Expense Factor Shift On A Super Jumbo — The Quick Read: No, the expense factor itself doesn’t move because a loan gets bigger. It’s tied to the borrower’s business type and staffing, not the balance. What actually changes at super jumbo size is the review process — files above roughly $4,000,000 leave automated grids and go to manual, case-by-case underwriting, where documentation quality (especially a CPA-prepared ratio) matters more than at smaller sizes.
That’s the short version. The rest of this piece walks through the mechanics, where the standard percentages come from, when an accountant’s letter can override them, and how a self-employed borrower refinancing a large balance decides whether bank statements are even the right qualification path.
Key Terms Defined
Expense factor — the percentage of gross business deposits a lender assumes goes to overhead, leaving the remainder as qualifying income.
Bank statement loan — a mortgage that qualifies a self-employed borrower off 12 or 24 months of deposit history instead of traditional personal-income documentation.
Super jumbo — a loan size well above conventional and standard jumbo limits, generally starting somewhere in the $3,000,000 to $4,000,000 range depending on occupancy and program.
Case-by-case review — manual underwriting applied once a file exceeds a program’s automated approval threshold, typically above $4,000,000 in our network.
DSCR loan — a business-purpose loan for rental property that qualifies primarily on the property’s own rental income covering the payment, subject to lender guidelines, rather than on the owner’s personal deposits.
Asset allowance — an income method that divides a borrower’s liquid assets by a set number of months (36, 60, or 84) to produce a monthly qualifying figure instead of, or alongside, deposit income.
How The Expense Factor Actually Works
The expense factor is a haircut applied to business deposits, not to the loan amount. A lender adds up eligible deposits over the statement window, divides by the number of months, then applies the factor to estimate real take-home income. Scotsman Guide describes this as a standard practice across non-QM lending, where a lender uses a default percentage — often around 50% — unless a profit-and-loss statement or CPA letter supports something different.
Across the wholesale programs we place files with, the factor is tiered by business structure rather than loan size. A service business with no employees typically gets a lighter haircut applied to its deposits. A business with a small handful of employees usually sees a somewhat larger reduction. A business with a larger staff, or any company selling a physical product, is generally treated with the heaviest haircut of the group. None of those tiers shift because the loan happens to be larger or smaller.
Personal-account deposits are treated differently from business deposits. Because personal accounts are assumed to already reflect income after business costs are paid, they generally aren’t run through the same haircut. Transfers the borrower moves from their own business account into a personal account count in full — no factor applied — which matters for owners who sweep profit into a personal account each month rather than letting it sit in the business.
So What Actually Changes At Super Jumbo Size?
The review process changes, not the math. Once a bank-statement file crosses roughly $4,000,000, our network stops relying on standardized approval grids and moves the file to manual, case-by-case underwriting before submission. That’s true whether the property is a primary residence, a second home, or an investment property.
Above that line, credit expectations tighten. Programs generally want a 700 credit floor once a primary residence balance passes $3,500,000, or once a second home or investment property balance passes $3,000,000 — those are our network’s super-jumbo overlay thresholds. Housing history has to be clean (no late payments in 24 months), any past credit event needs 48 months of seasoning, and cash-out proceeds can’t be used to satisfy reserve requirements. Borrowers also need to be U.S. citizens or permanent residents, with no non-occupant co-borrowers and no rural property allowed above that overlay.
Leverage steps down as size increases, and it steps down before the file even reaches super jumbo territory. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Past $4,000,000, leverage in our network compresses further — typically around 65% purchase and rate-term, 60% cash-out, in the $4,000,000 to $5,000,000 range — and every one of those figures is subject to case-by-case review before submission, with no approval treated as guaranteed.
Second homes and investment properties run roughly five points lower than the primary-residence numbers at every size. An investment property in the $3,000,000 to $3,500,000 range, for example, typically tops out closer to 60% leverage across purchase, rate-term, and cash-out, again subject to full underwriting review.
None of that touches the expense factor’s percentage. It’s the surrounding conditions — score, seasoning, reserves, and manual review — that tighten as balances climb, which is the part of this question most explainers get backwards.
The CPA Letter — Where The Real Leverage Sits
A CPA-prepared expense ratio can replace the standard tiered factor. At super jumbo size, this document often becomes the most useful piece in the whole file. Say a borrower runs a consulting business with low overhead — lower than the default assumption. In that case, an accountant’s letter documenting the real ratio can boost qualifying income. This happens without any extra deposits showing up in the account.
There’s a documentation threshold, though. The letter has to specify an actual number and be dated before the loan closes; a narrative reference to “low overhead” without a stated percentage generally isn’t enough to move off the standard figure. Lenders want something they can underwrite, not an assumption. A profit-and-loss method is also available as an alternative path, generally capped at 80% of the income it shows, and used when deposits alone understate a business’s real cash flow.
For a borrower with lumpy or seasonal deposits — common in commission-based or project-based businesses — this override matters even more, because raw averages can misrepresent a business that’s actually healthy but uneven month to month.
Does A Refi Requalify Differently Than A Purchase?
Refinancing doesn’t change the expense factor mechanic, but it does force a fresh look at income at the moment the file is submitted. If revenue dipped since origination — common for a borrower coming off an interest-only period and heading toward a rate reset — the refi-qualifying income can come in lower than what supported the original loan, even with the same expense factor applied.
This is where asset-based paths become useful as a bridge. An asset allowance divides liquid assets by 36 months (when used to supplement deposit income and overall debt-to-income sits at or below 60%), by 60 months (supplemental, above 60% DTI), or by 84 months when used as a standalone income source or on any loan above $3,500,000. Retirement accounts count toward that calculation at 70%, rising to 80% once the borrower is 59.5 or older. Business funds, gifts, non-revocable trusts, unvested stock, and cryptocurrency don’t count at all.
Borrowers with deep liquidity have another option: an assets-only path. This method skips the debt-to-income calculation completely. To qualify, borrowers need U.S.-based liquid assets that equal the loan amount plus closing costs. They also need 60 months of coverage for any net loss on other residential properties they own. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
When The Better Answer Is DSCR Instead Of Bank Statements
Sometimes the expense factor question doesn’t matter at all. This happens when an investor refinances a rental property instead of a primary home. DSCR loans exist specifically for non-owner-occupied investment properties. Because they’re business-purpose investor loans, lenders review them differently than standard owner-occupied mortgages. Qualification mainly depends on whether the rental income covers the payment, subject to lender guidelines. Personal bank deposits matter much less here.
Why the difference? Non-owner-occupied rental credit counts as business-purpose lending under federal rules. The CFPB’s Regulation Z commentary explains this. It says credit used to buy, improve, or maintain rental property counts as business purpose — no matter how many units — as long as the property isn’t owner-occupied. Some investors don’t have income documents or deposit history that tell their full income story. For them, qualifying the property instead of the person often works better. This way, they skip the expense-factor conversation entirely. Lendmire’s complete DSCR loans guide explains how this qualification process works in more depth.
Most DSCR files use coverage ratios around 1.00x to 1.25x — that’s the typical program level. However, select lenders in the network will consider lower ratios if the borrower brings lower leverage or stronger credit to balance it out. This isn’t a guaranteed outcome. Every file still goes through full underwriting.
A Worked Look At The Difference
Picture a business owner refinancing a $4,200,000 primary residence, qualifying off 24 months of business bank statements with six employees, placing this borrower in the 50% expense factor tier. At the $4,000,000-plus size, leverage in our network is generally reviewed case by case, with figures in the neighborhood of 65% for a rate-and-term refinance and a 680+ credit floor as a starting reference — every number here reviewed individually before submission, never approved off a grid.
Now picture the same borrower refinancing a rental duplex worth about the same amount instead. Here, lease income comfortably covers the property’s payment — somewhere around a 1.2x ratio. On this rental file, the expense factor conversation may never even come up. That’s because qualification centers on the property’s coverage ratio, not the owner’s personal deposit history. This is the real fork to think through before picking a qualification path. It’s not about which number looks bigger — it’s about which underwriting question the file actually needs answered.
Files this large are always underwritten individually across our network, and the leverage bands above are ceilings for illustration, not commitments to lend.
Common Misconceptions
The idea that the expense factor gets stricter automatically as loans get bigger doesn’t hold up. Trade coverage and program guidelines both describe the factor as tied to business type and documentation, with loan size affecting the surrounding review — not the percentage itself.
Treating 50% as a fixed industry rule is another common error. It’s a default that shifts with third-party documentation, as Scotsman Guide notes in describing non-QM underwriting practice generally.
Bank statement math and DSCR math also aren’t the same tool. One converts personal or business deposits into an income figure through the expense factor; the other measures a property’s rental income against its own payment obligation and never touches the borrower’s personal deposits. Lendmire’s comparison of super jumbo bank statement documentation and its companion piece on setting the expense factor at large loan sizes both go deeper on how the CPA-override process plays out in practice.
Tax treatment on any refinance can depend on how funds are used and how the property is titled; investors should keep clear records and speak with a qualified tax professional before relying on a deduction.
Frequently Asked Questions
Does the expense factor percentage itself change once a loan crosses the super jumbo line? No. The percentage is set by business type and staffing, not loan size. What changes above roughly $4,000,000 is that the deal works to manual, case-by-case underwriting instead of an automated approval grid.
Can a CPA letter lower my expense factor on a large refinance? Yes, when the letter states an actual percentage and is dated before closing. A general statement about low overhead without a specific number generally won’t move the underwriter off the standard tiered figure.
What if my deposits dropped since I got the loan, and now I’m refinancing? That’s common coming off an interest-only period, and it can lower the refi-qualifying income even with the same expense factor applied. An asset allowance or assets-only path can sometimes bridge the gap for borrowers with sufficient liquidity.
Should I use bank statements or DSCR to refinance a rental property? If the property’s own rent comfortably covers its payment, DSCR often removes the expense-factor question entirely, since qualification runs on property income rather than personal deposits, subject to lender guidelines.
Do transfers from my business account into my personal account get the same haircut as raw business deposits? No. Transfers from the borrower’s own business into a personal account generally count at 100%, while raw business-account deposits get the applicable expense factor applied first.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Self-employed borrowers can compare both super jumbo programs on Lendmire’s self-employed mortgages page.
About Lendmire
As a DSCR and non-QM mortgage broker, Lendmire — NMLS# 2371349 — connects investors with wholesale lending channels across 40 markets, including Washington, D.C. The property’s rental income, not the borrower’s tax returns, is central to lender review, which works for self-employed operators and portfolios beyond four financed properties. 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 — Regulation Z § 1026.3 Exempt Transactions
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.
