The Quick Read: A 25% stake usually works for a bank statement cash-out when the program accepts business statements at that ownership level, because the lender counts only your quarter of the net deposits, and the best program for your situation is the one whose ownership floor and leverage fit. Below that floor, personal statements, a co-borrower, or a different loan type are the usual routes.
- Your share is what counts. On business statements, the lender takes the business’s net deposits and counts only your ownership percentage of them.
- The floor is a program rule. A 25% minimum is common, but each lender words it differently (“at least 25%” versus “more than 25%”).
- Cash-out leverage depends on occupancy. On a primary residence, cash-out runs up to 80% LTV. On a second home or an investment property, it tops out around 75% LTV.
- The smaller income can cap the loan. Your diluted income often limits the cash you can take before the equity does.
- Rentals have another path. A DSCR loan tests the property’s rent instead of your diluted income.
What “Best Program” Means for a 25% Owner
No single program wins for every 25% owner. The best program for your situation depends on five things: the ownership floor, the expense factor, the statement type, the property’s occupancy, and how much equity you want out.
Lendmire is a mortgage broker. It does not lend. It works with a network of wholesale lenders, and each lender sets its own rules for partial owners. One lender may accept 25% ownership on business statements. Another may want more. A third may handle your file best on personal statements.
That spread is why a broker’s view helps. Across the wholesale network Lendmire works with, the programs that treat minority owners well share a few traits:
- A clearly stated ownership floor that your stake meets.
- An expense factor that fits your kind of business.
- A willingness to use personal statements when the deposits trace back to business income.
- Cash-out leverage that matches your property type.
- Reserve requirements you can meet, typically around six months of the housing payment.
How a Bank Statement Cash-Out Refinance Works
A bank statement cash-out refinance replaces your current mortgage with a larger one and pays you the difference. The lender reviews your file on documented income under the applicable program, subject to lender guidelines. The documentation is 12 months of bank statements instead of tax-return income alone.
Here is the sequence most programs follow:
1. Choose the statement type. You use personal statements or business statements. Some lenders let you pick whichever gives the stronger income figure.
2. Prove ownership. Lenders typically ask for a K-1, an operating agreement, or a letter from your CPA or tax preparer. This document proves your share. It does not set your income.
3. Average the eligible deposits. The lender totals 12 months of qualifying deposits and averages them. Transfers between your own accounts and non-business deposits are generally stripped out.
4. Apply an expense factor. On business statements, the lender subtracts a percentage of deposits to estimate what the business actually keeps. Kubera’s overview of bank statement loans describes this expense-factor approach. The factor varies widely by program.
5. Apply your ownership share. On business statements, the net figure is multiplied by your ownership percentage.
6. Layer on the rest of the file. The lender tests your personal debts against that income, then reviews credit, reserves, the appraisal, and the cash-out LTV limit.
Loan sizes in the programs Lendmire places files with generally run from $125,000 to $3,500,000. Every file is underwritten individually.
These loans are called non-QM, short for non-qualified mortgage. The term describes how income is documented. It does not describe borrower quality. NerdWallet’s non-QM explainer notes that these loans use alternatives such as bank statements and cannot be bought by Fannie Mae or Freddie Mac.
Why Ownership Percentage Changes the Math
On business statements, the lender is not asking how much the business earns. It is asking how much of that is yours. The business deposits belong to the entity. Your share of them is what supports your loan.
Picture four equal partners in one company. The company’s deposits and expenses are identical for all four. Each partner’s qualifying income is one quarter of the net figure. A 100% owner of the same company counts the entire net figure.
That is plain arithmetic, and it explains the ownership floor. A lender wants to know that you can actually reach the money. A tiny stake in a company that you do not control gives you little claim on its cash. A 25% owner sits right at a common line, so the exact wording of the lender’s rule matters.
The ownership math applies to business statements. On personal statements, your percentage does not enter the calculation. The deposits must still trace back to real business income, though.
Personal Versus Business Statements
Business statements measure the company. Personal statements measure what actually lands in your own account. A 25% owner should compare both, because the same year of deposits can produce very different qualifying income.
| Factor | Business statements | Personal statements |
|---|---|---|
| Ownership percentage | Applied to net income | Not part of the math |
| Expense factor | Applied to deposits | Generally lighter or none |
| Ownership proof | Required | Often not central |
| Best fit | Larger stake, steady company deposits | Owner pays self regularly |
Personal statements can look like the easy answer. They have a catch. If the deposits clearly come from business operations, a lender may move the file to business-statement rules. Programs differ here, so ask before you assume.
Many lenders also let a borrower show that regular transfers from the business account are real paychecks or distributions. A few months of business statements can confirm those transfers. That helps when your pay arrives in a personal account on a steady schedule.
A Worked Comparison: Same Deposits, Different Owners
Say a business shows a certain level of net deposits after the lender’s expense factor. Call that figure one full unit of income.
- A 100% owner counts one full unit.
- A 25% owner counts one quarter of a unit.
- A 25% owner who switches to personal statements counts what actually reaches the personal account, which may be higher or lower than a quarter.
The quarter-unit figure then has to cover your personal debts under the lender’s debt-to-income test. Each additional mortgage you carry adds to those debts. So a 25% owner’s cash-out is often limited by income before it is limited by equity.
There are three honest ways to improve that picture:
- Use a lower expense factor. An accountant-prepared ratio can replace the lender’s default. It can backfire. A business with high real expenses may end up with a ratio higher than the default.
- Add other documented income. Some programs let you blend sources.
- Use a program that fits better. Another lender may use a different statement type or expense approach.
One more point on the CPA route. On owner-occupied primary residence cash-out, the program Lendmire places files with allows up to 80% LTV using the lender’s fixed expense ratio. Using an accountant-prepared ratio, the ceiling is 75% LTV. Run both against your actual business before you choose. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Where the 25% Line Comes From
The 25% line is a convention, not a national rule. No law sets a minimum ownership percentage for bank statement loans. Lenders set their own.
The convention borrows from agency lending. Fannie Mae’s Selling Guide treats a borrower with a 25% or greater ownership interest as self-employed. Non-QM programs are not bound by that guide. Many borrow the 25% mark as a practical starting point anyway.
Two cautions apply to a 25% owner:
- Check the exact words. “At least 25%” includes you. “More than 25%” does not.
- Check for a higher floor. Some programs set the bar above 25% for business statements.
How Much Cash You Can Take Out
Your cash-out is limited by two things: income and equity. The tighter limit sets the number.
The equity limit is a maximum loan-to-value ratio, or LTV, which compares the new loan to the property’s appraised value. It depends on how you use the property.
| Property use | Typical cash-out ceiling |
|---|---|
| Primary residence | Up to 80% LTV, fixed expense ratio |
| Primary residence | 75% LTV, accountant-prepared ratio |
| Second home | Up to 75% LTV |
| Investment property | Up to 75% LTV |
Up to 90% LTV is available on a primary residence, but that is a purchase or rate-and-term ceiling, not a cash-out one. Stronger files earn the top of any range, and every figure is subject to lender guidelines. Investment purchase leverage on bank statement documentation varies by lender.
If you want to qualify from savings rather than deposits, there is an asset-depletion alternative. It uses liquid assets in place of deposit averages and runs to about 80% LTV on a primary residence. Whether it makes sense for a 25% owner depends on how much liquid cash you hold. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
If You Are Below 25%
Below the floor, business statements generally stop working, because your stake is too small to count. That does not end the conversation. It shifts the route.
| Option | How it helps | Watch for |
|---|---|---|
| Personal statements | Uses deposits you actually receive | Deposits must trace to your income |
| Co-borrower | Adds another income source | Their debts and credit count too |
| Accountant-prepared ratio | May lower the expense factor | Can raise it for high-cost businesses |
| Asset depletion | Qualifies from liquid assets | Needs sizable liquid funds |
| DSCR loan | Tests the property’s rent | Only for non-owner-occupied rentals |
A borrower who holds a small stake and also draws a steady salary or distribution often does best on personal statements. A borrower with substantial savings may prefer asset depletion. A borrower pulling equity from a rental may want DSCR.
Rentals Held in an Entity: When DSCR Fits Better
Owning 25% of the company that pays you is a separate question from how a rental is titled. The first is your income source. The second is the collateral. Lenders test them separately. Title held in an LLC is accepted subject to lender program eligibility.
For a rental, the cleanest comparison is simple. A bank statement cash-out tests the person. A DSCR cash-out tests the property. DSCR stands for debt service coverage ratio, which compares the property’s rent to its monthly obligation. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
A short way to remember the difference: a DSCR loan can stall on weak rent, while a bank statement loan can stall on heavy debt or diluted income.
A 25% owner pulling equity from a rental often finds that the ownership haircut shrinks the bank statement loan. On the DSCR side, your ownership share in an operating company does not enter the math at all. Many investors use a bank statement loan for the home they live in and DSCR loans for rentals. Lendmire’s complete DSCR loans guide explains how that side works.
Occupancy Decides the Paperwork
Occupancy decides which disclosure rules apply. A loan on a home you live in, including a second home, is a consumer mortgage. TRID, the federal loan-disclosure framework for consumer mortgages, applies to it. Owner-occupied files run through Lendmire’s consumer mortgage licensing, which covers 16 states.
A bank statement loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan. Business-purpose loans are exempt from TRID.
Regulation Z exempts credit extended primarily for a business purpose. The lender decides purpose in each transaction, so the label “investment property” does not settle it. What you do with the proceeds matters. Cash-out used for personal ends is consumer credit, even if the collateral is a rental.
Common Mistakes With Deposits and Documents
Most problems on these files come from deposits and paperwork, not from the ownership percentage itself. Watch for these:
- Counting transfers as income. Money moved between your own accounts is stripped out.
- Mixing personal and business deposits. Unrelated deposits get excluded.
- Assuming a CPA letter always helps. It can help or hurt, depending on your real expenses.
- Treating the K-1 as your income. On a bank statement file, the K-1 mostly proves ownership.
- Skipping the operating agreement. A lender may want it to confirm your access to company funds.
- Assuming the label decides the rules. Calling a loan an investment loan does not make it business-purpose.
Questions to Ask Before You Compare Programs
These questions separate programs quickly and help you find the right fit:
- What is the minimum ownership for business statements, and is it “at least” or “more than”?
- Can I use personal statements if my stake falls short?
- What expense factor applies, and can an accountant-prepared ratio replace it?
- How many months of statements are needed, and how are transfers handled?
- What is the cash-out LTV for my occupancy type?
- How many months of reserves are required?
- Does the program accept my entity type and how the property is titled?
Term length follows each lender’s program sheet. Do not assume a bank statement loan offers the longer or interest-only structures that DSCR programs may offer.
Key Terms Defined
Bank statement loan: A mortgage that is reviewed around average deposits from 12 months of statements instead of tax-return income alone.
Expense factor: The percentage a lender subtracts from business deposits to estimate what the business keeps.
LTV (loan-to-value): The new loan divided by the property’s appraised value.
Non-QM: A mortgage outside the standard qualified-mortgage box, usually using alternative income documentation.
DSCR: A ratio that compares a property’s rent to its monthly obligation.
Asset depletion: A method that is reviewed against liquid assets instead of income deposits.
Not Legal or Tax Advice
This article is general information, not legal or tax advice. Tax treatment can depend on how the funds are used and how the property is held; borrowers should keep clear records and speak with a qualified tax professional before relying on any deduction. Consult a qualified attorney or CPA about your own situation.
Frequently Asked Questions
Can I use business statements if I own exactly 25%?
Often yes, but it turns on the lender’s wording. A rule written as at least 25% includes you. A rule written as more than 25% does not. Some programs set a higher floor. Ask for the exact wording before you spend time on documents.
What happens to my income if I own only a quarter of the business?
The lender counts one quarter of the business’s net deposits, after its expense factor. The same deposits support a smaller income figure for you than for a full owner. A lower expense factor, other documented income, or a different statement type can improve the result.
Do I need a CPA letter?
Not always. A letter can replace the lender’s default expense factor with a lower one, which can raise your income. For a business with high real expenses, the certified ratio can come out higher than the default and cut your income. Compare both before deciding.
What if my stake is below the program’s minimum?
Business statements generally will not work. Personal statements may, if the deposits are your own income. A co-borrower, asset depletion, or a DSCR loan for a rental may fit better, depending on your property and goals.
Is the cash-out limit the same as the purchase limit?
No. A primary residence purchase or rate-and-term loan can reach up to 90% LTV, but cash-out on a primary residence tops out at 80% LTV. A second home or an investment property tops out around 75% LTV on a cash-out. All limits are subject to lender guidelines.
Next Step
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. You can reach the team at 828-256-2183 or request a quote. Nothing here is a commitment to lend.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging bank statement and other alternative-documentation mortgages — P&L-only, 1099-only and asset-based paths — through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Kubera: Bank Statement Loans
3. Fannie Mae Selling Guide: Underwriting Factors and Documentation for a Self-Employed Borrower
4. CFPB Regulation Z, Section 1026.3
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 on a 2-4 Unit Rental You Already Own · Bank Statement Cash-Out Refinance Rules on an Inherited House · Bank Statement Cash-Out Refinance Requirements With a HELOC Still Open
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.