The Quick Read: It depends on three numbers, but the formula never changes: the new loan is the maximum LTV times the appraised value, and your cash is that loan minus your payoff, liens and closing costs. At the top of the range, the lender’s cap leaves you holding equity equal to 100% minus the cap, and the cash you receive is always less than the equity you hold above the payoff, because liens and closing costs come out first.
- On a primary residence, cash-out typically tops out at 80% LTV with a fixed expense ratio, or 75% with an accountant-prepared ratio.
- On a second home, cash-out typically tops out at 75% LTV.
- On an investment property, cash-out typically tops out around 75% LTV.
- Payoff, other liens, closing costs and the appraisal decide what actually lands in your account.
Key Terms Defined
LTV (loan-to-value): the new loan amount divided by the appraised value of the property.
Cash-out refinance: a new loan larger than your current balance, where you receive the difference as cash.
Rate-and-term refinance: a new loan that replaces the old one without paying you any cash out.
Bank statement loan: a loan that is reviewed around documented income, using 12 months of business or personal bank statements instead of tax-return income.
Expense factor: the percentage of your business deposits a lender treats as operating costs when it turns deposits into qualifying income.
CLTV (combined LTV): all loans against the property, first and second liens together, divided by value.
Seasoning: the waiting period a lender wants after you buy a property before it sizes a loan on the full appraised value.
Reserves: liquid savings, commonly around six months of the housing payment, that you hold after closing.
What Is the Formula for Cash Out at Maximum LTV?
The formula has four steps. Take the appraised value and multiply it by the LTV cap. Subtract the balance on your current loan and any other liens. Subtract closing costs and any fees tied to paying off the old loan.
What remains is your net cash. The cap sets the ceiling on the new loan. It does not promise you any particular amount of cash.
Run it in percentages of value, which keeps the picture clean. Say your payoff equals 40% of the home’s value and the cap is 75%. The new loan is 75% of value, so gross cash is 35% of value before costs. Every 5 points of LTV you can add moves gross cash by 5% of value.
| Payoff (% of value) | LTV cap | Gross cash (% of value) |
|---|---|---|
| 30% | 80% | 50% |
| 50% | 80% | 30% |
| 50% | 75% | 25% |
| 70% | 75% | 5% |
| 75% | 75% | 0% |
The last row is the one people miss. A borrower who already owes the cap amount gets nothing from a cash-out refinance, no matter how well the statements look. Closing costs then make the net figure smaller than the gross figure in every row.
What Is the Maximum LTV for Each Occupancy Type?
Occupancy sets the ceiling. Select lenders in Lendmire’s wholesale network cap cash-out loans lower than purchase loans, and they cap second homes and investment properties lower than primary residences. These are typical ranges, subject to lender guidelines, credit profile and loan size.
| Property use | Cash-out ceiling | Notes |
|---|---|---|
| Primary residence | Up to 80% LTV | Fixed expense ratio |
| Primary residence | Up to 75% LTV | Accountant-prepared ratio |
| Second home | Up to 75% LTV | Varies by loan size and credit |
| Investment property | Around 75% LTV | Non-owner-occupied rental |
The accountant-prepared route looks more customized, so borrowers often assume it earns more leverage. It earns less. Lenders in this space cap that route at the lower number. Loan sizes in this lane run from roughly $125,000 to $3,500,000, and larger loans or lower credit scores usually pull the ceiling down.
Many borrowers also hear high leverage figures in conversations about bank statement loans. The top of the range belongs to primary-residence purchase and rate-and-term loans through select lenders, and only the strongest files earn it. Cash-out sits in a different box. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
An asset-depletion alternative exists for some borrowers. It is reviewed against liquid assets instead of deposits and runs to about 80% LTV on a primary residence. It suits a retiree or a borrower with irregular deposits and large savings. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
How Do Bank Statements Turn Into Qualifying Income?
The lender reads 12 months of business or personal statements and averages the deposits. For business accounts, it applies an expense factor to estimate what you actually keep. The factor differs by lender and program, so no universal formula exists, and nobody can promise you one before reviewing your file.
Transfers between your own accounts, loan proceeds and one-time windfalls are typically stripped out of the deposit average. That surprises borrowers whose accounts look busy but whose true business deposits are smaller.
Bank statement loans belong to the non-QM category. Scotsman Guide describes non-QM loans as quality loans that fall short of the standards for purchase by Fannie Mae and Freddie Mac. The same trade publication notes that non-QM lenders still confirm ability to repay, with more flexibility in how they qualify the borrower. Flexible does not mean undocumented. Expect to explain your business and your deposits.
What Shrinks Your Cash Below the Headline Number?
The existing payoff and other liens. A first mortgage, a HELOC or a second lien all come off the top. A HELOC you forgot about can erase a large share of the proceeds.
Closing costs. Title, appraisal, lender and broker fees come out of proceeds. They vary by loan size and lender, and your estimate shows them line by line.
The appraisal. The cap applies to appraised value, not the price you hoped for. Because the cap multiplies the miss, a low appraisal hits harder than the percentage suggests. Picture a property you expect to appraise at 100, with a payoff equal to 50% of that value and a 75% cap.
| Appraisal result | New loan (% of expected value) | Gross cash (% of expected value) |
|---|---|---|
| As expected | 75.00% | 25.00% |
| 5% low | 71.25% | 21.25% |
| 10% low | 67.50% | 17.50% |
In that scenario, a 10% appraisal miss drops gross cash from 25.00% to 17.50% of expected value, a cut of 30%. The payoff does not shrink when the value does.
Seasoning. If you bought recently, many lenders size the loan on your cost basis until the seasoning period clears. Seasoning rules vary by lender, so a recent purchase can cap your cash well below what the appraisal alone suggests.
Your income test. A bigger loan means a bigger monthly obligation. Your deposit-based income has to carry that new obligation, and on some files the income test binds before the LTV cap does. Chasing the maximum can leave you with a thinner cushion than you want.
Does the Disclosure Regime Change With Occupancy?
Yes, and the property’s use decides which one applies. An owner-occupied file, meaning a primary residence or second home, is a consumer mortgage. It carries the full consumer disclosure package, including the standard Loan Estimate and Closing Disclosure. Lendmire arranges owner-occupied bank statement files in the 16 states where its consumer mortgage licensing applies.
A bank statement loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan. It is reviewed differently from an owner-occupied mortgage, and the consumer disclosure rules do not apply to it. The CFPB’s Regulation Z exempts credit extended primarily for a business purpose. Its ability-to-repay rulemaking treats investment-purpose loans as business-purpose loans.
The exemption has an edge for small properties. On a one- or two-unit property you plan to live in, it is not automatic. A cash-out on a home you personally occupy is not a clean investment loan, and the stated purpose of the funds matters. Declare the occupancy honestly, because it decides both the leverage ceiling and the paperwork.
When Should You Take Less Than the Maximum?
Take less when the extra cash costs more than it earns. A few situations come up often.
- The extra proceeds have no job. Borrowed money that sits in a checking account still adds to the monthly obligation.
- Your income test is already tight. Stepping down a few points of LTV can widen your cushion on the new payment.
- A thin appraisal cushion. If you need a certain amount of cash to make a purchase work, build the plan around a conservative appraisal, not the optimistic one.
- A lower tier prices better. Higher leverage tiers often carry adjustments, so a smaller loan can sometimes cost less per dollar borrowed.
For investors, the cap decides how much capital you recycle into the next deal. At 75% on a rental, you keep 25% of the value tied up. That is the real tradeoff of a refinance strategy, and it is why the extra 5 points matter less than the total you can safely carry.
What Are the Alternatives If the Cash Is Too Small?
Three paths come up when the math falls short.
A HELOC can pull equity from a property without replacing the first mortgage. It makes sense when your existing loan is worth keeping.
A DSCR loan is reviewed for the rental on its own rent instead of your deposits. Practitioners often use bank statement documentation on the primary home and DSCR on the rentals. Lendmire’s complete DSCR loans guide covers the full DSCR side.
Asset depletion is the third option. If you hold substantial liquid assets but your deposits look uneven, qualifying from assets may support the leverage you need on a primary residence.
The right program depends on the property, the credit profile, how much leverage you need and how you document income. A broker that places files with several wholesale lenders can match the scenario to the program, instead of forcing it into one lender’s box.
Frequently Asked Questions
Can I take out 100% of my equity?
No. The LTV cap applies to appraised value, so you always leave at least 100% minus the cap in the property. On a primary residence that is typically at least 20%, and on a second home or investment property it is typically at least 25%, subject to lender guidelines. Payoff, liens and costs then reduce the cash further.
Does the 90% LTV figure apply to cash-out?
No. Up to 90% LTV applies to primary-residence purchase and rate-and-term loans through select lenders, and stronger files earn the top of that range. Cash-out on a primary residence typically stops at 80% with a fixed expense ratio. Second homes and investment properties sit at 75% or lower.
Are closing costs deducted from my cash?
Yes. Closing costs, title fees and any fees tied to paying off the old loan come out of proceeds, so the net is smaller than the gross. Your estimate shows each cost. Ask for it before you decide how much to borrow.
Do I need reserves for a bank statement cash-out?
Reserves are commonly around six months of the housing payment on these programs, subject to lender guidelines. Lenders hold the number against your file and may weigh it against your credit profile, loan size and leverage. Cash from the refinance itself may or may not count toward reserves, depending on the program.
Can I use a bank statement cash-out on a rental property?
Yes, on a non-owner-occupied rental the ceiling typically tops out around 75% LTV. That loan is a business-purpose file, while an owner-occupied file is a consumer mortgage. Many investors compare it with a DSCR loan, which is reviewed on the property’s rent.
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. Call 828-256-2183 or request a quote. Lendmire is a mortgage broker, so lenders review each file and decide on approval, and every figure here is subject to lender guidelines and is not 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, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. 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. Scotsman Guide, Remove the Shroud of Mystery on These Loans
2. Scotsman Guide, Rev Up the Engine for Non-QM Lending
3. CFPB, Regulation Z § 1026.3, Exempt Transactions
4. Federal Register, Ability-to-Repay and Qualified Mortgage Standards (CFPB final rule)
This article is part of Lendmire’s bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.