The Quick Read: Your cash equals the loan-to-value (LTV) cap applied to the appraised value, minus every lien you pay off, minus closing costs and prepaids, minus any prepayment charge on the old loan. The income your deposits support can also limit the loan before your equity does. The bank statement label changes how your income is documented. It does not change the equity math.
- A primary residence cash-out goes up to 80% LTV with a fixed expense ratio, or 75% when an accountant prepares the ratio.
- A second home cash-out goes up to 75% LTV, depending on loan size and credit.
- An investment property cash-out tops out around 75% LTV.
- A paid-off home still counts as a cash-out, and the cost and reserve rules still apply.
- Loan sizes run from roughly $125,000 to $3,500,000, and reserves commonly run around six months of the housing payment, subject to lender guidelines.
What Is the Formula for Your Cash?
Cash to you = (appraised value × the program’s cash-out LTV cap) − payoff of existing liens − closing costs and prepaids − any prepayment charge on the old loan. An independent investor-education tool, the REInvestorGuide cash-out calculator, states the same shape: value times maximum LTV, less the balance, less closing costs.
Each piece does a different job. The appraisal sets the starting number. The LTV cap sets the ceiling on the new loan. The payoff and costs come off the top. What is left is the check you receive.
The examples below use percentages of value. They are modeled assumptions, not market data.
The Ceiling Depends on How You Use the Home
The cash-out ceiling follows occupancy first. Within each occupancy type, loan size and credit can also move the cap.
| Occupancy | Cash-out ceiling (LTV) | Notes |
|---|---|---|
| Primary residence | Up to 80% | Fixed expense ratio |
| Primary residence | Up to 75% | Accountant-prepared ratio |
| Second home | Up to 75% | By loan size and credit |
| Investment property | Around 75% | Cash-out only |
| Primary residence, purchase or rate-and-term | Up to 90% | Not a cash-out figure |
That last row trips people up. The 90% figure applies to a purchase or a rate-and-term refinance on a primary residence, where no cash comes out. Cash-out leverage sits lower. Investment purchase leverage on bank statement documentation varies by program, so treat it as a separate question.
Notice that the accountant-prepared route has the lower ceiling, 75% against 80% for the fixed expense ratio. Choosing it means accepting less leverage, so weigh that before you pick it.
A Worked Example: The Home With a Mortgage
Say your primary residence appraises at 100 units of value. The cash-out cap is 80%, so the new loan can reach 80% of value. Your existing mortgage equals 45% of value.
- New loan at the cap: 80% of value.
- Less the old payoff: 45% of value.
- Room before costs: 35% of value.
Then the costs come off. Closing costs are charged on the whole new loan balance, not only on the cash portion, and depending on the file they may come out of proceeds or be added to the loan. The CFPB notes that cash-out closing costs are generally higher than those of a home equity line. Prepaid taxes and insurance reduce the check too.
Your required reserves do not come out of the check. They must still sit in your accounts afterward, so they reduce your usable liquidity.
The takeaway is simple. A home with 55% equity on paper does not hand you 55% of its value. It hands you roughly the gap between the cap and the payoff, less costs.
What If the Home Is Paid Off?
A free-and-clear home is still a cash-out refinance. With no payoff, the new loan minus costs goes to you. On a primary residence at the 80% cap, that means close to 80% of value before costs.
The loan is still priced and capped as a cash-out. Reserves and income rules still apply. Fixed fees weigh more on a small loan, so a very small cash-out can be consumed by costs.
Here is a reality check on size. A CFPB research report puts the median cash-out in its sample of consumer refinances at about $37,000. That sample is mostly owner-occupied borrowers, not investors or bank statement borrowers, so treat it as context only.
Which Limit Binds: Equity or Income?
You face two limits at once. The lower one sets your cash.
The equity limit is the cap times value, less payoff and costs. It is the math above.
The income limit comes from your deposits. The lender takes 12 months of personal or business statements. It removes transfers and other non-income credits. On business accounts it applies an expense factor, then averages what is left. That qualifying income must support the new, larger loan under the program’s rules.
Use this quick test to see which one binds:
1. Run the equity math first and note the maximum loan.
2. Ask whether your averaged deposit income, after exclusions and the expense factor, can carry that loan.
3. If it can, equity binds and the cap decides your cash.
4. If it cannot, income binds and the loan shrinks until it fits.
The expense factor is set by the lender or program, not chosen by you. Where a program allows it, a CPA-prepared ratio may support a different figure. Wait for the lender to confirm a specific factor before you plan around it.
A larger new loan also means a larger payment. That can push a thin-income file into the second case, even when the home has plenty of equity.
Deposit Hygiene: What Shrinks Your Qualifying Income
Cash flow that looks strong on your statements may count for less once the lender removes what is not income. Check these before you apply.
- Transfers between your own accounts. These are removed, not counted.
- Loan proceeds and one-time credits. These are generally excluded as non-income.
- Mixed personal and business deposits. Mixing them makes the average harder to document.
- Large unexplained deposits. Expect to explain them with paperwork.
- Business expenses. On business statements, an expense factor reduces what counts.
- Thin months. A weak month pulls down a 12-month average.
Every file is underwritten individually. A file is reviewed on documented income under the applicable program, subject to lender guidelines. It is a fully documented loan, just documented through your deposits instead of tax returns.
Key Terms Defined
Cash-out ceiling. The highest share of your home’s appraised value the new loan can reach when you take cash.
LTV (loan-to-value). The new loan divided by the appraised value, shown as a percentage.
Expense factor. The share of business deposits the lender treats as operating costs when it calculates your qualifying income.
Seasoning. The waiting period a program wants between buying a home and cashing out on its appraised value.
Net proceeds. The check you actually receive after payoff, costs, prepaids and any prepayment charge.
Reserves. Liquid money you must still hold after closing, commonly around six months of the housing payment.
Does the Seasoning Rule Change the Number?
It can. Seasoning decides whether proceeds are based on today’s appraised value or on what you paid. Programs set their own waiting periods. If you bought recently with cash, a lender may limit the new loan to your documented purchase cost plus certain expenses until the waiting period passes. A documented renovation can change that picture on some programs.
Ask about seasoning before you order an appraisal. It can change the number more than the LTV cap does.
Prepayment Charges and the Old Loan
Some loans carry a prepayment charge. If your current mortgage has one, paying it off early cuts into your net cash. Check your note before you plan the number. This is one of the few costs that shows up only in the old loan’s paperwork.
Bank Statement, HELOC, DSCR or Full Documentation?
The right lane depends on the property, how you earn income, and what you want to keep.
| Factor | Bank statement | HELOC | DSCR | Full doc |
|---|---|---|---|---|
| Income basis | Deposit averages | Varies | Property rent | Tax returns |
| Replaces first loan | Yes | No | Yes | Yes |
| Typical fit | Self-employed owners | Keep first lien | Rental properties | W-2 or clean returns |
| Home type | Owner-occupied or rental | Mostly owner-occupied | Non-owner-occupied | Any |
That matters when your current first mortgage has terms you want to keep. Whether a cash-out costs more or less than a line depends on the specific terms, so compare both.
On a rental property, the choice is often bank statement versus DSCR. Bank statement is reviewed on your personal or business cash flow. DSCR, short for debt service coverage ratio, is reviewed on the property’s rent covering the payment. On a rental, a larger new payment can fail the rent-coverage test before equity runs out.
Which Rules Apply to Your File?
Occupancy decides the disclosure regime. An owner-occupied bank statement file, meaning a primary residence or second home, is a consumer mortgage, and TRID disclosure rules apply. A bank statement loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan and is exempt from TRID.
Either way, the lender must make a good-faith determination that you can repay the loan, even though non-QM programs sit outside the qualified mortgage safe harbor. 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.
The Investor Decision: Is the Cash Worth the Reset?
A cash-out replaces your whole loan, so the entire balance is re-priced, not only the new cash. A cash-out may lengthen your payoff period. Weigh the cash against what you give up.
A few questions help:
- Are you giving up a first mortgage with terms worth keeping?
- Does the cash fund something that earns more than the added carrying cost?
- Could a smaller loan, a line, or a different lane get you there with less reset?
- Will your deposit pattern look the same next year, or are you in a peak?
For self-employed investors, heavy write-offs can shrink tax-return income. Bank statement documentation can recover borrowing capacity. It does not remove the need to carry the new payment. Investors who recycle equity into the next purchase should also remember that seasoning decides whether proceeds follow new value or cost.
Lendmire’s piece How to Qualify and Apply for a Bank Statement Cash-Out Refinance on a Home You Already Own covers the application side. For the full investor lending picture, see the complete DSCR loans guide.
How to Estimate Your Own Number
Use these steps to get a realistic first read:
1. Pick the occupancy. Primary residence, second home, or investment property sets the ceiling.
2. Apply the cap to a realistic value. Use a conservative appraisal estimate, not a hopeful one.
3. Subtract every lien. Include the mortgage, any home equity line, and any prepayment charge.
4. Subtract costs and prepaids. Remember they apply to the whole new loan.
5. Test your income. Average 12 months of deposits, remove non-income credits, apply the expense factor, and see whether the loan fits. Confirm that your reserves cover about six months afterward.
The best program for your situation depends on the property, your credit profile, the leverage you need, and how you document income. A broker that shops multiple wholesale lenders can match your scenario to the programs whose guidelines fit it.
Frequently Asked Questions
Can I use a bank statement cash-out with no traditional personal-income documentation?
Yes, on programs built for it. The file is reviewed on documented income under the applicable program, subject to lender guidelines. You supply 12 months of personal or business statements, and the lender averages qualifying deposits after exclusions and the expense factor.
How much of my equity can I actually take?
Less than your equity. On a primary residence, the new loan can reach up to 80% of value, or 75% with an accountant-prepared ratio. A second home reaches up to 75%, and an investment property around 75%. Payoff, costs, and reserves then reduce what you can use, subject to lender guidelines.
Does a paid-off home change the formula?
It removes the payoff, but it is still a cash-out. The new loan, less costs, goes to you. The same cap, reserve requirement, and income test still apply. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Can I borrow up to the 90% purchase figure?
No. The 90% figure applies to a purchase or rate-and-term refinance on a primary residence. A cash-out on that home tops out at 80%, and lower for other occupancies.
How do closing costs affect my cash?
They come out of your proceeds, or they are added to the loan and reduce what is left under the cap. Either way, costs are charged on the whole new balance. Small cash-outs lose a bigger share of the check to fixed fees.
What to Do Next
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. Owner-occupied bank statement files are available where Lendmire’s consumer mortgage licensing applies, which covers 16 states. Lendmire is a mortgage broker and arranges financing through select wholesale lenders, subject to lender guidelines and not a commitment to lend.
For how equity extraction works on an investment property, see 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.
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. REInvestorGuide cash-out calculator
3. CFPB cash-out refinances and paydown behavior
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
- 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
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.