The Quick Read: Fannie Mae applies two separate seasoning tests to an investment-property cash-out refinance: at least one borrower on title for six months, and an existing first mortgage that is at least 12 months old when it is being paid off, per the Fannie Mae Selling Guide, while DSCR loans are a different product with their own lender-set seasoning. Investors mix the two tests up all the time. Mixing them up leads to bad exit plans.
- The agency title test and the agency loan-age test are separate clocks. Passing one does not satisfy the other.
- A cash buyer can use the delayed-financing exception, but the loan is capped at documented purchase cost, not post-rehab value.
- Seasoning is lender policy on the DSCR side, not a statute. Across Lendmire’s wholesale network, about 6 months from the recorded deed is the common expectation, subject to lender guidelines.
- Seasoning is only one gate. Rental coverage, credit, reserves, and the leverage cap all apply on top of it.
Key Terms Defined
Seasoning: the minimum time a lender requires you to own the property, or hold the existing loan, before cash can come out.
Title seasoning: the time a borrower has been on title, measured to the date the new loan is disbursed on the agency side.
Loan-age seasoning: the age of the existing first mortgage being paid off, measured from its note date to the new loan’s note date.
Delayed financing: an agency exception that lets a cash buyer refinance without waiting out the title clock, with the new loan limited to what the buyer documented putting in.
Cash-out refinance: a refinance that returns cash at closing. A refinance that returns none is a rate-and-term refinance.
Cost basis versus appraised value: two ways a lender can size the loan. Cost basis means price plus documented improvements. Appraised value means what the appraiser says the property is worth today.
DSCR Cash-Out Calculator
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What Does Seasoning Actually Control?
Seasoning controls how much cash you can take out and when. It is not a federal rule for DSCR loans. Each lender writes its own policy, and its written guideline is the document that governs your file.
Seasoning does more than set a waiting period. It often decides the value basis. Inside the window, many lenders size the loan off cost: purchase price plus documented improvements. After the window, they size off appraised value. For a BRRRR investor, that difference is the whole deal. A cost-basis refinance leaves forced appreciation trapped in the property.
BiggerPockets calls seasoning the second waiting period in a BRRRR deal and says most refinance lenders want a wait of six or even 12 months. It also advises planning a short-term loan of at least 18 months so the wait does not strand you. That advice is sound.
How Do Fannie Mae’s Two Clocks Work?
Fannie Mae runs a title test and a loan-age test, and they measure different things. The title test asks how long a borrower has owned the property. The loan-age test asks how old the existing first mortgage is. Both come from the Selling Guide section on cash-out refinance transactions.
| Factor | Title test | Loan-age test |
|---|---|---|
| What it measures | Time on title | Age of existing first mortgage |
| Length | 6 months | 12 months |
| Clock ends | New loan disbursement | New loan note date |
| Applies when | A borrower must be on title | An existing first mortgage is paid off |
| Does not apply | Delayed-financing buyers | Subordinate liens, co-owner buyouts |
The 12-month loan-age test was added by a later Selling Guide announcement. A law-firm client memo explains that it sits on top of the existing six-month title requirement. It did not replace it.
That is the misreading to avoid. An explainer glossary notes that the two tests often get merged into one twelve-month requirement. They are not one rule. An investor who owned a property free and clear for two years passes the title test and has no first mortgage to age. An investor who bought with a bridge loan five months ago fails both.
This article treats the agency rules as contrast only. Leverage limits for investment property sit in the agency’s own eligibility documents, and they are not restated here. DSCR loans are not agency products, and no agency rule governs them.
Which Exceptions Break the Fannie Mae Rule?
The main exception is delayed financing. Others cover inheritance, legal awards, co-owner buyouts, and subordinate liens. Each one removes a specific test, not all tests.
Delayed financing. A cash buyer can refinance without the six-month title wait if the delayed-financing conditions are met, per the Selling Guide. An archived version of the guide lists an arm’s-length original purchase and borrower eligibility among the conditions. The other cash-out requirements still apply.
The catch is the loan cap. The new loan is limited to the documented purchase investment plus closing costs, prepaids, and points. Renovation spend sits outside that formula, per the same glossary. A cash buyer who rehabs and then uses delayed financing does not get to borrow against the new value.
Inheritance or legal award. An archived 2020 version of the guide shows no waiting period for property received by inheritance or a legal award such as a divorce settlement. That version is superseded. Check the current guide before relying on it.
Co-owner buyouts and subordinate liens. The 12-month loan-age test does not apply when paying off a subordinate lien or buying out a co-owner under a legal agreement.
Listed properties. A property listed for sale must come off the market on or before disbursement.
Back-to-back cash-outs. A limited cash-out refinance is not eligible if the borrower did a cash-out refinance on the same property with a note date 30 days or less before the new application, per the prohibited practices section.
How Does Seasoning Work on a DSCR Cash-Out?
On the DSCR side, seasoning is a lender’s own risk policy, and it varies by lender. Across Lendmire’s wholesale network, about 6 months of ownership, measured from the recorded deed, is the common expectation for a cash-out. Programs differ, and every file is underwritten individually.
Here is how the network’s cash-out parameters line up with the agency contrast.
| Factor | Agency (contrast) | DSCR network guidance |
|---|---|---|
| Ownership clock | 6 months on title | About 6 months from recorded deed |
| Existing-loan age test | 12 months | Set by each lender |
| Cash-out LTV, standard rentals | See agency matrix | Up to 75% |
| Short-term-rental cash-out | See agency matrix | Up to 70% |
| Review basis | Personal income and DTI | Rental income vs. PITIA |
A few mechanics matter more than the headline number.
The value basis inside the window. Early refinances are commonly sized on cost, not appraisal. Ask the lender in writing which basis applies before you buy. Verify the clock start date the same way.
Leverage. Cash-out tops out around 75% LTV on a standard rental across most of the network. On short-term-rental collateral, the cash-out ceiling is 70%, and those programs typically want a 640+ score and about 12 months of hosting history. A refinance that returns no cash can reach higher leverage, up to 85% on a rate-and-term refinance in this network, but that is a different transaction.
Coverage. DSCR compares monthly rent to PITIA: principal, interest, taxes, insurance, and any HOA dues. Many select programs start at 1.00, and stronger ratios open better terms. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Clearing 1.00 does not mean positive cash flow, because repairs, vacancy, management, and capex sit outside the calculation.
Credit and reserves. A 620 floor exists in parts of the network, most programs want around 660, and 700+ opens the strongest tiers. Reserves commonly run about 6 months of PITIA, stepping up to about 9 months above $1,500,000. Standard programs go up to $3,000,000. Seasoning does not waive any of these. Passing the clock only gets the file into the review.
For the full program picture, see the complete DSCR loans guide.
Three Timelines Side by Side
Run these as month counts from the date the deed records. They show where each test bites.
A cash buyer. The investor buys with cash in month 0 and rehabs through month 3. On the agency side, delayed financing allows a refinance before month 6, but the loan is capped at documented cost. On the DSCR side, the lender typically sizes an early refinance on cost. After about month 6, appraised value generally becomes the basis, subject to lender guidelines and the 75% ceiling.
A BRRRR investor with a bridge loan. The investor buys with a short-term note in month 0, rehabs, and leases the property by month 5. The agency loan-age test fails, because the bridge note being paid off is under 12 months old. A DSCR lender with about 6 months of seasoning from the recorded deed may be in range around month 6. That is why BiggerPockets suggests a bridge term of at least 18 months. Extra runway costs money, but a forced payoff costs more.
A long-term owner. The investor has owned the property free and clear for years. The title test is met on both sides, and there is no first mortgage to age. The binding limits become leverage, reserves, and rental coverage. Picture rent that clears roughly 1.2x at 75% LTV. That file is limited by the cap, not by seasoning. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A Pass/Fail Check Before You Plan
Run these questions in order.
1. Is there an existing first mortgage? If yes, is it at least 12 months old for an agency refinance? If it is a bridge note, assume no.
2. Has a borrower been on title for six months for an agency refinance, or is the DSCR lender’s clock, about 6 months from the recorded deed, met?
3. If you bought with cash, did you document the source of funds and an arm’s-length purchase? If yes, delayed financing may apply, capped at cost.
4. Is the property listed for sale? It must come off the market.
5. Does the rent clear the coverage threshold the program requires?
6. Do credit, reserves, and the leverage ceiling work at the loan size you want?
A problem on any of the first four tells you whether to wait, restructure, or look at a different rulebook.
Where the General Rule Breaks
Three situations catch investors who think they have read the rules correctly.
Entities. The agency’s archived guide let time held by a majority-owned LLC count toward the six months, but ownership then had to be transferred to the individual to close. That version is archived, so verify it. On DSCR loans, entity-titled borrowers are accepted subject to lender program eligibility, and the seasoning count can turn on how title moved. Retitling into an LLC mid-window can disturb the count, so ask before moving title. Lendmire’s Fannie Mae LLC seasoning rules for BRRRR cash-out refinance covers the entity side in detail.
Hard-money and bridge purchases. These generally do not qualify for the cash-buyer delayed-financing path, because there is a first lien to pay off. That sends the file into the loan-age test on the agency side.
Ineligible property types. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered through the network’s DSCR programs. No seasoning clock fixes that.
Common Misreadings
- Fannie requires 12 months of ownership. It does not. It requires six months on title plus a first mortgage at least 12 months old when one is being paid off.
- Delayed financing lets me borrow against the new value. It does not. The cap is documented investment.
- There is one seasoning rule. For non-agency loans, each lender writes its own.
- A strong coverage ratio shortens the wait. Treat that as lender policy, not a rule. Ask the lender.
- Finishing the rehab or signing a lease starts the clock. Lender wording governs the start date. Confirm it in writing.
What If You Don’t Pass?
You have three options. Wait out the clock. Restructure the purchase with a longer bridge term. Or move to a DSCR program, which uses a different rulebook and qualifies primarily on property-level rental income covering the payment, subject to lender guidelines.
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.
Frequently Asked Questions
Does Fannie Mae require 12 months of ownership before an investment property cash-out?
No. The title test is six months. The separate 12-month test applies to the age of an existing first mortgage being paid off. An investor who owns free and clear faces only the title test.
Can a cash buyer skip the Fannie Mae waiting period?
Yes, through delayed financing, if its conditions are met. The new loan is capped at the documented purchase investment plus closing costs, prepaids, and points. Renovation spend is not part of the formula.
Does the 12-month rule apply to a hard-money loan?
It applies to any existing first mortgage being paid off on an agency cash-out. A bridge note under 12 months old fails that test. This is why BRRRR investors often plan a bridge term of at least 18 months.
How long is seasoning on a DSCR cash-out refinance?
About 6 months from the recorded deed is the common expectation across the network, with cash-out up to 75% LTV on standard rentals. Seasoning is each lender’s own policy, so confirm the clock start and value basis for your file. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Does a higher DSCR shorten the seasoning period?
Not as a rule. Coverage affects pricing and leverage, while seasoning is a separate lender policy. Some lenders may treat the two differently, so ask.
Next Step
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. Terms are subject to lender guidelines and are not a commitment to lend. Call 828-256-2183 or use the quote form.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. Fannie Mae Selling Guide, Cash-Out Refinance Transactions
3. Black, Mann & Graham client memo on the 12-month rule
5. Fannie Mae Selling Guide, archived cash-out section (delayed financing)
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 LLC Seasoning Rules for BRRRR Cash-Out Refinance · Fannie Mae Guidelines for Cashout Refinance on Investment Property · What Fannie Mae Requires When an LLC Owns the Rental?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.