Down Payment and LTV Guidelines

Understanding down payment requirements and loan-to-value ratios for self-employed mortgage programs

Self-employed mortgage programs require larger down payments than conventional loans. Lenders offset the risk of this type of lending by requiring more borrower equity upfront.

For context, conventional mortgages allow down payments as low as 3-5% for well-qualified borrowers, and FHA loans require just 3.5%. Self-employed programs typically start at 10% and often require 20-25% or more.

Loan-to-Value Explained

Loan-to-value (LTV) is the ratio of your loan amount to the property value. If you’re buying a $500,000 home with a $100,000 down payment, you’re borrowing $400,000—an 80% LTV.

LTV = Loan Amount ÷ Property Value

Lower LTV means more equity and less risk for the lender, which translates to better rates and terms for you.

Typical LTV Limits

Property Type	Maximum LTV	Minimum Down Payment
Primary residence	90%	10%
Second home	85%	15%
Investment property	80%	20%

These are common guidelines—some lenders go higher, others are more conservative. Higher loan amounts and lower credit scores typically reduce maximum LTV.

How LTV Affects Pricing

Lower LTV generally means lower rates. Lenders apply pricing adjustments at various LTV thresholds:

LTV	Rate Impact
70% or below	Best pricing
75%	Slight adjustment
80%	Standard pricing
85%	Moderate adjustment
90%	Highest adjustment

Putting down 25% instead of 10% might save 0.25% to 0.75% on your rate.

LTV and Loan Amount

Maximum LTV often decreases as loan amount increases:

Loan Amount	Typical Max LTV
Up to $1 million	90%
$1-2 million	85%
$2-3 million	80%
$3 million+	70-75%

Jumbo self-employed mortgage loans require more skin in the game.

Refinance LTV Limits

For refinances, maximum LTV depends on the transaction type:

Refinance Type	Typical Max LTV
Rate and term	85-90%
Cash-out	75-80%

Cash-out refinances have lower limits because you’re extracting equity rather than just improving terms.

Maximizing Your Options

If you’re short on down payment:

• Some lenders accept gift funds for a portion of the down payment
• A few programs allow seller concessions toward closing costs
• Consider a lower purchase price to hit your target LTV
• Higher credit scores sometimes unlock higher LTV programs

More equity always improves your options—better rates, more lender choices, and easier approval.

Asset Depletion Loan LTV Limits

Asset depletion programs are more restrictive on LTV than bank statement, 1099, and P&L programs. Because the income qualification method converts assets to a monthly income figure rather than documenting earned income, lenders consider it higher risk and require more borrower equity:

Property Type	Maximum LTV	Minimum Down Payment
Primary residence	75%	25%
Second home	70%	30%
Investment property	65-70%	30-35%

These higher down payment requirements apply even to borrowers with strong credit scores and substantial assets. The tradeoff is access to a program that can qualify high-net-worth borrowers who have limited income documentation but significant liquid wealth.