The Quick Read: Usually less than the equity on paper, and often close to nothing in the borrower’s hands. The new loan is capped at the program’s cash-out leverage and must first pay off the old mortgage, cover closing costs and prepaids, and fund the ex-spouse’s equity buyout, so only what remains after those three payments reaches the borrower.
- The cash-out leverage for the loan size and occupancy sets the ceiling on the new loan, through select wholesale programs, subject to full underwriting.
- Net cash equals the maximum loan, minus the old payoff, minus the buyout owed to the ex, minus costs.
- At or below 60% LTV, cash-out proceeds are unlimited. Above 60%, the portfolio non-QM program caps cash in hand at $1,500,000, and the bank portfolio program publishes no cap.
- Above $4,000,000, every file is reviewed case by case before submission.
- In many divorces, the buyout absorbs most or all of the cash-out.
What Actually Limits the Check?
Three limits stack on top of each other: the leverage ceiling, the cash-in-hand cap, and the borrower’s qualifying income. Whichever binds first sets the size of the check.
Lenders usually treat a divorce buyout as a cash-out refinance. That means the cash-out ceiling applies, not the higher rate-and-term ceiling. Across the wholesale network, the pattern is consistent: the buyout is paid out of the cash-out, so it counts against the same limit.
The formula is short:
1. Maximum loan = appraised value × the cash-out LTV for that loan size and occupancy.
2. Net cash = maximum loan − old mortgage payoff − buyout owed to the ex − costs.
3. If step 2 is negative, the borrower must bring cash, lower the buyout, or trade other assets.
DivorceNet describes the common setup. The spouse keeping the home applies alone for a loan big enough to pay off the old mortgage and pay the departing spouse. Refinancing and trading other marital property are the two most common buyout methods.
The Leverage Ladder on a Primary Residence
On a primary residence, cash-out leverage steps down as the loan grows. The figures below are ceilings through select wholesale programs, subject to full underwriting. The bands are loan amounts, not purchase prices, so compute the loan first and then read the band.
| Loan band | Cash-out LTV (primary) | Program |
|---|---|---|
| $300K–$1M | 80% | Portfolio non-QM |
| $1M–$1.5M | 80% | Portfolio non-QM |
| $1.5M–$2M | 75% | Portfolio non-QM |
| $2M–$2.5M | 70% | Portfolio non-QM |
| $2.5M–$3M | 70% | Portfolio non-QM |
| $3M–$3.5M | 65% | Portfolio non-QM |
| $3.5M–$4M | 65% | Portfolio, super-jumbo overlays |
| $4M–$5M | 60%, on review | Bank portfolio |
| $5M–$6M | 55%, on review | Bank portfolio |
| $6M–$10M | 55%, on review | Bank portfolio |
Two details matter here. The portfolio non-QM program stops at $6,000,000, while the bank portfolio program carries twelve-month-statement files up to $30,000,000 on its own ladder. Above $4,000,000, leverage is always case by case, so treat any figure at that size as a starting point for review.
On credit, the top cell in each band needs a stronger score than the floor. The top cell at $1,000,000 and under needs 680. By $1,500,000 it needs 720, and in the $3.5M–$4M band it needs 760. A lower score takes a lower leverage cell in the same band. The portfolio program’s floor is 660 up to the super-jumbo line, and 700 above it. The bank portfolio program keeps its own 680 floor at every size.
A Worked Waterfall (Shown as Percent of Value)
Dollar math can hide the structure, so run it as a share of appraised value. These inputs are modeled assumptions, not market data. Say a primary residence has a loan landing in the $3M–$3.5M band, where the cash-out ceiling is 65%.
| Line | Share of value |
|---|---|
| Appraised value | 100% |
| Old mortgage payoff (assumed) | 25% |
| Equity | 75% |
| Ex-spouse’s half of equity | 37.5% |
| Maximum new loan | 65% |
| Left before costs | 2.5% |
Closing costs and prepaids come out of that 2.5%. At this size, the cash left for the borrower is thin, and costs could consume all of it.
Now change one input. Apply the same percentages to a smaller house, with a loan in the $1M–$1.5M band on a primary residence, and the ceiling would be 80%. That leaves 17.5% of value before costs. The lesson is that larger loans mean less cash per dollar of equity, because leverage steps down as the loan size rises.
Which Limit Binds First?
Work through these four checks in order. The first one that fails is your real ceiling.
1. Leverage. Is the loan you need above the cash-out LTV for its band? Then the ceiling binds before anything else.
2. Cash-in-hand cap. Above 60% LTV on the portfolio program, cash in hand is capped at $1,500,000. Below 60%, proceeds are unlimited. The bank portfolio program publishes no cap.
3. Income. Does the borrower’s solo qualifying income support the larger loan at a debt-to-income ratio up to 50%?
4. Reserves. Reserves run 3 months to $500,000, 6 months to $1,500,000, and 9 months above that. Past the super-jumbo lines, cash-out proceeds cannot satisfy reserves. Those lines are above $3,500,000 on a primary residence and above $3,000,000 on a second home or investment property. Liquid funds must sit outside the loan.
Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Reserves are the quiet failure point. Divorce often drains liquidity, so a borrower can clear leverage and income but still have no cash outside the loan to hold as reserves.
How a Self-Employed Borrower Qualifies Alone
Bank-statement programs qualify the borrower on deposits, not tax returns. The portfolio non-QM program uses 12 or 24 consecutive months of personal or business statements, and the bank program uses 12. Qualifying income is eligible deposits divided by the statement months, after an expense ratio.
For business statements, the borrower needs at least 25% ownership. The fixed expense 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-provided ratio or a profit-and-loss method, capped at 80%, are the alternatives. Transfers from the borrower’s own business into a personal account count at 100%. Transaction histories never substitute for consecutive statements.
Other paths exist for borrowers whose deposits understate the picture. An asset allowance divides liquid assets by 36, 60, or 84 months. Assets-only needs liquid assets equal to the loan plus closing costs, with no debt-to-income test. Business funds, gifts, and cryptocurrency never count.
Support payments count only when documented. If the ex’s income used to carry part of the old loan, the new solo income has to carry all of it now.
Bank-statement loans are non-QM, but they are not underwriting-free. The CFPB’s ability-to-repay compliance guide requires a reasonable good-faith determination of repayment ability using reasonably reliable third-party records. Bank statements are exactly that kind of record. The method of documenting income changes, but the duty to confirm it does not.
When the Buyout Is Bigger Than the Loan Can Fund
This is a common problem. The settlement number can exceed what the cash-out ceiling leaves after the old payoff. The options are practical, not magical:
- Bring cash from other assets, remembering that proceeds above the overlay lines cannot count as reserves.
- Trade assets. Giving the ex a retirement account, a brokerage balance, or another property in place of cash reduces the buyout the loan must fund.
- Stage the payments. Where the decree allows it, part of the buyout can be paid later, though the new loan will not fund a later payment.
- Renegotiate the figure before it is locked into the decree.
- Sell. If no combination works, a sale ends the leverage problem.
Settlement wording matters too. The decree should state the exact buyout amount and a completion window for the refinance. A deadline that arrives before the underwriting is done creates trouble that the loan structure cannot fix.
A larger loan also means a larger payment. For a self-employed borrower on a single income, that pushes the debt-to-income ratio toward the 50% ceiling. Sometimes the income test binds before the leverage test does.
Investment Property and Second Homes
Second homes and investment properties follow their own ladders, and you read each one on its own, never by subtracting from the primary-residence figures. Through select wholesale programs, subject to full underwriting, the cash-out ceilings on an investment property are 75% on loans from $300,000 to $2,000,000, then 70% from $2M to $2.5M, 60% from $2.5M to $3M, and 55% for loans from $3M to $4M. From $4M to $5M, the ceiling is 55% on review. Second homes are one-unit only.
Compare that with the primary residence in the same band. At a loan between $3M and $3.5M, the primary-residence cash-out is 65% while the investment property is 55%. That gap shrinks the cash after a buyout, so a rental property needs far more equity to fund the same settlement.
For a rental, a DSCR cash-out refinance is the other route. It tests property rent against the full payment instead of personal income, so a divorced borrower with messy deposits may find the rental’s coverage ratio is the cleaner path. The catch is that a larger buyout loan lowers rental coverage, so rent has to support the full monthly obligation, not just the buyout draw. Select lenders in the network may review files under 1.00 coverage, but leverage and terms adjust when they do. The complete DSCR loans guide covers how that test works.
Sequencing: Decree, Title, Payoff, Closing
Run the file in this order, because the documents depend on one another.
1. Decree or settlement agreement stating the buyout figure and any refinance window.
2. Payoff statement for the existing mortgage.
3. Appraisal. Every leverage test starts from the appraised value. A rental also uses the rent schedule and small-income-property forms (Form 1007 and Form 1025).
4. Bank statements and any business ownership proof.
5. Signed buyout agreement and title work.
A cash-out can proceed after the decree but before title changes, provided the payoff statement, decree, and the borrower’s own qualifying documents are in hand.
Size classification also shifts because of the buyout. The current baseline one-unit conforming limit is $832,750. Calculated Risk reports the high-cost ceiling at $1,249,125. A loan above the county’s limit is jumbo, and a buyout can push a normally conforming balance into jumbo territory. Jumbo overlays then apply.
Federal law protects some transfers. Under the Garn-St Germain Act, a lender generally cannot call a loan due when a home transfers to a spouse through a divorce decree, separation agreement, or incidental property settlement. That covers only residential property with fewer than five dwelling units. It does not force a refinance, and it does not remove the ex from the note. A refinance does. A transfer into an LLC is not protected.
Agency loans are the contrast. Some agency programs treat certain divorce buyouts as limited cash-out refinances. That does not carry over to non-agency jumbo files, which follow each program’s own ladder.
Key Terms Defined
Super jumbo: A loan large enough that extra overlays apply, which begin above $3,500,000 on a primary residence and above $3,000,000 on a second home or investment property.
Cash-out refinance: A new mortgage larger than the old payoff, with the difference used for buyouts, costs, or cash to the borrower.
Buyout: The payment to the departing spouse for their share of the home’s equity.
Cash-in-hand cap: The dollar limit on proceeds a borrower can take when LTV is above a set level, here $1,500,000 above 60% on the portfolio program.
Reserves: Liquid funds held after closing, measured in months of the payment.
Frequently Asked Questions
Does the buyout count as cash-out on a super jumbo refinance?
Usually, yes. The new loan pays off the old mortgage and funds the ex-spouse’s share, so the cash-out ceiling applies. Agency programs sometimes treat buyouts more gently, but non-agency jumbo files generally follow the program’s own cash-out ladder.
Is there a dollar limit on how much cash I can take?
On the portfolio non-QM program, proceeds are unlimited at or below 60% LTV and capped at $1,500,000 in hand above 60%. Leverage usually binds first at larger sizes.
Can cash-out proceeds count toward my reserves?
Not above the super-jumbo lines. Those are above $3,500,000 on a primary residence and above $3,000,000 on a second home or investment property. Reserves must come from liquid funds outside the loan.
Can I qualify alone on bank statements after the divorce?
Often, yes. Qualifying income is eligible deposits after an expense ratio, over 12 or 24 months, and business-to-personal transfers count at 100%. Debt-to-income can reach 50%, subject to underwriting. Documented support payments count, but undocumented ones do not.
What if the buyout exceeds what the loan can fund?
Bring outside cash, trade other assets, stage payments where the decree allows, renegotiate the figure, or sell. Loans above $4,000,000 are reviewed case by case, so test the numbers with a broker before the figure is final in the decree.
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.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
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 mortgage broker licensed for consumer lending in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages for self-employed and high-net-worth borrowers are arranged through wholesale lenders on primary residences, second homes and investment properties; every file is underwritten by the lender under its program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. DivorceNet: Negotiating a House Buyout
2. CFPB ATR/QM Small Entity Compliance Guide
4. FedLaws: Garn-St Germain Act
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: Does a Super Jumbo Bank Statement Cash-Out Refinance Make Sense Before Selling? · Super Jumbo Bank Statement Cash-Out Refinance Requirements Through a Broker · Best Super Jumbo Bank Statement Cash-Out Refinance Program After a Divorce Buyout
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.