The Quick Read: A buyout is a refinance that pays off the old mortgage and sends the leftover proceeds to the departing sibling or partner, and a super jumbo bank statement loan can fund it when the keeping owner qualifies alone on deposits. The lender usually treats the loan as cash-out, so leverage sits below purchase leverage. Through select wholesale programs, subject to full underwriting, the keeper’s deposits, credit, reserves and the appraisal decide how much can be paid out.
- The keeper qualifies alone. The departing owner’s income does not help.
- Deposits after an expense ratio set income, on 12 or 24 consecutive months of statements.
- Cash-out leverage is lower than purchase leverage, and above $4,000,000 every file is reviewed case by case.
- Buyout proceeds cannot count as reserves on a super jumbo file.
- A deed alone never releases the departing owner from the old debt. Only a payoff or refinance does.
What Is a Buyout Loan, Mechanically?
A buyout loan is one new mortgage that does three jobs. It pays off the existing note, it puts cash into the departing owner’s hands, and it releases that owner from the old debt. The departing owner signs a deed at closing. The keeping owner ends up on title and on the loan alone.
That is why the lender sees cash-out. Money leaves the transaction to someone other than the lender or the title company. Cash-out ceilings run lower than purchase and rate-and-term ceilings in every band of the ladder. Plan the buyout price around the cash-out column, not the purchase column.
Agencies have a version of this. Freddie Mac describes a special purpose cash-out refinance that lets a borrower use proceeds to buy out a co-owner’s equity. Agency loans stop at the conforming limit, though. Above that line the buyout goes the non-QM route.
Where Does “Super Jumbo” Start?
There is no official definition. The only government-anchored line is the conforming limit. HousingWire reports that FHFA set the baseline for a one-unit property at $832,750, with a high-cost ceiling of $1,249,125. Anything above the limit applicable to the property is jumbo.
Super jumbo is a lender overlay, and each program draws its own line. Across the wholesale network, the overlays that matter begin above $3,500,000 on a primary residence and above $3,000,000 on a second home or investment property. A buyout can push a mid-priced house over those lines faster than people expect, because the loan has to cover the payoff plus the departing owner’s share.
Two Programs, One Size Ladder
Two wholesale programs cover this size range. The first is a portfolio non-QM bank statement program. It carries files from $300,000 to $6,000,000. The second is a bank portfolio jumbo program. It carries twelve-month-statement files up to $30,000,000 on its own, lower-leverage ladder. Its bands begin above $4,000,000 on a primary residence, so the two programs overlap between roughly $4,000,000 and $6,000,000. They do not hand off at one number.
On the bank portfolio ladder, leverage is 65% to $5,000,000, 60% to $10,000,000 and 55% to $30,000,000. Those are the purchase-style ceilings, through select wholesale programs, subject to underwriting. Cash-out sits lower inside each band.
What Leverage Does a Buyout Actually Get?
Read the ladder by loan amount, not by purchase price. The bands are loan sizes. Cash-out leverage on a primary residence, through select wholesale programs and subject to underwriting, steps down like this:
| Loan band (primary) | Cash-out ceiling | Program |
|---|---|---|
| $300K–$1M | 80% | Portfolio |
| $1M–$1.5M | 80% | Portfolio |
| $1.5M–$2M | 75% | Portfolio |
| $2M–$2.5M | 70% | Portfolio |
| $2.5M–$3M | 70% | Portfolio |
| $3M–$3.5M | 65% | Portfolio |
| $3.5M–$4M | 65% | Portfolio, overlays |
| $4M–$5M | 60% | Bank portfolio |
| $5M–$6M | 55% | Bank portfolio |
| $6M–$10M | 55% | Bank portfolio |
| $10M–$20M | 50% | Bank portfolio |
| $20M–$30M | 50% | Bank portfolio |
Everything above $4,000,000 is reviewed case by case before submission, so treat any figure at that size as a ceiling on review, never a flat number. The top cell in each band needs a specific credit score. That score is what the best leverage needs, not a program floor. The program floors are 660 on the portfolio program up to the super jumbo line and 700 above it. The bank portfolio program keeps a 680 floor at every size. A lower score takes a lower cell inside the same band.
Second homes and investment property use their own ladders. Do not subtract from the primary figures to guess them. Read the occupancy’s own column.
Cash-in-hand has its own limits. On the portfolio program, proceeds are unlimited at or below 60% LTV and capped at $1,500,000 above 60%. The bank program publishes no cap. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
How Underwriting Treats a Buyout, Step by Step
Here is the sequence a file follows. Each step is a place where files stall.
1. Set the price. The siblings or partners agree on a number, usually tied to an appraisal. A written agreement should say how a low appraisal changes the price. Without that fallback, a short value stalls the file.
2. Confirm title. The keeping owner has to be able to take the loan. In an inheritance, heirs generally need to be on title first, through probate or the trust. If the property sits in an LLC, plan the sequence of deeds with the file in mind, because moving title before the payoff can trigger the existing lender’s due-on-sale clause.
3. Pick the qualification path. Bank statements, an asset path, or property cash flow if the house is a rental. More on each below.
4. Assemble documents. Twelve or 24 consecutive months of statements per account, proof of ownership percentage, the buyout agreement, the current mortgage statement and payoff, and asset and reserve statements. Add entity documents if an LLC is involved.
5. Run the appraisal and leverage test. The loan has to fit the cash-out column for its band. A low value shrinks the loan and the payout together.
6. Show reserves. Funds to close come out first. Reserves are what remains.
7. Close through escrow. The payoff clears the old note, the departing owner deeds out, and proceeds are paid through escrow.
Can the Keeper Qualify Alone on Bank Statements?
This is the question that decides most buyouts. The departing owner is not on the new loan, so that person’s income does not count. The keeper carries the whole payment on personal or business deposits.
Income is eligible deposits divided by the months reviewed, after an expense ratio. Personal-account deposits count at or near full value once screening is done. Scotsman Guide describes the typical borrower the same way: self-employed, no W-2, supplying 12 to 24 months of statements, with income calculated after an expense factor.
On the wholesale programs, business statements need at least 25% ownership. The expense ratio is fixed at 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%, can replace the fixed ratios. Transfers from the borrower’s own business into a personal account count at 100%. The bank portfolio program uses 12 months of statements.
Underwriters screen out what is not income:
| Counts | Does not count |
|---|---|
| Customer and client deposits | Transfers between the borrower’s own accounts |
| Business-to-personal transfers | Loan proceeds |
| Regular owner draws | Refunds and one-time items |
| Buyout or estate money moving through the account |
Commingled accounts tend to produce a more conservative file. Keep the business and personal activity separate where you can.
A quick self-test: take the full new payment on the whole loan, not the old shared payment, and compare it to deposit-based income after the expense ratio. Debt-to-income can run to 50%. The credit floor is 660 on the portfolio program, 680 on the bank program, and 700 above the super jumbo line.
Two other paths exist. An asset allowance divides liquid assets by 36, 60 or 84 months to create income. An assets-only file qualifies with no debt-to-income test when U.S. liquid assets equal the loan plus closing costs plus sixty months of any net loss on other residential property. Retirement accounts count at 70%, or 80% at age 59½ and up. Gifts, business funds and cryptocurrency never count.
Sibling Buyout vs. Partner Buyout
The mechanics are the same. The paperwork is not.
| Factor | Sibling or heir | Business or investment partner |
|---|---|---|
| Title issue | Probate or trust first | Individual vs. LLC title |
| Governing document | Buyout agreement, will or trust | Operating or partnership agreement |
| Income risk | Keeper’s own deposits | Partner’s exit may change business deposits |
| Common friction | Fair value, silent heirs | Entity deeds, due-on-sale |
For partners, an LLC adds a step. Investor commentary often describes deeding the property out of the LLC to the individual before a cash-out refinance. That is practice, not a rule, and the sequencing should be settled with the file reviewer and an attorney before anyone signs anything. If the property is a rental held through an entity, qualification may run through the portfolio program, subject to program terms and lender eligibility.
If the departing partner’s exit changes the business, the deposits you qualify on may shrink. Underwriters read the statement history as it is, not as the partnership used to look.
When Is DSCR the Better Route?
If the property is a rental and the keeper is a rental investor, DSCR can be cleaner. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Personal deposits stay out of it. It also avoids using up personal income capacity on each added mortgage. Through the network, two to twenty rentals can sit under one note on a portfolio DSCR loan, with cash-out never above 75% of pooled value on standard rentals and coverage measured on the whole pool against a 1.00 floor. A primary residence cannot use this route. The complete DSCR loans guide walks through the structure.
Pick the document type by who keeps the property. A self-employed heir keeping a family home fits bank statements. A pure landlord buying out a partner on a rental often fits DSCR.
Where the General Rule Breaks
Reserves. On a super jumbo file, cash-out proceeds cannot satisfy reserves. The buyout money pays the departing owner. The keeper needs separate liquid assets. Reserves run 3 months to $500,000, 6 months to $1,500,000, and 9 months above that, plus 2 months per additional financed property up to a 12-month maximum. First-time investors hold 12.
Free-and-clear property. Owning the house outright does not lift the cash-out ceiling. The cap applies no matter how much debt is on the property.
Overlay zone. Above $3,500,000 on a primary residence, and above $3,000,000 on a second home or investment property, the overlays apply: a 700 credit floor, a 0x30x24 housing history, 48-month seasoning on a credit event, U.S. citizens and permanent residents only, no non-occupant co-borrowers, and no rural property.
Asset-heavy businesses. A fixed expense ratio can understate or overstate income. Scotsman Guide notes that a one-size-fits-all expense factor can wrongly shut out some good borrowers, which is why the accountant-provided ratio exists.
Young business. A short history can still work when liquid assets and credit carry the file, since underwriters weigh them together.
Estate timing. Short-term estate loans exist for the stretch before heirs hold title. They are specialty products. The keeper’s permanent refinance comes after distribution.
Unwilling co-owners. A lender needs a signed agreement and a deed commitment. If a sibling will not sign, the real next step is an attorney, not a different loan.
Texas home equity. A 50(a)(6) loan takes a 5-point LTV reduction and stops at $3,000,000 on the portfolio program.
Consumer mortgage lending for these programs is licensed in 16 states: AL, CA, CO, FL, GA, IN, MI, MT, NM, NC, OH, PA, TN, TX, VA and WA.
Key Terms Defined
Buyout loan: one refinance that pays off the old mortgage and funds the departing owner’s share.
Cash-out refinance: a refinance that returns cash to the owners, and the lender’s label for most buyouts.
Super jumbo: a lender-defined size tier above the conforming limit, with extra overlays.
Expense ratio: the share of business deposits removed before income is counted.
Reserves: liquid funds left over after closing costs and funds to close.
Due-on-sale clause: a term letting the existing lender call the loan when title moves.
Is This the Wrong Tool?
Sometimes. If the keeper cannot carry the full payment on deposits or assets, the loan will not fit, and no program change fixes that. If the siblings cannot agree on value, sorting that out comes first. If the property is a rental and the keeper has no personal income story, DSCR or a sale may fit better. Partner buyouts also carry capital gains questions for the departing owner. Tax treatment varies; consult a qualified professional.
Run the leverage test first. In most buyouts the cash-out ceiling, not income, sets the maximum payout, so the pooled equity has to clear the cap before anything else matters.
Frequently Asked Questions
Can a super jumbo bank statement loan pay off a sibling’s share of an inherited house?
Yes, once the keeping sibling is on title and qualifies alone on deposits, assets, or rental cash flow. Heirs generally need to be on title through probate or the trust first. The loan is typically treated as cash-out, so leverage follows the cash-out column for its band, through select wholesale programs and subject to underwriting.
Does the departing owner’s income help me qualify?
No. The departing owner is not on the new loan, so only the keeper’s income, assets and credit count. Model the full new obligation against your own deposits after the expense ratio, with debt-to-income up to 50%.
Can the buyout cash count toward my reserves?
Not on a super jumbo file. Cash-out proceeds cannot satisfy reserves above the super jumbo line. Reserves come from separate liquid assets, 3 to 9 months by loan size, plus 2 months per additional financed property to a 12-month maximum.
What changes above $4,000,000?
Every file is reviewed case by case before submission. The bank portfolio program takes over its own ladder there, with cash-out at 60% on a primary residence from $4,000,000 to $5,000,000, on review. Between roughly $4,000,000 and $6,000,000 both programs can apply to one file. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Is a bank statement loan a no-documentation loan?
No. It is reviewed on documented income under the applicable program, subject to lender guidelines. Statements must be consecutive, and credit, assets, reserves and debts are all reviewed. Scotsman Guide notes that non-QM lenders still confirm repayment ability.
Does a deed to me remove my sibling from the old mortgage?
No. Only a payoff or refinance releases the departing owner from the debt. A deed alone leaves the old obligation in place.
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 is a broker that arranges financing through select lenders in its wholesale network, and nothing here is a commitment to lend.
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.
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References
1. Freddie Mac: cash-out refinance
2. HousingWire
3. Scotsman Guide: Rev Up the Engine for Non-QM Lending
4. Scotsman Guide: Don’t Shut the Door on Quality Borrowers
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 · How High a Credit Score Does a Super Jumbo Bank Statement Loan Need?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.