The Quick Read: The cost has three layers: the one-time closing costs, the leverage and documentation terms that set how much the loan can borrow, and the interest-only structure itself, which keeps your balance flat and makes the later payment step-up the largest cost to plan for. Lendmire does not publish pricing on a page, because every file is priced and underwritten individually. This article shows where each cost comes from, what moves it, and how to decide whether it is worth paying.
- Closing costs are one-time and file-specific. Expect lender or broker charges, an appraisal, title and escrow, and legal review if an LLC holds title.
- Your balance does not fall during the interest-only period, so equity builds only through appreciation.
- Bank statement income is reduced by an expense ratio, which can shrink your qualifying income and your borrowing power.
- Above $4,000,000, every figure is reviewed case by case before submission.
- The payment step-up at the end of the interest-only period is the cost most borrowers underestimate.
Key Terms Defined
Super jumbo is a market label for loans far above the standard jumbo threshold. No regulator defines it, and the threshold varies by county.
Interest-only period is the stretch of the loan when each payment covers interest alone. The balance stays where it started.
Bank statement loan is a mortgage that qualifies the borrower using 12 or 24 months of bank deposits instead of traditional personal-income documentation. The lender averages the deposits after an expense ratio.
Expense ratio is the share of business deposits the lender treats as costs. Only the remainder counts as your income.
Reset is the point when the interest-only period ends and the loan begins paying down principal.
Non-QM means the loan falls outside the standard mortgage box. Lenders set the terms program by program, and each file is underwritten individually.
What Is This Loan, Exactly?
It is a refinance of a high-balance property, documented with bank deposits, where the early payments cover interest only. It suits founders, physicians, attorneys, and investors whose traditional personal-income documentation understates what actually comes in the door.
Three features stack together. The size is large, the income documentation is alternative, and the payment structure is interest-only. Each feature has its own cost, and the three interact.
Lendmire is a broker. It shops this structure across multiple wholesale programs, and the lenders in those programs make the credit decisions. Everything below is offered through select wholesale programs, subject to full underwriting, and none of it is a commitment to lend.
The Three Layers of Cost
Most borrowers ask about closing costs first, but the larger numbers sit in the other two layers. The table lays them side by side.
| Cost layer | What drives it | When you pay it | Negotiable? |
|---|---|---|---|
| Closing costs | Loan size, property, title | At closing | Partly |
| Leverage and income terms | Loan band, credit, expense ratio | Built into the loan | Through file strength |
| Interest-only structure | Length of the interest-only period | Over the loan’s life | By choosing the structure |
The first layer is a one-time cash cost. The second layer shows up as a smaller loan or more cash in. The third layer is paid slowly, and the bill arrives at the reset.
What Do Closing Costs Include?
Closing costs on this loan fall into familiar categories. A refinance of a high-balance home has the same line items as any other refinance, and some of them grow with the loan amount.
- Lender or broker charges. These compensate the parties who structure and underwrite the file.
- Appraisal. Larger properties can call for more than one appraisal, and complex properties cost more to value.
- Title and escrow. These scale with the size of the loan.
- Legal review. This applies when an LLC or trust holds title.
- Prepaids and escrow deposits. These are taxes and insurance funded up front, so they vary by county and carrier.
Lendmire does not quote dollar amounts for these items on a page. The cost of a loan depends on the property, the loan size, the borrower, and the program. The useful move is to ask for an itemized settlement statement and compare it line by line, rather than comparing a single headline number.
Because this loan has an interest-only period, it falls outside the standard mortgage box. That means no standard cap on upfront charges applies, and the cost is set by the program and the market. Compare full terms, not one number.
What Does the Interest-Only Structure Add?
It lowers your early payment and raises your long-run cost. Both are real, and you should hold both in mind.
The CFPB defines an interest-only loan as one where scheduled payments cover only interest for a set time, so the amount owed does not fall with each payment. The FDIC’s consumer help center gives the same definition. That flat balance is the core of the cost.
Two consequences follow.
First, your equity comes only from your down payment and any price gain. If the market is flat or falling, your equity does not improve through payments.
Second, you pay more total interest over the life of the loan than on a fully amortizing loan of the same size. You are borrowing the principal for longer.
The benefit is cash flow. A smaller required payment frees money during the window when you may need it for a business, a build, a portfolio, or a liquidity event that has not landed yet.
How the Network Structures It
Across the wholesale network, the structures fall into two families.
The portfolio non-QM program, which carries bank statement files to $6,000,000, offers a 40-year term with a 10-year interest-only period. Interest-only on that program reaches up to 85% LTV with a 700 credit floor. That 85% is the ceiling of the interest-only structure on purchase and rate-and-term files. The loan-size ladder can set a lower ceiling. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The bank portfolio jumbo program carries twelve-month-statement files up to $30,000,000. Its interest-only structure uses 5- and 7-year fixed-period adjustables, capped at 60% LTV or the band’s ceiling, whichever is lower. Its 10-year fixed-period adjustable is fully amortizing, so it carries no interest-only benefit. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
For a closer look at the second program’s role in the larger sizes, see Lendmire’s piece How Much Can You Borrow With an Interest-Only Super Jumbo Bank Statement Loan?.
What Does Bank Statement Documentation Cost You?
It costs you qualifying income. The lender takes your deposits, applies an expense ratio, and divides by the statement months. What survives is your income for the file.
The Scotsman Guide describes this approach as an alternative to traditional personal-income documentation, using 12 to 24 months of statements. It also notes that lenders must still confirm your ability to repay, so this is not a no-questions loan. The loan is reviewed on documented income under the applicable program, subject to lender guidelines.
Here is how the expense ratio works in our network, through select wholesale programs, subject to full underwriting:
- 20% for a service business with no employees.
- 40% for a business with one to five employees.
- 50% for a business with six or more employees, or any product business.
- An accountant-provided ratio can replace the fixed figures when documented.
- A profit-and-loss method is also available, and it is itself capped at 80%.
At a 40% ratio, 60 cents of every deposit dollar counts toward your income. At 50%, it is half. That difference can move your borrowing power more than any closing-cost line.
Three details help or hurt.
- Transfers from your own business into your personal account count at 100%. Personal-account statements make this path cleaner for owners who pay themselves regularly.
- Business statements require at least 25% ownership.
- Statements must be consecutive. A transaction history is not a substitute.
Pass-through deposits deserve a warning. A contractor whose account carries client money headed to subcontractors may see those deposits excluded or treated with a heavier ratio. Sort that out before you apply, not after.
Not every borrower will qualify on deposits alone. An asset allowance can divide liquid assets by 36, 60, or 84 months to create supplemental or standalone income, subject to lender guidelines. An assets-only path typically requires U.S. liquid assets equal to the loan amount plus closing costs. These may be options when deposits don’t tell the full story.
How Does Loan Size Change the Cost?
Size changes the cost more than any other variable, because leverage steps down as the loan grows. A lower LTV is a cost you pay in cash at the closing table, or in the equity you must keep in the property.
On a primary residence, through select wholesale programs and subject to full underwriting, the highest rate-and-term LTV ceilings run like this:
- 90% for loans up to $1,000,000.
- 85% to $2,000,000.
- 80% to $3,000,000.
- 75% to $3,500,000, then 70% to $4,000,000 on the portfolio program’s super-jumbo overlays.
Each band’s top leverage cell requires a higher credit score than the program minimum. A lower score takes a lower leverage cell inside the same band. The bank portfolio program keeps its own 680 floor at every size.
Above $4,000,000, every figure is reviewed case by case before submission. On a primary-residence refinance, the bank portfolio program’s ladder runs 65% to $5,000,000, 60% to $10,000,000, and 55% to $30,000,000, always on review.
Second homes and investment properties follow their own ladders. Take each figure from that occupancy’s ladder and never infer it by subtracting from the primary figure.
The bands apply to the loan amount, not the purchase price. If you refinance, the appraised value has to support the loan inside the band’s ceiling.
A Worked Scenario
Say you own a primary residence and want a $2,400,000 rate-and-term refinance into an interest-only structure. That loan lands in the $2,000,000 to $2,500,000 band. The ladder’s ceiling there is 80% on a rate-and-term refinance, even though the interest-only structure can reach 85% elsewhere. The lower figure governs. The top cell in that band needs a credit score of 720 or higher. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
If you also want cash out, the ceiling in that band drops to 70%. That is the cost of pulling equity: the same home supports a smaller loan. Interest-only never raises a cash-out ceiling. On the portfolio program, cash-out proceeds are unlimited at or below 60% LTV. Above 60%, cash in hand is capped at $1,500,000. The bank portfolio program has no published cap. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
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.
What Cash Do You Need Beyond Closing Costs?
You need reserves, which are liquid funds left after closing. Reserves are not a fee, but they are cash you cannot use elsewhere.
Through select wholesale programs, subject to full underwriting, reserves run 3 months up to $500,000, 6 months up 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.
On the portfolio program’s super-jumbo overlays, cash-out proceeds cannot satisfy reserves. Those overlays apply above $3,500,000 on a primary residence and above $3,000,000 on a second home or investment property. They also carry a 700 credit floor, a 0x30x24 housing history, and 48-month seasoning on any credit event.
Add those reserves to your closing costs and your cash need becomes much clearer than the closing-cost line alone.
What Happens at the Reset?
The reset is the real cost of this loan. Your payment steps up when the interest-only period ends, and it steps up more than a gentle schedule would suggest.
The reason is arithmetic. The full balance must now be repaid over the remaining term. On a 40-year loan with a 10-year interest-only period, that is 30 years of amortization, not a fresh 40. A longer interest-only period shrinks the remaining term and sharpens the step-up.
The CFPB lists three choices when the period ends. You can pay off the balance in full, refinance if refinancing is available, or start paying down principal at a higher monthly payment. It also cautions against assuming you can sell or refinance if the payment rises. An extension is not on that list, and the interest-only period is written into the note, so do not count on one.
| Path at the reset | What happens | Cost to watch |
|---|---|---|
| Pay off | You clear the balance | Needs a large liquidity event |
| Refinance again | A new loan replaces the old | New closing costs and a new review |
| Let it amortize | Payments start paying principal | A much higher payment |
| Sell | The sale clears the balance | Depends on the market at that time |
The practical move is to budget the first amortizing payment from day one, using the actual remaining term. If you cannot carry it comfortably, plan your exit before you sign. The 10-year fixed-period adjustable on the bank program is fully amortizing, so it sidesteps the reset entirely.
For a side-by-side look at the longer-runway structure, read Lendmire’s comparison of interest-only and 40-year super jumbo bank statement loans.
One more point: programs differ on whether they test your qualifying income against the interest-only payment or a fully amortizing one. Confirm that before building a plan, because it decides how much loan your deposits support.
What Does It Cost to Leave Your Current Loan?
Leaving your current loan can cost you something, and the amount is known before you start. Read your existing note first.
If it carries a prepayment penalty, that penalty is a fixed cost of the refinance. A new loan may carry its own terms, so ask what applies to the new note. Payoff timing matters too, since interest continues to accrue on your old balance until it is paid.
A refinance also restarts the clock on any seasoning your next move may need. If you refinance repeatedly to keep resetting the interest-only period, each cycle adds a new set of closing costs. Repeated restarts rarely make sense unless the cash-flow benefit is large.
Is It Worth It? A Break-Even Frame
Run the decision as a cash-flow question, not an interest-savings question. An interest-only refinance does not usually save interest. It moves the payment lower now and the cost later.
Ask three questions.
1. What do the closing costs total, and how long will the lower payment last? Divide the one-time costs by the monthly cash-flow benefit to find the break-even point.
2. What will you do with the freed cash? If the money funds a business or an asset that earns more than the extra interest costs, the structure may pay for itself.
3. What is your exit at the reset? If you plan to sell, pay off, or refinance, test each path against a flat market.
Run those numbers with the real figures from your own file. If the break-even point lands beyond the time you expect to hold the loan, the structure costs more than it returns.
Appreciation changes the picture. Since the balance does not fall, a rising market builds your equity anyway. A falling market erodes it, and there is no principal paydown to cushion the drop.
When This Isn’t the Right Move
Skip this structure when the rent or income does not support the post-reset payment. Skip it when you need the money out of the property but your target leverage is higher than the cash-out column allows.
Consider alternatives in these cases:
- You own a rental, not a residence. A DSCR loan sizes on the property’s cash flow against its payment, rather than on your personal deposits. The complete DSCR loans guide explains how that path works. Bank statement loans test personal income, so each added mortgage can consume the same personal capacity.
- You want predictable amortization. A fully amortizing option, such as the 10-year fixed-period adjustable on the bank program, removes the reset.
- Your documented income is thin. An asset-based path can qualify you on liquid assets when deposits underrepresent your resources.
Which structure is right depends on the borrower, property, program, and current lender guidelines. A broker who sees several programs side by side can compare them for your file.
Frequently Asked Questions
Can I pay down principal during the interest-only period?
Usually yes, since the interest-only feature sets the minimum payment and does not forbid extra payments. Confirm how the program treats extra principal and whether any penalty applies. Voluntary paydowns cut your balance and ease the reset, but they are optional.
Can I combine interest-only with bank statement income?
Yes, through select wholesale programs, subject to full underwriting. The portfolio program offers interest-only up to 85% LTV with a 700 credit floor, and the bank program offers it at 60%. Your leverage can be lower than those figures once the loan size band is applied.
Can I extend the interest-only period when it ends?
Do not count on it. The period is written into the note, and the CFPB’s list of choices at the end of the period does not include an extension. The realistic paths are payoff, a new loan, or amortization.
Does interest-only raise my cash-out limit?
No. Interest-only never raises a cash-out ceiling, and cash-out tops out at the ladder’s cash-out column. On a primary residence, the best cash-out figure is 80%, for loans up to $1,500,000. Above 60% LTV, the portfolio program caps cash in hand at $1,500,000. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Are these loans available everywhere?
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. Availability depends on the property, the program, and current lender guidelines.
Next Steps
Before asking for a quote, gather 12 to 24 consecutive months of statements, your business ownership details, a recent mortgage statement, and a clear picture of your reserves. Decide your exit before the reset, not after.
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.
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 brokerage with consumer lending licenses in 16 states. Bank statement, P&L-only, 1099-only and asset-based mortgages are arranged through wholesale lending partners for borrowers whose tax returns understate their income, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. CFPB – What is an “interest-only” loan?
2. FDIC Ask – What is an interest-only loan?
3. Scotsman Guide – Rev Up the Engine for Non-QM Lending
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 to Document a 40-Year Super Jumbo Bank Statement Loan · How a 5-Year ARM Super Jumbo Bank Statement Loan Works · Interest-Only vs Amortizing Super Jumbo Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.