Mortgage on Life Insurance and Retirement Assets? · Do Business Bank Accounts Count Toward an Asset Qualifier Mortgage? · Do Mutual Funds and ETFs Count the Same as Cash on an Asset-Based Mortgage?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.