The Quick Read: The ceiling depends on the property, not on the sale: on the asset depletion path, a cash-out refinance is capped at 60% of the home’s value, and the cash you receive is that cap minus your existing payoff and closing costs, so selling a business gives you assets to qualify with but never raises the ceiling. The sale proceeds matter because they document the assets.
- Prepaids also come out of the check, alongside the payoff and closing costs.
- Cash-out proceeds never count as qualifying assets. Only the assets you already hold do.
- Privately held company stock is not an eligible asset on either path. Sale proceeds sitting in a regulated account are.
- On the asset qualifier path, cash-out leverage is set by the lender and is not published, so the figures here belong to the depletion path.
- Everything is subject to underwriting, and the lender’s own calculation governs.
What does “asset-based” mean after you sell a business?
Asset-based means the loan is reviewed on what you own, not on a paycheck. After a sale, that is the usual situation. The business income is gone, and the balance sheet is large.
Across the wholesale network, the asset-based mortgage program runs on two paths, and a borrower is on one path at a time. Details are on Lendmire’s asset-based mortgage program page.
- Asset qualifier path. Eligible assets, after the credit percentages, must equal or exceed the entire loan. No employment or income is documented. The assets are.
- Asset depletion path. Usable assets are divided by 60 months into a monthly qualifying income. That income carries the housing payment and other debts through the debt-to-income test.
Assets are fully documented on both paths. The file is fully underwritten. What you skip is tax returns, pay stubs and employment verification.
Key Terms Defined
Cash-out refinance. A new loan larger than the one it pays off, with the difference paid to you.
Asset qualifier. The path where eligible assets cover the whole loan amount.
Asset depletion. The path where usable assets divided by 60 months become qualifying income.
Seasoning. How long funds have sat in an account before the lender will count them.
Haircut. The part of a balance that does not count. If securities count at 80%, the haircut is 20%.
How is the cash-out amount calculated?
Net cash equals the maximum loan, minus what you owe, minus costs. The maximum loan is the appraised value times the path’s cash-out leverage.
On the asset depletion path, cash-out leverage is up to 60% of value on a principal residence, a second home or an investment property. Purchases and rate-and-term refinances run higher: up to 80% on a principal residence or second home and up to 65% on an investment property. Cash-out gets the lower ceiling.
Here is the formula in percentages. Say the existing payoff equals 40% of the home’s value. The 60% ceiling leaves about 20% of value before closing costs and prepaids come out. Say the payoff is 55% of value. Then only about 5% of value is left, and the refinance may not be worth doing.
That is why the payoff is the first number to pull. A home with a large balance leaves little room, however large your accounts are.
What about the asset qualifier path?
Up to 75% on a refinance is the published leverage on the qualifier path, for a principal residence or second home. Whether cash-out proceeds are allowed there, and at what leverage, is set by the lender and is not published. Do not plan a cash-out on that path from a general figure. Ask for it on the specific file.
Does selling the business raise how much I can take out?
No. The sale feeds qualification, not the leverage cap.
The 60% ceiling comes from the property. The sale proceeds show you can carry the loan. On the depletion path, they can also fall under the seasoning exception: sale-of-business funds are excused from the 120-day statement requirement. Inheritance and legal-settlement funds get the same treatment.
The asset side has its own limits:
- Cash-out proceeds never count as qualifying assets. You cannot borrow money out of the house and then use it to qualify for the house.
- Pledged or borrowed funds are not published as eligible on either path.
- Minimum assets on the depletion path are the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, at least $250,000 of that must be liquid.
How do different sale proceeds count?
Proceeds count only once they are documented assets in the right account type. Here is how the parts of a typical sale are treated.
| Proceeds type | Qualifier path | Depletion path |
|---|---|---|
| Cash in savings or money market | Counts at 100% | Cash counts at 100% |
| Brokerage securities bought with proceeds | Counts at 100% | Securities count at 80% |
| Retirement account rollover | 90% under 59½, 100% after | Counts at 70% |
| Escrow holdback or earn-out | Not counted until paid out | Escrow accounts not eligible |
A few of these deserve a plain explanation.
Privately held company stock is not an eligible asset on either path. That includes shares in your own company if you kept an interest after the sale. The route is a sale or buyout that turns the stock into a seasoned cash balance in a regulated account.
Escrow holdbacks and earn-outs are money you do not have. Until it lands in your account and the statements show it, it is not an asset for the file.
Seller notes are a promise to pay. They are not published as eligible, so plan as though they are not.
Cryptocurrency, precious metals and collectibles are not published as eligible either. Selling them into a regulated account is the documented route, with the source reviewed by the lender.
Why do the haircuts matter for sizing?
They set how much of your balance counts toward income. Take the shape the program uses on the asset depletion path. Suppose you hold $1,500,000 in securities, counted at 80%, which is $1,200,000. Add $300,000 in cash, counted at 100%. That is $1,500,000 of usable assets. Divided by 60 months, it is $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test.
On the asset qualifier path, the comparison is different, because usable assets must equal or exceed the entire loan. An $800,000 loan with $330,000 in brokerage accounts (100% counts), $300,000 in a 401(k) under age 59½ (90% counts, so $270,000) and $200,000 in savings (100% counts) shows $800,000 of usable assets. That covers the loan on assets alone.
These are illustrations. The lender’s own calculation governs.
Two seller scenarios
Cash fully in the bank. Picture a founder whose sale closed and whose proceeds sit in a savings account and a brokerage account. She owns a second home with a payoff well under half its value. On the depletion path, statements are excused from seasoning as sale-of-business funds. The 60% cash-out ceiling less her payoff and costs sets her check. The assets, not the check, carry the qualification. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Proceeds partly held back. Consider a seller who received part of the price at closing and the rest through an earn-out and an escrow holdback. Only the cash at closing counts as an asset today. The earn-out and the escrow do not count until they are paid and show on statements. If waiting changes the file, the tighter sizing may mean a smaller loan. Plan the refinance around money you hold now.
Before or after the sale closes?
After is the cleaner order for the file. The lender wants to see the proceeds in an account, with statements, before it counts them. Before the sale, the same money is either company stock, which is not eligible, or a pending payment, which is not an asset.
If a refinance is time-sensitive, the borrower may be better served by a different structure, such as a purchase or a rate-and-term loan with more cash going in. That choice also changes the leverage ceiling, so run it before you pick.
What reduces the cash you receive?
- The payoff on the existing mortgage and any liens.
- Closing costs, prepaids and escrow deposits.
- The leverage cap itself. It sits on value, not on your account balances.
- A lower appraised value than you expected.
- Any assets you decide to keep outside the file, which changes the depletion math rather than the check.
On the qualifier path, reserves are not required at or below 75% loan-to-value. Above that, the lender sets them. The depletion path has no published reserve months.
Consumer purpose versus business purpose
On a principal residence or second home, the loan is consumer purpose, and consumer mortgage disclosures apply. On an investment property, available only on the depletion path, the loan is business-purpose. Business-purpose treatment is not the same as being exempt from compliance. A law-firm analysis of business-purpose lending lays out how owner-occupancy and entity tests can change the classification. How you use the cash is part of that picture, so keep the loan’s purpose clear and ask your attorney about edge cases.
Should you consider a 1031 exchange or another tool instead?
A 1031 exchange applies only to real property. A business itself cannot be exchanged, but the real estate inside it can, as Deferred explains. The seller must also not touch the proceeds, which go to a qualified intermediary, per Fidelity’s 1031 overview. That is a different path from borrowing against assets, so the two should not be mixed up on the same dollars. Tax treatment varies; consult a qualified professional.
Which loan fits a business seller?
| Situation | Better fit |
|---|---|
| Large balances, little documented income, primary or second home | Asset-based mortgage |
| Rental property bought for the rent | DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines |
| Income that shows up in business deposits | Bank statement program |
An asset-based mortgage fits a seller whose balances are large and whose documented income is thin. A DSCR loan is for a rental, and a bank statement loan is for a borrower who documents income through deposits. A seller whose business income has ended may find the third option hard to use, since it relies on deposits that are no longer coming in.
Frequently Asked Questions
Can I use cash-out proceeds to meet the asset requirement?
No. Cash-out proceeds never count as qualifying assets on the depletion path. The assets must already be in your accounts and documented with statements before the loan.
Does my company stock count if I sold only part of the business?
Only the proceeds that have landed in a regulated account count, at the percentage for their account type.
How much can I take out on an investment property?
On the asset depletion path, up to 60% of value on a cash-out refinance, minus the payoff and costs. A purchase or rate-and-term refinance on an investment property runs up to 65%. All figures are through select programs and subject to underwriting.
Do sale proceeds need to be seasoned?
On the depletion path, sale-of-business funds are excused from the 120-day statement requirement. The qualifier path asks for 60 days of seasoning and two months of statements for each qualifying account. Which path fits depends on whether you want assets to cover the loan or to become income.
What is the loan size range?
Up to $4,000,000 on the asset qualifier path and $125,000 to $3,500,000 on the asset depletion path. Credit follows a 600 minimum on the qualifier path and the lender’s matrix on the depletion path. A first-time investor on the depletion path needs 700.
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. Lendmire is a broker, not a lender, and consumer mortgage lending is licensed in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Reach the team at 828-256-2183.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
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 tax returns, 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
1. Hunton – Beware of “Business Purpose”
2. Deferred – Can you do a 1031 exchange on the sale of a business
3. Fidelity – What is a 1031 exchange
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 Get Approved for an Asset-Based Cash-Out Refinance With No Income Verification? · Asset-Based Cash-Out Refinance Requirements After Selling a Business · Asset-Based Cash-Out Refinance Lenders on a Condo
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.