Guide · Self employed mortgages
Using Business Funds for Your Down Payment
Plenty of business owners keep most of their cash in the business. You can usually use it for a down payment. The lender just has to see that taking it out won't hurt the business.
The short answer: usually yes
You need to be an owner of the business, and the lender has to confirm that pulling the money out won't hurt the business's ability to operate. That's it. The funds don't have to be moved months ahead of time.
How the lender checks
Most of the time the lender does its own review of the business's cash: recent business bank statements, the business tax return, and sometimes a year to date P&L or balance sheet. If the business has plenty left over after the withdrawal, it's fine.
- Two or three months of business bank statements
- Your ownership percentage, usually from the business return or K-1
- If you own less than 100%, the amount you can use may be limited to your share, or the other owners may need to sign off
About the CPA letter
Some loan officers ask your CPA for a letter saying the withdrawal won't hurt the business. Many CPAs won't sign that, and they're right to be careful: it asks them to predict the future. Most of the time it isn't needed, because the lender can do the cash flow review itself. I don't ask CPAs for comfort letters.
Plan ahead
- Don't move large amounts between accounts right before applying without talking to me. Every big transfer needs a paper trail.
- Keep the business account healthy after the withdrawal. A balance near zero raises questions.
- Tell your CPA you're doing it, so the books show it correctly as a distribution.
Common questions
Does my CPA have to write a letter?
Usually not. The lender can review the business cash itself. If a specific program needs anything from your CPA, it's facts they already know, like that you own the business.
Can I use funds from a business I partly own?
Often yes, up to your share, or with the other owners' sign off. It depends on the program.
Want me to look at your numbers?
Free and confidential. I'll tell you which program fits and what you'd qualify for, and I'm happy to loop in your CPA. Hablo español.
More guides
- Getting a Mortgage as an S Corp Owner: How Lenders Read Your K-1
- Real Estate Investors: DSCR Loans and How Depreciation Affects Qualifying
- 1099 Contractors and Agents: How to Qualify for a Mortgage
- Buying a House While Your Taxes Are on Extension
General information, not tax or legal advice. Program terms vary by lender and change often. Not every borrower will qualify.