Self-Employed Cash-Out Refinance: Pulling Equity Without Two Years of Returns

The equity is real. You have watched it build for years. And the reason you cannot get at it is a tax return that shows what your accountant made it show.

Meanwhile the business needs capital, or the rate on everything else you owe is worse than a mortgage, or there is an opportunity with a deadline on it.

Cash-out on these programs works differently from the flat caps people expect, and the difference is worth understanding before you pick a loan amount.

Cash-out is capped by leverage, not by a flat number

From CMG Financial's Non-QM Sharp Series guidelines (NMLS #1820, revised 09/21/2026), every tier uses the same structure: a cap above sixty percent loan-to-value, and unlimited cash-out at or below sixty percent.

Sharp Expanded (48 months or more clean housing event history, 0x30x12):

• Above 60% loan-to-value: $750,000 maximum cash-out
• At or below 60% loan-to-value: unlimited cash-out

Sharp Premium (36 months or more clean, 1x30x12):

• Above 60% loan-to-value: $500,000 maximum cash-out
• At or below 60% loan-to-value: unlimited cash-out

Sharp Standard (24 months or more clean, 2x30x12 and 1x60x24):

• Above 60% loan-to-value: $250,000 maximum cash-out
• At or below 60% loan-to-value: unlimited cash-out

That sixty percent line is the whole design. Below it the investor is comfortable enough with the equity cushion to stop counting. Above it, your housing history decides how much you can take.

So the first question on a self-employed cash-out is not "how much do I need." It is "does the amount I need keep me at or below sixty percent." If it does, the tier caps are irrelevant to you.

What the tier also sets

Cash-out is one line in a tier. The rest moves with it:

• Maximum loan size: $3.5 million Expanded, $3.0 million Premium, $2.0 million Standard
• Maximum loan-to-value: 90%, 90%, 85%
• Debt-to-income ceiling: up to 55% Expanded (requiring a 700 FICO, 80% maximum loan-to-value, primary residence only, no first time homebuyers, and 1.5x residual income), up to 50% Premium, up to 45% Standard
• Minimum reserves: 6 months Expanded, 3 months Premium and Standard
• Interest only: eligible on Expanded to 85% loan-to-value and Premium to 80%, both requiring a 700 minimum FICO, not permissible on Standard

And the documentation routes: Expanded and Premium allow written verification of employment, asset depletion, asset qualifier and the 12 month third-party P&L. Standard does not.

The rule that solves your reserve problem

Across all three tiers: cash-out can be used as reserves.

That is more useful than it sounds. A self-employed borrower doing a cash-out refinance on the Expanded tier needs six months of reserves. The proceeds of the transaction itself can satisfy that requirement.

So you are not being asked to produce reserve cash from somewhere else while simultaneously taking cash out. Structure the amount with the reserve requirement included and the file solves its own condition.

No mortgage insurance, at any leverage

Worth stating plainly because it changes the comparison against agency financing:

Mortgage insurance is not required on any loan in the series, regardless of loan-to-value.

On a conventional cash-out above eighty percent you would be paying mortgage insurance. Here you are not, at any point up to the program maximum. That is a genuine structural advantage and it narrows the rate gap people assume exists between agency and non-QM.

Two adjustments that move your number after you start

Declining markets carry a 5% loan-to-value reduction. If the appraisal comes back flagging a declining market, your maximum leverage drops by five points. On a cash-out that is a direct reduction in proceeds, and it arrives late in the process.

Build a margin. If you are structuring at exactly the maximum, a five point reduction is a problem. If you are structuring at sixty percent for the unlimited cash-out, you have room.

Non-warrantable condominiums are capped at 75% loan-to-value and combined loan-to-value with no cash-out on the relevant matrix. If your property is in a project with commercial space, high investor concentration, pending litigation or single-entity ownership above the limits, cash-out may not be available at all. Establish that before you plan around the money.

How much income the file can document still governs

None of the above matters if the qualifying income does not support the new payment.

So the sequence is: establish which documentation route produces the highest defensible income for your business, then size the cash-out against the ratio ceiling for your tier, then check where that lands you against sixty percent.

Run all of these before choosing:

• Bank statements, twelve or twenty-four months, with the expense factor by business type and headcount, multiplied by your ownership percentage
• Third-party prepared P&L, with depreciation, depletion, amortization and casualty losses added back, validated within plus or minus 10% of total qualified deposits
• Third-party prepared expense ratio, floored at 15%
• Streamline documentation, one year of business and personal returns plus K1s and a year to date P&L
• Full documentation

And remember the one-way door: a bank statement file with tax returns or transcripts in it is ineligible for sale to the investor and must be run as full documentation instead. Choose the route before documents start moving.

Uses, and one caution worth stating

People do this for good reasons: capital into a business that can earn more than the mortgage rate, consolidating expensive debt, funding an acquisition, or buying out a partner.

The caution is the same one that applies to every cash-out and it is not a reason to avoid one. Consolidating unsecured debt secures it against your home. A credit card is a claim on you. A mortgage is a claim on the house. Moving the balance lowers the payment and changes what is at risk if the business has a bad year.

Do it deliberately, with the business plan in view, not because the payment looks better in a spreadsheet.

The order to work it

1. Get a realistic value and calculate what sixty percent leverage would give you.
2. If that covers what you need, structure there and ignore the tier caps.
3. If it does not, pull your housing history and find your tier cap.
4. Run every documentation route and take the highest defensible income.
5. Include the reserve requirement in the cash-out amount, since proceeds can satisfy it.
6. Leave margin for a possible five point declining market reduction.

Common questions

How much cash can I take out as a self-employed borrower? Above 60% loan-to-value the cap is set by your tier: $750,000 on Expanded, $500,000 on Premium, $250,000 on Standard. At or below 60% loan-to-value, cash-out is unlimited on all three.

Do I need two years of tax returns for a cash-out refinance? No. Bank statements, a third-party prepared P&L, a third-party expense ratio and streamline documentation are all routes to qualifying income, subject to which tier you are in.

Can the cash-out count toward my reserve requirement? Yes. Cash-out can be used as reserves on all three tiers, which frequently lets the transaction satisfy its own condition.

Is there mortgage insurance on a non-QM cash-out? No. Mortgage insurance is not required on any loan in the series regardless of loan-to-value.

What is a declining market adjustment? A 5% loan-to-value reduction applied when the property is in a market flagged as declining. On a cash-out that directly reduces your proceeds, so leave margin if you are structuring near the maximum.

Can I take cash out on a non-warrantable condo? On the relevant matrix, no. Non-warrantable condos are capped at 75% loan-to-value and combined loan-to-value with no cash-out.

Related reading

• Self-employed and business owner home loans, the full index for this topic
• One Late Payment: How Housing History Moves You Between Non-QM Tiers
• Self-Employed Home Loan FAQ: What Actually Qualifies a Business Owner
• Write-Offs and Qualifying Income: The Trade Every Business Owner Makes Without Knowing

Why bring this file to us

• We solve for the 60% line. Above it your cash-out is capped by tier. At or below it, it is not capped at all.
• We use the cash-out toward reserves where it helps, which is permitted here and frequently solves the requirement outright.
• We run the documentation routes first, because how much equity you can access depends on how much income the file can document.
• Broker model. Multiple investors rather than one bank's shelf, which is what a file like this needs when the first answer is no.
• You talk to the principal. Ricky Khamis is President of EPiQ Lending and a Certified Mortgage Planner, NMLS #173141, originating mortgages since 1999. Direct line: (480) 999-9842.

EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.

Tell me your value, your balance and how much you need, and I will tell you which side of the sixty percent line the deal falls on. That line decides everything.

Program figures in this post come from the CMG Financial (NMLS #1820) guideline set named above, as published on the revision date given. CMG Financial is the parent company of EPiQ Lending. These figures describe one investor's program at one point in time. Other investors price and underwrite the same borrower differently, guidelines change without notice, and nothing here is an offer of any specific program or terms. Confirm current eligibility on your own file before you plan around any of it.

Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Rates, terms, and program guidelines change and depend on credit approval, property appraisal, income and asset verification, and other qualifying factors. Not all applicants will qualify. Non-QM, asset-based and business purpose financing carry different pricing, terms and consumer protections than agency financing. Consult your tax advisor regarding the tax treatment of any income or distribution strategy.