The Quick Read: An asset-based mortgage is reviewed around the balances in your accounts, while a bank statement loan is reviewed around the deposits flowing through your business, so the right choice depends on whether your strength is a portfolio or steady cash flow, and on whether the home is a residence or a rental. Both sit outside standard agency underwriting. Both still require a full file, and neither is a no-documentation loan.
- Asset-based fits owners with large, seasoned balances and little documented income, such as after selling a business.
- Bank statement fits owners with strong, steady deposits and little in savings, because the business reinvests its cash.
- Rentals are often better served by a DSCR loan, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
- Tennessee does not change the program figures below, which are subject to underwriting through select programs.
The Honest Answer on Who Each Option Is For
Pick the asset-based mortgage if your wealth sits in accounts and your paperwork shows modest income. Pick the bank statement loan if your wealth is in the business and the deposits prove it. Most Tennessee owners lean clearly one way.
Some owners fit neither. A contractor who reinvests every dollar may have thin balances and uneven deposits. That owner may be better off with a different route, which a broker can talk through.
One definition first. “Asset-based mortgage” is not a standardized product name. Here it means a consumer mortgage that is reviewed against eligible assets. It does not mean commercial asset-based lending, which is borrowing against inventory or equipment for a business. Some people also use the phrase for DSCR loans, because the rental carries the file. That route gets its own section below.
Side-by-Side
The asset-based column reflects the guidelines Lendmire’s wholesale network places files under. The bank statement column shows published industry norms, which vary by program. Both are subject to underwriting.
| Factor | Asset-Based Mortgage | Bank Statement Loan (industry norms) |
|---|---|---|
| Review basis | Eligible assets, or assets turned into income | Average monthly deposits after an expense factor |
| Documentation | Account statements; no income documented on qualifier path | Typically 12–24 months of statements |
| Property types | Residence, second home; investment only on depletion path | Mostly owner-occupied; investment is program-dependent |
| Entity vesting | Individual borrower | Individual borrower on owner-occupied homes |
| Time-based requirements | 60-day asset seasoning on qualifier path | Months of statement history matter most |
| Reserves | None at or below 75% LTV on qualifier path | Varies by program and file |
| Biggest risk | Assets in ineligible forms | Gaps, lumps or transfers in deposits |
Key Terms Defined
Asset qualifier path: The loan is covered by eligible assets alone, and no employment or income is documented.
Asset depletion path: Usable assets are divided by 60 months to create a qualifying income. That income then runs through the debt-to-income test.
Debt-to-income (DTI): Your monthly debts, including the new housing payment, compared with your monthly qualifying income.
Expense factor: The share of business-account deposits a bank statement lender treats as business costs rather than income.
Seasoning: How long money must sit in an account before a lender counts it.
Non-QM: A mortgage outside standard agency underwriting that still has to show you can repay.
DSCR: A rent-to-payment ratio used on rental properties instead of your personal income.
How an Asset-Based Mortgage Works
There are two paths, and a borrower is on one at a time.
On the asset qualifier path, eligible assets, after the credit percentages, must equal or exceed the entire loan. Brokerage accounts, certificates of deposit, money market and savings count at 100%. Retirement accounts count at 90% under age 59½ and 100% after. Accounts combine.
Picture an owner who sold a company and wants an $800,000 loan. Say she holds $330,000 in brokerage accounts, $300,000 in a 401(k) and $200,000 in savings. She is under 59½. The brokerage counts at 100%, which is $330,000. The 401(k) counts at 90%, which is $270,000. The savings count at 100%, which is $200,000. That adds up to $800,000 of usable assets, so she is reviewed on assets alone. This is illustrative, and the lender’s own calculation governs.
On the asset depletion path, assets become income. Cash and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, retirement accounts at 70% at any age, and real-estate equity at 60%.
Take $1,500,000 in securities and $300,000 in cash. The securities count at 80%, which is $1,200,000. The cash counts at 100%, which is $300,000. That gives $1,500,000 usable. Divide by 60 months and you get $25,000 of monthly qualifying income. That income must carry the housing payment and your other debts through the DTI test.
Leverage differs by path. On the qualifier path, loans go up to 80% loan-to-value on a purchase and 75% on a refinance of a principal residence or second home. Loan amounts reach $4,000,000. On the depletion path, loans run $125,000 to $3,500,000. Principal residences and second homes go up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out. Investment property goes up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Cash-out proceeds never count as qualifying assets.
Credit and seasoning come next. The qualifier path has a 600 minimum score, 60 days of seasoning and two months of statements per qualifying account. The depletion path follows the lender’s matrix. It wants statements at least 120 days old plus one within 45 days. Sale-of-business, inheritance and settlement funds are excused from that seasoning. A first-time investor on the depletion path needs a 700 score.
The depletion path also has asset minimums. You need the lesser of $1,000,000 or 1.25 times the loan balance. When assets are your only income source, you need at least $250,000 liquid. Asset-derived income can instead supplement documented income up to a 45% DTI. In that case the minimum-assets rule is waived.
These are floors and ceilings, not offers.
When an Asset-Based Mortgage Is the Better Fit
It fits best when your balances are large and your documented income is not. Think of an owner who just sold a business, received an inheritance or settlement, or retired early.
It also fits when you want to live in the home. Most bank statement programs target owner-occupied purchases, and the asset path covers principal residences and second homes. Investment property is available only on the depletion path, at the lower leverage above.
Some cases lean on the path itself. A sale proceeds file can skip the usual seasoning on the depletion path. The qualifier path suits someone who can cover the whole loan with assets and prefers to document no income at all. That is a statement about income. The assets are fully documented.
The catch is eligibility. Cryptocurrency, precious metals, collectibles and pledged or borrowed funds are not published as eligible on either path. Business accounts count only to the extent of your ownership share, and they are not published as eligible beyond it. The documented route for the rest is to convert the funds into a seasoned cash balance in a regulated account. The lender then reviews the source.
Several asset types are flatly ineligible on the depletion path. Those are 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.
Across Lendmire’s wholesale network, the most common surprise is the down payment. Money used for closing is no longer sitting in the account to be counted. Owners who run the math on their full balance, then spend part of it, often come up short on the file.
When a Bank Statement Loan Is the Better Fit
It fits best when your cash flow is strong and your traditional personal-income documentation understates it. Business deductions can shrink the income a standard lender sees. Deposits show what actually came in.
A Scotsman Guide trade article describes the usual setup. A self-employed borrower with no W-2 supplies 12 to 24 months of personal or business statements. The lender applies a standard expense factor to business deposits, with 50% given as an example. A profit-and-loss statement prepared by a third-party tax professional is a common alternative. Actual factors vary by lender and business type.
Mechanically, the underwriter strips out transfers between your own accounts, refunds and loan proceeds. Eligible deposits are averaged into monthly income. If you own less than all of the business, income is prorated to your share. Then the new payment and your existing debts run through the DTI test.
This works well for an owner with modest savings and strong, consistent deposits. It works poorly with gaps, lumps, or deposits made mostly of transfers. Mixing business and personal money in one account makes the file harder to read. Lendmire’s piece How to Use a Personal vs Business Account for a Bank Statement Mortgage covers that decision.
Bank statement loans on investment property exist in some programs but are program-dependent. Each new mortgage also stacks against the same income base. That limits how many properties you can finance this way.
On an owner-occupied home, a bank statement loan is a full consumer mortgage. The CFPB’s ability-to-repay compliance guide lists self-employment among the employment types a creditor may consider. It also shows a third-party-prepared profit-and-loss statement can verify current income. So the file is documented, just differently.
A Tennessee Owner, Run Both Ways
Picture a Nashville-area owner who sold half of a service company and kept the rest. She has seasoned brokerage and savings balances, and a smaller stream of business deposits. She wants a second home.
Run the asset side first. Add her eligible balances at the credit percentages for the qualifier path. If the total meets or exceeds the loan, she can qualify on assets alone. If it falls short, she checks the depletion path, where usable assets divided by 60 months produce income that must carry the payment through DTI.
Then run the deposit side. Average her eligible deposits after the expense factor, then test DTI. Compare the two. Whichever gives the stronger file, with the better leverage and fewer documentation problems, is the better path.
Hybrids exist, with limits. On the depletion path, asset-derived income may supplement documented income up to a 45% DTI.
Tennessee does not change these figures. Lendmire’s consumer mortgage lending is licensed in 16 states, and Tennessee is one of them. State facts such as taxes or local prices are context, not program parameters.
Where DSCR Fits Instead
If the property is a rental, neither of these may be your best tool. 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 on business-purpose credit turns on the actual facts and stated purpose.
The practical consequence is simple. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal income is not the main test. Select lenders in the network also review sub-1.00 coverage, though leverage and terms adjust. Lendmire’s complete DSCR loans guide covers the mechanics.
For a business owner, a mixed approach is common. Use an asset-based or bank statement loan for a residence. Use DSCR for the rentals, so each property stands on its own rent. Keep records clear. Tax treatment varies; consult a qualified professional.
The Balanced Verdict
Ask where your strength lives. If it lives in accounts, start with the asset-based mortgage. If it lives in deposits, start with the bank statement loan. If it lives in a rental’s rent, look at DSCR.
Each has a weak spot. Asset-based loans can fail on ineligible or unseasoned assets, or on money you need for closing. Bank statement loans can fail on messy deposits, thin history or heavy existing debt.
Calculate both before you commit, and let the numbers pick. 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. Lendmire is a broker that places files with select lenders, and nothing here is a commitment to lend.
Frequently Asked Questions
Is an asset-based mortgage the same as a bank statement loan?
No. An asset-based mortgage counts your account balances, either to cover the loan outright or to create income over 60 months. A bank statement loan averages your deposits after an expense factor. Both are fully documented, and both depend on underwriting.
Do I have to sell my investments to use an asset-based mortgage?
No. The assets are counted, not liquidated. On the qualifier path, eligible balances at the credit percentages must equal or exceed the loan. On the depletion path, usable assets are divided by 60 months to produce income. Money used for down payment and closing no longer counts, so plan for that.
Can I combine assets and deposits?
Partly. On the depletion path, asset-derived income may supplement documented income up to a 45% DTI, subject to underwriting. A blend of assets and bank statements in a single qualifying calculation is not something this article can promise. Ask a broker to test your file both ways.
Which one gives me more qualifying income?
It depends on your profile. An owner with large balances and weak deposits usually gets more from assets. An owner with strong deposits and modest savings usually gets more from bank statements. Run both calculations on the same borrower and compare.
Can I use either one for a rental property?
Sometimes. Asset-based loans allow investment property only on the depletion path, at 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Bank statement programs on investment property are program-dependent. DSCR is built for rentals and qualifies primarily on the property’s rental income, subject to lender guidelines.
Lendmire’s asset-based mortgage in Tennessee page presents the program for Tennessee borrowers.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Scotsman Guide, Rev Up the Engine for Non-QM Lending
2. CFPB ATR/QM Compliance Guide
3. eCFR, 12 CFR 1026.3 (Reg Z exempt transactions)
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Asset Depletion vs Bank Statement Loan for a High-Net-Worth Buyer · How to Document a Bank Statement, 1099 or Asset Depletion Loan · Asset Depletion vs Bank Statement HELOC for an Owner Between Businesses
Guides: Asset-Based Mortgage in Tennessee
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.