The Quick Read: Privately held company stock is not an eligible asset on either path, and six months of reserves does not shrink the check: reserves are liquid assets you keep in your own accounts, so the cash you can actually spend is the new loan, up to the leverage cap for your path and occupancy, minus the payoff, costs and whatever you must hold back.
- On the asset depletion path, a cash-out refinance tops out at 60% loan-to-value on a principal residence or second home, and at 60% on an investment property, subject to underwriting.
- On the asset qualifier path, a refinance goes up to 75% loan-to-value on 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.
- Reserves on the qualifier path are none at or below 75% loan-to-value. The depletion path has no published reserve months. A six-month hold-back is a lender-set condition, not a fixed program rule.
- Cash-out proceeds never count as qualifying assets on the depletion path, so the check cannot be used to rescue a thin asset file.
This question usually comes from borrowers with substantial assets who want one dollar figure. Nobody can give an honest one without the appraisal, the payoff and the path, but the formula is simple, and this page walks through it.
What Does “Six Months of Reserves” Actually Mean?
Reserves are liquid assets left in your accounts after the loan closes. Lenders measure them in months of your full housing payment: principal, interest, taxes, insurance and any association dues. Six months means six times that monthly total, sitting in cash or other eligible accounts.
Reserves are not a fee. They are not escrowed, and they are not subtracted from the loan. They are a second test that sits beside the leverage cap.
That is why the headline question has a slightly counterintuitive answer. Reserves do not reduce the check the lender sends. They reduce the part of your net worth you can spend, because the money has to stay put.
Here is the part that trips people up. The asset-based program does not publish a six-month rule. On the asset qualifier path, reserves are not required at or below 75% loan-to-value, and above that the lender sets them. On the asset depletion path, no reserve months are published. If a file carries six months, a lender added it, and you should treat it as a condition to confirm early. These figures are ceilings and floors, never offers, and every file is underwritten individually.
The Cash-Out Formula, Step by Step
Net spendable cash comes from four steps, and reserves are held back as a separate fifth line outside the cash calculation. Brokers see this arithmetic on every cash-out file, and the order matters.
1. Appraised value sets the base. The appraisal decides what the property is worth for lending purposes.
2. Leverage cap sets the maximum loan. Multiply value by the cap for your path and occupancy. A cash-out refinance replaces your first mortgage with a larger loan; a home equity loan or HELOC leaves the first mortgage in place, as the CFPB’s research on cash-out refinances explains.
3. Payoff comes out first. The new loan pays off the old mortgage and any second lien. What is left is your gross cash.
4. Closing costs come out next. They reduce what reaches you. Asking for the full cost picture early prevents surprises.
5. Reserves are held back separately. If the lender requires them, you document them from your own accounts. They are not taken from the check.
Worked example in percentages (illustrative only)
Take a principal residence on the asset depletion path, where the cash-out cap is 60% loan-to-value. Assume the existing mortgage is 35% of appraised value. The maximum new loan is 60% of value, so the gross check is 25% of value before closing costs.
Now assume the existing mortgage is 55% of value. The same cap leaves only 5% of value before costs, and costs could consume most of it.
Next, assume the existing mortgage is 62% of value. The payoff already exceeds the 60% cap, so the new loan cannot even cover it, and no cash comes out. In that case the qualifying assets may be plentiful, but the equity is not.
Then apply reserves as a separate line. If a lender asked for six months, you would show six times the new monthly housing payment in eligible accounts, in addition to everything else. The lender runs that figure on the actual new loan, so it cannot be stated until the loan is sized. The lender’s own calculation governs all of this.
Which Path Are You On, and How Does It Change the Check?
The asset qualifier path covers the whole loan with eligible assets and documents no employment or income. The asset depletion path divides usable assets by 60 months to create a monthly qualifying income, which then runs through the debt-to-income test. You qualify on one path at a time, and you should never blend the two tables.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| Cash-out leverage | Lender-set, not published | 60% (residence, second home, investment) |
| Refinance leverage | 75% (residence or second home) | 80% rate-and-term, residence or second home |
| Reserves | None at or below 75% LTV | No published months |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | Lender’s matrix |
Rate-and-term means a refinance that changes the loan’s terms without pulling equity out. On an investment property on the depletion path, rate-and-term goes to 65% and cash-out to 60%. That is a business-purpose loan, and the depletion path is the only path where investment property is available.
The practical read is simple. If you want the largest possible check, the depletion path’s 60% cash-out cap is the published number to plan around. If you want to qualify with assets alone and skip income documents, the qualifier path fits, but you must confirm early whether cash-out proceeds are available on your file. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Do the Same Dollars Count Twice?
Cash-out proceeds never count as qualifying assets on the depletion path. You cannot borrow against the house, count the new cash as an asset, and use it to qualify for the same loan.
Whether a particular lender lets your existing liquid assets double as both qualifying assets and reserves is a lender-level call that is not published. The safe planning assumption is that reserve dollars and qualifying dollars are tracked separately, so ask before you commit to a structure.
Here is a scenario to test. Say you hold $1,500,000 in securities and cash. On the depletion path, securities count at 80% and cash at 100%, so the usable total feeds the 60-month division. If a lender also wants reserves, those balances must still exist after closing. A plan that spends the same balance twice will not clear review.
What Counts as an Asset, and What Does Not
Percentages below are the share of the balance that counts.
Qualifier path: brokerage accounts, certificates of deposit, money market and savings count at 100%. Retirement accounts count at 90% if you are under 59½ and at 100% at 59½ or older. Accounts combine, and the total must equal or exceed the entire loan.
Depletion path: cash and certificates of deposit count at 100%, securities at 80%, retirement accounts at 70% at any age, and real-estate equity at 60%. The part that does not count is the haircut, so securities lose 20% and retirement accounts lose 30%.
Not eligible on the depletion path: 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. Privately held company stock is not an eligible asset on either path.
Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. The documented route for any of them is converting the holdings to a seasoned cash balance in a regulated account, with the source reviewed by the lender. A founder or shareholder follows the same route: documented liquid assets from a sale or conversion, plus cash, public securities and retirement accounts at their percentages.
Seasoning is the waiting period an account must have been funded. It is 60 days with two months of statements per account on the qualifier path. On the depletion path, statements must be 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 on the depletion path.
Both paths document the assets with statements. The program skips traditional personal-income documentation, pay stubs and employment verification on the qualifier path, but every file is fully underwritten.
Why the Appraisal Decides More Than You Expect
The appraisal sets the base for every cap above. A low value shrinks the loan and the check together, which is why equity-light files get little or nothing back.
On an investment property, appraisers often include a rent schedule. Fannie Mae’s appraisal forms guidance describes Form 1007 as the single-family rent schedule and Form 1025 as the small income appraisal for two-to-four-unit properties. The form estimates monthly market rent.
Do not confuse that exhibit with qualification. An asset-based file is reviewed on your documented assets, not on the property’s rent. The rent schedule is an appraisal exhibit here, and rental coverage ratios belong to a different product. Business-purpose rental financing is DSCR, and that is a separate conversation.
What Shrinks the Check Without Warning
A few items reduce the real figure beyond the headline formula:
- A second lien. A home equity loan or HELOC behind your first mortgage must be paid off too.
- Prepaids and escrow funding. Taxes and insurance often need to be funded at closing, and those dollars come from the proceeds.
- A low appraisal. The cap applies to the appraised number, not your estimate.
- Funds to close. If you bring cash to closing, those dollars are no longer in your accounts for qualifying or reserves.
- A larger balance. A bigger loan raises the monthly payment, which raises any month-based reserve requirement.
Pulling less cash out can also make the file simpler. A smaller loan needs fewer qualifying assets and a smaller reserve hold-back, so a borrower with a big portfolio sometimes takes less equity on purpose.
Key Terms Defined
Reserves: liquid assets you keep after closing, measured in months of your full housing payment.
Cash-out refinance: a new, larger mortgage that pays off the old one and sends you the difference.
Loan-to-value (LTV): the loan amount divided by the appraised value, expressed as a percentage.
Asset depletion: a method that divides usable assets by 60 months to create a monthly qualifying income.
Seasoning: how long funds must have been in an account, shown by statements.
Haircut: the part of a balance that does not count toward qualifying, such as the 20% of securities that is excluded on the depletion path.
Frequently Asked Questions
Do six months of reserves reduce how much cash I receive?
No. Reserves are not taken from the loan or the check. They are liquid assets you keep in your own accounts, so they limit what you can spend rather than what the lender sends. The program does not publish a six-month rule, so ask which reserve condition, if any, applies to your file.
Can the cash-out money count toward my reserves?
Not on the depletion path, where cash-out proceeds never count as qualifying assets. On the qualifier path, treatment is set by the lender and is not published. Plan on documenting reserves from money you already hold, and confirm before closing.
What is the maximum cash-out leverage?
On the depletion path, the published cash-out cap is 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting. On the qualifier path, cash-out leverage is set by the lender and is not published, so no figure applies until a lender confirms it. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Can I use retirement accounts and brokerage balances?
Yes, at the percentages that count. On the qualifier path, brokerage accounts count at 100% and retirement accounts at 90% under 59½ or 100% after. On the depletion path, securities count at 80% and retirement accounts at 70%.
Does privately held company stock help?
No. The route is documented liquid assets, such as seasoned proceeds from a sale or buyout, cash, public securities and retirement accounts.
Where to Go From Here
Start with the equity: compare your payoff to 60% of a realistic appraisal if you plan to use the depletion path. If the payoff is already near that cap, the cash-out check will be thin no matter how large your portfolio is. Then confirm the path, the reserve condition and whether your statements meet the seasoning rules. The program is offered through select lenders in consumer lending states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
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 programs based on your statements, the property, credit profile, leverage, and your goals. Qualification is subject to lender guidelines and underwriting. This is not a commitment to lend.
Investors weighing their equity options can start with 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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References
1. CFPB Office of Research: A Look at Cash-Out Refinance Mortgages and Their Borrowers
2. Fannie Mae’s appraisal forms guidance
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Asset-Based Cash-Out Refinance Lenders on a Condo · Can You Get Approved for an Asset-Based Cash-Out Refinance With No Income Verification? · Best Asset-Based Cash-Out Refinance Program With Only Six Months of Reserves
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.