The Quick Read: Yes, usually, as long as the money is yours, has been converted to dollars, and can be traced from its source to the closing account. Business funds work when the borrower owns the account. Stock and crypto work once they are sold and the proceeds are documented.
- Business funds: accepted on most files when the borrower owns the business account and can show the ownership.
- Stock sales: accepted as documented proceeds, with the sale confirmation and the matching bank deposit.
- Crypto: accepted only after it is sold for dollars and the trail from exchange to bank is clear.
- No asset goes in as-is. Shares, coins and inventory are not a down payment. Dollars are.
- The loan still has to work. A bigger down payment helps, but leverage caps, credit floors and reserves still apply.
What Counts as a Down Payment Source?
The test is simple: verified dollars, in the borrower’s control, from a source that is not borrowed. Across the wholesale network Lendmire works with, most purchase files land at 75%–80% LTV, which means 20%–25% down. Select high-leverage programs reach 85% LTV on a purchase, with roughly a 700+ credit score. Those are typical ranges, subject to lender guidelines, and every file is underwritten individually.
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Lenders care about where the money came from for three reasons. They want to rule out money laundering. They want to rule out a straw borrower, where someone else is really funding the deal. And they want to confirm the cash was not borrowed on an unsecured basis.
Lenders in the network differ on how long funds must sit in an account. Some want a short seasoning period. Others focus on sourcing any large deposit instead. The strictest overlays want both. Planning for the stricter version avoids surprises.
Key Terms Defined
- Down payment: the share of the purchase price you pay in cash, set by the loan-to-value limit.
- Cash to close: the down payment plus closing costs, prepaid items and escrows.
- Reserves: liquid money left over after closing, held to cover the payment if rent stops.
- Seasoning: how long funds have sat in your account before the lender counts them.
- Sourcing: documenting where a deposit came from.
- Proceeds: the dollars you receive after selling an asset, before any tax owed.
Can Business Funds Be Used for the Down Payment?
Yes, on most files, when the borrower owns the account. Lenders typically want two or more months of business bank statements, proof of ownership such as articles of organization or an operating agreement, and a short note explaining the transfer. A sole owner is the easiest case. A partial owner may need a letter from the other owners. If the account belongs to a different entity than the borrower, expect more questions.
Two details trip people up. First, a business line of credit is borrowed money, not business funds. Many lenders in the network will not accept unsecured borrowed funds toward the down payment, so treat that as a lender-specific question and ask before you draw. Second, pulling operating capital out of a company is a business decision. A large transfer is visible on the statements, and a lender may reasonably ask whether the business can still operate afterward.
Picture an investor who owns a landscaping company and wants to move cash from the business account into a personal account before closing. The cleaner path is a documented owner distribution with a short letter of explanation, made early enough to appear on statements. A last-minute transfer with no explanation is the version that draws a request for more paperwork.
Lendmire’s piece Can You Use Gift or Business Funds for a P&L Loan Down Payment? covers the sourcing logic for self-employed borrowers in more depth.
Can Stock Sales Pay the Down Payment?
Yes. Sell the shares, let the sale settle, and move the proceeds into the bank account that will fund the closing. The file typically needs the brokerage sale confirmation or statement, then the bank statement showing the matching deposit. That pairing is what lets an underwriter follow the money in a straight line.
Timing matters more than most investors expect. Stock does not become cash the instant you click sell. It settles, then transfers, then lands in the bank. Prices can also move between application and closing, so selling early locks in the dollar amount you plan to use.
Remember that a sale at a gain creates a tax bill. Set that cash aside separately, or the net proceeds may fall short of the down payment you planned. Brokers report stock sales on Form 1099-B, which feeds Form 8949. Lenders generally ask for broker records rather than tax forms, but the forms corroborate the sale. Tax treatment varies; consult a qualified tax professional before relying on any particular result.
Can Crypto Sales Pay the Down Payment?
Yes, after the crypto is sold for dollars. No program takes coins as the down payment itself. The workable path is to sell on a regulated U.S. exchange, wire the dollar proceeds to your bank, and keep the records that connect each step.
The usual crypto file includes the exchange transaction history, the bank statement showing the deposit, and evidence that the coins were bought with your own funds. A coin sitting in a self-custody wallet or at an offshore exchange is much harder to document. The trail is thin, and an underwriter reads thin trails as risk. If your holdings sit there, move them to a regulated exchange and sell well before you need the cash.
The IRS treats selling digital assets for dollars as a taxable event, with gain or loss recognized on the sale. One year or less of holding is short-term, and more than one year is long-term. Reinvesting the proceeds into a rental does not make the sale tax-free. The same warning as above applies: tax treatment varies, so consult a qualified professional.
Which Fund Sources Work, and What Do You Show?
| Source | Generally accepted? | What to document | Main risk |
|---|---|---|---|
| Business account | Yes, if you own it | Statements, ownership proof, letter | Looks like borrowed money |
| Stock sale | Yes, as proceeds | Sale confirmation, bank deposit | Price swings, settlement delay |
| Crypto sale | Yes, after sale to dollars | Exchange history, bank deposit | Weak trail, wallet origin |
| Cash-out from another rental | Yes | Prior loan closing records | Seasoning on the original loan |
| Unsecured personal loan | Typically no | Not accepted by most lenders | Counts as borrowed funds |
Cash-out refinance proceeds from another rental are a common alternative. Across most of the network, cash-out tops out around 75% LTV, and about 6 months of seasoning is the common expectation. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The Sell-to-Close Sequence
Work backward from your contract’s closing date, and leave margin at each step:
1. Decide which asset to sell, weighing the tax cost and market upside you give up.
2. Sell and let it settle. Stocks and crypto both need time before the dollars are usable.
3. Transfer to your bank in a single, clean wire where possible.
4. Document each step: confirmation, transfer record, deposit statement.
5. Write a short letter of explanation for any large deposit.
6. Stop moving money. Extra transfers between accounts create new questions.
An unexplained deposit, a sale that settles after your deadline, and crypto arriving from an unverifiable wallet are the three most common ways this goes wrong. Each is avoidable with an early start.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Reserves Are Not the Down Payment
This is the confusion that costs investors money. Counting toward reserves and being usable at closing are different tests. Reserves are liquid money you hold after closing, commonly around 6 months of PITIA, though they vary by lender, leverage, loan size and transaction type. Loans above $1,500,000 typically step up to about 9 months. Conservative rate-term files at modest leverage under $1,500,000 can see reserves waived.
Both tests must be verified, and the same dollars cannot be counted twice. If you sell a stock position to fund the down payment, check what remains for reserves before you commit.
Does a Bigger Down Payment Fix a Weak Deal?
Not on its own. More cash down lowers the monthly obligation and can lift the coverage ratio, but it never erases leverage caps, credit floors, reserve rules or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Coverage is rent compared with PITIA, meaning principal, interest, taxes, insurance and any HOA dues. Many select programs start at 1.00, and stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Credit matters too. A 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage tiers.
Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities and capital expenses all sit outside the calculation. DSCR loans are designed for non-owner-occupied investment properties, and because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The borrower qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Funds are still verified. Skipping personal income documentation does not mean skipping the source-of-funds review.
Not every property qualifies either. Manufactured homes, log homes and barndominiums are not offered in the network. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and above $2,500,000 the network generally holds to 30-year fixed structures.
When the Decision Flips
Selling assets is the right call when the position is already a drag, or the gain is small. It is the wrong call when the tax cost and lost upside outweigh what the rental will earn, or when pulling cash from a business weakens the company that pays your bills. In those cases, a cash-out refinance on an existing rental may serve better, and a lower-leverage purchase may let you keep more of the position intact.
Think of it as a trade. Liquidating crypto that has run up sharply may cost you a large tax bill and future upside. Using business cash may cost you working capital. Neither is wrong. Each has a price, and the price should be weighed before the contract goes in.
For the full picture of how programs, leverage and documents fit together, see Lendmire’s complete DSCR loans guide.
Frequently Asked Questions
Can I use crypto held in a wallet instead of on an exchange?
Not directly. The coins have to be sold for dollars, and the paper trail is hard to build from a private wallet. Moving the holdings to a regulated U.S. exchange, selling, and wiring the proceeds to your bank gives the underwriter a clear path to follow.
Can an LLC pay the down payment for another LLC’s purchase?
It depends on the lender and on how the entities are owned. The borrower generally needs to own the paying account and show the ownership. Expect more documentation when the paying entity and the borrowing entity are different, and ask before moving any money.
Does a loan from my business count as a down payment source?
Usually not. Borrowed money, including a business line of credit, is a separate question, and most lenders in the network will not accept unsecured borrowed funds toward the down payment. A documented owner distribution is a different thing and generally works.
Do sale proceeds need to sit in my account for a set time?
It varies by lender. Some lenders waive seasoning on documented proceeds, while others want the funds to sit for a period. Either way, a large deposit needs a documented origin, so keep the sale confirmation and bank statement together.
Do I need to keep reserves after using sale proceeds for the down payment?
Yes. Reserves are tested separately from the down payment, commonly around 6 months of PITIA, with variations by lender, leverage and loan size. The same dollars cannot count twice, so plan the amount you sell with both tests in mind.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire, a broker arranging financing through select lenders in its wholesale network across 41 markets including Washington, D.C., can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals. Programs change, every file is underwritten individually, and nothing here is a commitment to lend.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
1. IRS — Instructions for Form 8949
2. IRS — Frequently Asked Questions on Digital Asset Transactions
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a DSCR Lender Splits a Rental Business Across Two LLCs · Do HOA Dues Count in the DSCR Ratio on a Condo? · Can You Get a DSCR Loan After a Short Sale or a Lost Rental?
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.