The Quick Read: Lenders underwrite this loan by turning twelve or twenty-four months of bank deposits into monthly qualifying income, applying an expense ratio, testing that income against the new payment and your other debts, and then capping the cash you can take by the loan-size leverage ladder, reserves, and the file’s credit tier. Your 1099 forms matter less than the deposits behind them.
- Deposits, not the 1099 total, are the income measure on a bank statement file; these files are offered through select wholesale programs and are subject to full underwriting.
- Business statements need at least 25% ownership, and the expense ratio is typically 20%, 40% or 50% unless an accountant supplies a ratio.
- Debt-to-income can run up to 50%, and the new cash-out payment counts in full.
- Cash-out leverage steps down as the loan grows, and every loan above $4,000,000 is reviewed case by case before submission.
- Above $3,500,000 on a primary residence, cash-out proceeds cannot satisfy reserves, so you need liquid assets outside the refinance.
Key Terms Defined
Super jumbo is a lender label for very large loans. No agency sets one official line, so every program draws its own.
Bank statement loan is a mortgage that is reviewed around deposits in your bank accounts instead of tax-return income.
Expense ratio is the share of business deposits the underwriter treats as costs of running the business rather than income to you.
Cash-out refinance replaces your current mortgage with a larger one and pays you the difference.
Reserves are liquid assets left over after closing, counted in months of the new payment.
Debt-to-income (DTI) compares your total monthly debts, including the new payment, to your qualifying monthly income.
Why a 1099 Total Is Not the Underwriting Number
A 1099 form reports what one payer sent you in a year. It does not show what reached your account, what you spent earning it, or whether it will continue.
Self-employed borrowers often write off a large share of earnings, so net income on a return can look small next to the cash that actually moved. A bank statement program rebuilds income from the cash. Tax treatment varies; consult a qualified professional.
On this kind of file, the 1099s play a supporting role. They show who pays you and help explain a deposit pattern. The deposits themselves are what get counted.
Some lenders do read 1099 forms directly in a separate documentation lane, with a different expense treatment. Which lane fits you depends on whether your payers issue forms, how steady the history is, and which program offers the better leverage at your loan size. That comparison is a big part of what a broker does.
From Deposits to Income, Step by Step
1. Pick the window. Programs read 12 or 24 consecutive months of personal or business statements. The bank portfolio program, which carries the largest loans, uses 12. Every page must be present, and a transaction history never substitutes for a statement.
2. Remove what is not income. Transfers between your own accounts, loan proceeds, refunds and one-off deposits come out. Large deposits need a source.
3. Apply the expense ratio. On business statements, eligible deposits are divided by the statement months, and the expense ratio then reduces that average.
4. Test DTI. Qualifying income is measured against the full new payment plus your other debts. The new payment is bigger than the old one because of the cash-out, which is why a rental or home that passed at purchase can strain at refinance.
5. Layer on the size overlays. Leverage, credit, reserves and appraisal conditions tighten as the loan grows.
6. Find the binding limit. The lowest of the leverage cap, the cash-in-hand cap, the reserve test and the DTI result controls the cash you can take.
Step six surprises people. A borrower with plenty of income can still be limited by leverage at the top sizes.
Personal or Business Statements?
Most 1099 contractors and sole proprietors have a choice, and the choice changes the math.
Personal statements are typically read closer to raw deposits after the non-income items are removed. Business statements take the expense ratio. Through select wholesale programs, subject to full underwriting, the fixed ratios are 20% for a service business with no employees, 40% for one to five employees, and 50% for six or more employees or any product business.
An accountant can supply a ratio of their own, and that ratio can be lower when your real costs are low. A profit-and-loss method also exists, capped at 80%.
Business statements require at least 25% ownership. Money moved from your own business into your personal account counts at 100%, which is useful when 1099 payments land in a business account and then flow to you.
Commingled accounts invite more questions. If personal spending runs through the business account, expect the underwriter to separate it line by line.
What Changes at Super Jumbo Size
The loan amount controls the program. A portfolio non-QM program (the portfolio program) carries files from $300,000 to $6,000,000. A bank portfolio program (the bank program) carries twelve-month-statement files to $30,000,000 on its own ladder. The bank program’s ladder begins above $4,000,000, overlaps the portfolio program to $6,000,000, and stands alone above that.
Credit follows a similar split. The portfolio program starts at 660 and moves to 700 above the super-jumbo line. The bank program carries its own 680 floor in its bands, though the super-jumbo overlays below, including the 700 floor, apply above $3,500,000 on a primary residence. Within a band, the top leverage cell needs a stronger score, and a lower score takes a lower cell.
Cash-out leverage on a primary residence, through select wholesale programs, subject to full underwriting:
- Loans to $1,500,000 reach 80% on a cash-out. The top cell needs 680 or better to $1,000,000 and 700 or better to $1,500,000.
- Between $1,500,000 and $4,000,000, the cash-out ceiling steps down by band from 75% to 65%. The top cells need 720 or better, and 760 in the $3,500,000 to $4,000,000 band.
- Above $4,000,000, the bank program reads 60% on a cash-out in the $4,000,000 to $5,000,000 band, and 55% to $10,000,000. Every figure here is on review, case by case, before submission.
- Beyond $10,000,000, the bank program’s cash-out ceiling is 50% on a primary residence, also case by case.
Second homes and investment property take their own ladders, and the purchase ceiling equals the primary figure in some bands and sits well under it in others. Read each figure from the ladder for your occupancy, not by subtracting from the primary number.
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:
- A 700 credit floor and a 0x30x24 housing history.
- 48 months of seasoning on any credit event.
- U.S. citizens and permanent residents only, with no non-occupant co-borrowers.
- No rural property, and ten acres at most.
- Cash-out proceeds cannot satisfy reserves.
The Cash-Out Layer
Proceeds are unlimited at or below 60% LTV on a cash-out. Above 60%, the portfolio program caps cash in hand at $1,500,000. The bank program publishes no cap, so its leverage ladder does the limiting. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Reserves scale with size: 3 months through $500,000, 6 months through $1,500,000, and 9 months above that. Each additional financed property adds 2 months, up to a 12-month maximum, and first-time investors need 12.
Those reserves must come from assets that count. Retirement accounts count at 70%, or 80% at age 59.5 and older. Business funds, gifts, unvested stock and cryptocurrency never count. At the top sizes the refinance’s own proceeds cannot fill the gap either.
The cash-out also pays off your existing loan and any liens first. The cash that reaches you is what remains after payoff and costs, so a high balance on the current loan shrinks the usable cash even when leverage allows more.
Worked Example: One 1099 Borrower, Start to Finish
Picture a consultant who is paid by several clients on 1099s. The clients’ payments land in a business account she owns outright, and she moves money to her personal account each month.
- Window: Twelve consecutive business statements, which suits the bank program.
- Cleaning: Transfers from her own accounts and a refunded deposit come out. A large client payment gets a payer letter and invoice.
- Expense ratio: She has two employees, so the fixed ratio is 40%, and income is 60% of average eligible deposits. Her accountant’s letter supports a lower ratio, which could raise income if the program allows it.
- DTI test: Qualifying income must keep total debts, including the new cash-out payment, at or under 50%.
- Leverage: Her primary residence falls in the $4,000,000 to $5,000,000 loan band. The bank program reads 60% on a cash-out there, case by case.
- Binding limit: Leverage, not income, sets her cash. Her reserves must be 9 months of liquid assets outside the refinance.
The point is the order. Income gets her into the program, and leverage and reserves decide the proceeds.
Where the General Rule Breaks
Occupancy changes the review. An investment-property cash-out is a business-purpose loan, so it is reviewed differently from a standard owner-occupied mortgage. A primary-residence cash-out is a consumer loan, and the federal ability-to-repay rule applies. That rule asks for a reasonable, good-faith repayment determination, but it does not set an expense factor or a look-back length. Those are program choices. It does call for verification against third-party records, and financial-institution records qualify, which is why statements work.
Rental properties can skip personal income. A rental with strong cash flow may qualify on property-level income under a DSCR program instead. See the complete DSCR loans guide for how that lane works. Sub-1.00 coverage is available through select lenders in the network, but leverage and terms adjust.
Asset paths exist. An asset allowance divides liquid assets by 36, 60 or 84 months to add income, on primary and second homes only. The 84-month divisor applies to standalone use or any loan above $3,500,000. Assets-only qualifies with no DTI when U.S. liquid assets equal the loan plus closing costs plus sixty months of any net loss on other residential property.
High DTI changes the mix. If your debt load is the problem, Lendmire’s piece on bank statement cash-outs with high debt-to-income walks through what shifts.
Texas home-equity loans are restricted. A Texas 50(a)(6) loan takes a 5-point leverage reduction and stops at $3,000,000 on the portfolio program.
Which Documentation Path Fits
| Path | Income basis | Fits when |
|---|---|---|
| Bank statements | Deposits after expense ratio | Income varies, returns understate it |
| 1099-based | 1099 forms with trend support | Payers issue clean forms |
| P&L method | Accountant-prepared P&L, capped at 80% | Books are well kept |
| DSCR | Property rent vs. debt | Rental, income not the story |
| Asset-based | Liquid assets over a divisor | Large liquid balances |
Availability and terms differ by program, and the right one depends on your documents, property and leverage need.
Red Flags and Fixes
- Unexplained large deposits. Gather the source documents before submission.
- Overdrafts and returned items. Write a short explanation and show the pattern ended.
- A declining trend. Underwriters weigh the recent months, so a strong early period that fades can cut qualifying income.
- Missing pages. Statements must be consecutive and complete.
- Business funds as reserves. They never count, so plan personal liquidity.
- Commingled spending. Separate accounts going forward and annotate the past.
Prepare twelve or twenty-four statements, any 1099s, an accountant letter if you want a lower ratio, ownership proof, current mortgage statements, and liquid-asset statements. A fresh appraisal sets the value for the leverage test, so budget for it, and for two appraisals if the program requires them.
Next Step
If you are financing a high-balance property on business or personal bank statements and want to see how the numbers work, Lendmire can help you compare super jumbo bank statement loan options based on your deposits, the property, credit profile, leverage, and your goals. Lendmire’s consumer mortgage licensing covers 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA. A title or scenario outside those states needs a scope check first.
This article is general information, not legal or tax advice. Talk with a qualified attorney or CPA about your own situation. Nothing here is a commitment to lend, and every file is underwritten individually.
Frequently Asked Questions
Do my 1099 forms or my deposits set my income?
On a bank statement program, deposits do. The forms help show who pays you and why deposits rise and fall. Where a 1099 total and the deposit total differ, the underwriter works from the deposits after removing transfers and non-income items.
Can cash-out proceeds count toward my reserves?
Not at the top sizes. Above $3,500,000 on a primary residence, and above $3,000,000 on a second home or investment property, proceeds cannot satisfy reserves. Below those lines, the answer depends on the program, so plan to hold the required months in liquid assets that already exist.
What if I have no 1099s at all?
Bank statements are then the main route. Your deposits show the work you are paid for, and invoices or client letters can explain them. A 1099-form lane is simply not available to you.
What if I earn both W-2 and 1099 income?
Underwriters can combine the two. The W-2 side is documented the usual way, and the 1099 side runs through deposits or the program’s own method. The combined figure still has to fit the DTI test.
Is the review different for a rental property than for my home?
Yes. Leverage ladders differ by occupancy, and a rental cash-out is a business-purpose loan reviewed differently from a primary-residence loan. A rental can also qualify on property income through DSCR instead of personal income. Terms depend on the property, your credit and the program.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving self-employed and high-net-worth borrowers in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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. CFPB, Regulation Z § 1026.43
2. 12 CFR § 1026.43, Cornell Legal Information Institute
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: Can You Get Approved for a Super Jumbo Bank Statement Cash-Out Refinance After Delisting? · How Lenders Underwrite a Super Jumbo Bank Statement Cash-Out Refinance in Three Weeks
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.