Bank Statement Lender Applies The Expense Factor And Cpa Letter — The Quick Read: A bank statement lender totals eligible deposits, then applies a fixed expense ratio — commonly 20%, 40%, or 50% depending on business type and staff count — to estimate how much of that cash flow is real income. A CPA letter replaces that fixed ratio with a documented, business-specific figure when the borrower’s actual overhead runs leaner than the default assumption. The lower the certified ratio, the higher the qualifying income, which can directly change the loan size a borrower can support.
This matters most for founders, physicians, attorneys, and other self-employed borrowers whose traditional personal-income documentation understate real cash flow. A bank statement loan skips the tax return and reads the deposits instead — but the expense ratio decides how much of those deposits actually count.
Key Terms Defined
Expense factor — the fixed percentage a lender subtracts from gross deposits to estimate the business’s operating costs before counting the rest as income.
CPA letter — a signed statement from a qualified preparer certifying a business’s actual expense ratio, used to replace the lender’s default assumption with a documented number.
Qualifying income — the monthly income figure a lender uses to size the loan, calculated after the expense factor (or CPA ratio) is applied to average deposits.
Deposit aggregation — the process of totaling eligible business deposits across the statement period while excluding transfers, refunds, and other non-recurring items.
How The Expense Factor Actually Works
Across the wholesale bank statement programs Lendmire places files with, the expense factor isn’t a single flat number — it moves with the business itself. A service business with no employees typically sits at a 20% factor. A business with one to five employees typically runs at 40%. A business with six or more employees, or any product-based operation, typically lands at 50%. Some lenders will instead accept a profit-and-loss statement, capped at 80%, in place of a fixed ratio.
The math is simple once the ratio is set: average monthly deposits, minus the expense factor, equals qualifying income. A borrower whose business deposits average a given monthly figure at a 50% factor ends up with half that amount as qualifying income. Drop that same business into the 20% bucket and qualifying income roughly doubles — which is the entire reason the CPA letter conversation exists.
Two documentation details shape this before any ratio gets applied. First, the lender needs 12 or 24 consecutive months of statements — never a pieced-together transaction history. Second, business statements require the borrower to show at least 25% ownership of the entity. Money the borrower transfers from their own business account into a personal account counts at 100%, with no haircut, which is why some borrowers structure how they move cash before applying.
What A CPA Letter Actually Does
A CPA letter doesn’t remove the expense factor. Instead, it replaces the lender’s default assumption with a documented, business-specific ratio. When a business’s real overhead runs well below the fixed bucket it would otherwise land in, a signed letter from a qualified preparer can swap in an accountant-provided ratio in place of the standard 20/40/50% tiers.
This only makes sense when there’s a real gap. A consultant running a lean, no-overhead practice who would otherwise land in the 20% service-business tier already has favorable treatment — a CPA letter adds little there. But a business that would otherwise get bucketed into the 50% tier because of headcount or product mix, when its actual costs run far lower, is exactly where the letter pays for itself.
The letter typically needs to state:
- The business’s actual expense ratio for the period the bank statements cover
- Confirmation that the preparer reviewed the business’s financial records
- Confirmation that the preparer completed or filed the borrower’s most recent business tax return
Across the non-QM market, lenders commonly accept several types of preparers: a CPA, an enrolled agent, a CTEC-certified tax preparer, or a tax attorney. Lenders also tend to want the letter dated close to the application. Market practice puts that window around 120 days, but exact dating rules vary by program. So borrowers should confirm the specific lender’s requirement before assuming any date will hold.
Here’s a constraint people often overlook: CPAs follow professional-standards rules that limit what they’re willing to sign. The AICPA states clearly that CPAs can only offer the kind of assurance found in audits, reviews, or agreed-upon procedures. They can’t make open-ended promises about a borrower’s ability to repay. If your CPA balks at broad “certification” language, you’re not stuck. Most lenders will accept a narrower letter — one that stays within those factual bounds while still stating the actual expense ratio.
Business Statements vs. Personal Statements
Personal bank statement programs usually skip the expense factor step. Why? Deposits in a personal account already reflect the business’s costs — those costs came out before the borrower moved the money. Business statements are different. They always need some kind of expense treatment, because gross business deposits haven’t had operating costs subtracted yet.
Some lenders will run both document sets — personal and business — and qualify the borrower using whichever one produces the stronger number. This matters most for a borrower who pays themselves irregularly out of the business. Why? The “cleaner” personal-account number can sometimes beat the business-statement math, even after the expense factor is applied to the business side.
Sizing And Leverage On A Bank Statement File
Bank statement programs Lendmire’s wholesale network places range from $300,000 to $30,000,000, spread across two structures. A portfolio non-QM program carries files to $6,000,000. A separate bank portfolio program, built for larger twelve-month-statement files, runs its own leverage ladder all the way to $30,000,000 — 65% loan-to-value to $5,000,000, 60% to $10,000,000, and 55% up through $30,000,000, with interest-only capped at 60% or the band’s own ceiling, whichever is lower.
Leverage on a primary residence steps down as the loan size climbs: as high as 90% at the smallest sizes, tightening to 85% around the $1,000,000-$2,000,000 range, then to 80% near $2,000,000-$3,000,000, and 75% at the top credit tier up to $4,000,000. Above $4,000,000, every file gets reviewed case by case before submission — never assume a flat “up to” figure applies once a loan crosses that line. Second homes and investment properties typically run about five points lower than the primary-residence ceiling at any given size.
Credit requirements shift with size too. The portfolio program typically works with a 660 credit floor. Above the super-jumbo line — $3,500,000 on a primary residence, $3,000,000 on a second home or investment property — the floor typically rises to 700, alongside tighter overlays: a clean housing-payment history, 48-month seasoning on any credit event, and no cash-out proceeds counting toward reserves.
Debt-to-income on these files typically runs as high as 50%. Reserve requirements typically scale with loan size — 3 months of reserves at smaller balances, 6 months into the $1,500,000 range, and 9 months above that, plus additional months for each other financed property the borrower carries.
Lendmire’s team sees the same pattern show up again and again on files with mixed business and personal deposits. When a borrower’s business has genuinely low overhead — no staff, a service model, minimal fixed costs — the CPA letter is usually the single most valuable document in the file. That’s because the gap between the default tier and the actual ratio can be wide enough to change how much loan the file supports. But on files where the business already sits in a lean default tier, or where actual costs run close to the fixed assumption anyway, the letter rarely moves the number enough to justify the accountant’s time.
Why Some Investors Skip This Entirely
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.
Say you’re an investor buying or refinancing a rental property. In that case, the expense factor and CPA letter conversation may not even apply. DSCR lenders mainly look at whether the property’s own rental income covers the payment, subject to lender guidelines. They don’t focus on your personal deposits, expense ratios, or traditional income documents. That’s a very different path to qualifying than the one above. Before you assume a business-statement file is your only option, it’s worth learning how DSCR loans compare to bank statement loans.
Say an investor’s business would land in a high expense-factor tier — for example, a product-based business with several employees. That investor may find a simpler path: qualify the rental property itself instead of the business’s deposits. This sidesteps the whole calculation. Anyone weighing the two paths side by side can start with Lendmire’s complete DSCR loans guide to see how property-level qualification actually works.
Tax treatment can depend on how loan proceeds are used and how the property is titled; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Some investors also ask whether a lower expense ratio can be requested without a CPA at all — Lendmire’s breakdown of how the expense factor can replace a CPA letter walks through that specific scenario.
For deeper background on the mechanics discussed here, see CFPB Regulation Z 2026 Threshold Notice.
Frequently Asked Questions
Can a borrower just pick whichever expense ratio helps them most?
No. The ratio is either the lender’s fixed tier based on business type and headcount, or a documented CPA-certified figure — there’s no self-selected middle option. A borrower can request a CPA letter to try to qualify for a lower ratio, but the number still has to be certified by a qualified preparer, not chosen freely.
Does a low CPA-certified ratio guarantee loan approval?
No. A lower ratio raises qualifying income, which can strengthen the file, but approval still depends on credit, reserves, property, and full underwriting review, subject to lender guidelines. It’s an input to the file, not a decision.
What happens if the CPA-certified ratio turns out to be wrong?
This is a real risk, not a formality. CPAs who certify figures outside what their professional standards allow expose themselves to liability, which is why many preparers stick to narrow, fact-based letters rather than broad guarantees. Borrowers should expect their accountant to push back on overly promotional language.
Is a CPA letter required on every bank statement loan?
No. It’s optional and only useful when there’s a meaningful gap between a business’s actual costs and the fixed tier it would otherwise fall into. Many files close on the default 20/40/50% ratio without ever involving an accountant.
Do bank statement loans use net profit like a tax return does?
No. The calculation starts from gross deposits, not net profit, then applies the expense factor. A business with strong revenue and heavy tax deductions can produce solid qualifying income through bank statements even when its tax return shows a modest bottom line.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Reach the team at 828-256-2183 or request a quote directly to walk through a specific scenario.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
About Lendmire
Lendmire (NMLS# 2371349), a non-QM mortgage broker serving investors in 40 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
Lendmire’s Top Mortgage Workplace recognition is documented by Scotsman Guide 2025 Top Mortgage Workplace and Scotsman Guide 2026 Top Mortgage Workplace.
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References
1. AICPA & CIMA — CPA Comfort Letter Guidance
2. CFPB Regulation Z 2026 Threshold Notice
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.
