The Quick Read: Your cash is the appraised value times 75%, minus the payoff on every existing lien, minus costs paid from proceeds, so the 75% caps the new loan and never the check you receive. The result depends on how much of the property’s value you already owe.
- Net cash equals the new loan minus payoff, minus costs paid from proceeds.
- On a typical investment-property cash-out, 75% LTV is the ceiling at the wholesale lenders that write this program.
- If the appraisal lands below your estimate, the cash shrinks by 75 cents for every dollar of lost value.
- Reserves of roughly six months are commonly held in your accounts, not deducted from the check.
Everything here is a typical program range, subject to lender guidelines and not a commitment to lend.
The Formula: Three Steps
Start with the lender’s appraised value. Multiply it by 0.75. That is the largest loan a lender in the network will usually place on an investment property. Then subtract the payoff of your first mortgage, any HELOC or second lien, and any bridge loan. What remains is gross cash. Costs paid from proceeds come off that figure.
Here is a hypothetical, labeled as such. Say a property appraises at $400,000. At 75%, the maximum new loan is $300,000. If the existing payoff is $220,000, you have $80,000 before costs. Costs paid from proceeds reduce that further, so the check lands below $80,000.
Notice what the 75% did. It set the roof. Your existing debt and your costs decided how much of that roof you could actually use.
Key Terms Defined
Loan-to-value (LTV): The new loan amount divided by the appraised value of the property.
Payoff: The total you owe on all liens that must be cleared at the refinance, including first mortgages, HELOCs and other liens.
Net cash: What you receive after the payoff and any costs taken out of proceeds.
Seasoning: The time between when you took title and when a lender will size the loan on an appraisal instead of your cost basis.
Expense factor: The percentage a lender subtracts from business deposits to estimate usable income on bank statement files.
How Much Equity Do You Need Before Any Cash Comes Back?
Your appraised value must exceed the sum of your payoff and costs, divided by 0.75. Below that point, 75% leaves nothing for you. In percentage terms, a property with a payoff near 75% of value is already at the cap, so the loan is a rate-and-term refinance at best.
Think in bands of payoff as a share of value, which keeps the math program-neutral:
| Payoff as % of value | Room under the 75% cap | What it means |
|---|---|---|
| 40% | 35% of value | Meaningful cash before costs |
| 50% | 25% of value | Solid cash before costs |
| 60% | 15% of value | Modest cash; costs bite harder |
| 70% | 5% of value | Little cash after costs |
| 75% or more | None | No cash-out; rate-and-term at most |
Costs matter most in the lower rows. A fixed set of costs takes a bigger bite out of a small cushion. Closing costs vary with loan size and program, so build your estimate from a written quote rather than a rule of thumb.
What Happens If the Appraisal Comes In Low?
Cash falls by 75 cents for every dollar the value drops, because the loan is 75% of value. Return to the $400,000 example. If the value comes in at $380,000, the maximum loan drops to $285,000. With the same payoff, gross cash falls from $80,000 to $65,000. A low appraisal can also push a thin-equity file into cash-to-close territory, where the new loan no longer clears the payoff.
The lender’s appraisal governs, not your estimate. Plan your next purchase around a conservative value.
Seasoning matters too. Across the programs a broker sees, a recently acquired property is often sized on cost (price plus documented rehab) until roughly six months after title recording, and on appraisal after that. A buyer planning a renovate-and-refinance should check which basis applies before counting on a post-repair value.
Which LTV Ceiling Applies to Your Property?
The ceiling depends on occupancy. Mixing them up is the most common source of wrong cash estimates.
| Property / transaction | Typical maximum LTV |
|---|---|
| Investment property, cash-out | Up to 75% |
| Primary residence, cash-out | Up to 80% with a fixed expense ratio; 75% with an accountant-prepared ratio |
| Second home, cash-out | Up to 75%, by loan size and credit |
| Primary residence, purchase or rate-and-term | Up to 90% on select programs |
The 90% figure is a purchase and rate-and-term ceiling on a primary residence. It does not apply to cash-out. Notice also that the accountant-prepared expense ratio route has the lower cap, 75% instead of 80%. Short-term-rental collateral often sits lower than standard rentals; a 75% ceiling fits a standard rental, while short-term rental collateral commonly sits nearer 70%, and exact limits vary by lender.
Programs typically fund loan amounts from about $125,000 to $3,500,000 and expect around six months of reserves. Those reserves sit in your accounts. They are not netted from the check, but they do need to exist.
How Bank Statements Qualify the Income
The loan is reviewed on documented income under the applicable program, subject to lender guidelines. Most programs ask for 12 months of business or personal bank statements. The lender averages eligible deposits, then applies an expense factor to estimate usable income. HousingWire’s non-QM guide describes the same method, with a review of 12 to 24 months of deposits and an expense factor on business accounts.
Expense factors vary by lender. Some programs use a fixed ratio, and some accept a ratio prepared by an accountant. Do not assume a particular factor. The same deposits can produce different qualifying income at different lenders, which is why a broker that compares several programs can change the result.
Bank statement loans also verify repayment ability. The CFPB’s ability-to-repay guide describes a reasonable, good-faith determination using reliable third-party records, which governs owner-occupied files.
Equity Limit or Income Limit: Which Binds First?
Either one can. The equity limit is the 75% math above. The income limit is whether your deposits support the new payment. A big equity cushion does not help if qualifying income, after the expense factor, cannot carry the larger loan.
Self-employed owners with heavy business expenses often see the income side bind first. Investors with strong deposits but a high payoff see the equity side bind first. Run both before you promise anyone a number.
Rental or Owner-Occupied: Which Rules Apply?
Occupancy decides the disclosure regime. An owner-occupied file, meaning a primary residence or second home, is a consumer mortgage, and TRID disclosures apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is business-purpose and exempt from TRID. Under Regulation Z’s business-purpose exemption, the creditor determines case by case whether a transaction is primarily for an exempt purpose.
Bank Statement or DSCR on a Rental?
It depends on what makes your file stronger. Bank statement documentation reads your deposits. A DSCR loan reads the rent. If a rental’s income is the cleaner story, DSCR can fit better, and it avoids stacking an expense factor on top of rental expenses. The tradeoff is that on DSCR, coverage can cap the loan before equity does. A thin-coverage property may support less cash than the 75% math suggests.
For the complete picture of how the rental-income side works, see the complete DSCR loans guide.
Programs sized on value rather than income exist because many investors hold properties through entities and have uneven personal income, subject to program eligibility. The market has noticed: HousingWire’s reporting on Optimal Blue data shows bank statement loans at about 30% of non-QM production and investor/DSCR loans at 33%.
Common Mistakes That Shrink the Check
- Treating 75% as the payout. It is the loan size.
- Using an after-repair value too soon. Seasoning decides when an appraisal can replace cost.
- Ignoring other liens. A HELOC or second mortgage counts in the payoff.
- Forgetting reserves. They stay in your accounts, but you must have them.
- Counting on 90%. That ceiling is for purchase and rate-and-term on a primary residence.
- Assuming a buyout is free of the cash-out cap. Cash released to a departing co-owner is treated as cash-out.
A Pre-Application Checklist
1. Estimate a conservative appraised value. 2. List every lien and its payoff. 3. Multiply value by 0.75 for an investment property. 4. Subtract payoff, then a cost estimate from a written quote. 5. Gather 12 months of statements and confirm the account structure. 6. Confirm reserves of roughly six months. 7. Check how long you have held title.
If the number still works after a 5% to 10% appraisal haircut, you have a margin of safety. If it only works at your best-case value, treat it as a stretch.
Frequently Asked Questions
Do I have to take the maximum 75% loan?
No. You can request a smaller loan, and a lower balance leaves more room if the appraisal comes in light. Many investors size the loan to what their next purchase needs rather than to the cap. Qualification stays subject to lender guidelines.
Do closing costs come out of my cash?
Usually, if you finance them. Costs paid from proceeds reduce the check dollar for dollar. Costs vary by loan size and program, so use a written estimate rather than a general percentage.
Can I cash out on a rental with bank statements?
Yes, on programs that allow it, typically up to 75% LTV on an investment property. A DSCR loan may suit the rental better when rent is the stronger documentation. Programs differ, so a broker comparing several can match the file to the right one.
Does a primary residence get a higher cash-out limit?
Yes. A primary residence can reach up to 80% LTV with a fixed expense ratio, while the accountant-prepared route tops out at 75%. A second home is typically capped at 75%, by loan size and credit.
What if I owe more than 75% of value?
Then no cash comes back at that cap. The loan would be rate-and-term at most, and on some programs a higher-leverage lane may apply. Any cash-out request, however small, falls under the lower cash-out limit instead.
Next Steps
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 that works with a network of wholesale lenders, and consumer mortgage licensing covers 16 states. Reach the team at 828-256-2183 or request a quote.
The best next step is simple arithmetic: value times 75%, minus everything you owe, minus costs, and then a hard look at whether the appraisal will really land where you hope.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s bank statement loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges bank statement, P&L-only, 1099-only and asset-based home financing in 16 states through wholesale lenders, on primary residences, second homes and investment properties. Every option is subject to the lender’s guidelines and full underwriting. 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. HousingWire – Non-QM loans guide
2. CFPB – ATR/QM small entity compliance guide
3. CFPB – Regulation Z §1026.3
4. HousingWire’s reporting on Optimal Blue data
This article is part of Lendmire’s bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Top Bank Statement Cash-Out Refinance Providers to Renovate a Condo
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.