The Quick Read: A physician with a new practice can qualify for a cash-out refinance on twelve months of bank statements, rather than tax returns, when the averaged deposits support the loan after the lender’s expense factor, reserves run about six months, and leverage stays within the limits for the property’s occupancy, subject to lender guidelines. The statements replace the two-year tax history that a brand-new practice cannot show yet. They do not replace underwriting. Here is what matters most:
- Documentation: twelve months of business or personal bank statements. Income comes from averaging eligible deposits and applying a lender expense factor.
- Cash-out leverage: up to 80% LTV on a primary residence using a fixed expense ratio, or 75% LTV with an accountant-prepared ratio. Up to 75% LTV on a second home. Up to 75% LTV on a cash-out of a standard rental.
- Loan size and reserves: roughly $125,000 to $3,500,000, with reserves commonly around six months of the housing payment.
- The new-practice problem is deposit quality. Start-up loans, owner injections and transfers between your own accounts usually do not count as income.
- Occupancy decides the paperwork. Your own home is treated as a consumer mortgage. A rental you do not live in is a business-purpose loan.
Opening a practice changes how you get paid. You go from a contract salary to deposits that start small and uneven. Lenders know that. The question is whether your statements show a practice that is working.
Why a New Practice Complicates Underwriting
Standard mortgage underwriting wants a track record of self-employed income, usually shown on tax returns. A practice that opened recently has a short or partial return history. It may also show a loss in the first year, because start-up costs hit before revenue settles.
That leaves a physician with strong credit, real equity and a growing practice, but a paper trail that looks thin. Bank statement programs exist for exactly this gap. They read the cash moving through your accounts instead of the net line on a tax return.
Two things make a physician an interesting file. Income potential is high, and prior employment in the same field is easy to document. Many lenders treat that history as a bridge between a salaried job and practice ownership.
Bank Statement Cash-Out Refinance Requirements, Step by Step
Here is how underwriting treats your file from start to finish. Think of it as six checkpoints.
1. Classify the property and the use of funds. Is the collateral your home, a second home, or a rental you do not occupy? That answer sets the leverage cap and the disclosure rules.
2. Choose the statement type. Business statements show the practice’s deposits. Personal statements show what you move into your own accounts. Business statements get an expense factor because deposits are revenue, not profit. Personal statements are usually read closer to raw deposits. Which one fits depends on how your practice pays you.
3. Scrub the deposits. The underwriter removes anything that is not earned income. Transfers between your accounts come out. So do loan proceeds, refunds and one-time capital you put in. For a new practice, this step does the most damage, because start-up funding often runs through the same account as patient revenue.
4. Average and apply the expense factor. The lender totals eligible deposits, divides by the number of months, and reduces the result by an expense factor. If you own less than all of the practice, the figure is adjusted for your ownership share. The program sets the factor, not you. Some programs accept an accountant-prepared expense ratio, and on a primary-residence cash-out that choice moves the leverage ceiling, as covered below.
5. Verify your professional footing. Expect a request for your medical license, the practice entity’s formation documents and proof of ownership. You will also be asked to show prior work in the same field, such as an attending or employed-physician history.
6. Run the cash-out layer. The new loan pays off the existing mortgage first. What is left over comes to you as cash, up to the loan-to-value limit. LTV is the new loan balance divided by the appraised value of the property.
Review details vary by program and lender. Treat these steps as how the process usually runs across select wholesale lenders, not as a guarantee for any one file.
Which Deposits Count for a New Practice
Deposit treatment is where a new-practice file is won or lost. Lenders differ on details, but the pattern is consistent.
| Deposit type | Usually counts? | Why |
|---|---|---|
| Patient and insurance payments | Yes | Earned practice revenue |
| Owner capital injection | No | Your own money, not income |
| Start-up or equipment loan proceeds | No | Borrowed funds |
| Transfers between your accounts | No | Same dollars counted twice |
| Refunds and reimbursements | Usually no | Not earned income |
| Distributions to you from the practice | Depends | Counted once, not twice |
The last row trips up many physicians. If the same money shows up as practice revenue and again as a distribution to your personal account, a careful underwriter counts it once. Keep business and personal activity separate if you can. Commingled accounts invite more questions and sometimes a denial.
Timing matters too. Insurance reimbursements arrive in lumps, so a single strong month can inflate the average and a slow month can drag it down. A longer, steadier run of deposits usually helps. If your first months were light, waiting a little longer before applying can lift the averaged income.
The Cash-Out Layer: Leverage, Reserves and Seasoning
Cash-out limits differ by occupancy. State them correctly, because the wrong number sends a file in the wrong direction.
- Primary residence cash-out: up to 80% LTV with a fixed expense ratio, or 75% LTV with an accountant-prepared ratio.
- Second home cash-out: up to 75% LTV, depending on loan size and credit.
- Investment property cash-out: up to 75% LTV on a standard rental. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Primary-residence leverage can reach 90% LTV, but that is a purchase or rate-and-term figure. It is not a cash-out ceiling. If someone quotes you 90% for a cash-out, ask what transaction they mean. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Stronger files earn the upper end of each range. Credit profile, loan size and reserves all push the number up or down.
Reserves are cash and liquid assets left after closing. Programs commonly look for about six months of the housing payment. New-practice physicians sometimes hold most of their liquidity inside the practice. Lenders may not count business accounts as personal reserves, so plan where the reserve money sits.
Seasoning is the waiting period between buying a property and cashing out of it. It varies by program. If you bought the property recently, ask about seasoning before you assume the equity is available.
One more point on the proceeds. Cash-out money from a rental often funds the next purchase or the practice itself. Tax treatment varies; consult a qualified professional.
Documents to Gather Before You Apply
A clean file moves through underwriting with fewer questions. Gather these first:
- Twelve months of statements for every account you are using, with all pages included.
- Your medical license and the practice’s formation documents.
- Proof of ownership share if you are a partner or part of a group.
- A work history showing prior physician employment, if any.
- A short letter explaining large or unusual deposits, such as start-up funding.
- An accountant-prepared expense ratio, if you plan to use one.
- Recent mortgage statements, insurance and property tax details for the collateral.
The loan-purpose paperwork matters as well. For a rental, expect a business-purpose declaration. For your own home, expect the standard consumer file.
Structures and Alternatives Worth Comparing
Bank statements are one path. A broker who shops multiple wholesale lenders can compare several.
Personal versus business statements. If your practice pays you through regular transfers, personal statements may show the cleanest picture. If the practice is the revenue engine, business statements show scale but take an expense factor. Run both before choosing.
Asset depletion. Some programs review your file on liquid assets instead of deposits. On a primary residence, that route reaches up to 80% LTV. It can suit a physician with substantial savings but uneven new-practice deposits. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
DSCR on the rental. If the collateral is a rental, a DSCR loan is reviewed for the property on its rent rather than your practice income. DSCR stands for debt service coverage ratio. The lender checks whether the rent covers the property’s full monthly payment. That sidesteps the new-practice income question entirely. The tradeoff is that DSCR has its own leverage and documentation rules, so it fits investment property only. Lendmire’s complete DSCR loans guide explains how those programs work.
Physician loan programs. These are generally built around an employment contract and aimed at purchases by employed doctors. When you leave a contract for your own practice, the contract-based income disappears. That transition is why a bank statement or DSCR file becomes relevant.
Terms. Term length and payment structure follow each lender’s program sheet. Do not assume extended terms or interest-only options carry over from the DSCR side.
Where the General Rule Breaks
The steps above describe the typical file. These edge cases bend them.
The statement window and your time in business are separate clocks. Twelve months of statements does not mean twelve months of practice history. A lender may want both. Some programs accept a shorter practice history when you bring prior same-field experience, stronger credit, solid reserves or lower leverage. Others do not. Two years of self-employment is a common program convention, not a legal rule, so a shorter history is not automatically fatal.
Partial ownership. If you own part of a group practice, the lender adjusts income to your share. Some programs require a minimum ownership percentage before business statements count at all.
Practice purchase versus a new start. Buying an existing practice often brings a deposit history from day one, though the history belongs to the prior owner. A start-from-scratch practice has your own deposits only. Lenders read these differently, and the documentation differs.
Mixed accounts. Personal spending running through the business account, or large circular transfers, can end a file.
A rental you live in. A two-to-four-unit property where you occupy one unit is not treated like a pure rental. The occupancy rules apply to it.
Entity vesting. A rental held in an LLC may be eligible, subject to program terms. Your personal documentation may still be reviewed.
Which Rulebook Applies: Your Home Versus a Rental
The property you borrow against decides how the loan is documented and disclosed.
An owner-occupied file, meaning your primary residence or second home, is a consumer mortgage. TRID disclosure rules apply, and the lender must reasonably confirm your ability to repay. A bank statement loan on your own home is a non-QM loan. Non-QM means it falls outside the standard qualified-mortgage box, but it is still fully verified.
A bank statement loan on a rental you do not occupy, including a short-term rental, is business-purpose and exempt from TRID. Under the text of Regulation Z § 1026.3, credit to acquire, improve or maintain a non-owner-occupied rental is deemed business purpose. That is a purpose test, not a blanket exemption for anything that is not your primary home. Proceeds used for personal purposes can change the picture.
Bank statements are not a way around verification. The CFPB’s ability-to-repay summary says loans where income or assets are never verified cannot be qualified mortgages, and that creditors generally rely on reasonably reliable third-party records. Statements are exactly that kind of record. Lendmire’s consumer mortgage licensing covers 16 states, so availability on an owner-occupied file depends on where the home sits.
How a Broker Finds the Right Fit
No single lender writes every version of this loan. The lenders that fit a physician with a new practice depend on your property type, credit profile, leverage need, deposit pattern and prior work history. The right program for your situation may be bank statements, asset depletion or DSCR.
Lendmire is a mortgage broker that works with a network of wholesale lenders. It does not lend. Its job is to read your deposits, compare how different programs treat them, and match the scenario to the guidelines most likely to work. Programs differ on expense factors, shorter practice history, ownership share and how they count business reserves. A broker sees those differences before you apply, so you are not guessing from a single lender’s marketing page.
Some physicians use the proceeds to buy the next rental. Lendmire’s piece on documents for a super jumbo bank statement cash-out refinance on a home is useful if your home is a high-balance property.
Your decision tends to run like this:
1. Is the collateral your home or a rental?
2. Do your cleaned deposits support the loan, or should you wait for a longer track record?
3. Would asset depletion or DSCR fit better than bank statements?
4. Do you have six months of reserves outside the practice?
Honestly, the third question gets skipped too often. A physician with a strong rental and a young practice may find DSCR cleaner than any income-based loan.
Frequently Asked Questions
Can a physician with a brand-new practice use bank statements for a cash-out refinance?
Often yes, depending on the program. Twelve months of statements is the usual documentation, and prior same-field experience helps when the practice itself is new. Some lenders want a longer business history, so the match matters. Approval is subject to lender guidelines, credit and property review.
How much can I cash out?
It depends on the property. On a primary residence, up to 80% LTV with a fixed expense ratio or 75% LTV with an accountant-prepared ratio. On a second home, up to 75% LTV. On a standard rental, up to 75% LTV. Credit, loan size and reserves move the final number, and loan amounts generally run from $125,000 to $3,500,000.
Do start-up loans and my own capital count as income?
Usually not. Underwriters remove borrowed funds, owner injections and transfers between your accounts before averaging. Only earned practice revenue and verified distributions generally count. A short explanation letter for large deposits keeps the file clean.
Is a physician loan better than a bank statement loan?
They solve different problems. Physician programs are generally built on an employment contract and aimed at purchases. A bank statement program reads your deposits, so it fits a doctor who has left a contract to run a practice. Which is better depends on your income source and the property.
Will a bank statement loan hurt my chance to buy more rentals?
It can, because income-based qualification limits how much new debt your income supports across financed properties. A DSCR loan on a rental qualifies the property on its own rent instead, which may leave room to add more. Each path has its own program rules.
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. Reach the team at 828-256-2183 or request a quote.
A young practice rarely stays young, and the physicians who borrow well are the ones who let the deposits build a record before they ask.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps self-employed and high-net-worth borrowers in 16 states qualify on bank statements, a profit-and-loss statement, 1099s or liquid assets instead of tax returns, through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and its guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. CFPB Ability-to-Repay Summary
This article is part of Lendmire’s bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement HELOC Options When Self-Employed · Bank Statement HELOC Lenders Without Full Income Documentation · Best Bank Statement HELOC Program to Purchase Investment Property in Cash
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.