The Quick Read: Fannie Mae allows a cash-out refinance on a rental, but it caps leverage on investment property below what it allows on a primary residence, and several other tests can limit the loan before that cap does. The agency path runs on personal income, personal credit, and seasoning rules, so the cap is only one of several gates. DSCR cash-out is a separate product with its own leverage ceiling and qualification test.
- Agency cash-out on a rental sits below primary-residence leverage, and the exact cap depends on unit count and rate type.
- A new loan must pay off an existing first mortgage that is at least 12 months old.
- At least one borrower must typically have been on title for six months.
- Agency underwriting leans on personal DTI, credit, and reserves.
- On Lendmire’s DSCR side, cash-out tops out at 75% LTV on a standard rental, subject to lender guidelines.
Investors search this phrase because they want one number. The honest answer is that the number lives on a matrix that changes by occupancy, unit count, and fixed versus adjustable rate. This article explains how the agency path treats LTV, where it breaks down, and how it compares with a DSCR cash-out.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 8, 2026
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As of Oct 8, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Property value, balance, taxes, and insurance are editable estimates. Maximum loan-to-value varies by lender, program, property type, and seasoning. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
What Is a Fannie Mae Cash-Out Refinance on a Rental?
A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference. Under Fannie Mae’s Selling Guide, the new first mortgage must pay off the existing mortgage on the same property. It can also be a new mortgage on a property owned free and clear.
Fannie Mae buys these loans from lenders, so the lender must follow Fannie Mae’s rules to sell the loan. Those are agency rules, not DSCR rules. They apply only to loans sold to Fannie Mae. A DSCR lender sets its own leverage, seasoning, and coverage tests.
How Does Underwriting Treat Investment Property LTV?
Underwriting measures LTV by dividing the new loan amount by the appraised value. The result must fit under the cap for that occupancy, unit count, and rate type. Fannie Mae’s Eligibility Matrix publishes those caps, and investment-property cash-out sits below primary-residence leverage. Check the live matrix before you rely on a specific percentage, because it is updated over time.
Here is the process, step by step:
1. Eligibility check. The property must be eligible, and the borrower must meet the title and loan-age tests described below.
2. Appraisal. Fannie Mae’s appraiser forms include Form 1004 for one-unit homes, Form 1025 for 2-4 unit income properties, and Form 1007, the rent schedule that supports rental income on one-unit properties.
3. LTV calculation. The loan amount is divided by the appraised value and compared with the matrix cap.
4. Borrower underwriting. Personal DTI, credit score, reserves, and documented rental income decide whether the borrower fits.
5. Pricing. Fannie Mae’s loan-level price adjustments add cost as LTV rises and credit scores fall. Higher leverage costs more on agency paper, not just less eligibility.
6. Disbursement. Seasoning is measured at disbursement.
The appraisal is the lever you cannot control. A lower value shrinks the maximum loan even when your balance has not changed.
What Are the Seasoning Rules?
Two separate clocks apply, and investors often blur them. The first measures time on title. At least one borrower must have been on title for six months before disbursement, with exceptions listed in the guide. The second measures the age of the loan being paid off. An existing first mortgage must be at least 12 months old, counted from its note date to the new loan’s note date.
Two more agency rules can trip a file. A property that was listed for sale must be off the market by disbursement. And for loans run through Desktop Underwriter, a DTI above 45% triggers a six-month reserve requirement, per the same Selling Guide section. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Lendmire’s DSCR network uses a different yardstick: about six months of ownership measured from title recording. There is no separate loan-age test to pass.
Where the General Rule Breaks
The agency framework has named exceptions, and each one changes the math.
Delayed financing. A cash buyer can skip the six-month wait. The original purchase must be arm’s-length and documented, and the new loan cannot exceed the documented initial investment plus eligible financing costs. A purchase financed with hard money falls outside the exception. Fortune’s investor guide lays out the same limits.
Title exceptions. The guide references inheritance and legal awards. Fannie Mae’s limited cash-out section also covers situations such as divorce awards and revocable-trust beneficiaries.
Limited cash-out versus cash-out. A rate-and-term refinance, which returns little or no cash, gets higher leverage. The cash-out ceiling on investment property is lower. Do not borrow one number for the other.
High LTV refinance. Fannie Mae also has a High LTV Refinance option aimed at on-time Fannie Mae borrowers. It requires 15 months of seasoning and a borrower benefit, and the existing loan must be owned or securitized by Fannie Mae. It is a refinance for existing agency borrowers, not a way to pull equity.
Property count and entity limits. Agency loans are personal-name, income-documented products. A portfolio with many financed properties can run into agency limits, and LLC-held rentals generally do not fit. Confirm the current financed-property limit in the Selling Guide before you plan around it.
How Does This Compare With DSCR Cash-Out?
DSCR cash-out is not an agency product. It is business-purpose lending sized by LTV and rent coverage, and it does not use the agency 12-month and six-month tests. For a fuller walkthrough, Lendmire’s complete DSCR loans guide covers the basics.
| Factor | Agency cash-out | DSCR cash-out (Lendmire network) |
|---|---|---|
| Reviewed on | Personal DTI and income | Property rent vs PITIA |
| Seasoning | 6 mo. Title, 12 mo. Loan age | About 6 months ownership |
| Cash-out LTV | Matrix cap, below primary home | Up to 75% on standard rentals |
| Credit | Per agency matrix | 620 floor; most want about 660 |
| Reserves | Per matrix, often 6+ months | About 6 months PITIA |
| Holding title | Personal name | LLC may be eligible, subject to lender guidelines |
DSCR measures rent against PITIA, meaning principal, interest, taxes, insurance, and any HOA dues. Many select programs start at 1.00. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger coverage opens better pricing and leverage. Credit tiers typically run from 620 up through 660, 680, and 700, and loans reach up to $3,000,000 on standard programs, subject to lender guidelines.
One caution: clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capex sit outside the calculation.
What the Decision Looks Like in Practice
Three investor profiles show where the flip point sits.
Picture a salaried investor with one rental owned personally, strong documented income, and a loan that is more than a year old. Agency cash-out may carry the lowest-cost paper, and the lower leverage may be enough. Conventional can be the right call here.
Now consider a self-employed investor whose traditional personal-income documentation understates real cash flow. Personal DTI is the weak link, not the property. Rent might cover PITIA at roughly 1.2x, and DSCR can take the property’s income as the main test, subject to lender guidelines.
Last, run the numbers on a BRRRR exit. An investor rehabs a rental and wants to refinance soon after the work is done. The agency 12-month loan-age test can stall that plan if the existing loan is young. A DSCR file instead asks about roughly six months of ownership. Appraised value still sets the loan, so the improvements must show up in the comps, and any lift is subject to underwriter review.
Across the wholesale network, the pattern is steady. Agency paper wins on cost when the borrower fits the box. DSCR wins when the box is the problem: many financed properties, entity ownership, or income that documents poorly.
Reading Your Cash-Out Number
The formula is simple. Appraised value times the LTV cap gives the maximum new loan. Subtract the payoff, other liens, and financed costs. What remains is potential proceeds.
Say a property appraises at $400,000 and the DSCR cash-out ceiling is 75% LTV on a standard rental. The maximum new loan is capped by that 75% share of value. Your payoff and costs come out of that amount, and the balance is your potential proceeds. If the appraisal comes in lower, the proceeds shrink with it. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Coverage and reserves are separate gates, so passing one does not excuse the other. The strongest files clear both: enough equity and enough rental coverage. A larger equity cushion can lift coverage, but it never erases leverage caps, credit floors, or reserve rules. Reserves typically run about 6 months of PITIA, stepping up to about 9 months above $1,500,000. Lendmire’s piece Max LTV Cash Out Refinance Investment Property goes deeper on the ceiling.
Short-term rentals run tighter. Cash-out on an STR sits at 70% LTV, versus 75% on a standard rental, with a 640+ score and about 12 months of hosting history expected. Short-term rental rules can vary by city, county, HOA, and property type, so investors should confirm local rules before relying on projected rental income. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the property’s appraised value.
CLTV: Combined loan-to-value, which adds subordinate liens to the first mortgage before dividing by value.
Seasoning: The time you have owned the property, or the age of the loan being paid off.
Delayed financing: An agency exception that lets a cash buyer refinance without the six-month title wait.
DSCR: Monthly rent divided by PITIA, a measure of whether the property’s income covers its own debt.
PITIA: Principal, interest, taxes, insurance, and HOA dues, the full monthly obligation.
Limited cash-out: A refinance that pays off the existing loan and costs but returns little or no cash.
Common Misreads
- “Fannie Mae lends 80% on a rental cash-out.” That figure belongs to owner-occupied one-unit loans. Rental caps sit lower.
- “Delayed financing has no limit.” The loan is bounded by documented cash invested plus eligible costs.
- “Hard-money purchases qualify.” They do not, because the exception covers cash purchases only.
- “The six-month and 12-month rules are one test.” One measures title time, the other the age of the loan being paid off.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
For a side-by-side view of the agency route, see Lendmire’s piece Fannie Mae Cash Out Refinance Investment Property.
Frequently Asked Questions
What is the Fannie Mae LTV limit on an investment property cash-out?
It is lower than the primary-residence cap and varies by unit count and rate type. The exact percentage lives on the live Eligibility Matrix, so check it before you plan a deal. On Lendmire’s DSCR side, standard-rental cash-out tops out at 75% LTV. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
How long do I have to own the property first?
Under agency rules, at least one borrower must typically have been on title for six months, and any existing first mortgage must be at least 12 months old. Delayed financing is the main exception for cash buyers. DSCR programs in the network generally look for about six months of ownership.
Can an LLC do a Fannie Mae cash-out refinance?
Generally no. Agency loans are personal-name, income-documented products. DSCR loans can close in an LLC, subject to lender program eligibility.
Does clearing 1.00 mean the property cash flows?
No. DSCR compares rent only to PITIA. Repairs, vacancy, management, utilities, and capex sit outside the number, so budget for them separately.
What if the agency cap does not give me enough cash?
Compare a DSCR cash-out, which is a different product with its own tests. Leverage tops out around 75% on standard rentals, and qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines.
If you are buying or refinancing a rental property and want to see how the numbers work, Lendmire can help you compare DSCR loan options based on the property income, credit profile, leverage, and investor goals.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage built around DSCR investor lending, with programs available in 41 markets, including Washington, D.C. DSCR lenders commonly evaluate rental-income coverage instead of personal income paperwork — a practical fit for LLC-owned and multi-property investors. Terms vary by lender, property, leverage, and program. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. Fortune, investment property cash-out refinance guide
This article is part of Lendmire’s investment property cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Fannie Mae Cash Out Investment Property LTV · Fannie Mae Guidelines for Cashout Refinance on Investment Property · What Is The Maximum LTV For A Conventional Cash Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.