The Quick Read: It depends on how the lender classifies the home, because an asset-based mortgage is a consumer loan placed on principal residences and second homes, with investment property allowed only on the asset depletion path, so a house you will not live in needs an occupancy review first. Your assets can carry the loan, but the occupancy question comes before the asset math.
- Your assets can qualify you without documented employment income, but the assets themselves are fully documented.
- A home your parent lives in, and you do not, is not your principal residence or second home on its face.
- The asset depletion path lists investment property as an eligible occupancy, at lower leverage than a primary home.
- A parent who truly cannot qualify alone may have a better route in an agency family-purchase program.
- Every file is underwritten individually, and program figures are ceilings and floors, not offers.
What Is an Asset-Based Mortgage, Exactly?
An asset-based mortgage is reviewed around what you have saved instead of what you earn. It suits retirees, people who sold a business, heirs, and households living off a portfolio. The balances are large and the paychecks are small or missing.
This is not commercial asset-based lending, which secures business credit against inventory or receivables. This is a home loan to a person, secured by the house.
Across Lendmire’s wholesale network, it comes in two forms, and a borrower is reviewed on one path at a time.
- Asset qualifier path. Your eligible assets, after the credit percentages below, must equal or exceed the entire loan amount. No employment or income is documented.
- Asset depletion path. Your eligible assets, after haircuts, are divided by 60 months into a monthly qualifying income. That income must carry the housing payment and your other debts through the debt-to-income test.
Lendmire is the broker. It arranges these loans through select lenders, and the lender underwrites and approves. Consumer mortgage lending is licensed in 16 states, and New Mexico is one of them.
Can a Parent Live in the Home You Finance?
Here is the plain answer: you can finance a home your parent occupies only if the lender’s occupancy rules allow it, and the rules are written around your use of the property. Both paths are built around a principal residence or a second home. A second home is generally a place you occupy part of the year, not one a relative lives in full time.
A house where a parent lives full time and you do not is neither of those on its face. On the asset depletion path, investment property is an eligible occupancy, but with lower leverage than a primary home. Whether a parent’s house gets reviewed that way depends on the lender and the file.
Tell your broker the plan at the start. Misstating who will live in the home is the fastest way to turn a good file into a bad one, and lenders can treat it as misrepresentation. Occupancy declarations are signed statements, so they should match the facts.
If you will actually live there part of the year, or you plan to move in, that is a different conversation. Say so, and let the lender classify the home against the real plan.
How Does the Money Work on Each Path?
The leverage and the assets that count differ on each path. Keep the tables separate, because the two never blend.
Leverage (subject to underwriting, through select programs):
| Path and occupancy | Purchase | Refinance |
|---|---|---|
| Qualifier, principal residence or second home | Up to 80% | Up to 75% |
| Depletion, principal residence or second home | Up to 80% | 80% rate-and-term, 60% cash-out |
| Depletion, investment property | Up to 65% | 65% rate-and-term, 60% cash-out |
Qualifier-path cash-out terms are set by the lender and are not published. Loan amounts run up to $4,000,000 on the qualifier path and from $125,000 to $3,500,000 on the depletion path.
What counts, by path:
| Asset | Qualifier path | Depletion path |
|---|---|---|
| Cash, savings, money market | 100% | 100% (cash accounts) |
| Certificates of deposit | 100% | 100% |
| Brokerage and securities | 100% | 80% |
| Retirement accounts | 90% under 59½, 100% after | 70% at any age |
| Private stock | Not listed | 75% |
| Real-estate equity | Not listed | 60% |
Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. The documented route is to convert them to a seasoned cash balance in a regulated account, with the lender reviewing the source. Custodial accounts, foreign funds, cash on hand and stock options are also off the depletion list.
What Does the Arithmetic Look Like?
These examples are illustrative. The lender’s own calculation governs.
On the qualifier path, picture an $800,000 loan. You hold $330,000 in brokerage accounts, which count at 100%, or $330,000. You hold $300,000 in a 401(k) while under age 59½, which counts at 90%, or $270,000. You hold $200,000 in savings, which counts at 100%, or $200,000. That is $800,000 of usable assets, enough to qualify on assets alone.
On the depletion path, take $1,500,000 in securities. At 80% that counts as $1,200,000. Add $300,000 in cash at 100%, and you have $1,500,000 usable. 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 debt-to-income test.
One practitioner point: depletion has floors. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They are never below $250,000 liquid when depletion is your only income source. Asset income can also supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived in that case.
Whose Assets Count When It Is a Family Purchase?
The borrower’s own assets count, in the borrower’s own name. If the assets sit in your account, you qualify on them. If they sit in a parent’s account, the parent is the one who qualifies, and then the loan is the parent’s loan.
Most programs we place files with review who is on the loan and who holds the assets. Each is a different structure.
| Structure | Whose assets qualify | Watch-outs |
|---|---|---|
| Loan in your name alone | Yours | Occupancy review; you carry all liability |
| Parent as sole borrower | Parent’s | Parent’s age, credit and assets drive the file |
| Parent and you together | Depends on lender | Both sign; both are liable |
| Gift of funds toward cost | Gift treatment varies | Needs sourcing; not every program accepts it |
Whether combined assets pool across borrowers is a lender-by-lender call. Ask before you move any money. Moving funds between family members can trip the seasoning rules, so keep a paper trail.
Seasoning is the waiting period an account must show before a lender counts it. On the qualifier path, expect 60 days of seasoning and two months of statements for each qualifying account. On the depletion path, statements must be at least 120 days old at application, plus the most recent statement within 45 days. Sale-of-business, inheritance and legal-settlement funds are excused from that seasoning.
The assets are documented on both paths. Qualifying on assets means no employment or income documentation on the qualifier path. It never means no documentation.
For a related angle, see Lendmire’s piece How to Use Trust Assets to Qualify on an Asset Depletion Mortgage.
Credit and Eligibility
The qualifier path publishes a 600 minimum credit score. The depletion path follows the lender’s score and loan-amount matrix. A first-time investor on the depletion path needs a 700 score. Housing history of 0x30x12 is the norm, and one 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible, and a housing event needs four years of seasoning on the depletion path.
On the qualifier path, no reserves are required at or below 75% loan-to-value. Above that, the lender sets them. The depletion path has no published reserve months.
Those are guidelines, not promises. Credit is still pulled and reviewed.
Is There a Better Route When the Parent Cannot Qualify Alone?
Sometimes. Fannie Mae, a government-sponsored mortgage buyer, has a path for exactly this family. Its Selling Guide occupancy section treats a child buying for a parent as the owner-occupant when the parent is unable to work or lacks the income to qualify. This is Fannie Mae’s rule for loans it buys, not a feature of an asset-based program. It exists as the closest purpose-built option for a child buying a home a parent will live in.
That route generally means owner-occupied pricing treatment, and that is the point. An asset-based mortgage can be a different tool for a different problem. Which one wins depends on your assets, your parent’s income, and how the lender classifies the occupancy.
A third route is DSCR. 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 federal rule behind that distinction is a business-purpose exemption in Regulation Z, and the official commentary says there is no precise test for primary purpose. In practice, a home bought as housing for a parent starts to look like a personal purpose, which undercuts the premise of a business loan. A DSCR loan is for a real rental to an unrelated tenant. Our complete DSCR loans guide explains how that product works.
| Route | Best for | Main catch |
|---|---|---|
| Asset-based mortgage | You have assets and little documented income | Occupancy must fit the program |
| Agency family purchase | Parent cannot qualify alone | Parent must be unable to work or lack income |
| DSCR loan | A true rental to a tenant | A parent living there generally does not fit |
| Cash | You want no loan | Ties up your liquid assets |
What Are the Real Risks?
The biggest risk is drawing down your own liquidity. Qualifying assets must stay in place through review, and after closing you still need a cushion. A portfolio of securities can fall in value, and that changes what counts.
A second risk is liability. If the loan is in your name, you owe it whatever your parent can contribute. Plan for the day your parent cannot help.
A third is the plan changing. If a parent moves out and you want to rent the home, that is a refinance or new-loan conversation. Check the occupancy terms in your documents first.
Tax treatment varies, so consult a qualified professional before relying on any deduction.
Key Terms Defined
- Asset qualifier: the path where eligible assets cover the entire loan amount and no income is documented.
- Asset depletion: the path that divides usable assets by 60 months to create qualifying income.
- Seasoning: the length of time money must sit in an account before a lender counts it.
- Haircut: the percentage of an asset’s balance that a lender refuses to count.
- Occupancy: how the home will be used, such as a principal residence, second home or investment property.
- Loan-to-value (LTV): the loan amount as a share of the home’s value.
- DSCR: a rental-property ratio that compares the property’s rent to its monthly debt payments.
Who This Fits
This route fits you if your balances are large and your documented income is thin. It fits better if the home matches a classification the program supports. It fits worst if the real plan is a house for a parent who will live there rent-free while you live elsewhere. That calls for a direct occupancy conversation before any application.
A practical order of operations:
1. Decide who will live in the home and for how long.
2. List accounts, owners and balances, with statements in hand.
3. Ask which path and occupancy classification the lender would use.
4. Compare the agency family route and cash if your parent cannot qualify.
5. Confirm gifts and any parent assets in advance.
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.
Frequently Asked Questions
Can my parent live in a home I finance with an asset-based mortgage?
Only if the lender’s occupancy rules allow it, so ask before applying. Both paths are built around a principal residence or second home, and the depletion path also lists investment property. A home a parent occupies full time and you do not needs an occupancy review.
Can I use my parent’s assets to qualify?
Typically, assets must belong to a borrower on the loan. If a parent’s assets will be used to qualify the file, the parent is usually a borrower. Whether assets pool across borrowers is a lender decision, so confirm it before moving any money.
Do I have to sell investments?
Not necessarily. Securities count at 100% on the qualifier path and 80% on the depletion path, so you can qualify while keeping them invested. The funds you use for down payment and closing still need documented sourcing.
Does it work for a second home?
Yes, second homes are eligible on both paths, with up to 80% on a purchase. A second home is a place you use yourself, not a relative’s full-time residence. Eligibility is subject to underwriting.
Does my parent have to be on the loan or title?
Not always, but each choice has consequences. Being on the loan makes a person liable, and being on title gives ownership rights. Agree on both with the lender and a qualified professional before you apply.
Lendmire’s asset-based mortgage in New Mexico page presents the program for New Mexico 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
1. Fannie Mae Selling Guide B2-1.1-01, occupancy types
2. CFPB – Regulation Z §1026.3, business-purpose exemption
3. Cornell LII – Regulation Z Official Interpretations
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is an Asset-Based Mortgage Reported to Credit Bureaus Like Any Other Mortgage? · Does a Securities-Backed Line of Credit Hurt Your Asset-Based Mortgage Application? · Can You Get an Asset Depletion Mortgage After a Foreclosure or Short Sale?
Guides: Asset-Based Mortgage in New Mexico
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.