Investment Property HELOC Requirements Using Asset Depletion as Income

The Quick Read: Asset depletion converts your liquid assets into notional monthly income so a borrower with large balances and thin taxable income can be tested on debt-to-income, but whether an investment-property line accepts it depends on the specific program, and the line’s own limits on leverage, credit, title and property type apply either way.

• You do not sell the assets. The lender discounts them and spreads the result over a set number of months to create imputed income.
• An investment-property equity line on Lendmire’s network tops out at 70% combined loan-to-value (CLTV), with a 700 minimum credit score and a $500,000 maximum line.
• Title must sit with you personally or in a revocable living trust. An LLC cannot hold title on these lines.
• The imputed income must carry your whole debt-to-income ratio, including the payment on the full line.
• If your strength is the rent rather than your balance sheet, a DSCR cash-out loan tests a different thing entirely.

Key Terms Defined

Asset depletion is an income method. A lender treats eligible liquid assets as if they were paid out over a fixed number of months.

Imputed income is the monthly figure that method produces. It is a calculation, not money you receive.

Haircut is the discount a lender applies to an asset before counting it. Volatile or hard-to-access assets usually take a bigger one.

Debt-to-income (DTI) compares your monthly debt obligations to your monthly income. Asset depletion supplies the income side.

Combined loan-to-value (CLTV) adds every loan secured by the property and divides by the property’s value.

DSCR is the debt service coverage ratio. It divides a property’s monthly rent by its full monthly payment: principal, interest, taxes, insurance and any HOA dues.

How Does Asset Depletion Turn Savings Into Income?

The lender takes your eligible assets, discounts them, and divides the result by a set number of months. That quotient is your monthly imputed income. Your debts are then measured against it.

Here is the sequence as underwriting typically treats it.

1. Confirm the program accepts it. Many investment lines test personal income or rental coverage and never offer this method. Acceptance is a program-by-program question.

2. Gather eligible assets. Checking, savings, brokerage and retirement accounts are the usual categories. The documents are recent periodic statements.

3. Apply the haircuts. Each asset type gets its own discount. The divisor and the discounts are set by the individual lender, not by a universal formula.

4. Divide into months. The discounted pool becomes imputed monthly income.

5. Run the DTI. The new line’s payment, your existing mortgage payments and your other debts go on top. The imputed income goes on the bottom.

6. Layer the rest of the file. Credit score, CLTV, valuation, property type and title all still apply.

The math has one feature people miss. The method adds no income beyond what the pool supports. A bigger pool or a lighter debt load is the only way to move the ratio.

On this network, an investment line is qualified on the interest-only payment calculated on the maximum draw. You may draw less than the full line, but the DTI is tested as if you drew all of it. That is a heavy test for an imputed-income calculation to carry.

What Does the Investment Line Itself Require?

The line has fixed limits no matter how you document income. Across Lendmire’s wholesale network, an investment-property equity line works within the following ranges, subject to lender guidelines and full file review. Lendmire is the broker, never the lender.

• Leverage: 70% CLTV on an investment property, with no higher tier available.
• Credit: 700 minimum. A 720 score and a 700 score both reach the same 70% CLTV, so higher credit buys eligibility rather than extra leverage.
• Line size: up to $500,000 on an investment property. Larger lines exist on the network, but only for primary residences.
• Structure: a standalone line in first or second lien position, with a 5-year interest-only draw followed by a 25-year fully amortizing repayment. At least 75% of the line is drawn at closing. Pricing floats through both the draw and the repayment period.
• DTI: 50% maximum.
• Valuation: because an investment line caps at $500,000, it runs in the automated-valuation lane and commonly closes with no traditional appraisal. You can request a full appraisal.
• Property types: single-family, 2-4 units, PUD, townhome, and condominium including non-warrantable. Manufactured homes, co-ops, condotels, log homes, commercial, mixed-use and agricultural-zoned properties are not eligible.
• Exposure: a borrower is limited to three lines, and anyone with more than 15 financed properties is not eligible.
• Availability: these lines are offered in 16 full-service states, narrower than Lendmire’s 41-market DSCR footprint.

These figures describe the line. They do not say how every wholesale lender treats imputed income. Ask for that answer on your specific file before you gather statements.

Which Assets Count, and Which Don’t?

Liquid, accessible assets count. Illiquid or restricted ones count for less or nothing. The table shows the typical treatment, which varies by lender.

That last row deserves attention. The equity you are borrowing against is not part of the asset pool. It would be circular.

Assets that qualify you generally cannot also serve as reserves or closing funds. Cash-out proceeds typically cannot be counted as qualifying assets either. Plan the pool so each dollar does one job.

Why Do So Few Lines Accept This Method?

Most lenders that use asset depletion do so on closed-end mortgages. A line is a different product, and no federal formula tells a lender how to treat imputed income on one. The method is a lender or investor choice.

Part of the reason is the legal frame. The Federal ability-to-repay rules are written for closed-end consumer mortgages, so they do not set a formula for open-end lines. They also say a creditor cannot structure a closed-end loan as an open-end plan to evade the rule. Lenders that do offer this method on lines are working from their own overlays.

Business purpose matters too. 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 separate rule exempts credit extended primarily for business purposes. Compliance Alliance notes the test is the purpose of the credit, not the label on the property.

The practical consequence is simple. Product availability is thin, and it varies widely by lender. Programs that accept asset depletion on a line are the exception, so asking early saves effort.

Where the General Rule Breaks

A few situations change the answer even when you have plenty of assets.

Entity title. Asset depletion tests a person’s income, and the line must be held by that person. Individuals and inter vivos revocable living trusts can hold title. LLCs, corporations, partnerships, and irrevocable, blind or land trusts cannot. A property already deeded to an LLC needs a vesting change, or a DSCR cash-out instead.

Property type. Manufactured homes, log homes and barndominiums fall outside the network’s programs. A large portfolio does not change that.

Leverage. Strong assets do not lift the 70% CLTV ceiling on an investment line. They only help the DTI.

Credit. The 700 floor on investment lines is firm, and no tier sits beneath it. A bankruptcy needs 4 years of seasoning from discharge or dismissal. For foreclosure-family history, investment files season a foreclosure at 7 years and a deed-in-lieu, pre-foreclosure or short sale at 4 years.

Existing debt. Your other mortgages and obligations all sit in the numerator. An investor with several financed rentals may find the imputed income stretched thin. An open line on the same property also counts as a debt when you later refinance with a closed-end loan.

Listing status. In several states, a property listed for sale, or listed within the past 60 days, is ineligible.

Borrower count. More than 15 financed properties makes a borrower ineligible.

Asset Depletion, DSCR and Other Ways to Qualify

Each path tests a different strength. Pick the one that matches where your file is strongest.

A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal portfolio does not rescue a rental whose rent falls short. Across the network, 1.00 is where many select programs start, and stronger ratios open better pricing and leverage. A separate select-lender path goes below 1.00, with leverage and terms adjusted.

The DSCR route has its own structure. Cash-out refinances on standard rentals top out around 75% LTV, with about 6 months of seasoning as the common expectation. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and most programs want about a 660 score. Title can sit in an LLC, subject to lender program eligibility. The complete DSCR loans guide walks through those mechanics.

One caution on DSCR. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities and capex all sit outside the calculation.

Bank-statement analysis is worth a look if your strength is deposits. The 680 minimum for business-account deposit analysis sits below the 700 investment floor, so it never becomes the binding constraint on this line.

What the Decision Looks Like in Practice

Picture an investor between businesses. Taxable income is low after heavy write-offs, but brokerage and savings balances are large. A conventional income test would fail this file. Asset depletion could support the DTI, if the lender accepts the method and the 700 credit floor is met. The equity in a single-family rental then sets the 70% CLTV limit.

Now picture a different investor who holds several rentals in an LLC. Asset depletion does not help, because the LLC cannot hold title on the line. A DSCR cash-out fits better, since it tests the rent and allows LLC title, subject to program terms.

A third investor wants cash for a down payment on the next rental, and holds the property personally with a 720 score. This file can fit the line: title and credit qualify, and the 70% CLTV limit decides how much cash the equity can release after existing liens. The remaining test is whether imputed income carries the DTI on the full line payment. If it does, the line can work. If not, a DSCR cash-out is the fallback.

Work through four questions in order.

1. Does the property type and title qualify for the line? 2. Does your credit reach 700? 3. Does 70% CLTV leave you enough cash after existing liens? 4. Does the imputed income carry the DTI on the full line payment?

If any answer is no, the decision is already made. Move to a DSCR cash-out or another structure.

Documents to Gather First

• Two or more recent statements for each asset account.
• A current mortgage statement for each financed property.
• Proof of title and vesting for the subject property.
• A credit report no more than 90 days old at closing.

If you are considering a home equity line and want to see how the numbers work, Lendmire can help you compare HELOC options based on the property, the equity available, credit profile, combined leverage, and your goals. You can reach the team at 828-256-2183 or request a quote.

For current guidelines and terms, see Lendmire’s investment-property HELOC programs page.

About Lendmire

Lendmire is a mortgage brokerage (NMLS# 2371349) arranging home equity lines of credit — primary-residence, second-home and investment-property lines — through a wholesale lending network in its 16 full-service states. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. Cornell LII, 12 CFR 1026.43

2. eCFR, 12 CFR 1026.3: exempt transactions

3. Compliance Alliance