The Quick Read: This refinance pays off the old note with a new non-QM loan that is reviewed around twelve or twenty-four months of bank deposits instead of traditional personal-income documentation, and you decide whether the new loan keeps interest-only payments or amortizes from the start, through select wholesale programs subject to full underwriting. It works best when your deposits are clean, your reserves are in place, and you start well before the reset date.
- Qualifying income comes from eligible deposits after an expense ratio, not from taxable income.
- Interest-only is optional on the new loan. Through select wholesale programs, it tops out at 85% LTV on purchase and rate-and-term files, and at 60% on the bank portfolio program.
- A new loan starts a new interest-only clock, so a refinance is not free time.
- Credit floors typically run 660 to 700 depending on the program and loan size.
- Above $4,000,000, every file is reviewed case by case before submission.
Key Terms Defined
Interest-only (IO) period: the stretch when your payment covers interest only, so the balance does not fall.
Reset or recast: the point where the IO period ends and the payment is recalculated to pay off the balance over the remaining term.
Jumbo loan: a mortgage larger than the standard conforming limit for your area.
Non-QM loan: a mortgage that falls outside the standard rules that make a loan easy to sell to the large mortgage agencies.
Bank statement loan: a non-QM loan that verifies income from your deposits rather than from your traditional personal-income documentation.
Expense ratio: the share of business deposits the lender treats as operating costs and removes before counting income.
Seasoning: time a loan or property has been in place before certain refinance options open up.
What Does This Refinance Actually Change?
It changes two things at once: how your income is proven and how your payment is built. The old loan was probably approved on traditional personal-income documentation. The new one is approved on deposits.
That matters because write-offs shrink taxable income. A founder, physician or attorney can show strong cash flow in the bank and a thin number on the return. Full-documentation jumbo underwriting reads the return. A bank statement program reads the deposits.
Verification does not disappear. Income is still documented and checked. It is just measured from a different record. Lendmire’s broker view is simple: the file is reviewed on documented income under the applicable program, subject to lender guidelines.
The second change is the payment structure. You can keep an interest-only feature, drop it, or switch to a structure that amortizes. We cover that choice below.
Is This the Right Move?
This is the right move when your traditional income documentation understates income, your reset is approaching, and you want a loan that matches your real cash flow. It is the wrong move when a simpler fix exists. Here is how the options compare.
| Option | Fits when | Watch out for |
|---|---|---|
| Bank statement refinance | Returns understate income | Expense ratio trims deposits |
| Full-doc jumbo refinance | Returns show strong income | Write-offs can sink approval |
| Recast with current servicer | You have cash and a good note | Servicer may not allow it |
| Stay put | Reset is far off, payment fits | Reset risk grows with time |
| DSCR refinance (rentals) | Property rent covers the payment | Only for investment property |
Many servicers do not extend an IO period, so do not plan around an extension. Also do not assume you can refinance at reset. Income, property value and credit can all move between now and then.
Step by Step: How the Refinance Works
The sequence is the same across most programs in the wholesale network. The order matters more than the speed.
1. Audit the existing note. Pull the payoff figure, the number of IO months left and the reset date. Read the note for a prepayment penalty. If one exists, the cost of leaving early goes into your break-even math.
2. Pick the statement type. You can document with personal statements, business statements, or a profit-and-loss method. Each treats your money differently, as the next section shows.
3. Pick the lookback. Most programs accept twelve or twenty-four consecutive months. The bank portfolio program uses twelve. Statements must be consecutive, and a transaction history never replaces them.
4. Clean up deposits before you apply. Move personal and business money back into their proper accounts. Document any large or unusual deposit. Unexplained credits tend to be left out of income rather than assumed.
5. Choose the new structure. Decide on interest-only, fully amortizing, or a fixed-period adjustable. A broker can run the options side by side across lenders.
6. Submit and underwrite. The lender builds income from deposits, checks credit and reserves, and orders an appraisal. The new loan then pays off the old jumbo.
How Do Deposits Turn Into Income?
Qualifying income equals eligible deposits divided by the number of statement months, after an expense ratio. That is the whole formula. The details decide the outcome.
Lenders first remove transfers between your own accounts, loan proceeds, refunds, gifts and capital contributions. Then they apply the expense ratio to business accounts. Through select wholesale programs, the usual fixed ratios are:
| Business type | Typical expense ratio |
|---|---|
| Service business, no employees | 20% |
| Service business, 1 to 5 employees | 40% |
| 6 or more employees, or any product business | 50% |
| Accountant-provided ratio | Set by your CPA letter |
A profit-and-loss method is also available, capped at 80% of the figure it supports. Business statements generally require at least 25% ownership. Where you own less, personal statements may be the better lane.
Here is a modeled comparison. A product business at 50% counts half of its business deposits. A solo service business at 20% counts four-fifths. Same revenue, very different qualifying income.
One more rule helps. When you move money from your own business into your personal account, that transfer counts in full on personal statements. So how you pay yourself changes the math. Think about this before you apply, not after.
How Much Can You Borrow, and What Does the Lender Want?
Leverage steps down as the loan gets larger. The figures below are ceilings through select wholesale programs, subject to full underwriting. They are not promises.
On a primary residence, a rate-and-term refinance runs up to 90% LTV from $300,000 to $1,000,000 with a 680 score. From $1,000,000 to $1,500,000 it is up to 85% with a 700 score. Cash-out on a primary residence runs up to 80% in both bands. Second homes and investment property sit about five points lower at most sizes. On an investment property, for example, a rate-and-term refinance from $300,000 to $1,000,000 runs up to 85%, and cash-out up to 75%. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Two programs carry these files. The portfolio non-QM program carries loans to $6,000,000. The bank portfolio program takes twelve-month-statement files to $30,000,000 on its own ladder: 65% to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000. Its ladder begins above $4,000,000 and overlaps the portfolio program to $6,000,000. Above $4,000,000, every file is reviewed case by case before submission.
Other typical requirements:
- Credit: 660 on the portfolio non-QM program, 680 on the bank portfolio program, and 700 above the super-jumbo line.
- Debt-to-income: up to 50%.
- Reserves: 3 months to $500,000, 6 months to $1,500,000, and 9 months above. Add 2 months per additional financed property, to a 12-month maximum. First-time investors need 12.
- Super-jumbo overlays: above $3,500,000 on a primary residence, and above $3,000,000 on a second home or investment property, expect a 700 floor, a clean 24-month housing history, and tighter property rules.
Reserves are where many refinances stall. Cash-out proceeds cannot be used to satisfy reserves on super-jumbo files, so plan the liquidity separately.
Should the New Loan Stay Interest-Only?
Keep interest-only if you have a clear plan for the end date. Otherwise, amortize. An IO payment is a cash-flow tool with an expiration, not extra buying power.
On the portfolio non-QM program, interest-only runs to 85% LTV with a 700 score, on a 40-year term with a 10-year IO period. That ceiling applies to purchase and rate-and-term files. It does not raise a cash-out limit. On the bank portfolio program, interest-only tops out at 60% LTV, using 5- and 7-year fixed-period adjustables. A 10-year fixed-period adjustable on that program is fully amortizing. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Here is the trap. A refinance restarts the interest-only clock, which feels like relief. But the balance has not moved. Each restart delays principal paydown, and the reset risk comes back with it. Repeating this cycle works only while your income, your property value and your credit stay strong.
Where the General Rule Breaks
The steps above hold for most files. These edge cases change the picture.
Owner-occupied homes. A primary residence is a consumer-purpose loan, so the lender must make a documented, good-faith determination that you can repay. For an interest-only loan, that review looks past the low early payment. The CFPB‘s compliance guide for the ability-to-repay standard explains that a General QM loan cannot have interest-only features, balloon payments or terms over 30 years. That is why every interest-only jumbo is non-QM, and why a consumer-purpose lender tests the payment you will face after the IO period.
Investment property. 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. That is where a rental can open a second path, covered below.
Minority owners. If you own less than the business-statement floor, usually 25%, business deposits may not count. Personal statements often fill the gap.
Falling deposits. If your recent months run below your older months, the lender may shorten the lookback or weight the recent trend. Seasonal businesses should model both windows. A twelve-month window can beat twenty-four when income is climbing. The reverse is true when it is falling.
What counts as jumbo. The FHFA’s conforming loan limit announcement sets a baseline of $832,750 for a one-unit property, with a high-cost ceiling of $1,249,125. A loan above your area’s limit is jumbo. Your balance relative to that line affects which program fits.
Cash-out. Cash-out is unlimited at or below 60% LTV. Above 60%, the portfolio non-QM program caps cash in hand at $1,500,000, while the bank portfolio program publishes no cap. Cash-out in a refinance can stack leverage fast. Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Prepayment terms. A penalty on the existing note can erase the benefit of a refinance. Read it first.
Common Reasons Files Stall
Most declines trace back to a short list.
- Commingled accounts. Personal and business money in one account makes deposits hard to classify.
- Large unexplained deposits. These get excluded or trigger a sourcing request. Each lender sets its own trigger.
- Thin reserves. Liquidity falls short once the loan size passes a reserve tier.
- Credit below the tier. A score that clears 660 may not clear 700 at a larger size.
- Expense ratio surprise. The borrower expected 20% and the business profile supports 50%.
- Property limits. Rural property, acreage over ten acres, and certain condos carry lower leverage.
The fix for most is time. Clean deposits for several statement months before applying, and the file reads better.
What If You Have Assets but Uneven Deposits?
Asset paths exist for borrowers whose deposits do not tell the full story. Asset allowance divides liquid assets by 36, 60 or 84 months to create income, on primary and second homes only, to 80% LTV. Assets-only needs no DTI when U.S. liquid assets equal the loan amount plus closing costs. Retirement accounts count at 70%, or 80% at age 59½ and older. Business funds, gifts, cryptocurrency and unvested stock do not count. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What About a DSCR Refinance Instead?
If the collateral is a rental, a DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. That sidesteps your personal income entirely. It also avoids the deposit-cleanup work.
The trade-off is leverage and structure, because rent has to carry the loan. For a rental held by a self-employed owner with strong deposits, run both paths. Lendmire’s complete DSCR loans guide explains the property-income route in full.
On rentals, interest-only raises the coverage ratio at closing. The ratio drops after the recast. Test the file at the amortizing payment before you commit.
What Brokers See in These Files
Across the wholesale network, the strongest bank statement refinances share a pattern. The borrower starts early, separates accounts, and knows the expense ratio before applying. The weakest files start inside the reset window with deposits that have never been sorted. A broker can compare how several lenders treat the same deposits, which matters because ratios, ownership floors and sourcing triggers differ by program. Lendmire’s consumer mortgage lending is licensed in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA.
Frequently Asked Questions
Can I keep interest-only on the new loan?
Often yes, through select wholesale programs. The portfolio non-QM program allows interest-only to 85% LTV with a 700 score on purchase and rate-and-term files. The bank portfolio program allows it to 60% LTV. Leverage above $4,000,000 is reviewed case by case before submission.
Can I extend my current interest-only period instead?
Rarely. Many servicers do not extend an IO period, and a recast generally needs the loan to be in good standing and cash to pay down principal. Ask your servicer in writing, then compare the answer with a refinance.
Does refinancing restart the interest-only clock?
Yes, if the new loan has an interest-only feature. The IO period starts over on the new note. That delays principal paydown, so many borrowers choose an amortizing structure on the new loan.
What if my deposits are irregular?
Irregular deposits are workable if you can document them. Large or unusual credits may trigger a sourcing request. Seasonal income is often smoothed over twelve or twenty-four months, so pick the window that reflects your real trend.
Does the lender still pull conventional personal-income paperwork?
Generally not on a bank statement program, because income comes from deposits. Credit, reserves, assets and the appraisal are still reviewed. Each file is underwritten individually, and a CPA letter can support the expense ratio.
Next Step
If you are financing a high-balance property on bank statements and want to see how the numbers work, reach the team at 828-256-2183 or request a quote through Lendmire’s quote page. Nothing here is a commitment to lend.
For current guidelines and terms, see Lendmire’s super jumbo bank statement loan programs page.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of traditional income documentation, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
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References
1. CFPB
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: How Much Can You Borrow With an Interest-Only Super Jumbo Bank Statement Loan? · How to Document a 40-Year Super Jumbo Bank Statement Loan · How Super Jumbo Bank Statement Loan Limits Work
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.