The Quick Read: The cash comes from the home’s equity, not from the size of the asset balance. On the asset depletion path, the lender caps cash-out at 60% loan-to-value on a principal residence, second home or investment property, then subtracts the payoff of existing liens and closing costs, and what remains is the cash, subject to underwriting. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
- Assets decide whether the loan is reviewed. The home’s appraised value and the leverage cap decide how much cash comes out.
- On the asset depletion path, usable assets are divided by 60 months to create qualifying income.
- Cash-out proceeds never count as qualifying assets on that path.
- Tennessee has no Texas-style home-equity cap, so the limit comes from the loan program.
- On the asset qualifier path, cash-out terms are set by the lender and are not published.
Tennessee homeowners with large brokerage or retirement balances and little documented income run into this question often. A bigger portfolio does not mean a bigger check. The house is the collateral, and the house sets the ceiling.
How Is the Maximum Cash Calculated?
The maximum cash is the leverage cap times the appraised value, minus the payoff of every existing lien and the closing costs. On the asset depletion path, that cap is 60% on a cash-out refinance. The loan must also pass the qualification test, and on this path the test is the assets.
Take the steps in order:
1. Start with the appraised value of the home.
2. Multiply by the cap for the occupancy and transaction type.
3. Subtract the payoff of the first mortgage and any second liens.
4. Subtract closing costs.
5. What is left is the cash to the borrower.
Run it on a home valued at $1,000,000. At 60% loan-to-value, the maximum new loan is 60% of that value. If existing liens already consume most of that, little cash is left. A home with a small mortgage leaves much more room. Lenders on this path lend between $125,000 and $3,500,000, so the loan amount must also fall inside that band, subject to underwriting.
Equity is the first ceiling. Loan size is the second. The assets are the third, and they bind only when they fall short of the program minimums. In practice, equity binds first on most files.
What Is the Difference Between the Two Asset Paths?
Across the wholesale network, there are two separate paths, and a borrower is reviewed on one at a time. Never blend their numbers.
| Factor | Asset Qualifier | Asset Depletion |
|---|---|---|
| How assets are used | Cover the whole loan | Become monthly income |
| Income documented | None | Derived from assets |
| Refinance leverage | Up to 75% | Cash-out up to 60% |
| Cash-out terms | Set by lender, not published | 60% on all occupancies |
| Loan range | Up to $4,000,000 | $125,000 to $3,500,000 |
The asset qualifier path requires eligible assets, after the credit percentages, to equal or exceed the entire loan amount. Leverage runs up to 80% on a purchase and 75% on a refinance, through select programs. Whether cash-out proceeds are allowed on that path is the lender’s call. Treat any cash-out on the qualifier path as something to confirm file by file, not something to plan around.
The asset depletion path is the one that answers this title. Usable assets are divided by 60 months, and the result must carry the full housing payment and other debts through the debt-to-income test. That test is why this path is income-light, not income-free.
How Do Assets Count on the Depletion Path?
Each asset class counts at a percentage of its balance, and the total divided by 60 becomes the qualifying income. Cash and CDs count at 100%. Securities count at 80%. Private stock counts at 75%. Retirement accounts count at 70% at any age. Real-estate equity counts at 60%.
Here is the sanctioned shape of the math. 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%. Usable assets total $1,500,000. Divided by 60 months, that is $25,000 of monthly qualifying income. That income then carries the housing payment and other debts through the debt-to-income test. This is an illustration, and the lender’s own calculation governs.
Not everything qualifies. 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 are not eligible on this path. Crypto, precious metals and collectibles are not published as eligible on either path. The documented route is converting them to a seasoned cash balance in a regulated account, with the source reviewed by the lender.
Minimums apply as well. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. Where depletion is the only income source, liquid assets cannot fall below $250,000. If asset income only supplements documented income, it can do so up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
Which Ceiling Binds First?
Equity binds first for most Tennessee homeowners, and the minimum-assets rule binds first for borrowers with thin portfolios. Check both before assuming a number.
Picture a retiree with a $900,000 home and $450,000 of liens. At 60% loan-to-value, the cap on the new loan sits at 60% of $900,000. The existing liens eat most of that room before closing costs. No amount of extra brokerage balance changes it. More assets would not raise the cash.
Now flip it. A homeowner with a paid-off $1,400,000 house has plenty of equity room. But if the loan target is $800,000 and usable assets sit near $700,000, the 1.25x minimum fails. The assets bind, not the house.
This is the part many borrowers miss. The assets prove repayment. The house limits the check.
What Does Taking Cash Out Do to the Assets?
Cash-out proceeds never count as qualifying assets on the depletion path. So the cash you pull out cannot be used to prop up the file. Plan the qualification on the balances you already hold.
The assets are documented, not waived. The path calls for statements 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 qualifier path uses a shorter 60 days of seasoning with two months of statements per account. Either way, this is documented lending. Qualification runs on documented assets under the applicable program, subject to lender guidelines.
The depletion is a calculation only. The borrower does not have to sell or drain the accounts. Keep the accounts intact and the statements clean, and avoid large unexplained transfers before applying, because they invite questions.
What Does Credit Look Like?
Credit follows the lender’s score and loan-amount matrix on the depletion path. A first-time investor on that path needs a 700 score. Housing history is 0x30x12, though 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. The 600 floor belongs to the qualifier path only.
What Is Different About Tennessee?
Tennessee does not impose a Texas-style home-equity cap, and the limit comes from the loan program. That reading comes from a secondary explainer on Tennessee cash-out rules, and borrowers should confirm it with their closing agent.
The state cost that does apply is the mortgage tax. The Tennessee Department of Revenue lists the rate at $0.115 per $100 of indebtedness, with the first $2,000 exempt. The UT County Technical Assistance Service confirms the tax falls on the debtor. It runs on the full new loan, because a new deed of trust is recorded, not just the cash extracted. A larger cash-out loan carries a slightly higher tax. Small, but not zero.
The program figures themselves do not change by state. Lendmire’s consumer lending is licensed in 16 states, and Tennessee is one of them.
Is This a Consumer Loan or a Business Loan?
This is a consumer mortgage on a home. Federal ability-to-repay rules let a creditor rely on income or assets, with the home’s value excluded, and require verification from reliable third-party records. The CFPB’s Ability-to-Repay provision says this plainly. That is why statements are reviewed account by account.
A rental property is a different animal. 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. Investment property can still run through the asset depletion path at the 60% cash-out cap, but a pure rental cash-out often fits DSCR better. Lendmire’s complete DSCR loans guide walks through that route.
Asset Depletion or Another Cash-Out Route?
The right route depends on occupancy and how the borrower documents. Run the same file through several programs, because the qualifying basis changes the outcome.
| Route | Best fit | Reviewed on |
|---|---|---|
| Asset depletion cash-out | Cash-heavy, income-light owner | Usable assets over 60 months |
| Bank statement program | Self-employed with deposits | Documented deposits |
| DSCR cash-out | Rental property | Property rent covering the payment |
| HELOC | Owner wanting a second lien | The HELOC lender’s rules |
For larger balances, see Lendmire’s piece Can an Equity-Rich Homeowner Take a Large Cash-Out Refinance?.
Maximum Versus Prudent
The maximum is a ceiling, not a target. A cash-out loan replaces the existing mortgage with a larger one, and the new loan must be carried by income derived from assets. Pull the full amount, and the debt-to-income test gets tighter at the next refinance. Pull less, and the file has room.
Common uses include a down payment on a rental, renovations or reserves. Keep in mind that the accounts used to qualify stay tied to the file until the loan is paid off or refinanced. Tax treatment varies; consult a qualified professional.
Key Terms Defined
Asset depletion: A method that divides usable assets by 60 months to create monthly qualifying income.
Asset qualifier: A path where eligible assets must cover the entire loan amount and no income is documented.
Loan-to-value (LTV): The new loan balance divided by the appraised value.
Seasoning: The period funds must sit in an account before they count.
Usable assets: The balance after each asset class is reduced by its percentage.
Frequently Asked Questions
Can I use IRA or brokerage balances?
Yes, through select programs. On the depletion path, securities count at 80% and retirement accounts at 70% at any age. On the qualifier path, brokerage counts at 100%, and retirement counts at 90% under 59½ and 100% after, subject to underwriting.
Does the cash-out reduce my qualifying assets?
No, the accounts stay in place. But the cash you receive never counts as a qualifying asset on the depletion path, so it cannot be added back to meet the minimums.
Is there a cash-out cap?
On the depletion path, 60% loan-to-value on a principal residence, second home or investment property. On the qualifier path, cash-out terms are set by the lender and are not published, so confirm them for the specific file.
Does a bigger portfolio mean more cash?
No. A larger portfolio helps the file qualify, but equity sets the check. Past the program minimums, extra assets add nothing to the cash.
Is this different from a HELOC?
Yes. A HELOC is a second lien under its own lender’s rules. An asset depletion cash-out replaces the first mortgage with a new loan, and qualifying income is derived from assets.
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. Program figures are ceilings and floors, not offers, and every file is underwritten individually.
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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References
1. ProperRefi — Tennessee cash-out refinance rules
2. Tennessee Department of Revenue — recordation tax rates
3. UT County Technical Assistance Service — Mortgage Tax
4. CFPB — 12 CFR 1026.43 (Ability-to-Repay)
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 Qualifier vs Asset Depletion for a Cash-Out Refinance · How Much Down Payment Does an Asset Depletion Jumbo Loan Need? · Does an Asset Depletion Loan Require Any Income?
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
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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.