The Quick Read: Yes, through select asset-based programs a Tennessee buyer can count IRA balances toward qualifying without taking a withdrawal, because the lender reads the statement balance and nothing in the account is sold, moved, or frozen, subject to underwriting. Across the wholesale network, the IRA counts in two different ways, and a third use of it does require a distribution.
- Asset qualifier path: IRA balances count at 90% under age 59½ and 100% at 59½ or older, and eligible assets must cover the entire loan.
- Asset depletion path: retirement balances count at 70% at any age, then divide by 60 months into qualifying income.
- Down payment and closing costs: IRA money generally cannot fund these without a distribution.
- Rental purchases: a DSCR loan leans on the property’s rent, so the IRA mostly shows reserves.
- Tennessee: the program figures do not change by state.
Do You Have to Withdraw From the IRA to Qualify?
No. Qualifying on assets is a calculation, not a withdrawal plan. The lender looks at your statements, applies a percentage to each account type, and uses the result to decide whether the file works. The money stays invested.
The confusion comes from two meanings of the word income. One is money an account already pays you, such as monthly distributions. The other is income the lender calculates from a balance you have not touched. Asset-based programs use the second meaning. That is why a retiree with a large untouched IRA and almost no documented income can still be a real candidate.
Here is the plain comparison of the three ways IRA money gets used in a purchase.
| Route | Withdrawal needed? | What it does |
|---|---|---|
| Asset qualifier path | No | Balance counts toward covering the loan |
| Asset depletion path | No | Balance becomes calculated monthly income |
| Down payment or closing costs | Generally yes | Cash must leave the account |
The first two routes leave the IRA intact. The third does not, and a distribution can carry penalty and tax consequences that depend on your age and account type. Tax treatment varies; consult a qualified professional before moving any retirement money.
Key Terms Defined
Asset qualifier path: a way to qualify where your eligible assets, after the credit percentages, equal or exceed the entire loan amount. No employment or income is documented.
Asset depletion path: a way to qualify where usable assets are divided by 60 months to produce monthly 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 income.
Vested: money that is fully yours, with no employer condition left on it.
Seasoning: how long funds have sat in your account before the lender counts them.
DSCR: debt service coverage ratio, meaning a rental’s income compared with its full monthly payment. It is used on investor loans.
Non-recourse loan: a loan where the lender can look only to the property, not to you personally, if it goes unpaid.
Which Path Fits an IRA Holder?
Pick the path first, then the numbers. A borrower is qualified on one path at a time, and the two tables never blend.
The qualifier path suits a buyer whose liquid wealth is larger than the loan. Brokerage accounts, certificates of deposit, money market, and savings count at 100%. IRA and 401(k) balances count at 90% if you are under 59½ and at 100% once you are 59½ or older. Accounts combine.
Here is an illustrative case. Say the loan is $800,000. You hold $330,000 in brokerage accounts, $300,000 in an IRA, and $200,000 in savings, and you are under 59½. The brokerage and savings count in full. The IRA counts at 90%, which is $270,000. Together that is $800,000 of usable assets, so the file is reviewed on assets alone, subject to underwriting. Nobody touched the IRA.
The depletion path suits a buyer who wants to turn a portfolio into income. Cash and certificates of deposit count at 100%. Securities count at 80%, private stock at 75%, real-estate equity at 60%, and retirement accounts at 70% at any age. The usable total is divided by 60 months.
Run it for an IRA-heavy borrower. A $1,000,000 IRA counts at 70%, which is $700,000. Divide by 60 and you get roughly $11,667 of monthly qualifying income. That income must carry the housing payment and your other debts through the DTI test. The lender’s own calculation governs, and the example is illustrative only.
The depletion path has floors that surprise people. Qualified assets must be at least the lesser of $1,000,000 or 1.25 times the loan. When asset depletion is your only income, you also need at least $250,000 in liquid assets. If the asset income only supplements documented income, it can do so up to a 45% DTI, and the minimum-assets rule is waived.
Leverage, Loan Size, Credit, and Seasoning
Both paths are consumer mortgages through select programs, and every figure below is a ceiling or floor, not an offer.
On the asset qualifier path, leverage runs up to 80% loan-to-value on a purchase and 75% on a refinance of a principal residence or second home. Loans go up to $4,000,000. The credit floor is 600. Reserves are not required at or below 75% loan-to-value, and above that the lender sets them.
On the asset depletion path, a principal residence or second home can go up to 80% on a purchase or rate-and-term refinance and 60% on a cash-out refinance. An investment property is limited to 65% on a purchase or rate-and-term refinance and 60% on a cash-out. Loans run from $125,000 to $3,500,000. Credit follows the lender’s matrix, and a first-time investor on this path needs a 700 score. Cash-out proceeds never count as qualifying assets.
Seasoning differs by path. The qualifier path wants 60 days of seasoning and two months of statements for each qualifying account. The depletion path wants statements at least 120 days old plus the most recent statement within 45 days. Funds from the sale of a business, an inheritance, or a legal settlement are excused from that depletion seasoning.
Documentation never disappears. The assets are documented on both paths. What falls away on the qualifier path is traditional personal-income documentation, pay stubs, and employment verification.
Do Account Types and Age Change Anything?
Age matters on the qualifier path and not on the depletion path. Under 59½, an IRA counts at 90% there. At 59½ or older it counts at 100%. On the depletion path the 70% treatment applies at any age.
Account type matters less than ownership and access. A traditional, Roth, SEP, or SIMPLE IRA held in your own name is your asset. The lender wants statements that show your name and the vested balance. Funds that are not yet vested, or that you cannot reach, are generally excluded. Assets already producing income used elsewhere in the file are not counted twice.
Some things do not count on either path. Custodial accounts, deferred compensation, escrow accounts, foreign funds, cash on hand, stock options, and non-vested restricted stock units are out on the depletion path. Cryptocurrency, precious metals, collectibles, and borrowed or pledged funds 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.
Programs also differ lender to lender. Across the wholesale network, the same IRA can be counted differently depending on the program, so a headline percentage on one page never confirms your result.
What About the Federal Rule and Pledging the IRA?
Nothing in the federal framework forces you to liquidate. The CFPB’s ability-to-repay rule lets a lender base its decision on income, on assets other than the home being financed, or on both. The same text lists amounts vested in a retirement account among the assets a lender may consider.
Showing a balance is different from pledging it. The IRS lists using an IRA as security for a loan as a possible prohibited transaction. A lien, hold, or collateral assignment on the account would cross that line. A statement that simply proves the balance does not. Keep the account in place, in your name, and do not sign anything that attaches it to the loan.
Tennessee Buyers: Does the State Change the Answer?
Not the program figures. The percentages, leverage ceilings, seasoning, and credit floors above are the same in every state. Lendmire’s consumer mortgage lending is licensed in 16 states, Tennessee among them, and the loan is arranged through select lenders in its network. The brokerage does not lend or approve.
The Tennessee buyers who tend to fit are the ones with large balances and thin documented income. Think of a retiree living on a portfolio, someone who sold a business, or a household that received an inheritance or settlement. A traditional lender may turn these buyers down because the income line on the application is small. Across the network, an asset-based mortgage program reads the same file by its balances.
Where you buy changes the property and the price, not the way your IRA counts.
When the Buyer Is the IRA Itself
This is the edge case that costs people the most. If a self-directed IRA buys the rental, it is the IRA that borrows, not you. Any financing generally must be non-recourse, because you cannot personally guarantee a loan to your own IRA. Disqualified persons include the account owner and certain family members. Directed IRA, an IRA custodian, explains that a personal guarantee on an IRA-owned property loan counts as a prohibited extension of credit.
The penalty for getting it wrong is severe. If an IRA owner engages in a prohibited transaction during the year, the account stops being an IRA as of January 1 of that year. It is treated as distributing all assets at fair market value on that date.
A standard loan to you personally, or to your LLC subject to lender program eligibility, is a different product. Most investor loans carry a personal guarantee, so they do not fit an IRA-as-buyer structure. Whether any non-recourse option exists depends on the lender guidelines in the network at the time. The classic mistakes are mixing the two: signing a guarantee, using the property personally, or paying its costs from personal funds when the IRA owns it.
Buying a Rental: Where the IRA Fits
For a rental purchase, the IRA usually plays a supporting role. The asset-based programs described above are consumer mortgages. Investment property is eligible only on the depletion path, at 65% on a purchase and 60% on a cash-out.
A rental buyer often has a better route. 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. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Your IRA balance then matters for reserves and liquidity, not as income.
That has a real advantage. You can leave the IRA invested and still show verified liquidity, instead of taking a distribution just to prove you have cash.
Think of it as two separate strategies. In the first, you or your LLC buys with a DSCR loan and the IRA shows reserves. In the second, the IRA buys with non-recourse financing, which fewer lenders offer and which carries prohibited-transaction risk. Keep them apart.
What the Lender Will Want to See
Plan your paperwork around the path you choose.
- Statements for every IRA you want counted, showing your name and the vested balance.
- Two months of statements per qualifying account on the qualifier path.
- Statements at least 120 days old plus one within 45 days on the depletion path.
- Documentation of the source of any large recent deposit.
- A credit profile that meets the path’s floor, 600 on the qualifier path or the lender’s matrix on the depletion path.
A lender questions an account when a balance arrived recently without a paper trail, when ownership is unclear, or when the funds look pledged or borrowed. Joint accounts and inherited IRAs are reviewed case by case by the lender.
When This Approach Does Not Fit
Be honest with yourself about three cases. If your IRA is small relative to the loan, the math will not clear, especially on the depletion path with its minimum-assets rule. If you need the IRA cash for the down payment, you are back to a distribution. And if you want the IRA itself to buy and borrow, you are in a narrow structure with its own risks.
Fallbacks exist. You can combine IRA balances with brokerage, savings, and certificates of deposit. You can use a seasoned cash balance converted from other assets. Or you can pursue a different program altogether.
Frequently Asked Questions
Can I use a Roth IRA?
Yes, a Roth IRA held in your own name is your asset, and it counts like other retirement accounts on the paths above, subject to underwriting. The lender looks at ownership, the vested balance, and access. The percentage depends on the path, not on whether the account is traditional or Roth.
Do I need to be 59½ or retired?
No. Age changes the qualifier-path credit, 90% under 59½ and 100% after, but it is not a cutoff. On the depletion path, retirement accounts count at 70% at any age. You do not need to be retired or taking distributions.
Can I use IRA money for my down payment?
Generally not without a distribution. The IRA can count toward qualifying while staying in place, but cash for the down payment and closing costs has to come from somewhere you can actually withdraw it. Plan that money separately, from other seasoned funds.
Can I combine the IRA with Social Security or a pension?
Yes, on the depletion path. Asset-derived income may supplement documented income up to a 45% debt-to-income ratio. When it supplements, the minimum-assets rule is waived.
Can I pledge the IRA as collateral?
No. Showing a balance on a statement is fine. A lien, hold, or collateral assignment on the account is not.
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. Programs change, every file is underwritten individually, and nothing here is a commitment to lend.
For a Tennessee buyer, the sharpest question is rarely whether the IRA counts, but whether you need it as income, as proof of liquidity, or not at all.
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 traditional personal-income documentation understates their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB – 12 CFR 1026.43 (ability-to-repay rule)
2. IRS – Retirement topics: Prohibited transactions
3. Directed IRA – Prohibited transactions in a self-directed IRA
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 Michigan Buyer Qualify for a Mortgage on IRA Assets Without Withdrawals? · How Much Does a Retiring Physician Need in Assets to Qualify for a Mortgage? · Can a New Mexico Widow Qualify for a Mortgage on Life Insurance and Retirement 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
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.