The Quick Read: Lenders count a set share of your vested retirement balances, then test those assets against the whole loan or turn them into monthly income. Your accounts are never pledged as collateral, and you never withdraw a dollar.
- Assets-cover-the-loan path: usable assets must equal or exceed the entire loan. 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older, subject to underwriting.
- Assets-become-income path: usable assets divided by 60 months become qualifying income. Retirement accounts count at 70% at any age.
- Leverage: on the income path, a cash-out refinance tops out at 60% loan-to-value on a principal residence, second home or investment property. On the assets-cover-the-loan path, a refinance on a principal residence or second home goes to 75%.
- Paperwork: you provide no traditional personal-income documentation, pay stubs or employment verification. Every asset is still documented with statements.
- Not eligible: privately held company stock is not an eligible asset on either path.
What Does Asset-Based Actually Mean?
Asset-based means the lender reviews your file on what you own instead of what you earn. It fits a reader whose balances are large and whose documented income is small: a retiree, someone who sold a business, an early-retired professional, or a household living off a portfolio.
The property secures the loan. Your brokerage, savings and retirement accounts do not. Lenders only verify those balances and apply a percentage to them.
Asset-based programs run on two paths, and a borrower is qualified on one path at a time. On the asset qualifier path, eligible assets, after the percentages below, must equal or exceed the entire loan amount. No employment or income is documented. On the asset depletion path, eligible assets are converted into a monthly qualifying income, and that income must carry the housing payment and other debts.
One trap is worth naming. Retirement balances also appear in rental-property financing, where the property’s rent drives lender review and retirement money only helps meet a post-closing reserve requirement. That is a different file. This article covers the case where the assets themselves qualify the borrower. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Lendmire is a mortgage broker. It places these files with select lenders in its wholesale network, and the lender underwrites. Lendmire’s asset-based mortgage programs are consumer mortgages on a principal residence or second home. The depletion path also reaches investment property, where the loan is business-purpose.
Key Terms Defined
Asset qualifier: the path where eligible assets must cover the full loan amount, with no income documented.
Asset depletion: the path where usable assets divided by 60 months become monthly qualifying income.
Vested balance: the part of a retirement account that is yours to keep and access. Only this part counts.
Seasoning: the amount of time funds have sat in an account before you apply. It shows the money is really yours.
Haircut: the part of a balance that does not count. If securities count at 80%, the haircut is the other 20%.
Debt-to-income (DTI): your monthly debts divided by your monthly income. On the depletion path, the derived income goes in the denominator.
How Do Lenders Underwrite It, Step by Step?
Underwriting follows a fixed sequence. The lender sorts the accounts, applies percentages, runs one test, then checks the property. Here is how a typical file moves.
1. Pick the path. If your assets can cover the whole loan, the qualifier path is usually simpler. If they cannot, depletion may work, because it turns the pool into income instead.
2. Inventory the accounts. List every account in your name: brokerage, savings, CDs, money market, 401(k), IRA. Only vested balances count.
3. Collect statements. On the qualifier path, expect two months of statements for each qualifying account. On the depletion path, expect statements at least 120 days old at application, plus the most recent statement within 45 days.
4. Apply the credit percentages. Each account type counts at its own share of the balance, as shown in the next section.
5. Check seasoning and sources. The qualifier path wants 60 days of seasoning. Large or unexplained deposits get questioned, because the lender must know where the money came from.
6. Run the test. On the qualifier path, usable assets must equal or exceed the loan. On the depletion path, usable assets divided by 60 months produce income, and that income runs through the DTI test.
7. Underwrite the property and credit. The appraisal, loan-to-value limit, credit score and housing history still decide the loan. Assets cannot rescue a property or a credit file that fails its own tests.
The lender also has a legal reason to document assets carefully. Under the federal repayment-ability rule, a lender may base its decision on income, on assets other than the home itself, or on both, per the CFPB’s explanation of Regulation Z. The rule’s text requires the lender to verify those amounts with reliable third-party records, per the eCFR. That is why statements matter and your own summary does not.
Credit is the other gate. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s score and loan-amount matrix. Neither promises approval.
How Are Retirement Accounts Valued?
Retirement accounts count for less than their statement balance on both paths. The share that counts differs by path, so never blend the two tables.
On the qualifier path, brokerage accounts, CDs, money market and savings all count at 100%. Retirement accounts (401(k) and IRA) count at 90% if you are under 59½ and at 100% at 59½ or older. Accounts combine.
On the depletion path, the percentages are lower:
- Cash accounts and CDs count at 100%.
- Securities count at 80%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
Why discount retirement money at all? Pulling it out early can cost real money. A lender does not compute your personal bill. It applies a flat percentage instead, and the discount reflects that cost. Tax treatment varies; consult a qualified professional.
Here is how the arithmetic looks on each path. These are illustrations only, and the lender’s own calculation governs.
Qualifier example. Picture an $800,000 loan with three pools behind it:
- $330,000 in brokerage accounts, counted at 100%, is $330,000.
- $300,000 in a 401(k) held by a borrower under 59½, counted at 90%, is $270,000.
- $200,000 in savings, counted at 100%, is $200,000.
That totals $800,000 of usable assets. It matches the loan, so the file is reviewed on assets alone, subject to underwriting.
Depletion example. Say you hold $1,500,000 in securities and $300,000 in cash:
- The securities count at 80%, which is $1,200,000.
- The cash counts at 100%, which is $300,000.
The usable total is $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income must then carry the housing payment and your other debts through the DTI test.
Notice what the first example shows. The 401(k) holder falls $30,000 short on that account alone, and the other pools make up the gap. The same borrower at 59½ would count the 401(k) in full.
Which Path Fits Your Situation?
Lead with the question of whether your assets can cover the whole loan. If they can, the qualifier path asks the least of you. If they cannot, depletion converts the pool into income and sets stricter minimums.
| Factor | Asset qualifier | Asset depletion |
|---|---|---|
| What it tests | Assets cover the full loan | Assets become income |
| Income documented | None | Derived from assets |
| Retirement counts at | 90% under 59½; 100% after | 70% at any age |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Debt-to-income test | No income documented | Yes, on derived income |
| Seasoning | 60 days; two months of statements | Statements 120 days old plus one within 45 days |
The depletion path also sets asset minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never be below $250,000 liquid when depletion is your only income source.
The depletion path can also supplement documented income, up to a 45% DTI. When it supplements, the minimum-assets rule is waived.
What Leverage Applies to a Cash-Out?
Leverage limits differ by path, occupancy and loan purpose. The figures below are ceilings, not offers, and all are subject to underwriting through select programs.
- Qualifier path, purchase: up to 80% loan-to-value on a principal residence or second home.
- Qualifier path, refinance: up to 75% on a principal residence or second home. Whether cash-out proceeds are allowed on this path, and at what leverage, is set by the lender and not published.
- Depletion path, purchase or rate-and-term refinance: up to 80% on a principal residence or second home, and up to 65% on an investment property.
- Depletion path, cash-out refinance: up to 60% on a principal residence, second home or investment property.
Cash-out proceeds never count as qualifying assets on the depletion path. The money you pull from the property cannot be used to qualify for the same loan.
Reserves work differently by path. On the qualifier path, none are required at or below 75% loan-to-value, and above that the lender sets them. The depletion path has no published reserve months.
Where Does the General Rule Break?
Most of the surprises come from edge cases. Each one below changes how a file is counted or whether it counts at all.
Age 59½. On the qualifier path, a borrower under 59½ counts retirement at 90%, and one at 59½ or older counts it at 100%. On the depletion path, the percentage stays at 70% at any age, so the age line does not matter there.
Accounts you cannot reach. The balance must be vested, meaning you own it. Some employer plans also restrict access while you still work there. Expect the lender to ask you to document that you can actually reach the money.
Privately held company stock. Privately held company stock is not an eligible asset on either path. The same goes for stock options and non-vested restricted stock units on the depletion path. If you own a company, the route is documented liquid assets. That means seasoned proceeds from a sale or buyout, cash, public securities and retirement accounts at their percentages. On the depletion path, sale-of-business, inheritance and legal-settlement funds are excused from the 120-day statement-age requirement.
Crypto, metals and collectibles. These are not published as eligible on either path. The same applies to business accounts beyond your ownership share and to pledged or borrowed funds. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Other ineligible depletion assets. The depletion path also excludes custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, and funds from non-regulated financial companies.
Credit events. A first-time investor on the depletion path needs a 700 score. The program wants a 0x30x12 housing history, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning on the depletion path.
Taking distributions as income. Setting up regular retirement withdrawals and using them as income is a separate documentation route. Lenders then look for proof the income will continue. That route sits outside the two paths here, so ask a broker before assuming it fits.
What Mistakes Do Borrowers Make?
A few errors repeat. Each is easy to avoid once you know it.
- Cashing out the 401(k) to show funds. The balance is verified, not liquidated. A withdrawal can trigger costs the statement balance would have avoided.
- Counting balances dollar-for-dollar. Retirement money counts at a share of the balance, so a large IRA covers less than its face value.
- Mixing the two paths. The qualifier and depletion tables use different percentages. Applying one table to the other produces numbers no lender will use.
- Moving money right before applying. Large transfers need a documented source and can reset the seasoning clock.
- Ignoring the property. Assets qualify you, but the appraisal and loan-to-value limit still cap the loan.
What Does the Decision Look Like in Practice?
Three borrower pictures show how the choice plays out. All are hypothetical and subject to underwriting.
The retiree with a mixed portfolio. Say a 62-year-old holds brokerage accounts, savings and an IRA, and wants to refinance a primary residence. If the combined usable assets cover the whole loan, the qualifier path asks for no income documents. The IRA counts in full at her age.
The business seller. Suppose a founder sells his company and holds the proceeds in cash. His closely held shares do not count on either path, but the seasoned sale proceeds do. Because proceeds from a business sale are excused from the 120-day statement rule on the depletion path, the sale funds may be usable sooner than other money, subject to the lender’s review of the source.
The early retiree. Picture a 52-year-old with a large 401(k) and a smaller brokerage account. On the qualifier path, her 401(k) counts at 90%. If her pool falls short of the loan, depletion turns the same assets into income. The 70% share on retirement accounts reduces the total, but the 60-month divisor may still produce enough income for a modest cash-out at 60% loan-to-value. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
In each case, the question is not whether the account is large. It is whether the usable balance clears the test for that path.
If you are weighing whether a particular account type will count, Lendmire’s piece Can You Get Approved for an Asset-Based Cash-Out Refinance Using Retirement Accounts? covers the approval question directly. To compare how programs differ, see Lendmire’s guide Best Asset-Based Cash-Out Refinance Program Using Retirement Accounts to Qualify.
Frequently Asked Questions
Do I have to withdraw money from my 401(k) or IRA?
No. The lender verifies the vested balance with statements and applies a percentage. The account is not collateral, and nothing leaves it. The property alone secures the loan.
Does a Roth IRA count the same as a traditional IRA?
The program parameters list retirement accounts as one category, without separate treatment for Roth and traditional. On the qualifier path they count at 90% under 59½ and 100% after. On the depletion path they count at 70%. Ask your broker to confirm how a specific account is handled.
Can I qualify if I am under 59½?
Yes, subject to underwriting. On the qualifier path, retirement balances count at 90% under 59½ and 100% at 59½ or older. On the depletion path, the 70% share applies at any age, so age does not change the math.
Why can’t I use my cash-out proceeds to qualify?
Counting the money you are borrowing against the same loan would be circular. On the depletion path, cash-out proceeds never count as qualifying assets. Your usable assets must come from balances you already hold.
Is this the same as a no-doc loan?
No. You provide no traditional personal-income documentation, pay stubs or employment verification, but every asset is documented with statements. The loan is fully underwritten, and the lender reviews credit, the property and the source of your funds.
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. The program is available through consumer mortgage lending in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Every file is underwritten individually, and programs change, so nothing here is a commitment to lend.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
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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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. CFPB, Regulation Z §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: Best Asset-Based Cash-Out Refinance Program Without a Mortgage · Asset-Based Cash-Out Refinance Lenders When Traditional Income Verification Is a Barrier
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.