A DSCR cash-out refinance replaces the loan on a rental with a larger one and pays you the difference in cash, qualified on the property’s rent instead of your income. Most lenders lend up to 70% to 75% of the appraised value after a short seasoning period, and you can use the cash for anything, including your next down payment.
Key takeaways
- Typical max cash-out LTV is 70% to 75% of appraised value.
- Many lenders require 3 to 6 months of ownership (seasoning) before using the new appraised value.
- The new, larger payment must still produce a DSCR of about 1.0 or higher.
- Cash-out proceeds often count toward reserve requirements.
How a DSCR Cash-Out Refinance Works
The lender orders an appraisal with a rent schedule, sizes the new loan to the lower of the LTV limit and the amount the rent can support, pays off your existing loan, and sends the remainder to you at closing. No tax returns or W-2s are required.
Example: A duplex appraises at $520,000 and has a $210,000 mortgage. At 75% LTV, the new loan is $390,000. After paying off $210,000 and roughly $12,000 in closing costs, you receive about $168,000. The new payment must still be covered by the rent at the lender’s minimum DSCR.
Seasoning Rules
Seasoning is how long you have owned the property. Lenders handle it differently:
- Under 3 to 6 months: many lenders cap value at your purchase price plus documented improvements.
- After 6 months: most lenders use the full appraised value.
- Delayed financing: if you bought with cash, some lenders let you cash out right away up to your purchase price plus improvements.
Seasoning matters most for BRRRR investors refinancing out of a bridge or fix and flip loan. Check the rule before you choose a lender for the purchase.
Cash-Out Limits and Pricing
| Item | Typical |
|---|---|
| Max LTV (1 unit) | 70% to 75% |
| Max LTV (2 to 4 units, STR) | 70% to 75%, sometimes lower |
| Max cash in hand | Some lenders cap at $500,000 to $1 million+ per loan |
| Rate | Usually 0.25% to 0.75% above a rate-and-term refi |
| Credit | 660 to 700+ for higher LTV tiers |
Common Uses for the Cash
- Down payment on the next rental.
- Paying off a higher-rate bridge or hard money loan.
- Renovations that raise rent and value.
- Consolidating debt or building reserves.
Lenders treat DSCR loans as business-purpose loans, so they may ask you to sign a statement confirming the proceeds are for business use.
Check the Math Before You Pull Cash
A bigger loan means a bigger payment and a lower DSCR. Run the new payment through our commercial loan calculator to confirm the property still covers. Also look at the prepayment penalty on your current loan and the new one.
Refinancing Into an LLC
If the property is titled in your name, a cash-out refi is a good time to move it into your LLC. See DSCR loans for LLCs.
Frequently Asked Questions
How much cash can I take out with a DSCR refinance?
Most lenders allow up to 70% to 75% of the appraised value, minus your existing loan and closing costs, as long as the rent still covers the new payment.
How long do I need to own a property before a DSCR cash-out refinance?
Many lenders want 3 to 6 months of ownership before using the full appraised value. Some allow delayed financing immediately after an all-cash purchase.
Do I need tax returns for a DSCR cash-out refinance?
No. Qualification is based on the property’s rent, the appraisal, your credit and your reserves.
Can I use DSCR cash-out proceeds as reserves?
Many lenders allow it, which can make it easier to meet reserve requirements on the refinance itself.
Have a deal in mind? Want to see how much equity you can pull? Tell us about the deal and we will match it with the lenders that fit.