The Quick Read: Yes, mutual funds in a regulated brokerage account usually count toward qualifying, though how much of the balance counts depends on your path: on the asset qualifier path brokerage balances count at 100%, while on the asset depletion path securities count at 80%, and funds inside a 401(k) or IRA follow the retirement percentages. Your funds stay invested. Nothing is sold, pledged or withdrawn just to qualify.
- Asset qualifier path: your eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented.
- Asset depletion path: usable assets divided by 60 months become monthly qualifying income, which then runs through the debt-to-income test.
- Paper trail: the qualifier path wants 60 days of seasoning and two months of statements per account. The depletion path wants statements at least 120 days old plus one within 45 days.
- Fit: these programs suit households with large balances and little documented income. All terms are subject to underwriting and apply through select programs.
Which Path Fits Your Portfolio?
Pick the path first, because the same fund balance counts differently on each. A borrower is qualified on one path at a time, and the two tables never blend.
On the asset qualifier path, the lender adds up your eligible assets after the credit percentages. If that total covers the whole loan, you qualify on assets alone. The path allows up to 80% loan-to-value on a purchase and 75% on a refinance, for a principal residence or second home.
On the asset depletion path, the lender turns assets into income. It haircuts each asset type, divides the usable total by 60 months, and tests the result against your housing payment and other debts.
| Factor | Asset qualifier | Asset depletion |
|---|---|---|
| What assets do | Cover the whole loan | Become monthly income |
| Brokerage funds | 100% | 80% (securities) |
| 401(k) or IRA funds | 90% under 59½, 100% after | 70% at any age |
| Loan size | Up to $4,000,000 | $125,000 to $3,500,000 |
| Statements | Two months, 60-day seasoning | 120 days old, plus one within 45 |
Leverage differs on the depletion path. A principal residence or second home can go up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. An investment property tops out at 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets on this path.
Across the wholesale network, the depletion path is the one that reaches investment property. These figures are ceilings, not offers, and every file is underwritten individually.
Key Terms Defined
Haircut: the share of an account’s balance a lender refuses to count. An 80% credit means a 20% haircut.
Usable assets: the balance left after haircuts, which is the number that actually qualifies you.
Seasoning: how long money has sat in your account, shown on statements, before the lender will count it.
Qualifying income: on the depletion path, usable assets divided by 60 months, treated as monthly income.
Brokerage line: the category for taxable investment accounts that hold funds, stocks and bonds.
How Each Type of Fund Is Treated
Mutual funds held in a brokerage account fall on the brokerage line. That one fact decides most of the outcome.
| Holding | Qualifier path | Depletion path |
|---|---|---|
| Fund in a brokerage account | 100% | 80% as securities |
| Money market | 100% | Cash line if a bank account |
| Fund inside a 401(k) or IRA | 90% under 59½, 100% after | 70% |
| Fund in a custodial account | Ask before relying on it | Not eligible |
| Foreign-held fund | Ask before relying on it | Not eligible |
ETFs and individual stocks in the same brokerage account are usually reviewed on that same line. Whether a money market fund at a brokerage counts as cash is an underwriter call, so confirm it before you plan around it.
Crypto, precious metals and collectibles are not published as eligible on either path. Pledged or borrowed-against funds are not published as eligible either. The documented route is converting such holdings to a seasoned cash balance in a regulated account. The lender then reviews the source of those funds.
What the Math Looks Like
Here are two illustrations. The lender’s own calculation governs, and nothing below is an offer.
Qualifier path. Picture an $800,000 loan. You hold $330,000 in brokerage accounts, which counts at 100%, or $330,000. You also hold $300,000 in a 401(k) at age 55, which counts at 90%, or $270,000. Add $200,000 in savings at 100%. Usable assets total $800,000, which equals the loan, so the file is reviewed on assets alone.
Notice what carries it. Lenders in Lendmire’s network count the brokerage and savings balances in full, and the retirement account loses a tenth. At 59½ that 401(k) would count at 100%.
Depletion path. Say you hold $1,500,000 in securities, including mutual funds, and $300,000 in cash. The securities count at 80%, or $1,200,000. The cash counts at 100%. Usable assets come to $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income must then carry the housing payment and your other debts through the debt-to-income test.
The depletion path also has minimums. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, liquid assets never fall below $250,000. If asset-derived income only supplements documented income, it can go up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Don’t Count the Same Dollar Twice
Your down payment, closing costs and any reserves the lender sets come out of the same pool. A fund balance that pays for closing cannot also be counted as qualifying assets.
The same logic applies to the down payment itself. The Consumer Financial Services Review via Lexology reports that the CFPB said a down payment cannot be treated as an asset when judging ability to repay. In practice you need verified assets beyond the cash you bring to the table.
On the qualifier path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them. The depletion path publishes no reserve months. Plan your pool as qualifying assets plus cash to close, not one number doing both jobs.
Documents and Seasoning for Fund Holdings
Gather these before you apply:
- Two consecutive monthly statements for every account you want counted (qualifier path).
- Statements at least 120 days old, plus the most recent one within 45 days (depletion path).
- Evidence of the owner’s name on each account. Joint, trust and business-titled accounts get extra review.
- A paper trail for any large recent deposit or transfer between custodians.
- A written source for funds from a sale of a business, an inheritance or a legal settlement. Those are excused from the depletion path’s seasoning window but still documented.
Your reinvested dividends and gains already sit in the statement balance, so they need no separate proof. A fund bought recently with cash is different, because the seasoning clock runs from when the money entered the account.
The assets are documented on both paths. Skipping income documentation never means skipping documentation.
Should You Sell Funds First?
Usually no. Selling funds is not required, and it creates a paperwork and timing problem. Cash proceeds need to be seasoned and sourced, and market timing can cost you more than the haircut does.
There is one real tradeoff on the depletion path. Securities count at 80%, while cash counts at 100%. Converting funds to cash raises the credit, but you pay the tradeoffs in taxes, timing and seasoning. Tax treatment varies; consult a qualified professional.
Market movement matters too. The lender works from documented statement balances. A drop between application and closing can shrink your usable assets, so a thin margin is a risk. Leave a cushion over the required total.
Why Lenders Insist on Statements
Because this is a consumer mortgage, the lender must make a reasonable, good-faith determination that you can repay. The CFPB’s Regulation Z ability-to-repay rule says reasonableness depends on the creditor’s own standards and how it applied them to the facts. The rule does not set a percentage for mutual funds. The haircut is a credit-policy choice made by the lender and investor.
The CFPB’s final ability-to-repay rule requires lenders to verify the income or assets they rely on with reliable third-party records. For funds, that means account statements. The CFS Review notes that a lender may base its decision on assets alone, though it must still consider debt-to-income or residual income separately.
Funds on a DSCR Loan Are a Different Test
A DSCR loan is a business-purpose rental loan. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, so your personal income is not the test. The complete DSCR loans guide covers it in full.
Mutual funds matter there as post-closing reserves rather than as income. Reserve requirements vary by program, and Lendmire’s piece How Many Months of Reserves Does an Asset Qualifier Mortgage Require? walks through that side of the question. Select lenders in the network also offer programs below 1.00 coverage, though leverage and terms adjust.
If the rent will not carry the payment and your portfolio is large, the asset depletion path on an investment property is the alternative. It runs at the lower leverage shown above. The same fund balance can count as income on one loan and as reserves on another, so run both numbers.
When Your Funds Fall Short
If the usable total comes up short, you still have moves. You can lower the loan amount or the leverage. You can add a co-borrower whose assets or documented income helps. You can use asset income to supplement documented income, which waives the depletion minimum.
Credit still matters. The qualifier path has a 600 minimum score, and the depletion path follows the lender’s matrix. A first-time investor on the depletion path needs 700. Housing history is reviewed at 0x30x12, and one 30-day late in the last twelve months is considered case by case.
If your income arrives as business deposits rather than portfolio balances, a different program may fit better. Lendmire’s comparison of an asset qualifier mortgage and a bank statement mortgage shows where each one works.
Frequently Asked Questions
Can I qualify with only mutual funds?
Yes, if they are eligible and the balance clears the path’s test. On the qualifier path, your usable assets must equal or exceed the entire loan. On the depletion path, 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 assets are your only income source. Underwriting makes the final call.
Do I have to sell my funds?
No. The lender calculates from your statements, and your holdings stay invested. Selling can help on the depletion path because cash counts at 100% against 80% for securities. That gain comes with tax, timing and seasoning tradeoffs.
Do funds inside my IRA or 401(k) count?
Yes, but as retirement assets rather than brokerage assets. On the qualifier path they count at 90% under 59½ and 100% at 59½ or older. On the depletion path they count at 70% at any age.
What happens if the market drops before closing?
Your usable assets can shrink. The lender works from documented statement balances, so a lower balance may leave you short of the required total. A cushion over the minimum is the practical protection.
Is a money market fund treated like cash?
Money market balances count at 100% on the qualifier path. On the depletion path, cash accounts count at 100%. Whether a money market fund held at a brokerage sits on the cash line is for the underwriter to decide, so ask early.
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 mortgage broker, and its 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. Program terms are subject to underwriting and are not a commitment to lend.
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. Consumer Financial Services Review via Lexology
2. CFPB Regulation Z, § 1026.43
3. CFPB Ability-to-Repay Final Rule
4. CFS Review, CFPB Addresses Non-QMs Under Ability-to-Repay 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 Asset Qualifier Mortgage Loan Limits Work · How to Qualify for an Asset Qualifier Jumbo Loan · How to Qualify for an Asset Qualifier Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.