The Quick Read: Not directly. Your retirement accounts never fund the check, because the cash comes from the equity in the property. The amount is the appraised value times the cash-out leverage cap, minus the payoff of your existing loan and closing costs, so the retirement balance only helps you qualify. Eligible assets decide whether you get approved, and the property decides how much you can take.
- On the asset depletion path, cash-out on an investment property is capped at 60% loan-to-value, through select programs and subject to underwriting.
- Retirement accounts count at 70% at any age on that path, and the counted balance is divided by 60 months to create qualifying income.
- On the asset qualifier path, retirement accounts count at 90% under age 59½ and 100% at 59½ or older.
- Cash-out proceeds never count as qualifying assets, so you cannot borrow the cash and then use it to qualify.
- Whether the qualifier path allows cash-out at all is set by the lender and is not published, so no figure is stated for it here.
Where the Cash Actually Comes From
The cash is a leftover. The lender sizes the new loan from the appraised value, subtracts what you still owe, and subtracts closing costs and prepaid items. Whatever remains is yours.
In plain terms: cash to you equals appraised value times the cash-out cap, minus your existing payoff, minus closing costs and prepaids.
Here is the formula on a made-up scale, with no dollar amounts. Say the property appraises at 100 units. At a 60% cap, the new loan tops out at 60 units. If you owe 45 units today, at most 15 units remain before costs. Closing costs and any assets set aside for the deal come out of that.
Notice what is missing. Your IRA or 401(k) balance appears nowhere in that formula. The retirement account sits on the qualifying side of the file, while the home sits on the cash side. Keeping the two sides apart is the key to reading any quote correctly.
Which Path Fits You: Assets Cover the Loan, or Assets Become Income
Asset-based mortgages come in two paths, and a borrower is qualified on one path at a time. Across the wholesale network Lendmire works with, the two paths behave very differently, and you should never blend their numbers.
The asset qualifier path asks one question. After the credit percentages are applied, do your eligible assets equal or exceed the entire loan amount? If yes, the file is reviewed on assets alone, with no traditional personal-income documentation, pay stubs or employment verification. Your statements are still fully documented and the file is still fully underwritten.
The asset depletion path turns assets into monthly income. Usable assets are divided by 60 months, and that income has to carry the full housing payment and your other debts through the debt-to-income test. This is the path that allows an investment property, and it is the path with a published cash-out cap.
Lendmire is a broker. It arranges these loans through select lenders in its network, 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. You can see how the options fit together on the asset-based mortgage programs page.
Loan sizes differ by path. The qualifier path runs up to $4,000,000. The depletion path runs from $125,000 to $3,500,000. Every figure here is a ceiling or floor through select programs, subject to underwriting. None of it is an offer.
What Counts, and at What Share
Every percentage below is the share of the balance that counts. The haircut is the part that does not count.
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage accounts / securities | 100% | 80% |
| 401(k) or IRA, under 59½ | 90% | 70% |
| 401(k) or IRA, 59½ or older | 100% | 70% |
| Real-estate equity | Not listed | 60% |
Read the retirement rows carefully. On the qualifier path, age matters. On the depletion path, retirement accounts count at 70% whether you are 45 or 70, so turning 59½ changes nothing there. That makes a common belief wrong. A birthday does not raise your depletion credit.
Why does a haircut exist at all? The IRS says a 10% additional tax generally applies to distributions taken before age 59½, on top of regular income tax. Lenders commonly discount retirement money as a stand-in for that tax drag. The IRS page does not say lenders do this. It is the industry’s usual reasoning. Tax treatment varies; consult a qualified professional.
Some assets do not count at all. Privately held company stock is not an eligible asset on either path. Cryptocurrency, precious metals, collectibles, business accounts beyond your ownership share, and pledged or borrowed funds are not published as eligible either. The documented route for those is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. On the depletion path, custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units are also out.
Two practical notes on retirement accounts. A loan taken against a 401(k) reduces the vested balance, so it shrinks what counts. An IRA itself cannot be borrowed against.
A Retirement-Heavy Example, Step by Step
Consider two borrowers, with the arithmetic shown for illustration only. The lender’s own calculation governs.
Qualifier path. A borrower wants an $800,000 loan on a principal residence. The borrower holds $330,000 in brokerage accounts, which count at 100%, or $330,000. A 401(k) of $300,000, held while under 59½, counts at 90%, or $270,000. Savings of $200,000 count at 100%, or $200,000. Together, $330,000 + $270,000 + $200,000 comes to $800,000 of usable assets, equal to the loan, so the file is reviewed on assets alone, subject to underwriting.
Depletion path. A second borrower holds $1,500,000 in securities, which count at 80%, or $1,200,000, plus $300,000 in cash at 100%, or $300,000. That is $1,500,000 usable. Dividing by 60 months gives $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the debt-to-income test.
Both examples assume the assets are available to qualify. Assets you spend at closing, such as closing costs, prepaids and any required reserves, are not available, so set them aside before you run the numbers on a real file.
Notice what neither example tells you. Neither shows how much cash the borrower receives. Qualifying and cashing out are two separate tests. A strong asset pool clears the first test. The second still depends on the property.
Which Limit Binds First?
Three limits sit on every file. The smallest one sets your number.
| Limit | What it asks | When it binds |
|---|---|---|
| Asset test | Do counted assets cover the loan? | Qualifier path, retirement-heavy files |
| Income test | Does derived income pass debt-to-income? | Depletion path, larger loans |
| Leverage cap | Is the loan within the cap on appraised value? | Almost always, for cash-out |
For cash-out, the leverage cap usually binds first. A borrower with a big portfolio can clear the asset and income tests easily and still get a smaller check than expected. The reason is that the 60% cap on an investment property cash-out is a value limit on the house. More retirement money does not raise it.
The reverse also happens. A borrower with a thin asset pool and a lot of equity may hit the asset test or income test long before the leverage cap. In that case, the loan that qualifies is smaller than the loan the equity would support. Adding eligible assets helps here, but added equity does not.
Property Type and Occupancy Change the Cap
On the depletion path, the published limits depend on how you use the property:
- A principal residence or second home allows up to 80% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
- An investment property allows up to 65% on a purchase or rate-and-term refinance, and 60% on a cash-out refinance.
So on cash-out, the cap is 60% for both occupancy types. The gap shows up on purchases and rate-and-term refinances. The 60% cap also applies to non-warrantable condos, and the building review is a second test on top of it.
Investment property is allowed only on the depletion path. Asset-based loans on investment property are business-purpose loans, reviewed differently from a standard owner-occupied mortgage. A first-time investor on the depletion path needs a 700 score. Otherwise the lender’s score and loan-amount matrix sets the floor.
On the qualifier path, refinances on a principal residence or second home run up to 75%. Whether cash-out proceeds are allowed there, and at what leverage, is the lender’s call and is not published. Treat any qualifier-path cash-out number you hear as unverified until a lender confirms it.
When a Rent-Qualified Loan Releases More
If the property is a rental and the rent covers the payment, a different loan type may release more equity. One investor-education forum thread on rental cash-out loans describes cash-out limits on standard rentals as varying by lender. That is a market-wide picture from one discussion, not this program’s. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
On the asset depletion path in this network, the cap is 60% on an investment property cash-out. Run the 100-unit example again: at the depletion cap of 60%, the loan ceiling is 60 units. At a 75% rent-qualified cap on a standard rental, it would be 75 units. Rent-qualified leverage varies by lender and property type, so treat that gap as an illustration of the idea, not a quote.
Here is the honest tradeoff, and it cuts both ways. A rent-qualified loan can release more equity when rent covers the full payment. A bigger loan means a bigger payment and thinner coverage, so the coverage ratio can cut the cash below the leverage ceiling. An asset-based loan ignores rent, which helps when the property is vacant, new to you, or poorly documented as a rental. A borrower with large retirement balances and light documented income may want to compare both. In that comparison, retirement money often does its best work supporting reserves or a depletion qualification, not funding the check.
Programs below 1.00 rent coverage are available through select lenders in the network, but leverage and terms adjust. Which path wins is a question for a side-by-side look at the file.
What Shrinks Your Check
Most surprises come from items outside the leverage cap. Run through this list before you count on a number:
- Existing payoff. The balance you owe comes off the top. A lower payoff leaves more cash.
- Closing costs and prepaids. These reduce the cash before it reaches you.
- Appraisal. The cap applies to the appraised value, not your estimate. A lower appraisal shrinks the loan ceiling.
- Assets needed for the deal. Money used to close does not count toward qualifying.
- The depletion floor. On the asset 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. Asset-derived income may supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived when it does.
- Property review. A condo building review or other property issue can reduce or stop the loan.
- Proceeds do not qualify you. Cash-out money never counts as an asset, so you cannot recycle it into your own file.
Common Mix-Ups
The retirement account funds the cash-out. It does not. The equity funds it.
No income means no underwriting. Every file is fully underwritten. Under the CFPB’s ability-to-repay guide, a creditor on a consumer-purpose loan may consider income or assets, but must still consider debt-to-income or residual income. The guide sets no fixed threshold. On the qualifier path, that review rests on the assets.
Everyone counts retirement money the same way. They do not. Percentages vary by program and by path, and what one lender counts, another may count differently.
The number is guaranteed. It is not. The check depends on the appraisal, the payoff, costs, and the lender’s own calculation.
Documents and Seasoning
Both paths document the assets. Neither path is documentation-free.
- Qualifier path: 60 days of seasoning and two months of statements for each qualifying account. The credit floor is 600, and no reserves are required at or below 75% loan-to-value. Above that, the lender sets them.
- Depletion path: statements at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning. Housing history of 0x30x12 is the standard. One 30-day late in the last twelve months is considered case by case, and a housing event needs 4 years of seasoning.
Deposits that land inside the seasoning window need a documented source. If you sold a business or received a settlement, keep the paperwork that shows where the money came from. Privately held stock does not count on either path, so a borrower holding it should plan to document the seasoned cash from a sale or buyout, along with cash, public securities and retirement accounts at their counted shares.
Key Terms Defined
Cash-out refinance: a new loan larger than your payoff, with the difference paid to you.
Asset qualifier path: qualifying when your eligible assets, after credit percentages, equal or exceed the whole loan.
Asset depletion path: converting eligible assets into monthly income by dividing usable assets by 60 months.
Haircut: the part of an asset balance that does not count. Retirement accounts count at 70% on the depletion path, so the haircut is 30%.
Loan-to-value (LTV): the loan amount divided by the appraised value of the property.
Seasoning: the time funds must sit in an account, with statements to prove it, before they count.
Frequently Asked Questions
Do I have to withdraw money from my IRA or 401(k) to get the cash-out?
No. The accounts stay invested and in your name. They are counted for qualifying only, at the share the path allows. The cash comes from the home’s equity, not from the account.
Does turning 59½ increase how much I can take out?
Not on the depletion path, where retirement accounts count at 70% at any age. On the qualifier path, age changes the credit from 90% to 100%. Even there, that only affects whether you qualify. The cash-out amount is still set by the property.
Can I use the cash I pull out to meet the asset requirement?
No. Cash-out proceeds never count as qualifying assets. Assets must already be in your accounts and seasoned.
Can I combine retirement, brokerage and cash accounts?
Yes. Accounts combine, each at its own counted share. Counted balances add together, and assets needed for closing come out first on the depletion path.
Which gets me more cash, an asset-based loan or a rent-qualified loan?
On an investment property, a rent-qualified loan can release more equity when rent covers the payment, because rental cash-out leverage on a standard rental is often set above the 60% depletion cap. The asset path matters most when rent does not carry the property or documented income is light. A side-by-side comparison on your file settles it.
Next Steps
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. Every program is subject to underwriting and lender guidelines. This is not a commitment to lend.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. 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. IRS Topic 557, Tax on Early Distributions
2. BiggerPockets forum, DSCR cash-out refi options
3. CFPB ATR/QM Small Entity Compliance Guide
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 Much Cash Comes Out of an Asset-Based Cash-Out Refinance With Tax Return Losses? · How Much Cash Comes Out of an Asset-Based Cash-Out Refinance With No Income Verification?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.