The Quick Read: Franchise owners can borrow with a bank statement loan, and the amount is the lower of two limits: the program’s size cap, which runs from $300,000 to $6,000,000 on a portfolio non-QM program, and the amount your deposits support after the expense ratio, your ownership share, and a debt-to-income limit of up to 50%. A bank portfolio jumbo program carries twelve-month-statement files up to $30,000,000 on its own size ladder, and every file above $4,000,000 is reviewed case by case before submission. All figures here are ceilings through select wholesale programs, subject to full underwriting and not a commitment to lend.
- No dollar amount applies to franchise owners as a class. Your deposits, your ownership percentage and your debts set your number.
- Business statements run through a fixed expense ratio of 20%, 40% or 50%, or an accountant-provided ratio.
- Business statements generally need at least 25% ownership.
- Leverage steps down as the loan grows, with the highest leverage reserved for smaller primary-residence purchases and far lower ceilings at the top.
- If you are buying a rental, a DSCR loan can take your franchise income out of the qualifying math.
How Is the Borrowing Ceiling Set?
Two limits apply, and the lower one wins. The first is the program ceiling. The second is the loan your qualifying income can carry.
The program ceiling depends on which wholesale program the file fits. The portfolio non-QM program covers loans from $300,000 to $6,000,000. The bank portfolio program starts above $4,000,000, overlaps the first program up to $6,000,000, and stands alone beyond that. Its ladder allows 65% leverage to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000, always on review above $4,000,000. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The income limit is where franchise owners usually land. Lendmire, a mortgage broker, compares lenders’ guidelines side by side, and the pattern is consistent. Most franchise files hit the income ceiling long before they hit the program ceiling.
Your debt-to-income ratio (DTI) compares your monthly debts to your qualifying monthly income. Most programs in the network allow DTI up to 50%. Every personal obligation you carry, including business-related ones, uses up some of that room.
How Do Deposits Become Qualifying Income?
Lenders average your deposits over 12 or 24 months, subtract an expense ratio, and count your ownership share. The result is monthly qualifying income. Traditional personal-income documentation does not enter the formula, which matters because depreciation, royalties and reinvestment often shrink a franchise owner’s taxable income.
The formula runs in five steps:
1. Collect 12 or 24 consecutive months of statements. The bank portfolio program uses 12.
2. Strip out deposits that are not income, such as transfers between your own accounts, loan proceeds and refunds.
3. Total the eligible deposits and divide by the number of statement months.
4. Apply the expense ratio if you are using business statements.
5. Multiply by your ownership percentage.
Here is the logic with index numbers, not dollars. Say your screened deposits index at 100 and the 50% expense ratio applies. A 40% owner counts 20. A 100% owner counts 50. Same business, very different borrowing power.
The fixed expense ratios in the wholesale network are 20% for a service business with no employees and 40% for one to five employees. The ratio is 50% for six or more employees or any business that sells a product. An accountant can also provide a ratio, or a profit-and-loss method capped at 80% can be used. A staffed franchise unit with a storefront usually lands at 40% or 50%. Franchise-specific ratios are not published, so treat any promise of a lower one with suspicion. The ratio comes from the lender’s guidelines, and it is not your choice. Accredited Real Estate Schools covers how the expense factor works in bank statement lending.
What Counts in Franchise Deposits?
Eligible deposits count, and pass-through cash does not. Franchise accounts mix several kinds of money, and underwriters sort them line by line.
| Deposit type | Typical treatment |
|---|---|
| Card processor and delivery payouts | Count as business revenue |
| Customer payments and cash deposited | Count if traceable |
| Transfers between your own accounts | Excluded |
| Loan proceeds and refunds | Excluded |
| One-time items and large unusual deposits | Excluded or explained by letter |
| Money flowing straight out to subcontractors | May get a higher factor or be excluded |
Circular transfers between personal and business accounts can sink a file, because the same dollars appear to count twice. Clean statements beat large ones.
Personal or Business Statements?
Personal statements count eligible deposits with no expense ratio, but the deposits must still trace to business income. Business statements run through the expense ratio and your ownership share. Most franchisees use business statements, and some owners run both sets of numbers.
One detail helps owners who pay themselves regularly. Transfers from your own business into your personal account count at 100% on the programs in the wholesale network. If your pay arrives as a steady transfer, personal statements can show it cleanly without the expense ratio. The underwriter still checks that the money traces back to the franchise.
Business statements need at least 25% ownership. That matters for partners and investor-operators who hold a minority stake.
Is a Bank Statement Loan a No-Doc Loan?
No. A bank statement loan is reviewed on documented income under the applicable program, subject to lender guidelines. The lender still reviews credit, assets, reserves and the property.
Because these are non-QM loans (loans that do not fit the standard qualified-mortgage box), lenders set their own income math. They still must make a good-faith judgment that you can repay. The CFPB’s ability-to-repay compliance guide lists eight factors a lender must consider, including income or assets, current debts, DTI and credit history. The same guide says the rule does not prescribe a single underwriting model, which is why deposit-based income is allowed.
What About Multiple Units and Partners?
Bank statement income is prorated by ownership, and each entity can be read separately or combined. This is where the product helps multi-unit owners most.
A tax-return path reads each entity on its own, so a loss at one unit can drag down the total. A deposit-based path reads cash flow and counts your share, so a new unit still ramping up does not erase the strong ones. A common-sense rule applies. Include the statements that help your file and explain the ones that look odd.
If you own 100% of three units through one holding company, one set of business statements may cover them. If you own 40% of one unit and 100% of another, expect the underwriter to apply each percentage separately. Keep the operating agreement, K-1 or an accountant letter handy to prove each share.
How Much Leverage at Each Loan Size?
Leverage steps down as the loan grows. These are ceilings on purchases, through select wholesale programs, subject to full underwriting.
| Loan size | Primary residence | Investment property |
|---|---|---|
| To $1,000,000 | 90% | 85% |
| $1.5M to $2M | 85% | 80% |
| $2.5M to $3M | 80% | 75% |
| $3M to $3.5M | 75% | 60% |
| $4M to $5M | 65%, on review | 65%, on review |
Cash-out runs lower. On a primary residence, cash-out reaches 80% up to $1,000,000 with a credit score of 680 or higher. On an investment property, cash-out reaches 75% in that same size band with a 700 score or higher. On the portfolio program, cash-out proceeds are unlimited at or below 60% LTV and capped at $1,500,000 in cash in hand above 60%. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Above $3,500,000 on a primary residence, and above $3,000,000 on a second home or investment property, the super-jumbo overlays apply. They include a 700 credit floor, a 0x30x24 housing history and 48 months of seasoning after any credit event. Borrowers must be U.S. citizens or permanent residents. Cash-out proceeds cannot satisfy reserves.
Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Reserves run 3 months to $500,000, 6 months to $1,500,000 and 9 months above that. Each additional financed property adds 2 months, up to a 12-month maximum.
What Documents Does a Franchise Owner Need?
Expect to supply a short, specific list:
- Every page of 12 consecutive months for each account used. Transaction histories do not substitute.
- Account names that match you or your entity.
- A letter explaining large or unusual deposits.
- An accountant letter if you want a non-standard expense ratio.
- Proof of your ownership share, such as an operating agreement, K-1 or accountant letter.
The franchise agreement matters mainly as evidence of ownership and structure. A mortgage underwriter reviews your deposits, your debts and the property. Franchisor terms are not the qualifier.
Where Does a Franchise Owner’s Number Come In Lower?
Heavy expense ratios, large one-off deposits and personal debt cut the number most often. Three patterns show up again and again in franchise files.
First, the expense ratio is higher than the owner expected. Royalties, payroll and rent are real, and the ratio exists to cover them. Second, deposits include money that is not income, like transfers or loan proceeds. Third, a recent build-out or equipment loan adds debt that eats into DTI.
Reducing the number of accounts, documenting unusual deposits early and paying down small personal debts can all improve the file. None of that changes lender guidelines, and each lender sets its own overlays.
Do You Need Franchise Income at All to Buy a Rental?
Not always. If you are buying a non-owner-occupied rental, a DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. DSCR means debt service coverage ratio: the rent divided by the full monthly obligation of principal, interest, taxes, insurance and any association dues. Your franchise income and DTI are not the test. Lendmire’s complete DSCR loans guide walks through the mechanics.
Programs below 1.00 coverage are available through select lenders in the network, but LTV and terms adjust. Eligibility review depends on the property, credit and lender review.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The Federal Register’s ability-to-repay rule treats investment-purpose credit as business purpose. That is the practical reason the two paths work so differently.
| Factor | Bank statement loan | DSCR loan |
|---|---|---|
| What qualifies you | Deposit-based income | Property rent |
| Your franchise income | Central | Not the test |
| Your DTI | Tested, up to 50% | Not the test |
| Best fit | Your home or a second home | A rental purchase or refinance |
The choice often comes down to what you are buying. Lendmire’s piece DSCR Loan Vs Bank Statement Loan For Investors goes deeper. Many franchise owners use bank statements for the primary residence and DSCR for each rental. Doing so keeps rental debt from crowding the personal DTI.
Owners with large liquid balances have a third route. An asset allowance divides liquid assets by 36, 60 or 84 months to create qualifying income, on primary and second homes with leverage to 80%. Assets-only qualification needs U.S. liquid assets equal to the loan plus closing costs, with no DTI test. Business funds, gifts and cryptocurrency never count.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Key Terms Defined
Non-QM loan: A mortgage that does not fit the standard qualified-mortgage rules, so lenders set their own income math.
Expense ratio: The percentage of business deposits a lender subtracts to estimate what you could actually draw as income.
Debt-to-income ratio (DTI): Your monthly debts divided by your qualifying monthly income.
Reserves: Liquid savings you hold after closing, counted in months of the loan’s monthly obligation.
Seasoning: The waiting period a lender requires after a credit event or between two property events.
DSCR: Rent divided by the full monthly obligation on a rental property.
Frequently Asked Questions
Is there a dollar limit that applies to franchise owners?
No. Program size caps apply to everyone, and your income sets the rest. The portfolio non-QM program covers loans up to $6,000,000, and a bank program reaches $30,000,000 with review above $4,000,000. Most franchise owners are limited by qualifying income and DTI long before those ceilings.
Can a bank statement loan fund a franchise purchase?
Not directly. A bank statement mortgage is secured by real estate, so it funds a home purchase, refinance or an investment property. Buying or expanding a franchise unit is a business-financing question handled separately.
Do I need to own 100% of the franchise?
No, but business statements generally require at least 25% ownership. Only your percentage counts toward income. A 40% owner counts 40% of eligible deposits after the expense ratio.
Which statements are best for a multi-unit owner?
Often business statements for each entity, read separately or combined. If you pay yourself through regular transfers into a personal account, personal statements can count those transfers at 100%. A broker can run both versions before you pick.
Is a bank statement loan better than a full-documentation loan?
Not always. Bank statement loans suit owners whose returns understate cash flow. If your returns already show strong income, full documentation may carry simpler terms. Compare both before choosing.
Next Step
Lendmire’s consumer mortgage lending is licensed in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA. For a rental, Lendmire’s sole-proprietor borrowing piece covers a related self-employed path.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
Lendmire — NMLS# 2371349 — is a DSCR and non-QM mortgage brokerage with investor loan programs in 41 markets, including Washington, D.C. DSCR eligibility is commonly reviewed by the lender around property-level rent rather than personal income documentation, subject to lender guidelines, and the brokerage helps arrange financing for LLC-owned portfolios beyond conventional financed-property limits. Recognized by Scotsman Guide as a Top Mortgage Workplace in 2025 and 2026.
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References
1. Accredited Real Estate Schools
2. CFPB ATR/QM Small Entity Compliance Guide
3. Federal Register: Ability-to-Repay and Qualified Mortgage Standards
This article is part of Lendmire’s super jumbo bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Bank Statement Loan vs WVOE Loan for Jumbo Borrowers · Bank Statement Loan vs Assets-Only Mortgage · How to Get a Super Jumbo Bank Statement Loan After Changing Fields
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.