The Quick Read: A lender picks the path by testing which one the file actually passes. Asset qualifier asks whether verified assets cover the entire loan. Asset depletion turns assets into monthly income and runs that income through a debt-to-income test. Occupancy, loan size against assets, and existing debt usually decide it.
- A borrower is qualified on one path at a time, never a blend of both.
- The asset qualifier path is for principal residences and second homes. An investment property runs only on the asset depletion path, through select programs.
- Asset qualifier needs eligible assets at or above the whole loan amount. Asset depletion divides usable assets by 60 months.
- Statements, seasoning, and credit differ by path, and every figure is subject to underwriting.
- Michigan does not change the program figures. It only means a Michigan borrower is in a state where Lendmire’s consumer lending is licensed.
Key Terms Defined
Most of the confusion on this topic is vocabulary. These are the working definitions used in the rest of the piece.
Asset qualifier: A path where eligible assets, after the credit percentages, must equal or exceed the entire loan. No employment or income is documented.
Asset depletion: A path that converts usable assets into a monthly qualifying income by dividing them by 60 months. That income must carry the housing payment and other debts.
Usable assets: The share of each account balance the lender counts. Cash may count at 100%, while stocks and retirement funds count for less.
Haircut: The discount applied to an account because its value can swing or because it is harder to reach.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, divided by your monthly qualifying income.
Seasoning: How long funds have sat in an account, shown by statements, before the lender counts them.
Loan-to-value (LTV): The loan amount as a percentage of the property’s value.
DSCR: Debt service coverage ratio. It measures whether a rental’s income covers its own monthly obligation. It is the usual test for rental financing.
How Does a Lender Decide? The Sequence of Questions
The decision is a sequence, not a coin flip. Across the wholesale network Lendmire works with, underwriters run roughly the same questions in roughly this order. Each answer can close one door and open another.
1. What is the property and the transaction? A principal residence or second home can use either path. An investment property can use only the asset depletion path. That one answer settles many files before any math starts.
2. How big is the loan compared with the assets? The qualifier path needs eligible assets at or above the entire loan. If the assets fall short of the loan, the qualifier path is closed.
3. What do the accounts consist of? Retirement balances and stocks count for more on the qualifier path than on the depletion path. A portfolio heavy in those assets often tests better on the qualifier path.
4. What do your debts look like? Depletion income must carry the housing payment and every other debt. A borrower with heavy existing debts can fail that test even with a large portfolio.
5. Can the statements be documented? The two paths have different statement rules. A file that fits one set of rules may miss the other.
6. Do credit and leverage fit? The qualifier path has a published credit floor. The depletion path follows the lender’s score and loan-amount matrix.
A loan officer who runs these in order can usually tell you the path in the first conversation. That is the part many borrowers never see.
The Asset Qualifier Path, Step by Step
Asset qualifier treats the portfolio as the repayment source. It does not convert anything into income. Through select programs, the usual steps run like this.
First, the lender lists every account and applies the credit percentages. Brokerage accounts, certificates of deposit, money market, and savings count at 100%. A 401(k) or IRA counts at 90% if you are under 59½ and at 100% at 59½ or older. Accounts combine.
Second, the lender compares the total with the entire loan amount. The usable total must equal or exceed the loan. No employment or income is documented.
Third, the lender checks seasoning. Typically that means 60 days of seasoning and two months of statements for each qualifying account. The assets are fully documented on this path. “No income documentation” never means “no documentation.”
Fourth, credit and leverage. The published credit floor is 600, subject to underwriting. Typical ceilings are 80% LTV on a purchase and 75% LTV on a refinance, both on a principal residence or second home. Loans run to $4,000,000. Reserves are generally not required at or below 75% LTV, and above that the lender sets them.
One more point. Cash-out terms on this path are set by the lender and are not published. Do not assume a cash-out figure for it.
The Asset Depletion Path, Step by Step
Asset depletion turns the portfolio into income. Then it treats that income like any other qualifying income.
The lender applies the haircuts first. Cash accounts and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%. The usable total is divided by 60 months. The result is monthly qualifying income.
That income then runs through the program’s debt-to-income test. It must carry the full housing payment and your other debts. This is the biggest practical difference from the qualifier path, where debts do not enter a ratio.
Statements work differently here as well. They must be at least 120 days old at application, plus the most recent statement within 45 days. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that seasoning.
There are minimums too. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When depletion is the only income source, liquid assets must also be at least $250,000. Loan amounts run from $125,000 to $3,500,000, and the lender’s credit matrix applies, subject to underwriting.
Leverage depends on occupancy. On a principal residence or second home, the ceiling is typically 80% LTV on a purchase or rate-and-term refinance and 60% LTV on a cash-out refinance. Cash-out proceeds never count as qualifying assets.
Side by Side
| Factor | Asset Qualifier | Asset Depletion |
|---|---|---|
| What is tested | Assets cover the whole loan | Derived income passes the DTI test |
| Income documented | None | Derived from assets (can supplement other income) |
| Debts in a ratio | No | Yes |
| Property types | Principal residence, second home | Also investment property |
| Retirement accounts count at | 90% under 59½, 100% after | 70% at any age |
| Statement rule | 60 days, two months per account | 120 days old plus one within 45 days |
| Loan range | Up to $4,000,000 | $125,000 to $3,500,000 |
These are ceilings and floors through select programs. They are not offers, and the lender’s own calculation governs.
Same Assets, Both Paths
Here is how one file can land on opposite sides. The numbers are illustrative.
Picture a Michigan borrower under 59½ who wants an $800,000 loan on a principal residence. The borrower holds $330,000 in brokerage accounts, $300,000 in a 401(k), and $200,000 in savings.
On the qualifier path, the brokerage counts at 100%, which is $330,000. The 401(k) counts at 90%, which is $270,000. The savings count at 100%, which is $200,000. That totals $800,000 of usable assets, which equals the loan. The file is reviewed on assets alone, subject to underwriting and the 60-day seasoning rule.
Now run the same accounts on the depletion path. Treat the brokerage as securities at 80%, which is $264,000. The 401(k) counts at 70%, which is $210,000. The savings count at 100%, which is $200,000. That totals $674,000. The minimum for an $800,000 loan is the lesser of $1,000,000 or 1.25 times the loan, which is $1,000,000. The file falls short before any income math starts.
Now flip the situation. Picture a borrower with $1,500,000 in securities and $300,000 in cash. Securities count at 80%, which is $1,200,000, and cash counts at 100%, which is $300,000. That is $1,500,000 usable. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then has to carry the housing payment and other debts through the DTI test. A borrower with low debts and a large portfolio can clear this comfortably. A borrower carrying heavy monthly debts may not.
The lesson is that the same money can look strong or weak depending on the account types and the debt load. The lender chooses the path that produces the cleaner, fully documentable result.
What Counts as an Asset on Each Path
Eligibility is where files get re-routed most often. Do not mix the two tables.
On the qualifier path, brokerage, certificates of deposit, money market, and savings count at 100%. Retirement accounts count at 90% under 59½ and 100% after that.
On the depletion path, these are not eligible: 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. Lendmire’s piece How to Use Deferred Compensation in an Asset Depletion Mortgage File covers that asset class in more detail.
Cryptocurrency, precious metals, collectibles, and business accounts beyond your ownership share are not published as eligible on either path. Pledged or borrowed funds are not either. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Funds you plan to use for the down payment and closing costs generally come out of the pool before the math runs. The lender will not count the same dollar twice. Tax treatment varies; consult a qualified professional before drawing on retirement funds.
Which Way Does Your File Lean?
| Borrower profile | Likely lean | Why |
|---|---|---|
| Retiree with large cash and CDs | Either | Both count cash at 100% |
| Seller of a business, large cash | Depletion or qualifier | Sale funds are excused from depletion seasoning |
| Under 59½, big 401(k) | Qualifier | 90% credit beats 70% |
| Heavy monthly debts, big portfolio | Qualifier | No DTI ratio on this path |
| Buying a rental on assets | Depletion | Only path open for investment property |
| Some documented income, thin assets | Depletion | Asset income can supplement, up to 45% DTI |
Treat this as a starting point, not a verdict. Your statements and credit decide the real answer.
When Both Pass, and When Both Fail
When both pass, the lender weighs the tie-breakers. Leverage is the first one. Reserves are the next. Debt load comes third. On a principal residence, a borrower may find the qualifier path gives the same 80% ceiling on a purchase with no DTI test. On an investment property the question never arises, because depletion is the only path.
When both fail, the fix is usually on the asset side. Season more funds. Consolidate accounts so the balances are documented in one place. Convert ineligible holdings to cash in a regulated account. Lower the loan amount. Sometimes the answer is a smaller loan rather than a different method.
Where the General Rule Breaks
The rule of thumb is that a bigger portfolio relative to the loan favors qualifier, and a lower debt load favors depletion. These edge cases break it.
Investment property. Only the depletion path is open, and the ceilings drop to 65% LTV on a purchase or rate-and-term refinance and 60% LTV on a cash-out. A first-time investor on the depletion path needs a 700 score. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Supplemental income. Asset-derived income can supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived. This is the exception that most often surprises borrowers.
Housing events. A housing event needs four years of seasoning on the depletion path. Multiple bankruptcies are not eligible. One 30-day late payment in the last twelve months is considered case by case.
Why assets can be used at all. For consumer-purpose mortgages, the federal ability-to-repay rule lets a lender base its repayment decision on income, on assets other than the home being financed, or on both, according to the CFPB’s regulation text. That is the legal root of both paths. Asset depletion imputes income from assets. Asset qualifier relies on the assets directly.
Rentals bought purely as rentals. 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, and the Federal Register adoption notice treats investment-purpose loans as business-purpose. If the rent covers the property’s payment, the file usually belongs in DSCR instead. Programs below 1.00 coverage are available through select lenders in the network, but LTV and terms adjust. The complete DSCR loans guide walks through that route.
What Michigan Changes (and What It Does Not)
Michigan does not change the program figures. The credit percentages, haircuts, seasoning, and leverage ceilings above are the same in every state where Lendmire places these loans. Michigan is one of the 16 states where Lendmire’s consumer mortgage lending is licensed. Lendmire is the broker, and the loan itself is placed through select lenders in its network.
What Michigan changes is the file’s context. Picture a retiree buying a lake-area second home. That is a second home, so either path is open. Picture the same retiree buying a rental cottage instead. That is an investment property, so only depletion applies, at lower leverage. Local prices, taxes, and insurance shape how much house the assets can support. They never alter a program parameter.
What Changes Mid-File
A path choice is not permanent. Three things can force a re-run.
- Balances drop. A market dip in a securities account lowers the usable total. On the qualifier path, a shortfall against the loan amount can close the door. On the depletion path, it lowers the qualifying income and may break the minimum-assets rule.
- An unsourced deposit appears. The lender will want the source documented. Until it is, those funds may not count.
- The loan amount moves. A higher price raises the qualifier threshold dollar for dollar. On the depletion path it raises both the DTI burden and the 1.25 times minimum.
Keep your statements clean and avoid moving money between accounts without a paper trail.
What You Can Do Before You Apply
Move funds into regulated accounts well ahead of the application, and keep the statements. Pay down consumer debts if you lean toward depletion. Decide whether a retirement balance is better left alone. Ask the broker for a run of both paths before you commit to a purchase contract.
Frequently Asked Questions
Can I use both paths on one loan?
No. A borrower is qualified on one path at a time, and figures from different paths are never blended. A lender may run each path to see which is stronger, but the file closes on one.
Do I have to sell or pledge my accounts?
No. Both paths are qualifying calculations. The accounts stay yours, though the lender will document them with statements and review the source of any large deposit.
Which path works for an investment property?
Only asset depletion, through select programs. Typical ceilings are 65% LTV on a purchase or rate-and-term refinance and 60% LTV on a cash-out. If the rent covers the property’s payment, a DSCR loan may be the better fit.
Does the 401(k) count the same on both paths?
No. On the qualifier path it counts at 90% under 59½ and 100% after. On the depletion path it counts at 70% at any age. That gap often decides which path produces the larger usable total.
Does Michigan change the numbers?
No. The figures are the same in every state. Michigan matters only because the borrower, property, and licensing sit there.
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.
Lendmire’s asset-based mortgage in Michigan page presents the program for Michigan borrowers.
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
2. Federal Register – Ability-to-Repay and Qualified Mortgage Standards final rule
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 to Qualify for an Asset Qualifier Jumbo Loan · How Big Can an Asset Qualifier Mortgage Be? · Does an Asset Depletion Loan Require Any Income?
Guides: Asset-Based Mortgage in Michigan
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.