Issue with taxes on cash out refinance

[AJ Meyer]

I applied for a cash out refi on my primary residence. Good rate. Slightly higher monthly payment than what I currently pay, but a massive cash out amount due to appreciation, that I intend to use for REI.

I still haven’t filed last year’s tax return, so all I was able to show the lender is my 2 previous returns and last year’s P&L.

The lender (more specifically the underwriter) came back and said that even though I made more than enough money to carry the new loan, I won’t be approved, UNLESS I show a much higher NET CASH FLOW. Meaning I am not allowed to write off my perfectly legal business expenses that I write off every year, and as a result have to pay much more in taxes for last year.

Question: do all lenders look at net cash flow as the main criteria for someone’s ? Why can’t they just look at someone’s income? Or aggregated gross income?

Is there any way out of this for me?