The Quick Read: The right provider depends on your assets, your property, and how much equity you can borrow against today, not on a ranking. Lendmire is a mortgage broker, so it shops this question across its wholesale lenders instead of naming a single winner. A cash-out refinance sizes off what your home is worth now, so an unbuilt addition or ADU adds nothing to the loan budget. Select programs let you qualify on savings and investments instead of paychecks.
- A cash-out refinance replaces your first mortgage with a larger loan, and the difference comes to you as cash for the build.
- The lender’s appraisal reflects the home as it stands, not the finished project.
- One qualifying path covers the whole loan with eligible assets. The other turns assets into monthly income.
- On the asset depletion path, a cash-out refinance is capped at 60% of value, whether the property is a principal residence, a second home, or an investment property.
- Permits, an as-is appraisal, and seasoned statements decide whether the file works.
What an Asset-Based Cash-Out Does for a Build
An asset-based cash-out refinance funds an addition or ADU by pulling equity out of the home you already own. You qualify on your balances rather than your pay. Your tax returns, pay stubs and employment verification are not part of the qualifying file on the asset qualifier path. The file is still fully underwritten, and your assets are documented with statements.
This product suits a reader with large balances and light documented income, such as a retiree living on a portfolio. Lendmire’s asset-based mortgage programs are built for these borrowers and are placed through select lenders in Lendmire’s wholesale network, subject to underwriting.
Consumer mortgage lending through this program covers 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia, and Washington. Check that your property sits in one of them before going further.
Key Terms Defined
Cash-out refinance: a new mortgage larger than your current balance, where you receive the difference as cash after payoff and costs.
Asset qualifier path: a way to qualify where eligible assets must equal or exceed the entire loan amount, and no employment or income is documented.
Asset depletion path: a way to qualify where usable assets divided by 60 months become a monthly qualifying income, which then runs through the debt-to-income test.
ADU (accessory dwelling unit): a separate, self-contained living space on the same lot as a main home, such as a backyard cottage or garage conversion.
Seasoning: the time your money has sat in an account before a lender will count it.
As-is appraisal: a valuation of the property in its current condition, before any planned work.
Why a Cash-Out Cannot Borrow Against the Finished Project
A cash-out refinance sizes off the home’s value today. The appraiser values what exists on the day of the visit. A foundation sketch and a permit application do not count as value.
Many borrowers expect to borrow against the after-built value. Only a purpose-built construction or renovation loan underwrites on completed value. That product fits larger or detached builds, or thin-equity cases. An asset-based cash-out is the right tool when your existing equity is deep enough to fund the project by itself.
The practical question is simple. After the first mortgage is paid off, is there enough room under the leverage cap to cover construction? If yes, the cash-out works. If not, another structure fits better.
Here is how the main options compare for this purpose:
| Factor | Asset-based cash-out | HELOC | Construction loan |
|---|---|---|---|
| Replaces first mortgage | Yes | No | Depends on structure |
| Sizes off | Value today | Value today | Value after completion |
| Funds arrive | Lump sum at closing | Draw as needed | Staged draws |
| Reviewed on | Assets (two paths) | Lender’s own criteria | Lender’s own criteria |
| Best fit | Deep equity, light income | Smaller, phased work | Large build, thin equity |
The Two Qualifying Paths
You are qualified on one path at a time, never a blend of both. Knowing which path fits you tells you what to prepare.
Asset qualifier: assets cover the whole loan
On this path, your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented. Loans run up to $4,000,000. Leverage runs up to 80% on a purchase and up to 75% on a refinance, on a principal residence or second home.
Here is the catch for a build. Whether cash-out proceeds are allowed on this path, and at what leverage, is set by the lender and is not published. Ask for it directly before you plan around it. The depletion path below has a published cash-out ceiling.
The share of each balance that counts:
- Brokerage accounts, certificates of deposit, money market and savings: 100%.
- 401(k) and IRA balances: 90% under age 59½, and 100% at 59½ or older.
- Accounts combine.
Consider a borrower requesting an $800,000 loan. She holds $330,000 in brokerage accounts (counts at 100%, so $330,000), $300,000 in a 401(k) under age 59½ (counts at 90%, so $270,000), and $200,000 in savings (counts at 100%, so $200,000). That is $800,000 of usable assets, and the loan is reviewed on assets alone. This example is illustrative, and the lender’s own calculation governs.
Credit starts at a 600 minimum score. Statements need 60 days of seasoning, with two months of statements for each qualifying account. Reserves are none at or below 75% loan-to-value on a refinance, and above that the lender sets them. These figures are subject to underwriting.
Asset depletion: assets become income
On this path, the lender divides your usable assets by 60 months to create a monthly qualifying income. That income must carry the full housing payment and your other debts through the debt-to-income test. Loans run from $125,000 to $3,500,000.
This path publishes its cash-out leverage. On a principal residence or second home, the program allows up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. On an investment property, the limits are up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. Because an investment-property loan here is business-purpose, it is underwritten as a business-purpose loan rather than as an owner-occupied consumer mortgage.
The share of each balance that counts:
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%, so the 20% that does not count is the haircut.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
Take a borrower with $1,500,000 in securities (counts at 80%, so $1,200,000) plus $300,000 in cash (counts at 100%, so $300,000). That is $1,500,000 of usable assets. Divided by 60 months, it produces $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test.
Minimums matter here. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never fall below $250,000 liquid when asset depletion is your only income source. Asset-derived income can also supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived when it does.
Credit follows the lender’s matrix. A first-time investor on this path needs a 700 score. Statements 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 rule.
One firm rule applies to a cash-out: cash-out proceeds never count as qualifying assets. You cannot borrow the money and then count it toward qualifying.
What Counts as an Asset, and What Does Not
A founder or shareholder who holds wealth in private company stock needs to convert it first. Privately held stock is not eligible on either path. The route is documented liquid assets: seasoned proceeds from a sale or buyout, cash, and public securities. Retirement accounts count too, but the percentage depends on the path. On the asset qualifier path, 401(k) and IRA balances count at 90% under age 59½ and 100% at 59½ or older. On the asset depletion path, retirement accounts count at 70% at any age, and securities count at 80%.
Several other asset classes are not published as eligible on either path:
- Cryptocurrency.
- Precious metals and collectibles.
- Business accounts beyond your ownership share.
- Pledged or borrowed funds.
The route for all of these is also conversion. Move the value into a regulated cash account and let it season, and the lender reviews the source. On the depletion path, these are also ineligible:
- Custodial accounts.
- Deferred compensation.
- Escrow accounts.
- Foreign funds.
- Cash on hand.
- Stock options.
- Non-vested restricted stock units.
- Funds from non-regulated financial companies.
Lendmire’s piece Top Asset-Based Cash-Out Refinance Providers With Non-Traditional Income covers the borrower profiles that fit these rules.
How Underwriting Treats the Addition or ADU
Underwriting runs in a set order. Each step can change the cash you receive.
1. Value. The appraisal values the home as it stands. Added space that does not exist yet contributes nothing.
2. Leverage cap. The lender applies the loan-to-value ceiling for your path, occupancy, and transaction type.
3. Payoff. The new loan pays off your first mortgage and any junior liens.
4. Costs. Closing costs and prepaid items come out next.
5. Cash. What remains is your build budget. It is always less than the leverage percentage times the value.
6. Assets. The lender confirms your balances against the path’s seasoning and eligibility rules.
Because of steps three and four, a 60% cash-out ceiling does not mean 60% of your home’s value arrives as cash. The mortgage payoff comes out first. A borrower with a large existing mortgage may find little left over. A borrower who owns the home free and clear keeps far more. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
When the General Rule Breaks
An unpermitted unit. An appraiser typically confirms that an ADU is permitted before assigning it any value, according to Build With a Plan, a contractor-side explainer. Agency rules contrast here too: Freddie Mac’s ADU fact sheet says rental income from an illegal ADU cannot be used. Treat unpermitted space as zero value and zero income.
A finished ADU on a principal residence. If the unit is already built and permitted, an appraiser may value it, depending on comparable sales with similar units. Fannie Mae’s ADU sheet shows the agency approach, which pairs a rent schedule (Form 1007) with the appraisal on a one-unit principal residence. Those are agency documentation rules for agency loans. They do not set the rules for this program.
Contributory value is uneven. An appraisal-journal paper by Brown and Watkins on appraising properties with ADUs found that what an ADU adds to value varies widely. Treat any fixed-percentage claim with caution. A finished unit may support a higher appraised value, depending on comps and underwriter review.
Thin equity or a large detached build. If the leverage cap leaves too little room, a construction or renovation loan may be the only way to borrow against completed value. It is a different product with different documentation.
A short-term rental plan for the ADU. Short-term rental rules can vary by city, county, HOA, and property type, so confirm local rules before relying on projected rental income.
Rent from the new unit. The asset paths are built around your balances, not around rent from a unit that does not yet exist. If you want projected rent to help qualify, ask the lender how it treats that income on your path.
How to Find the Right Provider Through a Broker
You cannot rank asset-based lenders from the outside, and a ranking would mislead you anyway. The best program for your situation depends on your property type, credit profile, leverage need, and documentation. Lendmire is a broker, so it does not lend. It reviews your scenario and places it with the wholesale lenders whose guidelines match.
Before you apply with any provider, ask these questions:
- Which path fits? Do your assets cover the whole loan, or do they need to become income?
- Is a cash-out allowed on the qualifier path, and at what leverage? The answer is set by the lender.
- Which accounts count, and at what percentage? Get this in writing for every account you hold.
- How does the lender treat a permitted ADU in the appraisal? Ask whether it relies on comparable sales with similar units.
- What statements are needed, and how old can they be? Seasoning rules differ by path.
- How is a prepayment charge on your current loan handled? It reduces the net benefit of refinancing.
Lenders in this space differ on how they treat borderline items and overlays. A broker that sees several guideline sets can match a file to the right fit. The lenders that write your file depend on your situation, and every file is underwritten individually. Programs change, so confirm current terms before you plan around them.
Which Option Fits Which Situation
| Your situation | Likely direction |
|---|---|
| Deep equity, large liquid balances, light income | Asset-based cash-out |
| Smaller project, phased spending | HELOC |
| Large detached build, thin equity | Construction or renovation loan |
| Mostly private company stock | Convert to documented cash first |
| Unpermitted existing unit | Resolve permits before any refinance |
Where to build the plan: start with the equity. If a 60% cash-out ceiling on today’s value leaves enough after payoff and costs, the asset-based route can work. If the math is tight, a staged approach may fit better. In that approach, you fund the build with other capital, finish and permit it, and then refinance against the improved value. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Weigh the tradeoff plainly. A cash-out replaces your entire first mortgage, so the whole balance is repriced, not just the new money. A HELOC leaves your first loan alone. Closing costs on a cash-out are generally higher. For a smaller project, that gap can decide the question.
Steps and Documents for Your File
A clean file moves through these steps in order.
1. Pick your path. Decide whether your assets cover the loan or become income.
2. Gather statements. Collect two months of statements for each qualifying account on the qualifier path. On the depletion path, gather statements at least 120 days old plus a recent one within 45 days.
3. Convert ineligible holdings. Move private stock, crypto, or similar assets into a regulated cash account and let them season.
4. Line up project paperwork. Plans, a contractor bid, and permit status help the lender understand the purpose of funds.
5. Order the appraisal. It values the home as it stands today.
6. Review the payoff. Confirm your first mortgage payoff and any prepayment charge.
7. Underwriting review. The lender checks assets, credit, and the property against its guidelines.
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. For readers whose documented income is thin in other ways, Lendmire’s piece on cash-out refinancing without income verification is a useful companion.
Frequently Asked Questions
Can I borrow against what my ADU will be worth once it is built?
No. A cash-out refinance sizes off the home’s as-is appraised value. The unbuilt unit adds nothing to the loan budget.
What cash-out leverage applies on the asset depletion path?
On the asset depletion path, the program allows up to 60% on a cash-out refinance for a principal residence, a second home, or an investment property. That is a ceiling, subject to underwriting, and it is applied to today’s value. Your mortgage payoff, closing costs, and prepaid items come out before you receive cash.
Does privately held company stock count toward qualifying?
Privately held company stock is not an eligible asset on either path. If you own a business, the documented route is to sell or convert the stock and season the proceeds as cash. You can also use cash, public securities, and retirement accounts at their counting percentages.
Can I use cash-out proceeds to meet the asset requirement?
No. Cash-out proceeds never count as qualifying assets. Your qualifying balances must come from accounts you already hold, documented with statements.
Is an asset-based loan the same as a no-doc loan?
No. Every file is fully underwritten. The loan skips traditional personal-income documentation, pay stubs and employment verification on the qualifier path, but your assets are documented with statements, and the lender reviews credit and the property.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
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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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Build With a Plan – ADU Appraisal
2. Freddie Mac – ADU fact sheet
3. Fannie Mae – ADU income and appraisal sheet
4. Brown and Watkins – Appraising Properties with ADUs
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 and Apply for an Asset-Based Cash-Out Refinance on a Primary Home · Asset-Based Cash-Out Refinance Lenders on a Condo
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.