The Quick Read: A cash-out refinance can fund tuition when the loan is reviewed on your assets instead of your income. Either eligible balances cover the whole loan, or they convert into monthly qualifying income, and the best program for your situation depends on your property, credit, leverage and statements.
- Two paths exist. The asset qualifier path covers the entire loan with eligible assets. The asset depletion path turns usable assets into income over 60 months.
- Leverage is lower on cash-out. On the depletion path, a cash-out refinance on a principal residence or second home goes up to 60% loan-to-value, subject to underwriting.
- Your assets are documented in full. You skip traditional personal-income documentation, pay stubs and employment verification, but your account statements are reviewed in full.
- Privately held company stock does not count. It is not an eligible asset on either path.
Why There Is No Ranked List of Providers
A ranked list of lenders would mislead you, because the program that fits a retiree with a brokerage account differs from the one that fits a business seller with a large cash balance. Lendmire is a mortgage broker, not a lender. It places asset-based loans through select lenders in a wholesale network and matches each file to the program that suits it.
The lenders that write these loans differ on property type, credit matrix, leverage and what they accept as proceeds. That is why one borrower’s best fit is another’s decline. A broker reads your statements, your property and your goal, then shops the file across programs.
Lendmire’s asset-based mortgage programs are consumer mortgages on a principal residence or second home. Investment property is available only on the asset depletion path, where the loan is business-purpose rather than consumer. Consumer mortgage lending runs in 16 states: Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington. Every figure below is a ceiling or floor under the program, subject to underwriting. None of it is an offer.
Which Path Fits a Tuition Payer?
Pick the path by asking one question: are your assets large enough to cover the whole loan, or do you want them to become income? A borrower is qualified on one path at a time. The two never blend.
| Factor | Asset Qualifier | Asset Depletion |
|---|---|---|
| How assets are used | Must cover the entire loan | Divided by 60 months into income |
| Income documented | None | Derived income, run through debt-to-income |
| Loan size | Up to $4,000,000 | $125,000 to $3,500,000 |
| Refinance leverage | Up to 75% on a refinance | 60% on cash-out |
| Credit | 600 minimum | The lender’s matrix |
On the qualifier path, the refinance ceiling applies to a principal residence or second home. Whether cash-out proceeds are allowed on that path, and at what leverage, is set by the lender and is not published. Ask for it directly instead of assuming it.
On the depletion path, a cash-out refinance reaches 60% on a principal residence or second home. An investment property also tops out at 60% on cash-out. Cash-out proceeds never count as qualifying assets, so you cannot use the tuition money to qualify for the loan that produces it.
What Counts as an Asset, and How Much
The share that counts differs by path, and it is a share of each balance, not a flat credit. Treat the two tables below as separate.
Asset qualifier path:
- Brokerage accounts, certificates of deposit, money market and savings count at 100%.
- Retirement accounts (401(k) and IRA) count at 90% under age 59½ and 100% at 59½ or older.
- Accounts combine toward the total.
Asset depletion path:
- Cash accounts and certificates of deposit count at 100%.
- Securities count at 80%.
- Retirement accounts count at 70% at any age.
- Real-estate equity counts at 60%.
Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options and non-vested restricted stock units are not eligible on the depletion path. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. The documented route for those is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Here is the qualifier math, as an illustration only. Take an $800,000 loan. Say you hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) under 59½ (90% counts, so $270,000) and $200,000 in savings (100% counts, so $200,000). That adds up to $800,000 of usable assets, which covers the loan on assets alone.
The depletion math works differently. Suppose you hold $1,500,000 in securities (80% counts, so $1,200,000) and $300,000 in cash (100% counts, so $300,000). Together, the usable assets come to $1,500,000. Divide by 60 months and you get $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test. The lender’s own calculation governs in every case.
Where Tuition Money Fits
On a principal residence or second home, the loan is a consumer mortgage, and tuition is a personal use of the funds. Because it is a consumer mortgage, the standard consumer loan disclosures apply. Lenders set their own rules on cash-out proceeds, so confirm early that tuition is an accepted use on the program you are shown.
Investment property is a different case. On the depletion path, the loan on an investment property is business-purpose. That makes tuition awkward. 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.
The CFPB’s official commentary deems credit to acquire, improve or maintain a non-owner-occupied rental to be business purpose. Tuition is none of those. If the tuition money is meant to come from a rental, ask the lender how it treats personal use of proceeds before you build a plan around it.
Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction.
Also remember the leverage cost of cash-out. Pulling a large lump sum raises the loan balance, and at 60% on the depletion path, a cash-out leaves a lot of equity untouched. Size the draw to the real cost of attendance across all years and all children, not just the first bill. A lump sum is paid on in full from day one, so drawing more than you need costs you.
Founders and Business Sellers: The Stock Question
Shares in a closely held company do not count as assets at any percentage, on either path. Say it plainly to yourself before you plan around it, even if the paper stake is large.
The route that works is documented liquid assets. That means proceeds from a sale or buyout of the business converted to a cash balance, plus cash, public securities and retirement accounts at their credits. On the depletion path, sale-of-business funds are excused from the statement seasoning requirement of statements at least 120 days old at application. Inheritance and legal-settlement funds are excused from it too. Once the sale closes and the cash sits in a regulated account, the balance counts like any other cash account, with statements the lender can review. On the qualifier path, the 60-day seasoning applies, with two months of statements for each qualifying account.
Seasoning, Credit and Minimums
Seasoning is the waiting period an asset must sit in your account before a lender counts it. The qualifier and depletion paths set it differently.
- Qualifier path: 60 days of seasoning, with two months of statements for each qualifying account. No reserves are required at or below 75% loan-to-value. Above that, the lender sets them.
- Depletion path: statements at least 120 days old at application, plus the most recent statement within 45 days.
- Depletion minimums: qualified assets of at least the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, you also need at least $250,000 liquid.
- Supplemental income: asset-derived income may supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
- Credit: the qualifier path publishes a 600 minimum. The depletion path follows the lender’s matrix, and a first-time investor needs 700.
- Housing history: 0x30x12. One 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs 4 years of seasoning on the depletion path.
Weigh It Against Federal Parent Loans First
Home equity is not the only way to fund tuition, and it is not always the best one. Federal Parent PLUS loans are credit-checked but not need-based, according to Sonoma State’s financial aid office. One school’s aid page, from Coe College, summarizes new limits for first-time Parent PLUS borrowers of around $20,000 per year and $65,000 total. Verify those figures at studentaid.gov before relying on them.
The tradeoff is risk. A mortgage puts your home behind the debt, while federal loans carry protections that secured debt does not. The author of The College Investor argues strongly against using home equity for college and favors federal loans, then private loans, first. Treat that as one writer’s opinion. It is worth weighing before you put a house behind a tuition bill.
If your balances are large and your documented income is thin, an asset-based cash-out may still fit. Retirees, business sellers and portfolio households are the usual profile. Lendmire’s piece Top Asset-Based Cash-Out Refinance Providers With Non-Traditional Income covers that borrower in more depth. For a borrower who documents no personal income at all, see Lendmire’s piece Top Asset-Based Cash-Out Refinance Providers With No Income Verification.
Key Terms Defined
Asset qualifier path: the program route where eligible assets, after the credit percentages, must equal or exceed the entire loan, and no employment or income is documented.
Asset depletion path: the route where usable assets are divided by 60 months into a monthly qualifying income that must carry the housing payment and other debts.
Seasoning: the length of time funds must sit in an account, shown by statements, before a lender counts them.
Cash-out refinance: a new, larger mortgage that pays off the old one and hands you the difference in cash.
Loan-to-value (LTV): the loan balance divided by the property’s appraised value, shown as a percentage.
What to Prepare Before You Apply
Gather statements for every account you plan to use. Confirm each balance has sat long enough to season. Decide how much tuition you need across all years, then ask what each program allows for proceeds.
Ask each provider these questions:
- Is tuition an accepted use of cash-out proceeds on this program?
- Does cash-out apply on the qualifier path, and at what leverage?
- Which of my accounts count, and at what share of the balance?
- What credit matrix applies to my loan size?
Frequently Asked Questions
Can cash-out proceeds from an asset-based mortgage pay college tuition?
On a principal residence or second home, the loan is a consumer mortgage, and tuition is a personal use. Lenders set their own rules on proceeds, so confirm it with the specific program before you apply. On an investment property, the loan is business-purpose, which makes tuition a harder fit.
Can I count my 401(k) or IRA?
Yes, at a share of the balance. On the qualifier path, retirement accounts count at 90% under age 59½ and 100% at 59½ or older. On the depletion path, they count at 70% at any age. Both are subject to underwriting.
Does my startup or family-company stock count?
Privately held company stock is not an eligible asset on either path. Convert it through a sale or buyout into a seasoned cash balance, and that cash counts like any other account. Public securities count at 100% on the qualifier path and at 80% on the depletion path.
Can the tuition cash itself count toward my qualifying assets?
No. On the depletion path, cash-out proceeds never count as qualifying assets. Your qualifying balances must come from accounts you already hold, documented through statements.
How do I choose among providers?
The best program for your situation depends on your property, credit, leverage need and documents. A broker compares several wholesale lenders against your file and matches you to the program that fits. No single provider is the right answer for every borrower.
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, every file is underwritten individually, and nothing here is a commitment to lend.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages for self-employed and high-net-worth borrowers are arranged through wholesale lenders on primary residences, second homes and investment properties; every file is underwritten by the lender under its program 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
2. Sonoma State financial aid: Federal PLUS loans
3. Coe College financial aid: Federal Direct Parent PLUS loans
4. The College Investor: HELOC and student loans
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 as a Retiree · Best Asset-Based Cash-Out Refinance Program Without a Mortgage · Asset-Based Cash-Out Refinance Lenders on a Condo
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.