The Quick Read: Yes. Through select programs, a Tennessee business seller can qualify on the sale proceeds, because the lender treats the cash as assets rather than income. Which path fits depends on the money and the property, and every file is fully underwritten and subject to lender guidelines.
- On the asset qualifier path, eligible assets must cover the entire loan, and no employment or income is documented.
- On the asset depletion path, usable assets are divided by 60 months into qualifying income.
- Only proceeds released into your own account count today. Escrow holdbacks, earn-outs and seller notes do not.
- You still document the assets with statements. It is not a no-doc loan, but it asks for no traditional personal-income documentation, pay stubs or employment verification.
- Tennessee does not change the underwriting, though it does change your after-tax cash.
Why a Business Sale Breaks Normal Underwriting
You just sold the company. Last year’s tax return shows income from a business you no longer own. This year’s paycheck is zero. Yet your bank balance is the largest it has ever been.
A traditional lender reads the first two facts and stops. It wants a job, two years of returns, or deposits from a running business. None of that describes you today.
Asset-based programs read the file differently. They ask whether the money in your accounts can carry the loan. That is a question a seller can answer well.
This is a consumer-purpose path for a home you will live in, either a principal residence or a second home. Across Lendmire’s wholesale network, a handful of lenders offer it through select programs. Lendmire is the broker. It arranges the loan, and the lender underwrites it.
Which Path Fits: Assets Cover the Loan, or Assets Become Income?
The two paths are different tests. A borrower is qualified on one path at a time, and the figures never blend.
| Factor | Asset qualifier path | Asset depletion path |
|---|---|---|
| Core test | Eligible assets cover the whole loan | Assets become monthly income |
| Income documented | None | Derived from assets |
| Debt-to-income test | Not used | Yes |
| Leverage | Up to 80% on a purchase, 75% on a refinance | Up to 80% on a purchase or rate-and-term; 60% on cash-out |
| Loan amounts | Up to $4,000,000 | $125,000 to $3,500,000 |
| Credit | 600 minimum | The lender’s matrix |
All figures are typical ranges through select programs, subject to underwriting. These leverage figures apply to a principal residence or second home.
The qualifier path suits a seller whose liquid balances are at least as large as the loan. The depletion path suits a seller who wants to keep more cash. Lendmire’s asset-based mortgage programs cover both, and the fit depends on your balances and the home.
How the Asset Qualifier Path Works
On this path, the assets after credit percentages must equal or exceed the entire loan amount. Here is how much of each balance typically counts:
- Brokerage accounts, certificates of deposit, money market and savings: 100%.
- 401(k) and IRA balances: 90% under age 59½, and 100% at 59½ or older.
- Accounts combine.
Here is an illustration. Say you want an $800,000 loan. You hold $330,000 in brokerage accounts (100% counts, so $330,000), $300,000 in a 401(k) while under 59½ (90% counts, so $270,000), and $200,000 in savings (100%, so $200,000). That is $800,000 of usable assets. On this example the file is reviewed on assets alone. The lender’s own calculation governs.
Seasoning is the waiting period that proves money is really yours. Here it is typically 60 days, with two months of statements for each qualifying account. The credit floor is 600 on this path, and reserves are generally not required at or below 75% loan-to-value. Above that, the lender sets them.
One note on cash-out. Whether cash-out proceeds are allowed on this path is set by the lender, so don’t plan around it.
How the Asset Depletion Path Works
Here your assets are converted into a notional monthly income. The lender takes your usable assets and divides by 60 months. That income then has to carry the housing payment and your other debts through the debt-to-income test.
The haircuts on this path are different from the qualifier path:
- Cash accounts and certificates of deposit: 100%.
- Securities: 80%.
- Private stock: 75%.
- Retirement accounts: 70% at any age.
- Real-estate equity: 60%.
Several things are not eligible: 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.
Run the shape on $1,500,000 in securities (80% counts, so $1,200,000) plus $300,000 in cash (100%). That is $1,500,000 usable. Divided by 60 months, it gives $25,000 of monthly qualifying income. That figure must then carry the housing payment and other debts. It is illustrative only.
The minimums are real. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan balance. They can never fall below $250,000 liquid when asset depletion is your only income source. A first-time investor on this path needs a 700 score, though that applies to investment property.
Here is the friendly part for sellers. Sale-of-business funds are excused from the depletion path’s seasoning rule. Statements for other funds still need to be at least 120 days old at application, plus the most recent one within 45 days. Sale proceeds that landed recently are the exception to that rule, not the rule itself.
You also don’t have to spend the portfolio down. The assets are used to qualify, and you are not required to liquidate them.
Is the Money Yours Yet? Three Buckets
Lenders care less about the headline sale price than about what you control today. Sort your proceeds into three buckets.
| Bucket | Example | Counts today? |
|---|---|---|
| Released and in your account | Cash wired to a personal account | Yes, once documented |
| Held back | Escrow holdbacks | Generally no |
| Contingent or deferred | Earn-outs, seller notes | Generally no |
The IRS defines an installment sale as one where at least one payment arrives after the tax year of the sale. That is why a deferred payment is a promise, not spendable cash. If your buyer owes you money over three years, only what has actually landed counts as an asset now.
Money still in the company’s operating account is another trap. It belongs to the entity, not to you personally. Once proceeds are distributed to your personal account, they can become eligible, subject to program rules. Bring the distribution paperwork with you.
Money sitting with an exchange intermediary, or locked inside a retirement account, isn’t freely usable until it is released. Cryptocurrency, 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. Pledged or borrowed funds don’t count either.
What to Put in the Folder
Underwriters want a clear trail from the sale to your account. Gather these before you apply:
1. The purchase agreement for the business sale.
2. The closing or funds-flow statement.
3. The wire confirmation showing funds landing in your personal account.
4. Statements for each qualifying account, covering the required months.
5. Entity distribution records, if the money passed through the company first.
Large deposits need an explanation backed by paper. For a business sale, the closing statement does most of that work. Keep the deposit in its own account for a while if you can, so the trail stays easy to read.
Another point that catches buyers off guard: your down payment can’t be counted twice. Records must also be specific to you as an individual. Money you will need for closing costs and the down payment still has to be documented, even when the loan itself is not leaning on that cash for income.
A Tennessee Seller, Step by Step
Picture a Tennessee owner who sold a distribution company. The sale closed, the buyer wired the cash to the seller’s personal account, and the seller wants a primary residence. This is illustrative only.
Step one is sorting the money. Most of the price landed. A smaller piece sits in escrow, and a smaller earn-out is still contingent. Only the landed cash goes into the file.
Step two is choosing a path. If the landed money, after the credit percentages, covers the whole loan, the asset qualifier path may fit and no income is documented. If the seller wants a smaller down payment and a larger cushion left over, the depletion path may fit. Then the 60-month math decides whether the debt-to-income test works.
Step three is the paper trail. The seller assembles the sale documents and the statements. The lender then reviews credit, assets and the property.
A decision shortcut: if you want to keep the most cash, test the depletion path. If your liquid balances are far larger than the loan, test the qualifier path first. A broker who sees many lenders’ guidelines can run both and tell you which clears.
What Is and Isn’t Different in Tennessee
The program figures do not change by state. A Tennessee borrower gets the same parameters above, subject to underwriting. Lendmire’s consumer lending is licensed in 16 states, and Tennessee is one of them.
Where Tennessee matters is your after-tax cash. The Tennessee Department of Revenue says the Hall income tax was repealed for tax periods beginning January 1, 2021 or later. For an individual resident, that means the state doesn’t add its own income tax on investment income. If the business was sold through an entity, ask your CPA about any entity-level state taxes. Tax treatment varies, so consult a qualified professional.
This matters for the loan in a simple way. A lender sees your gross deposit. You may owe federal tax on that money. Keep a tax reserve in your plan so the balance you show is the balance you can actually keep.
When the Property Is a Rental Instead
Many sellers plan to buy a rental after an exit. That is a different loan. Rental financing is business-purpose DSCR financing, which qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Proceeds still matter there, since they fund the down payment, closing costs and reserves.
The consumer rules and the business-purpose rules separate by purpose. Credit for a non-owner-occupied rental is generally treated as business-purpose rather than consumer credit. A 2-4 unit house-hack that you will occupy is handled differently, so it is not automatically a DSCR file.
Within the asset-based program, the depletion path can also be used on investment property. Leverage there is lower, up to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Still, if a rental already is reviewed on its rent, asset depletion adds little. Match the program to the purpose.
Edge Cases That Trip Sellers Up
- Earn-outs and seller notes. They help your net worth but not your qualifying assets until paid.
- Tax bill before the cash. Depreciation recapture can be reported in the year of sale even when payments come later, per IRS Publication 537. That can squeeze liquidity.
- Consulting agreements. If you stay on as a paid consultant, that income may supplement your file. On the depletion path, asset-derived income can supplement documented income up to a 45% debt-to-income ratio, and the minimum-assets rule is waived.
- Credit. The 600 floor is a minimum, not a promise. Housing history is typically 0x30x12, with one late payment reviewed case by case. A housing event needs 4 years of seasoning on the depletion path.
Mistakes We See Sellers Make
- Assuming the sale price equals usable cash.
- Leaving proceeds inside the old company account.
- Moving large sums around right before applying, which muddies the trail.
- Forgetting that qualifying assets and closing cash come from the same pool.
- Counting the tax bill as spendable money.
Key Terms Defined
Asset qualifier path: A route where eligible assets, after credit percentages, cover the entire loan with no income documented.
Asset depletion path: A route that divides usable assets by 60 months to create qualifying monthly income.
Haircut: The share of an asset’s balance a lender discounts because the asset can lose value or is hard to access.
Seasoning: The time money must sit in an account so a lender knows where it came from.
Earn-out: Part of a sale price paid later, only if the business hits agreed targets.
Debt-to-income ratio: Your monthly debts divided by your monthly income, used to test whether a loan is affordable.
Frequently Asked Questions
Is there a waiting period after I sell my business?
Not a fixed one on the depletion path, where sale-of-business funds are excused from the usual seasoning. The qualifier path generally wants 60 days of seasoning and two months of statements for each account. Either way, you need the sale paperwork showing where the money came from. Subject to underwriting.
Can I use escrowed funds or an earn-out?
Not until they are released into your own account. Escrow accounts are not eligible on the depletion path, and contingent payments are promises, not cash. Once the money lands and is documented, it can count.
Should I just buy with cash instead?
That is your call, and it depends on your other plans for the money. Many sellers prefer to keep cash invested and liquid. An asset-based mortgage lets the assets qualify the loan without forcing you to spend them down. Talk through taxes and liquidity needs with a qualified professional.
Can I refinance later when my income resumes?
Yes, many borrowers revisit financing once income is documented again. Terms depend on your credit, property and the programs available then. Nothing here commits a lender to refinance.
Does the lender run a credit check?
Yes. Credit is reviewed on both paths, with a 600 minimum on the qualifier path and the lender’s matrix on the depletion path. Multiple bankruptcies are not eligible. Approval is never promised.
Next Steps
Start by sorting your proceeds into the three buckets, then gather the sale documents and statements.
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 details are subject to underwriting and not a commitment to lend.
Lendmire’s asset-based mortgage in Tennessee page presents the program for Tennessee borrowers.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Investors who want the broader program framework can review how DSCR loans work.
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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
1. IRS Publication 537 – Installment Sales
2. Tennessee Department of Revenue – Hall Income Tax
This article is part of Lendmire’s asset-based mortgage program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a New Mexico Trust Beneficiary Qualify for a Mortgage on Trust Assets? · Can a Business Owner Use Company Cash to Qualify for an Asset-Based Mortgage? · Can a Georgia Trust Beneficiary Qualify for a Mortgage on Trust Assets?
Guides: Asset-Based Mortgage in Tennessee
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.