The Quick Read: It depends on how the home is used: on a principal residence or second home, a cash-out refinance can run on the asset depletion path at up to 60% loan-to-value, subject to underwriting, while a rental usually fits property-rent financing better, and the home’s own equity never counts as a qualifying asset. The title leaves out the first question a processor asks: is this the borrower’s primary residence, a second home, or a rental? The answer decides which program, which leverage cap, and which documents apply.
- On a principal residence or second home, the depletion path allows a cash-out refinance at up to 60% loan-to-value, through select programs.
- On an investment property, the depletion path also tops out at 60% on a cash-out refinance, but most Tennessee rentals fit property-rent financing better.
- Cash-out proceeds and the equity in the subject home never count as qualifying assets.
- The asset qualifier path, where assets cover the whole loan, publishes a 75% ceiling on a refinance, but its cash-out terms are set by the lender and not published.
Which Tennessee Home Are We Talking About?
Occupancy is the first fork on every asset-based file. The program figures do not change because the property sits in Tennessee. Across the wholesale network, the borrower’s use of the home sets the leverage cap, and that cap matters most on a cash-out.
| Tennessee property use | Asset depletion cash-out leverage | Usual fit |
|---|---|---|
| Principal residence | Up to 60% LTV | Asset depletion path |
| Second home | Up to 60% LTV | Asset depletion path |
| Investment property | Up to 60% LTV | Depletion path, or DSCR |
Those are ceilings, not offers. Each file is underwritten individually, and the lender’s own calculation governs. Lendmire’s consumer mortgage lending is licensed in 16 states, Tennessee among them. Lendmire acts as the broker and places the loan with select lenders in its network.
Compare the cash-out cap with the purchase and rate-and-term caps on the same path. On the depletion path, a principal residence or second home goes up to 80% on a purchase or rate-and-term refinance. An investment property goes up to 65% on those same transactions. The cash-out cap drops to 60% for all three occupancies. Many borrowers expect cash-out to behave like a rate-and-term refinance, and it does not.
How the Asset Depletion Path Turns a Portfolio Into Income
The depletion path takes eligible assets, applies a haircut to each type, and divides the usable total by 60 months. The result is a monthly qualifying income. That income runs through the debt-to-income test, alongside the new housing payment and any other debts.
A borrower is qualified on one path at a time. The network has two asset-based paths, and they work differently.
- Asset qualifier path. Eligible assets, after the credit percentages, must equal or exceed the entire loan amount. No employment or income is documented. Loans run up to $4,000,000.
- Asset depletion path. Assets become imputed income. Loans run from $125,000 to $3,500,000. A debt-to-income test applies.
Asset-based does not mean undocumented. Both paths document every account that counts. A lender has to verify what it relies on, so statements are required. A reader who hears “no income documentation” should hear “no personal income documentation.” The assets are fully documented.
This is a consumer mortgage when the home is a residence, so the usual consumer disclosures apply. Programs change, and every file goes through underwriting.
What Counts, and What Doesn’t
Each path credits a different share of each balance. Do not mix the two tables.
| Asset | Depletion path credit | Qualifier path credit |
|---|---|---|
| Cash accounts / savings | 100% | 100% |
| Certificates of deposit | 100% | 100% |
| Brokerage / securities | 80% | 100% |
| Private stock | 75% | Not published |
| Retirement accounts | 70% at any age | 90% under 59½, 100% at 59½+ |
| Real-estate equity (other property) | 60% | Not published |
The depletion path does not accept custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, non-vested restricted stock units, or funds from non-regulated financial companies.
Cryptocurrency, precious metals, collectibles, business accounts beyond the borrower’s ownership share, 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. The lender then reviews the source of those funds. Plan for that step before application, not during it.
Real-estate equity in the table means equity in other property the borrower owns. The equity in the Tennessee home being refinanced is a different matter, and the next section covers it.
Can You Cash Out a Tennessee Home on the Depletion Path?
Yes, on the depletion path for a principal residence, second home or investment property, at up to 60% loan-to-value. Three things make a cash-out harder than a rate-and-term refinance on the same file.
First, the leverage cap is lower. The cash-out ceiling is 60%, against 80% for a residence rate-and-term on the same path.
Second, the equity you are pulling out cannot qualify you. The equity in the home securing the loan is not an asset for this purpose. This is the most common confusion on these files. A borrower with a paid-off Tennessee home has real wealth, but none of it counts as depletable income. The qualifying pool has to come from outside the subject property.
Third, cash-out proceeds never count as qualifying assets on the depletion path. A borrower cannot take cash out and count that cash toward the pool. Closing costs and any reserves the lender asks for come out of the pool first.
The qualifier path is a separate question. Its published refinance ceiling is 75%. Whether cash-out proceeds are allowed on that path, and at what leverage, is set by the lender and is not published. Any program that says otherwise is describing its own rules. If a borrower’s assets cover the whole loan and the goal is cash-out, the answer is a lender-by-lender question for the broker to run down.
Market context points the same direction. Scotsman Guide reports that non-QM loans made up about 5% of recent annual originations, up from about 3% four years earlier. The same piece lists property-rent qualification and asset depletion as separate non-QM use cases. They are separate tools, and cash-out questions get answered differently on each.
Does Tennessee Change Anything?
The program figures do not change by state. A Tennessee borrower sees the same haircuts, the same 60-month divisor, and the same leverage caps as a borrower anywhere else in the 16-state consumer footprint. State facts are context, never program parameters.
What changes is the closing cost side. A state recording tax adds to closing costs on a Tennessee deed of trust, so the cash-out check shrinks by that amount and by the other closing costs. Confirm the figures with the title company on your file. Local home prices in Nashville, Memphis, Knoxville or smaller towns affect appraised value, and appraised value drives how much 60% leaves available.
The paid-off-home case deserves a flag. A refinance on a home with no mortgage is still a cash-out refinance. It does not move to the higher rate-and-term cap.
Worked Example
The lender’s own calculation governs. These are the shapes the network uses, and they are illustrative.
Depletion path. A borrower holds $1,500,000 in securities, which count at 80%, or $1,200,000. The same borrower holds $300,000 in cash, which counts at 100%, or $300,000. Usable assets come to $1,500,000. Divide by 60 months and the result is $25,000 of monthly qualifying income. That income then carries the full housing payment and all other debts through the debt-to-income test.
This borrower still has to clear the minimum-assets rule. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. When asset depletion is the only income source, liquid assets can never be below $250,000. Asset-derived income may also supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Qualifier path. A borrower seeking an $800,000 loan holds $330,000 in brokerage accounts, which count at 100%. They hold $300,000 in a 401(k) under age 59½, which counts at 90%, or $270,000. They hold $200,000 in savings, which counts at 100%. Usable assets total $800,000, which equals the loan amount, so the borrower is reviewed on assets alone, subject to underwriting.
Both borrowers still face credit review. The qualifier path publishes a 600 minimum score. The depletion path follows the lender’s matrix. A first-time investor on the depletion path needs a 700 score. Housing history is 0x30x12, and a single 30-day late in the last twelve months is considered case by case. Multiple bankruptcies are not eligible. A housing event needs four years of seasoning on the depletion path.
What Underwriters Ask For on a Cash-Out File
Document the pool before the file goes in. Gaps in statements are the main reason these files stall.
1. Statements for every account that counts. On the qualifier path, that means two months per account and 60 days of seasoning. On the depletion path, statements must be at least 120 days old at application, plus the most recent statement within 45 days. 2. Seasoning exceptions. Sale-of-business, inheritance and legal-settlement funds are excused from the depletion-path seasoning rule. Expect the lender to ask for paperwork proving the source. 3. Ownership proof. Accounts held in an LLC or a business name usually do not count beyond the borrower’s ownership share. 4. Retirement account type and the borrower’s age. The credit percentage changes at 59½ on the qualifier path. 5. A transfer plan. If funds are moving into the account used to qualify, the new balance needs seasoning of its own. 6. Appraisal access and title information on the Tennessee home.
Moving funds right before application is the common failure point. A transfer that resets the statement clock can push the file past the seasoning window.
When Asset Depletion Is the Wrong Tool
A borrower who can pass the test is not always best served by it. The right choice depends on the property and the goal.
| Situation | Better-fit tool | Why |
|---|---|---|
| Rental with solid rent | DSCR loan | Property rent carries the payment |
| Income shown by bank deposits | Bank statement program | Documents deposits, not assets |
| Assets cover whole loan | Qualifier path | No income test |
| Small cash need, keeping existing loan | Home equity line | A separate product from a bank or credit union |
A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. For a Tennessee rental, that is usually the cleaner file, and the borrower’s portfolio stays out of the qualifying math. The complete DSCR loans guide covers how coverage is measured and which properties fit.
A home equity line is a different product from a first-lien refinance. It leaves the existing first mortgage in place and, for many borrowers, is the better choice when the existing loan is worth keeping. Compare it with the cash-out figure before assuming a refinance wins.
Does the Rental Case Get Treated Differently?
Yes. A rental held for business use is reviewed differently from an owner-occupied home. The business-purpose exemption sits in 12 CFR 1026.3, and the CFPB commentary says the creditor decides the primary purpose of the loan case by case. The commentary also sets unit-count tests for owner-occupied rentals. The loan’s purpose matters more than the property type.
That is why most Tennessee rentals move to DSCR financing and not to asset depletion. The depletion path will take an investment property, but on a cash-out it sits at 60% loan-to-value, and the borrower’s personal assets and debt-to-income carry the file.
Common Mistakes on Cash-Out Files
- Counting the home’s own equity. It does not qualify the loan. The pool has to come from outside the subject property.
- Assuming the purchase cap applies. A cash-out on the depletion path tops out at 60%, whatever the occupancy.
- Moving funds just before applying. A fresh transfer can break the statement window.
- Treating crypto or business accounts as eligible. They are not published as counting at a percentage on either path.
- Selling assets to qualify. Depletion is a calculation. Nothing is sold, frozen or pledged.
Key Terms Defined
Asset depletion path: A qualifying method that divides usable assets by 60 months to create monthly income, which then runs through a debt-to-income test.
Asset qualifier path: A method where eligible assets, after credit percentages, must cover the entire loan amount, with no income documented.
Haircut: The share of a balance that does not count, such as the 20% reduction applied to securities on the depletion path.
Cash-out refinance: A new first mortgage larger than the payoff of the old one, with the difference paid to the borrower.
Seasoning: The length of time funds must sit in an account, shown by statements, before the lender counts them.
Debt-to-income ratio: Monthly debts, including the new housing payment, divided by monthly qualifying income.
Frequently Asked Questions
Can I cash out a paid-off Tennessee home using asset depletion?
Yes, on the depletion path at up to 60% loan-to-value on a principal residence, second home or investment property, subject to underwriting. A paid-off home still counts as a cash-out refinance. The qualifying pool has to come from assets other than the home itself.
Do I have to sell my investments to qualify?
No. Asset depletion is a qualifying calculation. The lender counts the assets, applies the haircuts, and divides by 60 months. Nothing is sold, frozen or pledged, though the accounts must be documented with statements.
Can the cash I take out count toward my qualifying assets?
No. Cash-out proceeds never count as qualifying assets on the depletion path. The equity in the subject home does not count either. Closing costs and any required reserves come out of the pool.
Does a Tennessee rental qualify the same way?
It can run on the depletion path at up to 60% on a cash-out, but a rental is business-purpose, and most fit DSCR financing better. DSCR qualifies primarily on rental income covering the payment, subject to lender guidelines.
Is the 60% cash-out cap the same on every asset-based program?
No. The 60% figure belongs to the depletion path. The qualifier path publishes a 75% refinance ceiling, but its cash-out terms are set by the lender and not published. Lenders’ programs differ. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
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. Reach the team at 828-256-2183 or request a quote.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s asset-based mortgage programs page.
Lendmire’s asset-based mortgage in Tennessee page presents the program for Tennessee 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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
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. scotsmanguide.com: Which Groups Are Driving Non QM Lending
2. 12 CFR 1026.3, Exempt Transactions (eCFR)
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 an Asset Depletion Mortgage Works · How Big Can an Asset Depletion Jumbo Loan Be? · How Asset Depletion Income Differs on a Primary Home vs Rental
Guides: Asset-Based Mortgage in Tennessee
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.