The Quick Read: A 25% stake can work for a bank statement cash-out, but the lender usually credits you with only your share of the business’s net deposits when you document with business statements, so the qualifying income is often far below what the company actually earns. Personal statements can change that math when the entity pays you directly into your own account.
- Business statements typically get an expense factor, then a haircut to your ownership share. Personal statements usually skip the ownership multiplier.
- No federal rule sets a minimum ownership percentage. The floor is a lender program choice, so a 25% owner clears some programs and misses others.
- Cash-out proceeds are capped by the lower of the leverage ceiling and what your income and debts will support.
- Occupancy matters: investment cash-out tops out around 75% LTV, while an owner-occupied primary residence cash-out reaches up to 80% LTV.
- If the rental’s rent comfortably covers the payment, a DSCR cash-out may sidestep the ownership math entirely.
Minority owners get stuck on one question: whose income is it? Lenders answer it differently depending on which account the deposits land in. The rest of this piece walks through the mechanics, the variations, and the places the general rule breaks. For the broader picture of how investor financing fits together, the complete DSCR loans guide is a good companion.
What Is a Bank Statement Cash-Out Refinance?
It is a refinance that pulls equity out of a property while qualifying you on documented income under the applicable program, subject to lender guidelines. Instead of tax returns, the lender reviews 12 months of business or personal bank statements and averages the deposits.
Lendmire is a mortgage broker. It places these files with select wholesale lenders in its network, and each lender sets its own expense factors, ownership floors, and leverage limits. The loan sizes in this lane typically run from $125,000 to $3,500,000, and reserves commonly sit around six months of the housing payment.
Why does ownership percentage matter? Because the lender needs to know how much of the deposits belong to you. If you own all of a business, the whole net deposit stream is yours. If you own a quarter, the other three quarters belong to someone else.
How Does Underwriting Treat a 25% Owner, Step by Step?
Underwriters work through the same sequence on most files. The exact numbers change by program, but the order rarely does.
1. Choose the account type. Business statements mean the company’s own deposits are the income source, so an expense factor and your ownership share both apply. Personal statements mean the lender looks at what reaches your own account.
2. Collect the statements. Most programs here ask for 12 months, all pages, with nothing missing.
3. Scrub the deposits. Transfers between your own accounts, loan proceeds, refunds, and one-off windfalls come out. The CFPB’s ATR/QM Small Entity Compliance Guide lists bank statements among the records a creditor may use to verify income, which is why lenders insist the deposits be confirmed as real income, not just money moving around.
4. Average the eligible deposits over the number of months.
5. Apply the expense factor on business statements. This is the share of deposits the lender treats as operating cost. Trade press describes lenders calculating qualifying income from a standard expense factor, per Scotsman Guide’s non-QM coverage. Some programs accept an accountant-prepared ratio or expense letter instead of a flat factor, and whether that substitution is allowed, and how it affects leverage, depends on the specific program.
6. Multiply by your ownership share.
7. Compare to debts. The new housing payment plus your existing obligations are measured against that income.
8. Size the cash-out. Proceeds are capped by the lower of two tests: the leverage ceiling on appraised value, and what income and debts support.
Here is the 25% math in plain units. Say the business deposits 100 units a month. An assumed 50% expense factor leaves 50. A 25% owner is credited with 12.5. A sole owner would get all 50 from the same account. These numbers are illustrative only. Expense factors vary by lender program, and nobody should treat 50% as a promise.
That gap is the whole story. A small slice of a large company can still qualify poorly, especially when your personal debts are heavy.
Which Statements Should a Minority Owner Use?
Personal statements are often the better lane when the entity pays you regularly into your own account, but the choice depends on how the business actually compensates you. Business statements apply the ownership haircut. Personal statements generally count what reaches you without a separate ownership multiplier, though lenders still confirm the deposits are real income and may ask for proof that the business exists.
| Factor | Business Statements | Personal Statements |
|---|---|---|
| Income source | Company deposits | Deposits to you |
| Expense factor | Typically applies | Varies by program |
| Ownership share | Multiplied in | Usually not applied |
| Best fit | Owner controls the account | Paid via draws or distributions |
| Main risk | Heavy haircut at 25% | Commingled or unexplained deposits |
Picture an investor who owns 25% of a landscaping company and takes regular distributions into a personal checking account. The distributions are steady, documented, and traceable to the K-1. On personal statements, the lender evaluates the deposits that actually reach that account. On business statements, the same investor would see the company’s net cut to a quarter. Same borrower, very different qualifying income.
The catch: commingled funds. If personal deposits mix with transfers, family money, or loan proceeds, the scrub step eats the income. Clean accounts matter more than clever structuring.
What Documents Prove the 25%?
Expect to show the operating agreement or partnership agreement, formation papers, a business license, and the K-1 where one exists. The lender checks that the profit share on the K-1 matches the ownership you claim. A mismatch, such as 25% on paper but a different allocation on the return, draws questions fast and can stall the file.
Other owners rarely need to sign the loan, but lenders may ask for evidence that you have access to the funds you are documenting. If the other 75% controls the business account, say so up front and plan around it.
Key Terms Defined
Expense factor: The share of business deposits a lender treats as operating cost before counting the rest as income.
Ownership share: Your percentage of the entity, used to credit you with only your portion of business net income.
Deposit averaging: Totaling eligible deposits across the statement period and dividing by the number of months.
Cash-out ceiling: The maximum loan-to-value a program allows when you take equity out, which is lower than the purchase ceiling.
DTI: Your monthly debts divided by your qualifying monthly income.
Where Does Occupancy Change the Rules?
Occupancy decides both leverage and disclosure. On the network’s programs, an owner-occupied primary residence cash-out reaches up to 80% LTV with a fixed expense ratio, or up to 75% LTV with an accountant-prepared ratio. A second home cash-out reaches up to 75% LTV. Investment property cash-out tops out around 75% LTV. The 90% figure you may see for primary residence is a purchase and rate-and-term ceiling, not a cash-out one. All of these are typical ranges, and strong files earn the top of each range while weaker ones get less. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Occupancy also decides the disclosure regime. Under the CFPB’s rule on exempt transactions, credit used to acquire, improve, or maintain non-owner-occupied rental property is deemed business purpose. That generally takes a cash-out on a rental outside the consumer ability-to-repay framework, and it is why ownership percentage on an investment file is a program question, not a legal one. An owner-occupied cash-out is a consumer mortgage, and TRID disclosures apply. A non-owner-occupied rental, including a short-term rental, is business purpose and TRID-exempt. The two regimes should never be mixed in one file.
One nuance: owner-occupied rental property can fall outside the business-purpose exemption. The official commentary to the rule ties the deemed-business-purpose treatment on owner-occupied property to unit counts, so a cash-out on an owner-occupied one-to-two-unit property can stay under consumer rules.
Where Does the General Rule Break?
The 25% haircut is a rule of thumb, and several situations bend it.
- Ownership floors differ. Some programs set a minimum ownership percentage for business statements, and 25% is a common convention. It is a convention, not law. A 25% owner can clear one program and miss another, which is exactly why shopping multiple wholesale lenders matters.
- Asset-heavy businesses. A flat expense factor can understate a business with heavy equipment or fuel costs. An accountant-prepared expense ratio can fix that, though on owner-occupied primary cash-outs the leverage tier it supports may be lower than the tier available with a fixed expense ratio.
- Mid-window ownership changes. If you bought into the entity partway through the statement period, lenders decide how the earlier months count. Timing and paperwork decide the outcome, and programs treat it differently.
- The collateral sits in an LLC. Holding the property in an LLC is a separate question from owning part of an operating business. Subject to lender program eligibility, LLC-titled rentals often run on individual guarantors who get credit-checked, and some programs want any owner above a certain stake on the guaranty.
- Debt-heavy borrowers. Even a generous income calculation fails if existing debts crowd out the new payment.
- Asset depletion as a fallback. When deposits are lumpy, qualifying from liquid assets reaches about 80% LTV on a primary residence under select programs, though it is a different documentation path with its own requirements.
When Is DSCR the Better Tool?
If the rental’s rent comfortably covers the full monthly obligation, a DSCR cash-out removes the ownership math completely. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines, so your 25% stake in a separate business never enters the calculation. Programs below 1.00 coverage exist through select lenders in the network, though leverage and terms adjust.
Bank statement is the better fit when the property is owner-occupied, when rent coverage is thin, or when your own deposits are strong and the property does not carry itself. The cleanest decision comes from running both on the specific property. A broker that shops several wholesale lenders can also test the same file against both lanes.
What Does the Decision Look Like in Practice?
Run the numbers on three paths before choosing.
1. Personal statements, if the entity pays you directly. Check whether the deposits are steady and traceable.
2. Business statements with an accountant-prepared expense ratio. This helps when your real costs run below the flat factor.
3. DSCR on the rental itself. This helps when rent clears the payment with room to spare.
Then ask what the proceeds are for. Funding a down payment on another rental changes the leverage math differently than paying off business debt. If the file only works at the very edge of a program’s ownership floor, treat that as a signal to look at a different lane, not to force it.
Prepare early. Pull 12 months of clean statements, the operating agreement, the K-1, and any accountant letter. Explain unusual deposits in writing before the underwriter asks. Strong files with clean paperwork earn the better end of the leverage range.
Large lenders may decline files that smaller wholesale programs will review, because ownership floors and expense treatment are program choices. Tax treatment varies; consult a qualified professional before relying on any deduction.
This article is educational and is not legal or tax advice. Readers should consult a qualified attorney or CPA about their own situation, since entity structure, ownership documents, and guarantor requirements all carry consequences specific to each borrower.
Frequently Asked Questions
Is 25% ownership enough to use bank statements for a cash-out refinance?
On some programs, yes. No federal rule sets a minimum, so the floor depends on the lender. A 25% stake is a common convention, which means you may clear some programs and miss others. A broker that shops multiple wholesale lenders can match your ownership to a program that accepts it, subject to lender guidelines.
Do I get credit for the whole company’s income if I own 25%?
No, not on business statements. The lender credits your share of the net deposits after the expense factor. The other owners’ portion is not your income. Personal statements can look different when the entity pays you regularly into your own account.
What LTV can I expect on a cash-out?
It depends on occupancy. A primary residence cash-out reaches up to 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio. A second home reaches up to 75% LTV. Final proceeds are also limited by what your income and debts support. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Can a business-purpose rental cash-out skip the ownership math?
Often, yes, through DSCR. Because a DSCR loan is reviewed primarily on property-level rental income covering the payment, your stake in an outside business does not drive the result. That path requires the rent to comfortably cover the obligation.
Does Lendmire lend the money?
No. Lendmire is a mortgage broker that arranges bank statement financing through select wholesale lenders. Each lender sets its own program rules, and approvals depend on borrower, property, and lender review.
If You Are Self-Employed and Own a Minority Stake
If you are self-employed and want to see how the numbers work, Lendmire can help you compare bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Consumer bank statement programs are available in 16 states, and each file is underwritten individually by the lender. Reach Lendmire at 828-256-2183.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB ATR/QM Small Entity Compliance Guide
2. Scotsman Guide, Rev Up the Engine for Non-QM Lending
3. CFPB Regulation Z § 1026.3, Exempt Transactions
This article is part of Lendmire’s bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Bank Statement HELOC Program to Purchase Investment Property in Cash · Bank Statement HELOC Options Without Documented Income · Best Bank Statement HELOC Program on an Inherited Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.