The Quick Read: The plan turns equity in a high-value home into down payment cash by qualifying on twelve or twenty-four months of bank deposits under the applicable program, subject to lender guidelines, then sizing the new loan to a leverage ceiling that steps down as the balance grows. The usable cash is what remains after the payoff, closing costs and reserves, so you plan from the net number, not the gross. Every figure above $4,000,000 is reviewed case by case before submission, through select wholesale programs, subject to full underwriting.
Key takeaways
- Your deposits, not your tax returns, set the income. The lender removes non-income credits and applies an expense ratio to business deposits.
- Cash-out leverage on a primary residence steps down as the loan size increases, depending on the loan band.
- Gross cash is not down payment cash. The existing lien costs and reserves come out first.
- The new, larger payment counts against you on the purchase loan, so the debt-to-income ratio decides the plan as often as equity does.
- Confirm in advance that the purchase lender accepts the proceeds as sourced, usable funds.
What This Strategy Actually Does
You own a high-value home with real equity, and you want to buy another property without selling anything. A cash-out refinance replaces your current mortgage with a larger one and hands you the difference. That difference becomes your down payment.
Two loans are involved, and each gets underwritten on its own. The refinance has to work first. Then the purchase loan has to work with the cash it created.
This route fits founders, physicians, attorneys, entertainers, athletes and investors whose tax returns understate what actually moves through their accounts. Write-offs shrink taxable income, but deposits tell a different story. Bank statement programs exist to read that story.
Lendmire is a mortgage broker, not a lender. It shops this scenario across wholesale programs and matches the file to the one that fits. The best program for your situation depends on the loan size, occupancy, credit profile and how your income shows up in your accounts. Lendmire’s complete DSCR loans guide covers the investor side if the next purchase is a rental.
Key Terms Defined
Super jumbo: An industry label for a loan far above the conforming limit. It has no official definition. The current baseline conforming limit for one-unit properties is $832,750, with a high-cost ceiling of $1,249,125. Anything above the county limit is jumbo, and super jumbo sits well beyond that.
Bank statement loan: A mortgage that is reviewed around deposits in your personal or business accounts rather than on tax-return income.
Cash-out refinance: A new mortgage larger than the one it pays off, with the difference paid to you.
Net proceeds: The cash left after the old loan is paid off and closing costs are deducted.
Reserves: Liquid money you must still hold after closing, counted in months of payments.
Expense ratio: The share of business deposits the lender treats as overhead, not income.
Cash to close: Everything you must bring to the purchase closing, including the down payment and costs.
How Bank Statement Income Sets Your Loan Size
Underwriting starts with your income, and your income is built from deposits. The lender takes twelve or twenty-four consecutive months of statements. The portfolio non-QM program, which carries files to $6,000,000, accepts either window. The bank portfolio program, which carries files to $30,000,000, uses twelve months.
Here is how the number gets built:
1. Pick the window. Twelve months can show higher income if you are growing. Twenty-four months smooths out seasonal or lumpy revenue.
2. Remove non-income deposits. Loan proceeds and transfers between your own accounts do not count as earnings.
3. Apply the expense ratio to business statements. 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-provided ratio is another option. A profit-and-loss method is also available, capped at 80%.
4. Divide by the statement months. The result is monthly qualifying income.
5. Compare it to the new payment. Debt-to-income can run up to 50% on these programs, subject to underwriting.
Picture a business whose eligible deposits average 100 units a month. At a 50% expense ratio, qualifying income is 50 units. At 20%, it is 80 units. The ratio you land in matters as much as the deposits.
Business statements require at least 25% ownership. Transfers from your own business into your personal account count at 100%. That makes personal statements attractive when the owner pays himself or herself regularly from the business. Statements must be consecutive, and a transaction history never substitutes for them.
You do not pick the expense ratio. The program sets it by business type, unless you supply an accountant letter or choose the profit-and-loss path.
What Leverage Do You Get at Each Balance?
Leverage on a primary residence steps down as the loan grows. The table shows purchase and cash-out ceilings by loan band, through select wholesale programs, subject to full underwriting. The bands are loan amounts, not purchase prices, so compute your loan first and then read the row.
| Loan band | Purchase | Cash-out | Program |
|---|---|---|---|
| $300K–$1M | 90% | 80% | Portfolio non-QM |
| $1M–$1.5M | 85% | 80% | Portfolio non-QM |
| $1.5M–$2M | 85% | 75% | Portfolio non-QM |
| $2M–$2.5M | 80% | 70% | Portfolio non-QM |
| $2.5M–$3M | 80% | 70% | Portfolio non-QM |
| $3M–$3.5M | 75% | 65% | Portfolio non-QM |
| $3.5M–$4M | 75% | 65% | Portfolio, super-jumbo overlays |
| $4M–$5M | 65% | 60% | Bank portfolio, case by case |
| $5M–$6M | 60% | 55% | Bank portfolio, case by case |
| $6M–$10M | 60% | 55% | Bank portfolio, case by case |
| $10M–$20M | 55% | 50% | Bank portfolio, case by case |
| $20M–$30M | 55% | 50% | Bank portfolio, case by case |
The portfolio non-QM program also reviews files up to $6,000,000 on a case-by-case basis. Above $6,000,000, only the bank portfolio program applies.
The top cell in each band needs a certain credit score. It is not a program floor. On a primary residence cash-out, the top cell needs 680 or higher up to $1,000,000, 700 or higher to $1,500,000, 720 or higher from $1,500,000 to $3,500,000, and 760 or higher from $3,500,000 to $4,000,000. In the bank portfolio bands, the top cell needs 680 or higher. A lower score takes a lower cell inside the same band.
The actual floors are 660 on the portfolio program up to the super-jumbo line and 700 above it. The bank portfolio program keeps its own 680 floor at every size. Second homes and investment properties follow their own ladders, so read each figure from the ladder for the occupancy you are refinancing.
Cash-out proceeds are unlimited at or below 60% LTV. Above 60%, the portfolio program caps cash in hand at $1,500,000. The bank portfolio program publishes no such cap. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
From Gross Cash to Usable Down Payment
Plan from the net number. Here is a modeled example, not a quote. Assume a primary residence where the existing mortgage equals 40% of the home’s value. Assume the new loan lands in the $2,000,000 to $2,500,000 band, where primary-residence cash-out tops out at 70%. Your credit needs to be 720 or higher for that top cell.
- Gross cash: 70% minus 40% leaves 30% of the home’s value.
- Less closing costs on the refinance: this comes out of proceeds first.
- Less reserves, where proceeds may be used for them: this depends on the program and loan size.
- What remains is your usable down payment cash.
Now match it to the purchase. If the purchase loan lands in the same band on a primary residence, the purchase ceiling is 80%, so you put 20% down. Suppose the new home costs about what the old one is worth. Then 20 points of that 30% goes to the down payment. The last 10 points must cover costs on both loans and any reserves. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
That 10 points can disappear fast on a bigger deal. So price the plan before you commit to the purchase contract. Also remember that a lower leverage cell, because of your score or the loan size, means a larger down payment than the top cell suggests.
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.
Reserves: The Part Most Plans Miss
Reserves are where good plans quietly fail. On these programs, they run 3 months of payments for loans to $500,000, 6 months to $1,500,000, and 9 months above that. Each additional financed property adds 2 months, up to a 12-month maximum. First-time investors need 12 months.
Reserves are measured after closing. You cannot spend cash on a down payment and also count it as a cushion. Treat the down payment pool and the reserve pool as two separate buckets.
In the super-jumbo range, the rule is explicit. Above $3,500,000 on a primary residence, and above $3,000,000 on a second home or investment property, cash-out proceeds cannot satisfy reserves. Below those lines, the answer depends on the program. Ask before you plan around it.
The practical fix is a two-pool plan. Build or document a liquid reserve account before you apply, separate from the cash you expect from the refinance. That account also protects the purchase file, which carries its own reserve test.
How the Purchase Lender Will See the New Payment and the Cash Trail
The new, larger mortgage on the refinanced home is now a monthly obligation. The purchase lender counts it, plus the payment on the new property. Your bank statement income must carry both inside the 50% debt-to-income ceiling.
This is the squeeze most plans underestimate. A bigger cash-out raises the payment on the first home. That lowers the room you have left for the second. Sometimes a smaller cash-out, paired with more leverage on the purchase, works better.
Bank statements are an accepted way to document income. The CFPB’s small-entity compliance guide lists financial-institution records such as account statements among acceptable verification sources. Even so, underwriters review statements, credit and appraisal in full.
For the cash trail, prepare these items:
- The refinance settlement statement showing your net proceeds.
- The account where the proceeds landed, with the wire matching the settlement figure.
- A written use-of-funds note tying the money to the purchase.
- Explanations for any large deposits that are not obvious sales or business receipts.
- Statements for the separate reserve pool.
Unexplained deposits and inconsistent sourcing are common reasons a file stalls. Clean paper is cheap now and expensive later.
Cash-Out First or Purchase First?
Closing the refinance first is the cleaner route for most buyers. The proceeds are in your account, and the purchase lender can source them. Some buyers coordinate both closings together, but that requires both lenders to agree.
| Factor | Cash-out first | Purchase first |
|---|---|---|
| Proceeds documentation | Clean, sourced funds | Needs a bridge or other cash |
| Income counted twice | New payment shows up on purchase | Purchase debt shows up on refinance |
| Best when | Contract has room for the sequence | Contract date is fixed |
| Main risk | Cash sits idle if the deal fails | Refinance can fall short later |
A decision rule helps. If you have a signed contract with a hard date, confirm both lenders’ timelines before you start anything. If you are still shopping, refinance first and shop with real cash in hand.
Having the cash does not guarantee approval on the next loan. The purchase file is underwritten on its own income, credit, appraisal and reserves.
What Else Could Fund the Down Payment?
Cash-out is one tool, and it is not always the right one. The table compares it with the usual alternatives at this size.
| Option | Keeps current first mortgage? | Main tradeoff |
|---|---|---|
| Cash-out refinance | No | Resets the loan and its terms |
| Second lien or line | Yes | Availability varies by property and lender |
| Selling an asset | Yes | May trigger gains and reduce holdings |
| Asset-based qualification | Yes | Uses liquid assets, not equity |
A second lien or line of credit can be cheaper to set up and leaves your first mortgage alone. Many lenders do not offer lines on rentals, which pushes investors toward cash-out. If your current first mortgage has terms worth keeping, compare before you replace it.
Asset-based paths work differently. An asset allowance divides liquid assets by 36, 60 or 84 months to create qualifying income, and it applies to primary and second homes only. Assets-only qualification needs U.S. liquid assets equal to the loan amount plus closing costs, plus sixty months of any net loss on other residential property. Retirement accounts count at 70%, or 80% if you are 59½ or older. Business funds, gifts, most trusts, unvested stock and cryptocurrency never count.
For a deeper look at how the ladder behaves as balances rise, see Lendmire’s piece on how a super jumbo bank statement loan steps down cash-out by balance.
Where the General Rule Breaks
Most files follow the steps above. These cases do not.
Commingled accounts. A flat expense ratio on every deposit can understate your income when personal and business money mix. An accountant-provided ratio or the profit-and-loss method may fit better.
Seasonal or lumpy revenue. A twelve-month window that catches only high season overstates income. Underwriters may require twenty-four months, or may read a declining trend conservatively.
The property being refinanced is a rental. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. A DSCR cash-out reviews the property’s rent. A bank statement cash-out reviews your deposits. If the rental does not cover its own payment but your cash flow is strong, bank statements may be the better path.
Occupancy changes. Once you move out of the refinanced home and into the new one, its classification can shift. Each occupancy has its own ladder, and the purchase ceiling equals the primary figure in some bands and sits as much as 15 points under it in others. Take every figure from the right ladder.
Super-jumbo overlays. Above $3,500,000 on a primary residence and $3,000,000 on a second home or investment property, extra rules apply. They include a 700 credit floor, a 0x30x24 housing history and 48 months of seasoning on any credit event. Borrowers must be U.S. citizens or permanent residents, with no non-occupant co-borrowers, no rural property and a ten-acre maximum.
Texas home-equity loans. A Texas 50(a)(6) loan takes a 5-point LTV reduction and stops at $3,000,000 on the portfolio program.
Appraisal risk on the purchase. If the new home appraises low, the gap falls on you. Keep spare cash beyond the planned down payment, and keep it out of the reserve pool.
When Not to Do It
Skip the cash-out if any of these describe you:
- Your existing mortgage terms are worth keeping, and a second lien would do the job.
- Your cash need is small compared with the costs of replacing the loan.
- The new payment would push your debt-to-income past 50% once the purchase is added.
- You would have to use proceeds for reserves in a range where proceeds cannot count.
- The margin on the new property is thin, because stacking leverage across two properties raises the risk that one problem hurts the whole portfolio.
Taking the maximum cash is the most common planning mistake. Size the cash-out to what the purchase needs, including costs and reserves, and no more.
Frequently Asked Questions
Can the cash-out proceeds really be used as a down payment?
Yes, in most cases, because cash-out proceeds are generally not restricted in use. The purchase lender will want the funds sourced and documented as refinance proceeds. Confirm with that lender before you contract, since some programs limit how proceeds count toward reserves.
How much of my equity can I actually pull out?
It depends on the loan band, the occupancy and your credit. On a primary residence, the ceiling is lower at the largest loan sizes than on smaller loans, and the biggest loans are reviewed case by case. The portfolio program also caps cash in hand at higher leverage levels, subject to underwriting. The exact limits vary by lender and program and follow a full review of property, leverage, and credit.
Can I use the same lender for both loans?
You can, but it is not required, and it does not remove the need for full underwriting on each loan. A broker can shop both files across wholesale programs and align the sequence. The right fit depends on your deposits, property, credit and leverage.
Does a bank statement cash-out work if my income is uneven?
Often, yes, under the right window. Twenty-four months smooths seasonality, while twelve months can favor rising income. The underwriter may choose or require the window, so test both before applying.
What happens to my reserves if I spend the proceeds?
They are gone. Reserves are measured after closing, and spent cash cannot be counted twice. In the super-jumbo range, cash-out proceeds cannot satisfy reserves at all, so hold a separate liquid pool.
Putting the Plan Together
Work backward from the purchase. Start with the down payment percentage your target loan band allows. Add costs and reserves. Then see whether the refinance leverage and your bank statement income can deliver that amount while keeping debt-to-income inside 50%.
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. Consumer mortgage lending is available in AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA. Reach the team at 828-256-2183.
At this size, the strongest plans start from the net number and treat reserves as a separate pool.
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
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. CFPB Ability-to-Repay and Qualified Mortgage Small Entity Compliance Guide
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: Best Super Jumbo Bank Statement Cash-Out Refinance Program After a Divorce Buyout · Can You Get Approved for a Super Jumbo Bank Statement Cash-Out Refinance Through a Broker?
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.