Yes. Money held in a business account can be used for the down payment, the closing costs, and the post-closing reserves on a 1-4 unit investment property loan under our DSCR program. What decides whether it works is not the balance. It is whose name is on the account, how much of the account-holding company you personally own, and whether you can prove you can reach all of the money in it.
Borrowers who own their company outright almost never notice those conditions. Borrowers who share a company with partners fail one of them constantly — usually late, usually after the earnest money is committed.
The test is a name match, not a balance
Start with the base rule, because business funds are an exception layered on top of it.
Funds held in a checking, savings, money market, certificate of deposit or other depository account may be used for the down payment, closing costs, and financial reserves. The funds must be verified; unverified funds are not acceptable. Eligible assets must be held in a US account. We require the two most recent months of account statements from the borrower, the guarantor, the primary guarantor, or the borrowing entity — or, on a purchase, a Verification of Deposit form (FNMA 1006) completed by the depository institution. The verification must provide sixty days of account activity and include all items normally indicated on bank statements.
Now the exception. Our asset table has a row titled Business Funds, and the row defines itself parenthetically as an account that is not in the name of the borrowing entity. The additional requirements column repeats the trigger: if the business account used is not in the same name as the borrowing entity, further requirements must be met.
That is the whole test. Not "is this a business account." Not "does the company have other owners." The question is whether the name on the bank account matches the name of the entity taking title and signing the note.
If your borrowing entity is Maple Street Holdings LLC and the account is Maple Street Holdings LLC, you are documenting an ordinary depository account belonging to the borrower. If the money is sitting in Ridgeline Contracting LLC, the operating company you run with two partners, you are in the business funds row and two additional conditions apply.
Worth noticing: the column that reduces some asset types by a stated percentage carries no percentage for business funds. Retirement accounts carry a defined reduction; life insurance cash value and annuities carry the applicable policy penalty. Business funds carry a permission with conditions instead. The full table and its reductions are covered in [using retirement accounts for investment property reserves](/blog/using-retirement-accounts-for-investment-property-reserves).
Condition one: 25% or greater of the entity holding the account
The text: the natural borrower or guarantors must have ownership of 25% or greater of the entity holding the account.
Three words there do real work.
Natural. A human being. Ownership held through another company does not satisfy this on its own reading. If your stake in the operating company sits inside a holding company, expect the underwriter to trace it to a person.
The entity holding the account. Not the borrowing entity. The company whose name is on the bank statement. This is the most common misreading of the row, and a different 25% threshold applies to the borrowing entity for an entirely unrelated reason — see below.
25% or greater. A floor. At 24% you do not clear it, and the asset table describes no exception path below the line.
The text reads borrower/guarantor(s), plural. It does not say whether two guarantors holding 15% each may combine to reach 25%, and I am not going to tell you they can. The guideline is silent on aggregation here. If your file depends on that reading, raise it before you write the offer.
Condition two: named on the account, or access to 100% of the funds
The second condition is joined to the first by the word also. It is additional, not alternative. Clearing 25% ownership does not end the analysis.
The borrower or guarantor must also be named on the account, or provide proof of access to 100% of the funds from other members.
The first path is easy. Your name is on the account and the bank's records show it. Most owner-operators of a small company already are, and if you are, condition two is done.
The second is where files stall. If you are not named on the account, you must show access to 100% of the funds — not your pro rata share.
The guideline does not prescribe a form for that proof — no named document, template, or signature standard. What it does say, in the same asset section, is that the underwriter is responsible for determining whether the source of funds documentation provided by the borrower meets our requirements. So do not assume a short letter from a partner clears it, and do not assume it fails. Send us the entity structure and the account details early.
What each condition is actually tested with
| What we are testing | What satisfies it | Where it comes from |
|---|---|---|
| The funds exist and are verifiable | Two most recent months of statements, or a Verification of Deposit (FNMA 1006) completed by the depository institution | Asset Requirements |
| Sixty days of account activity | Statements showing all items normally indicated on bank statements | Asset Requirements |
| The account is eligible | Eligible assets must be held in a US account | Asset Requirements |
| Your stake in the account-holding company | Ownership of 25% or greater by a natural borrower or guarantor | Business Funds row |
| Your ability to reach the money | Named on the account, or proof of access to 100% of the funds from other members | Business Funds row |
| Large or unusual deposits | Source explained and/or documented | Asset Requirements |
The guideline does not name the specific document that evidences your ownership percentage of the account-holding entity. Expect to have to evidence it; what form we accept is an underwriting determination on your file, not a published list.
What happens when you do not own the business outright
You own 45% of an operating company with two partners, the account is in the operating company's name, and your borrowing entity is a separate single-member LLC. Condition one is satisfied at 45%. Condition two turns entirely on whether you are a named party on that bank account. If you are, you are finished. If you are not, you need proof of access to 100% of the funds from the other two members, and their willingness to give it is a business relationship question rather than an underwriting one. Ask before you make the offer.
You own 20%. Condition one fails on its face. Plan on a different source — a personal depository account, publicly traded securities, or another eligible asset type. Establish where the down payment is coming from before you shop.
You own 100% of the company, but the account is in the company's name rather than the borrowing entity's. You are still in the business funds row, because the trigger is the name mismatch, not the partner count. Both conditions are ordinarily satisfied, but neither is skipped.
A distribution is not a loan
One line in the ineligible assets list quietly governs a lot of business funds files.
A loan from the borrower's business is an ineligible asset unless it is placed on full stand-by — principal and interest payments suspended for the term of the loan — and the source of funds can be verified.
That matters because how money leaves a company is a characterization choice. Move 150,000 dollars from your operating company to yourself as a member distribution or owner draw and you are in the business funds row with the two conditions above. Book the same amount as a loan from the company to you and you have landed on the ineligible list, redeemable only through full stand-by plus verified sourcing.
The dollars are identical. The label is not.
How that transfer should be characterized for tax and accounting purposes, and whether your operating agreement permits it, are questions for your accountant and your attorney. What I will tell you is that the label has a direct, stated effect on whether we can count the money — so choose it deliberately rather than discovering it in a general ledger during underwriting.
Business funds and reserves
Reserves are where business funds carry a real advantage. Gift funds cannot be used to meet the post-closing reserve requirement. Business funds can: the row permits them for down payment, closing costs and reserves, conditions met.
The reserve requirement scales with the debt service coverage ratio on the subject property:
A short-term rental requires that additional six months on top of the applicable figure. On portfolio loans, an additional six months, nine in total, is required for transactions meeting the vacant definition. Cash-out proceeds may be utilized for reserves if the FICO is above 700.
Three rules bear directly on using a business account.
Funds used for down payment and closing costs cannot be included in reserve funds. The same balance cannot serve twice.
Liquid assets required for post-closing reserves are evidenced and verified prior to funding. Not at application. A balance present in month one and spent by closing does not count.
Eligible assets of all borrowers and guarantors may be combined to evidence liquid assets, and should be verified at approximately the same time to prevent double counting. This is the rule that catches shared business accounts: if two guarantors on the same loan both point at the same operating company balance, it counts once, and simultaneous verification is exactly how that surfaces.
Together those three rules produce the most common late-stage failure on a business funds file. One operating account is large enough to cover the down payment or the reserves, but not both, and the shortfall only becomes visible at the reserve check.
The other 25%, and why it is not the same 25%
The number 25% appears twice in this program for unrelated reasons, and conflating them causes real damage.
In the asset table, 25% is the minimum ownership a natural borrower or guarantor must hold in the entity holding the bank account to use its funds.
In the eligibility section, 25% is the ownership threshold in the borrowing entity that pulls a person into the loan. All loans are recourse. Any individual or legal entity that is a principal or controlling party with a 25% or greater direct or indirect ownership interest in the borrowing entity must sign a guaranty. Tri-merged credit reports are required on all individual guarantors, principals or controlling parties at that same threshold, and in certain situations we may pull a report on individuals below 25% based on our review of the borrowing entity structure. Background searches run on all parties controlling the borrower and any party owning 25% or more, directly or indirectly.
In most real files these are different companies. Your operating company holds the cash; your property LLC holds title. Your 45% of the operating company answers the asset question and says nothing about who signs the guaranty.
A related trap: any managing member or controlling holder who is not a borrower must be a personal guarantor. A controlling holder is anyone able to direct the activity of the borrowing entity, or act on its behalf — borrow money, dissolve the entity, remove members — without unanimous or majority consent of the members. If your operating agreement gives a partner that authority over the property LLC, that partner is coming onto the loan whether or not their money is.
Every guarantor then has to qualify. The minimum FICO is 660 for all guarantors. With a single guarantor, the middle score sets rate and LTV. With several, rate and LTV are based on the lowest middle score, and every other guarantor must still meet the 660 minimum.
Where the money in the account came from still matters
Clearing both conditions does not exempt the account from sourcing. Large deposits inconsistent with monthly deposit activity must be verified if the funds are being used for down payment, reserves or closing costs. The source of funds for newly opened accounts, or unusually large deposits into existing accounts, must be explained and/or documented. Funds that have not been vested or seasoned, where the source cannot be verified, are ineligible.
Business operating accounts are noisy by nature — receivables landing in lumps, a settled invoice, equipment sold — and that noise is exactly what triggers a large deposit review. How a deposit gets sourced and what documentation clears one is covered in [how large deposits get sourced on an investment property loan](/blog/how-large-deposits-get-sourced-on-an-investment-property-loan).
One boundary worth naming: if the business whose account you are using has an interest in the transaction — the seller, the builder, the real estate agent or brokerage, or an affiliate benefiting from the sale — this stops being an asset question. Interested party contributions may only be used for closing costs and prepaid expenses, may not be used for down payment or reserves, and are capped at 3% of the purchase price.
What this page does not do
This page explains one row of our asset table and the conditions attached to it. It is not an approval, not a pre-qualification, and not a quote, and nothing here commits us to accept any particular account, document, or ownership structure.
It does not tell you how a specific large deposit gets sourced, and it does not walk the full asset table or the reductions applied to other asset types; both are linked above. It does not address rate, points, LTV limits, prepayment penalties by state, appraisal or lease requirements, or the debt service coverage calculation itself beyond the reserve tiers business funds interact with.
It does not tell you how to characterize a transfer out of your company for tax or accounting purposes, whether your operating agreement permits a distribution, or what your partners are obligated to sign. Those belong to your accountant and your attorney.
Where the guideline is silent — on aggregating ownership across multiple guarantors to reach 25%, and on the form the proof of access to 100% of funds must take — this page says so rather than filling the gap. Bring us the structure and we will tell you what your file needs.
Guideline DSCR V28 · Reviewed August 31, 2026
Published September 1, 2026 · Updated September 1, 2026
How to use this guide
This article is educational guidance, not an offer or commitment to lend. Rules, property facts, credit, leverage, documentation, and full underwriting still control any actual scenario.