The Quick Read: An inheritance is an asset, not income, so you qualify by putting the money to work on paper rather than by showing a paycheck. Through select programs, a Michigan heir can either use eligible assets to cover the entire loan or convert them into a monthly qualifying income, with no traditional personal-income documentation, pay stubs or employment verification, though every file is fully underwritten and the assets are documented with statements.
- Pick one path: assets that cover the whole loan, or assets that become income.
- Cash, CDs and brokerage balances count most; retirement accounts and real-estate equity count for less.
- Inheritance funds are excused from the depletion path’s statement-age rule, but the money must be in your name and documented.
- Leverage, credit and loan size are ceilings, not offers, and all of it is subject to underwriting.
Picture a retired caregiver who left work to look after a parent. The parent passes away, and the estate settles into a brokerage account and some savings. Her documented income is close to zero. Her balance sheet is strong. A traditional lender sees the first number. An asset-based lender can see the second.
This guide walks through how that works, start to finish. It covers what lenders count, the two qualifying paths, the order of operations, and where the general rule breaks down.
Key Terms Defined
Asset: Money or property you own, such as cash, a brokerage account or a retirement balance.
Asset qualifier path: A structure where eligible assets, after credit percentages, must equal or exceed the entire loan amount.
Asset depletion path: A structure that divides usable assets by 60 months to create a monthly qualifying income.
Seasoning: How long funds have sat in an account before the lender will rely on them.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly income.
Haircut: The share of an asset’s balance a lender will not count, because the value can swing or carries a tax cost.
Why an Inheritance Isn’t Income
An inheritance is a one-time transfer, so lenders treat it as an asset. A paycheck repeats. A lump sum does not, and it can be spent.
That doesn’t make it useless. Underwriters can look at assets as well as income. A lender has to consider your current or expected income or assets, other than the value of the home you’re buying, and has to verify what it relies on with reliable third-party records. That is the federal ability-to-repay rule in plain terms: a job is one way to show you can repay, not the only way.
In practice, the lender wants a statement showing the money, in your name, held in an account type it accepts. Telling the loan officer you inherited it does nothing. The paper does.
Which Path Fits You? Assets Cover the Loan or Assets Become Income
Across the wholesale network Lendmire works with, asset-based files run down one of two paths. You are qualified on one at a time, never a blend. Lendmire is a broker, so it places the file through select programs in its network, and the lender underwrites it. The asset-based mortgage program page lays out both in more detail.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| How it works | Assets alone must cover the whole loan | Assets ÷ 60 months = monthly income |
| Income documented | None | Derived income, run through DTI |
| Purchase leverage | Up to 80% | Up to 80% (primary or second home) |
| Refinance leverage | Up to 75% | 80% rate-and-term, 60% cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | The lender’s matrix |
On the depletion path, investment property is capped at 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets. All figures are subject to underwriting and change by program.
The qualifier path suits someone whose inheritance is large relative to the loan. The depletion path suits someone whose assets are large but whose loan is bigger than they can cover outright, and who can accept a DTI test on the income the assets produce.
What Each Inherited Asset Is Worth on Paper
Each asset type gets a percentage. That percentage is the share of the balance the lender counts.
On the asset qualifier path:
- Brokerage accounts, CDs, money market and savings: 100%.
- 401(k) and IRA balances: 90% if you’re under 59½, 100% at 59½ or older.
- Accounts combine.
On the asset depletion path:
- Cash accounts and CDs: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
Some assets are 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. The CFPB’s compliance guide lists the same broad family of eligible assets: savings, vested retirement amounts, stocks, bonds, CDs and trust funds.
Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender. Don’t assume they count at any percentage.
Worked Examples
Qualifier path first. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) and you’re under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). Usable assets total $800,000. That equals the loan, so the file is reviewed on assets alone, subject to underwriting. No income is documented.
Now the depletion path. Say you hold $1,500,000 in securities, which count at 80%, so $1,200,000. You also hold $300,000 in cash at 100%. Usable assets are $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then has to carry the housing payment and your other debts through the DTI test.
Notice the difference. The first example needs no income at all. The second creates income, then tests it. The lender’s own calculation governs either way.
The Michigan Process, in Order
Probate timing and title mechanics vary by state and by estate, so work with the estate’s attorney on that part. The lending sequence looks like this.
1. Wait for distribution. Funds you expect but haven’t received don’t count. They need to be in an account in your name.
2. Move the money once, then stop. Place it in an eligible account at a regulated institution. Repeated transfers create questions.
3. Collect statements. The qualifier path wants two months of statements per qualifying account and 60 days of seasoning. The depletion path wants statements at least 120 days old at application plus the latest one within 45 days. Inheritance funds are excused from that depletion-path seasoning, though the lender still reviews the source.
4. Gather estate paperwork. Distribution records help show where the money came from. Your lender will tell you exactly what it needs.
5. Choose the path and run the numbers. Compare usable assets with the loan, or compute the derived income and your DTI.
6. Apply and go through underwriting. The loan is a consumer mortgage on a principal residence or second home. The lender verifies the assets with third-party records, which is the same verification standard in the federal rule.
What Documents You’ll Need
- Statements for every account you’re counting.
- Proof that the funds are in your name.
- Estate distribution paperwork that explains a large new deposit.
- A government ID and the standard credit and property documents.
That’s less paper than a salaried application. It isn’t no paper. Lenders also generally can’t rely on what a borrower says out loud.
Where the General Rule Breaks
Inherited retirement accounts. Only vested retirement amounts count, and the percentages are lower on the depletion path (70%) than on the qualifier path (90% under 59½, 100% after). Withdrawal rules and tax consequences depend on the account type, so talk to a qualified professional before you plan around one.
Inherited real estate. A house isn’t cash. Real-estate equity counts at 60% on the depletion path, but home equity in the property you’re buying doesn’t count, since the federal rule looks at assets other than the dwelling securing the loan. Whether you keep, sell or borrow on an inherited home depends on title, probate status and your goals.
Smaller inheritances. The depletion path requires qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is your only income source, you also need at least $250,000 in liquid assets. If your inheritance is smaller, this may not be your path. A co-borrower or a return to work might serve you better.
Supplementing real income. If you do have some documented income, asset-derived income can supplement it up to a 45% DTI. When it supplements, the minimum-assets rule is waived.
Credit and history. The qualifier path sets a 600 minimum score. The depletion path follows the lender’s matrix, and a first-time investor there needs 700. Housing history of 0x30x12 is standard, with one 30-day late considered case by case. Multiple bankruptcies are not eligible. A housing event needs 4 years of seasoning on the depletion path. None of this is a promise of approval.
Mistakes That Sink These Files
- Spending first. Using the inheritance to pay off a car or a credit card before applying shrinks the assets you can count.
- Over-sizing the down payment. Pouring too much into the purchase leaves too little for the loan test. On the depletion path, a bigger down payment cuts the assets available to count.
- Shuffling accounts. Moving money between banks muddies the paper trail.
- Counting what hasn’t arrived. An expected distribution isn’t an asset yet.
- Mixing funds. Combining the inheritance with a spouse’s account can complicate who owns what.
- Assuming “no income documentation” means “no documentation.” The assets are fully documented, and the file is fully underwritten.
If the Inheritance Is a House With a Mortgage
That is a different question. Inheriting a mortgaged home raises issues like successor rights and loan assumption, and an estate attorney is the right first call. This article covers using inherited assets to qualify for a new loan.
What About Renting the Property Out?
This article is about qualifying on assets for a home you’ll live in or use as a second home. If you want to buy a pure rental, the asset depletion path does allow investment property, at the lower leverage shown above, since the loan is business-purpose. Business-purpose rental financing more commonly runs through a different structure that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. The inheritance then works in the background as down payment and reserves. Tax treatment varies; consult a qualified professional.
Fallback Options
If the numbers don’t work today, you have choices. Add a co-borrower with documented income. Wait until the inheritance grows or seasons. Return to work and use a conventional route. A bank-statement program fits borrowers who document income through deposits, which an heir without earnings usually can’t. A broker can compare these against your statements.
Frequently Asked Questions
Does an inheritance count as income for a mortgage?
No. It’s an asset. It supports qualification either by covering the loan outright on the qualifier path or by being divided by 60 months into qualifying income on the depletion path. Both are subject to underwriting.
Can I use my inheritance before probate closes?
Only the funds that have actually been distributed and sit in your name count. Money you expect but haven’t received can’t be documented with statements, so it can’t support the loan. Ask the estate’s attorney when distribution will happen.
Do I have to sell my investments to qualify?
Not necessarily. Brokerage balances count toward qualification as they are, at 100% on the qualifier path and 80% for securities on the depletion path. You don’t have to liquidate them to count them, subject to lender review.
Can I qualify with a smaller inheritance?
Possibly on the qualifier path, if your usable assets equal or exceed the loan. The depletion path has high minimums. Smaller balances often point toward a lower loan amount, a co-borrower, or waiting.
Is this the same as a no-doc loan?
No. You skip traditional personal-income documentation, pay stubs and employment verification, but every file is fully underwritten and your assets, credit and property are all documented.
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. Programs change, and nothing here is a commitment to lend. For related reading, see Lendmire’s guide How to Qualify for an Asset Depletion Mortgage Without Selling Investments.
For an heir with a settled estate, the question is rarely whether the money is enough. It is whether the paper trail shows it clearly.
Lendmire’s asset-based mortgage in Michigan page presents the program for Michigan borrowers.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. CFPB ATR/QM Small Entity Compliance Guide
3. Cornell LII, 12 CFR 1026.43
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a New Mexico Trust Beneficiary Qualify for a Mortgage on Trust Assets? · Can a Michigan Buyer Qualify for a Mortgage on IRA Assets Without Withdrawals? · Can a Georgia Trust Beneficiary Qualify for a Mortgage on Trust Assets?
Guides: Asset-Based Mortgage in Michigan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.