The Quick Read: A 25% ownership stake can work for a bank statement cash-out refinance, but the real question is which program and which documentation route fit your file, not which bank to call. Many programs treat 25% as a floor for using business statements, and floors differ by program. Large retail lenders rarely write this product, which is why a broker that shops wholesale lenders is a common way to reach it.
- On business statements, your qualifying income is cut by an expense factor first, then by your ownership share.
- Personal statements can skip the ownership share, if the deposits clearly trace to income.
- Owner-occupied cash-out tops out around 80% LTV on a primary residence and 75% on a second home.
- Investment-property cash-out tops out around 75% LTV.
- On a rental you already own, a DSCR loan often fits better than bank statements.
Say you own a quarter of a landscaping company that deposits a healthy sum every month. You want cash out of your home, or out of a rental. You assume the lender will count your quarter. The truth is more specific, and it starts with how the loan is built.
What a Bank Statement Cash-Out Refinance Actually Is
A bank statement cash-out refinance replaces your current mortgage with a larger one and hands you the difference. The lender reviews your file on documented income from 12 months of bank statements instead of tax returns. Across the wholesale network Lendmire works with, the statements can be business or personal accounts. Income comes from averaging deposits and applying lender-specific expense factors.
This is not a no-underwriting product. Every file is underwritten individually, and the loan is reviewed on documented income under the applicable program, subject to lender guidelines. Loan sizes in this lane run roughly $125,000 to $3,500,000, and reserves commonly sit around 6 months of the housing payment.
Why “Which Bank?” Is the Wrong Question
Most large retail lenders do not offer alt-doc cash-out. These loans come mainly from non-bank and wholesale lenders, and the programs differ lender to lender. A broker that shops multiple wholesale lenders can match your ownership share, account type, and occupancy to the program that actually fits.
The 25% figure is a documentation rule, not a bank rule. Some programs set the floor at 25% for business statements. Others set it higher, and some ask for less when you use personal statements. “25% always works” is not a safe statement. The lenders that write your file depend on your property type, credit profile, leverage need, and documentation.
How Underwriting Treats Your 25%, Step by Step
Here is the sequence on a business-statement file.
1. Choose the account type. Business statements bring the ownership math. Personal statements count identifiable deposits with no ownership percentage, if the program allows it.
2. Review 12 months of deposits. The underwriter sorts them. Transfers, loan proceeds, and other non-income deposits come out. Total deposits are not income.
3. Apply the expense factor. This is a haircut for operating costs. Some programs fix it by business type. Some accept an accountant-prepared ratio. Expense factors are lender-specific, so no figure here should be treated as universal.
4. Multiply by your ownership share. A 25% owner counts a quarter of the net business figure. On identical deposits, a 100% owner counts four times the income you do.
5. Divide by 12 and test against your debts. Every financed property adds to your debt load, so later cash-outs get harder.
6. Build the cash-out layer. The new loan is capped by LTV on the appraised value. The old first lien is paid off, and what remains after costs is your cash.
Document verification is not optional. The CFPB’s ability-to-repay compliance guide says lenders must verify income with reasonably reliable third-party records. It lists bank statements as an acceptable record and rules out relying on a borrower’s word alone.
A Side-by-Side Picture
Take two borrowers with identical deposits and identical expense factors.
| Factor | 100% owner | 25% owner |
|---|---|---|
| Deposits after sorting | Same | Same |
| Expense factor | Same | Same |
| Ownership share applied | Full | One quarter |
| Counted income | Four times higher | Base figure |
The 25% owner’s income can still support a loan. The supportable loan size and debt-to-income room are simply much smaller, so a partial owner carrying several mortgages may find the debt test tightens with each added property.
Leverage Limits for Cash-Out
Cash-out ceilings are lower than purchase ceilings. This table states the cash-out figures for this lane.
| Occupancy | Cash-out ceiling (typical) |
|---|---|
| Primary residence | Up to 80% LTV, fixed expense ratio |
| Primary residence | Up to 75% LTV, accountant-prepared ratio |
| Second home | Up to 75% LTV, by loan size and credit |
| Investment property | Up to about 75% LTV |
Notice that the accountant-prepared route is the lower ceiling, not the higher one. A bank statement purchase or rate-term refinance on a primary residence can reach up to 90% LTV through select lenders, but that is not a cash-out figure. An asset-depletion alternative, qualifying from liquid assets, runs to about 80% LTV on a primary residence. All of these are typical ranges subject to lender guidelines and credit approval, not commitments to lend.
Where the 25% Rule Breaks
Two different entities. “25% of the entity” can mean 25% of the operating business that produces your income. It can also mean 25% of the LLC that owns the rental. Bank statement ownership floors apply to the first. Guarantor rules on DSCR loans apply to the second. Keep them separate.
Personal statements sidestep the share. If the business pays you into a personal account, those deposits can count as personal income, provided the program allows it and the deposits trace to the business.
Below the floor. The business-statement path is usually unavailable, not prorated. You then need another route: personal statements, other documentation, or DSCR.
Combined ownership. Some programs let co-borrowers aggregate ownership if each meets a minimum. That varies by lender.
Limited partners and passive members. On DSCR loans to an LLC, guarantor thresholds differ by program. Capital-only partners are sometimes treated differently, so ask before assuming.
Retitling first. Moving a property into an LLC before refinancing can trigger a due-on-sale clause on your existing loan. Check with counsel and your title company first.
Owner-Occupied vs. Rental: Which Rules Apply
Occupancy decides the paperwork. An owner-occupied cash-out on a primary residence or second home is a consumer mortgage, so consumer disclosure rules apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from those consumer disclosures. Do not mix the two.
The label “investment property” is not the legal test. Regulation Z exempts credit extended primarily for a business purpose, and it looks at the purpose of the loan. Business-purpose treatment can also change if credit is later rewritten for consumer use. That matters if you move into a property you once rented.
When DSCR Fits a Rental Cash-Out Better
For a rental you already own, a DSCR loan often beats bank statements. The reason is simple: DSCR tests the property, not your share of someone else’s business. The lender divides monthly rent by the full monthly obligation: principal, interest, taxes, insurance, and any association dues. Your 25% stake never enters the math.
The tradeoff is real. Cash-out is limited by value and rent coverage, and a bigger cash-out raises the new obligation and lowers coverage. Some select lenders in the network will review sub-1.00 coverage, but leverage and terms adjust when they do. Lendmire’s complete DSCR loans guide walks through the full structure. Entity vesting is often available on DSCR loans, subject to lender program eligibility, and a personal guarantee generally still applies.
Bank statements make more sense when your own business income is strong and the property’s rent is thin, such as a vacant, lease-up, or transitional property. If your cash-out is meant to fund the next rental, Lendmire’s piece Short-Term Rental Cash-Out Refinance Rules When You Own Only 25% of the Entity covers that angle.
This one is a genuine toss-up for some borrowers. Strong personal deposits can make bank statements work. A well-leased rental can make DSCR cleaner. Running both side by side is the honest answer.
Key Terms Defined
Cash-out refinance: A new, larger mortgage that pays off your old one and gives you the difference in cash.
Bank statement loan: A mortgage that is reviewed around average deposits over 12 months instead of tax returns.
Expense factor: The percentage deducted from business deposits to account for operating costs.
Ownership share: Your percentage of a business, applied to its net income on business-statement files.
LTV: Loan-to-value, the loan amount divided by the appraised value.
DSCR: Debt service coverage ratio, a rental’s income divided by its monthly housing obligation.
Business-purpose loan: Credit taken mainly for commercial use, such as buying or improving a rental.
What to Prepare Before You Apply
- Twelve months of statements for the account you plan to use.
- Ownership documents, such as an operating agreement, showing your 25%.
- A CPA or preparer letter if you want a non-default expense factor.
- Proof of self-employment, such as a business license.
- Your current mortgage payoff and title or vesting documents.
- A list of every financed property, since each adds to your debt load.
Common mistakes are easy to name. Borrowers assume total deposits equal income. They assume the K-1 number sets qualifying income, when on this product the deposit average, expense factor, and ownership share do. They assume an LLC removes personal liability, when a guarantee usually remains. Some also forget that the 25% figure is a program rule, not a universal one.
Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income.
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. This article is not legal or tax advice, and readers should consult a qualified attorney or CPA about their own situation.
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. Lendmire is a mortgage broker arranging financing through select lenders in its wholesale network. Consumer mortgage licensing in this lane covers 16 states.
Frequently Asked Questions
Can I use a bank statement cash-out refinance with only 25% of my business?
Often yes on personal statements, and sometimes on business statements, depending on the program’s floor. On business statements, your income is reduced by the expense factor and then by your share. Programs differ, so the answer depends on the lender and your file.
Do banks offer this, or only non-bank lenders?
Mostly non-bank and wholesale lenders write it. Large retail lenders generally do not. A broker that shops multiple wholesale lenders can match your scenario to the program that fits your ownership, occupancy, and documentation.
What if I own less than the program’s floor?
The business-statement path usually closes rather than shrinking proportionally. You would look at personal statements, other documentation the program accepts, or a DSCR loan if the property is a rental.
How much cash can I take out?
It depends on appraised value, the cash-out LTV ceiling, your existing balance, and your income or coverage. Typical ceilings are up to 80% on a primary residence, 75% on a second home, and about 75% on an investment property, subject to lender guidelines.
Does a rental held in an LLC change the process?
Holding the rental in an LLC can change the process. Entity vesting is more common on DSCR loans, and a personal guarantee generally applies. Retitling before refinancing can trigger a due-on-sale clause, so confirm with counsel and title first.
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 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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References
1. CFPB ATR/QM Small Entity Compliance Guide
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
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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.