The Quick Read: The arithmetic is the same on every file: appraised value times the program’s cash-out LTV cap, minus the payoff of existing liens, minus closing costs. Which cap applies depends on the property you refinance, and your documented income can limit the loan below that cap. Bank statements change how your income is proven. They do not raise the cap, and the cash that reaches you is always smaller than the maximum loan.
- On a primary residence, cash-out typically tops out at 80% LTV, or 75% with an accountant-prepared expense ratio.
- On a second home, cash-out typically tops out at 75% LTV.
- On an investment property, the ceiling is the same 75% figure.
- The 90% LTV figure you may have heard belongs to purchase and rate-and-term loans on a primary.
- The new primary home is a separate loan with its own down payment, qualification, and reserves.
All figures reflect select wholesale-lender guidelines and are subject to lender guidelines, not a commitment to lend.
What Is the Formula for Your Net Cash?
The net-cash formula has four steps: value, cap, payoff, costs. Multiply the appraised value by the cash-out LTV cap. That gives the largest new loan. Subtract your current mortgage balance and any other liens. Subtract closing costs and prepaid items. What remains is your cash.
Fortune’s investor explainer lays out the same arithmetic. It uses agency caps as its example: 75% on a one-unit investment property and 70% on two to four units. Those are agency numbers, shown here only to illustrate the math. They do not govern bank statement programs.
Run it with round numbers. Say a property is worth $400,000 and the cap is 75%. The maximum new loan is $300,000. If the payoff is $200,000, that leaves $100,000 before costs. Those are illustrative figures, not a quote. Closing costs then come off the top, so the amount that lands in your account is smaller still.
Which Property Should You Refinance?
The property you tap sets the cap, and the cap sets your ceiling. Across the wholesale network, the three options compare like this.
| Source property | Typical cash-out LTV cap | What to know |
|---|---|---|
| Current primary residence | Up to 80% (75% with accountant-prepared ratio) | Highest cap; occupancy questions if you move out |
| Second home | Up to 75% | Owner-occupied consumer loan |
| Investment property | Around 75% | Business-purpose when non-owner-occupied |
A short-term rental generally carries a lower ceiling, around 70%, than a standard rental at 75%. Program sheets vary by lender and loan size.
The primary residence offers the most leverage. It also carries the most friction, because cashing out your current home and moving out soon after raises occupancy and intent questions. Raise your plans with your broker before you apply, so the file is matched to a lender whose guidelines fit.
A rental or second home is often the cleaner source for a new primary’s down payment. You keep living where you live. You pull equity from a property that was never your residence.
How Does Bank Statement Income Limit the Cash?
Income can be the binding constraint, not equity. A bank statement program is reviewed around documented income under the applicable program, subject to lender guidelines. Most programs ask for 12 months of business or personal statements. The lender averages your deposits and applies an expense factor. That factor varies by lender, and you should never assume a universal formula.
Not every deposit counts. Transfers between your own accounts, loan proceeds, and one-time credits are generally stripped out before averaging.
Here is why that matters for cash-out. A larger loan means a larger payment. If your qualifying income cannot support it, the loan size shrinks, and so does your cash. You can have plenty of equity and still be capped by income.
Consumer-purpose loans must also show ability to repay. Scotsman Guide’s non-QM overview notes that non-QM lenders still confirm that ability, and that some underwrite debt-to-income ratios up to 50%. That article is older, so treat its numbers as illustrative. Bank statement does not mean no documentation.
If your business is under 24 months old, some lenders weigh liquid assets and credit quality alongside a shorter history. Others do not. This is where shopping multiple lenders matters.
What Shrinks Your Cash Before It Arrives?
Four things come off the top, and each one can surprise you.
- Payoff. Every existing lien on the property is paid first, including a second mortgage or HELOC.
- Closing costs and prepaids. These reduce the check. Ask for a full cost estimate before choosing a loan size.
- A low appraisal. The cap applies to appraised value, not your estimate. A lower value cuts the maximum loan dollar for dollar.
- Income limits. As covered above, qualifying income can cap the loan below the LTV ceiling.
Reserves matter too. Programs commonly ask for around six months of the housing payment. Whether cash-out proceeds count toward those reserves differs by program, so ask before you assume.
Taking less than the maximum is a legitimate strategy. A smaller loan keeps the new payment lower and can help your income qualify. Size the cash to the actual need.
Two Loans, One Plan
The cash-out and the new purchase are two separate loans. The refinance puts money in your hands. The purchase is underwritten on its own, with its own down payment, qualification, and reserves.
The sequence usually runs like this:
1. Choose the source property and confirm its equity.
2. Refinance and receive the proceeds.
3. Use the funds, properly documented, toward the new home’s down payment and closing costs.
4. Qualify for the purchase loan with both housing payments counted.
Step four trips people up. The refinanced property now carries a larger payment. The purchase lender counts that payment in your obligations along with the new home’s payment. Carrying two housing payments pushes up your debt-to-income picture. Plan the purchase budget with both in view.
Purchase leverage is different from cash-out leverage. On a primary residence purchase, select lenders go up to 90% LTV, with stronger files earning the top of that range. That purchase ceiling does not apply to the cash-out loan.
Another route is asset depletion, which is reviewed against liquid assets instead of deposits. On a primary residence it runs to about 80% LTV. It suits borrowers whose deposits look uneven but whose balance sheet is strong. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
When the Source Is a Rental
Many investors tap a rental to fund a home. If the rental is non-owner-occupied, the cash-out can be a business-purpose loan. Business-purpose investor loans are reviewed differently from standard owner-occupied mortgages. The CFPB’s Regulation Z text treats credit for a non-owner-occupied rental as business purpose, and the analysis turns on the loan’s purpose, not just the property type.
The wrinkle is where the money goes. Proceeds spent on a personal residence purchase raise a classification question. Have your broker confirm with the lender how the file will be treated. Do not assume.
Two other points apply to rentals. First, a DSCR cash-out only works on investment property. It cannot buy your primary directly, but its proceeds can fund the down payment. Second, on a DSCR file the rent still has to cover the new, larger payment. The refinance can thin your cash flow on that property. Weigh the cash you gain against the cash flow you give up. For more on this lane, see the DSCR cash-out refinance guide.
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.
Cash-Out Versus Other Ways to Fund the Down Payment
A cash-out replaces your whole first mortgage. That is a fair trade when your existing loan carries a balance you are happy to refinance. It is a poor trade when you hold a low-balance first loan you would rather keep. A second lien may fit better in that case.
| Option | Replaces first mortgage? | Best fit |
|---|---|---|
| Bank statement cash-out | Yes | Self-employed borrower needing sizable cash |
| HELOC or home equity loan | No | Smaller cash need, keeping the first loan |
| Selling the property | Yes | Exiting the asset entirely |
If you want the larger picture of how these programs fit together, the complete DSCR loans guide covers the investor side.
Key Terms Defined
Cash-out refinance: a new, larger mortgage that pays off the old one and hands you the difference in cash.
Bank statement loan: a loan that is reviewed around average deposits over a set window rather than tax returns or W-2s.
LTV (loan-to-value): the loan amount divided by the property’s appraised value.
Expense factor: the share of business deposits a lender assumes goes to expenses before counting income.
Reserves: liquid funds you keep after closing, commonly expressed as months of housing payments.
Occupancy: how you use the property: primary residence, second home, or rental.
Frequently Asked Questions
Can I cash out my current home and move out right away?
It can cause trouble. Lenders look at occupancy and intent, and moving out soon after a primary-residence cash-out raises questions. A second home or a rental is another place to draw equity from.
Does 90% LTV apply to a bank statement cash-out?
No. Up to 90% LTV applies to purchase and rate-and-term loans on a primary residence through select lenders. Cash-out on a primary tops out at 80%, or 75% with an accountant-prepared expense ratio. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Do I need reserves for both loans?
Programs commonly ask for about six months of the housing payment. Each loan is underwritten separately, so plan for the requirement on the purchase as well. Whether cash-out proceeds count varies by program.
What loan sizes are available?
Bank statement programs in the network run roughly $125,000 to $3,500,000. Your qualifying income and the property’s value can each hold the loan below that ceiling.
Does a low appraisal change my cash?
Yes. The LTV cap applies to appraised value, so a lower value reduces the maximum loan dollar for dollar. Your payoff stays the same, so the shortfall comes out of your cash.
Next Step
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. Reach the team at 828-256-2183 or request a quote. Consumer mortgage availability covers 16 states, and every file is underwritten individually.
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.
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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. Fortune, investment cash-out refinance explainer
2. Scotsman Guide, “Rev Up the Engine for Non-QM Lending”
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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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.