The Quick Read: A cash-out refinance has no down payment in the purchase sense. The equity you already hold is the down payment, and the lender decides how much of it must stay in the property. Across the wholesale network, that required equity is 100% minus the maximum cash-out LTV, and it grows as the loan balance grows. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
- On a cash-out refinance up to $1,000,000, the ceiling is typically 75% LTV, so about 25% equity stays in the property (subject to underwriting).
- From $1,000,000 to $1,500,000, cash-out typically tops out at 70% LTV. From $1,500,000 to $3,000,000, it typically drops to 60% LTV.
- Above $3,000,000, cash-out is not available through the network’s programs. Purchase and rate-and-term are the paths.
- Proceeds are unlimited at or below 60% LTV and capped at $1,500,000 above it.
- Rent has to cover the new, larger payment, and cash-out proceeds do not count toward reserves.
All of these are ceilings through select wholesale programs, subject to underwriting and not a commitment to lend.
What Does “Down Payment” Mean on a Cash-Out Refinance?
It means retained equity. You are not bringing cash to a closing table. You are leaving a slice of the property’s value untouched, and the lender sets the size of that slice through its maximum loan-to-value ratio.
The arithmetic is simple. A 60% cash-out ceiling means 40% of the appraised value stays as your equity cushion. A 75% ceiling means 25% stays. The same property can carry very different equity requirements depending on the loan amount band it lands in. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Two points surprise investors:
1. The loan balance sets the tier, not the property price. A lower new balance can sit in a better-leverage band than a larger one on the same asset.
2. Appraised value is the denominator. Inside the seasoning window, most programs size the loan on the lower of cost or appraised value. A bigger appraisal does not always mean more cash.
Key Terms Defined
- Super jumbo: An informal market label for very large loans. No regulator defines it. FHFA draws only one official line, between conforming and jumbo, and the practical breakpoint in our network sits near $3,000,000.
- DSCR: Debt service coverage ratio, meaning the property’s monthly rent divided by its full monthly obligation (principal, interest, taxes, insurance, and any HOA dues).
- LTV: Loan-to-value, the new loan divided by the appraised value.
- Cash-out refinance: A new loan that pays off the old one and returns the difference to the borrower as cash.
- Seasoning: The length of time you must have owned the property before a lender sizes the loan on appraised value rather than cost.
- Proceeds cap: A dollar ceiling on the cash a borrower may take at a given LTV.
How Does Underwriting Treat It, Step by Step?
Underwriting runs six checks in order, and the final cash-out figure is the lesser of what the LTV tier, the rent test, and the proceeds cap allow.
1. Classify the loan. A refinance that returns cash is a cash-out. That label brings the lower LTV ladder.
2. Check seasoning. This is lender policy, not law. Across most programs we place files with, a window of roughly six months from the recorded deed is common. Inside it, the lower of cost or value governs.
3. Order the appraisals. Two appraisals are required above $2,000,000. The extra review exists because comparable sales get thin at this size. On a rental, the appraiser also supplies a rent schedule.
4. Apply the LTV tier. The tier comes from the loan amount band, credit score, and property type.
5. Test the rent. A coverage ratio of 1.00 or higher earns full leverage. Pulling more cash raises the payment and lowers coverage, so the rent test can cap proceeds before LTV does.
6. Verify reserves and the proceeds cap. Six months of PITIA on the subject property is typical, 12 for first-time investors, and cash-out proceeds cannot satisfy them.
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Our complete DSCR loans guide covers the full qualification model.
The Leverage Ladder: Equity Required by Loan Size
The table shows the best available cell for each band at coverage of 1.00 or higher. Every figure is a ceiling through select wholesale programs, subject to underwriting.
| Loan amount | Max cash-out LTV | Equity left in place | Credit floor |
|---|---|---|---|
| $150K–$1M | 75% | 25% | 660+ |
| $1M–$1.5M | 70% | 30% | 700+ |
| $1.5M–$2M | 60% | 40% | 720+ |
| $2M–$3M | 60% | 40% | 720+ |
| $3M and above | — | N/A | 700+ |
Purchase and rate-and-term run higher at the same size. On a purchase, the ceiling is 80% up to $1,000,000, 75% from $1,000,000 to $3,000,000, and 65% from $3,000,000 to $4,000,000. On review, purchase and rate-and-term step down to 60% above $4,000,000. Every request above $4,000,000 is reviewed case by case before submission, and cash-out is not part of it.
Borrowers with credit of 680 or below cannot take cash-out above $1,500,000. Short-term-rental collateral is more restrictive, capped at $2,000,000 in loan size, and its cash-out LTV ceiling is lower than the 75% available on standard rentals up to $1,000,000.
Where Cash-Out Stops (and What to Do Instead)
Cash-out ends at $3,000,000. Above that balance, the choices are purchase or rate-and-term, and a rate-and-term refinance returns no meaningful cash.
The proceeds cap creates a second cliff. At or below 60% LTV, proceeds are unlimited. Above 60%, they are capped at $1,500,000. That matters most in the $1,000,000 to $1,500,000 band, where 70% LTV is allowed but the cap applies. A borrower might choose to pull slightly less cash to stay at 60% and keep every dollar of proceeds available. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
If your file does not fit, four moves usually help:
- Take less cash. A smaller new balance can drop the loan into a better band or under the 60% line.
- Restructure the balance. Splitting equity access across more than one property can keep each loan in a friendlier tier.
- Switch to rate-and-term. It will not generate cash, but it can improve terms on a large balance.
- Strengthen credit. Moving from 680 or below to a higher band reopens cash-out above $1,500,000.
The Rent Test Can Cap You Before LTV Does
More cash out means a bigger payment, and the payment is tested against the rent. Picture a $4,000,000 luxury rental that rents well but not extravagantly. At 60% LTV the loan is a large number, and coverage may land in the low 1.0x range. Push toward a higher LTV and coverage slides toward the floor. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
That is the thinking behind reduced-coverage paths. Coverage from 0.75 to 0.99 is a real select-program path up to $2,000,000, but LTV and terms adjust, subject to underwriting. A handful of lenders in the network also review no-ratio files to $2,000,000 through select wholesale programs, with a seven-year clean housing history and 0x30x24 credit, subject to underwriting. Those are exceptions, not the default plan.
Interest-only helps with coverage. A 120-month interest-only period on 30- and 40-year terms is available to 75% LTV, with coverage of 0.75 or better qualified on interest, taxes, and insurance, subject to underwriting. At super jumbo balances, that can be the difference between a file that clears and one that does not.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Reserves: The Hidden Down Payment
Reserves are the second cash requirement. Six months of PITIA on the subject property is typical (the interest-only version uses ITIA), and first-time investors typically need 12. No extra reserves apply for other financed properties.
The catch: cash-out proceeds cannot satisfy reserves. If you plan to pull cash and park it as reserves, that plan fails. Reserves must come from other liquid assets. Investors recycling equity into a new acquisition should map the sources first. Lendmire’s piece Can DSCR Cash-Out Proceeds Fund a Super Jumbo Down Payment and Reserves? works through that sequencing.
How This Differs from Conventional Jumbo
A conventional jumbo is built on the borrower’s personal income. A DSCR loan is built on the property’s rent. The trade is documentation convenience for stricter leverage. Jumbo, in the official sense, simply means above the FHFA conforming loan limit. Super jumbo has no regulatory definition at all.
| Factor | Super jumbo DSCR | Conventional jumbo |
|---|---|---|
| Review basis | Property rent | Personal income |
| Borrower type | Investor, entity vesting welcome | Often individual |
| Cash-out ceiling at $2M–$3M | 60% LTV | Varies by lender |
| Cash-out above $3M | Not available | Varies by lender |
Because these are business-purpose loans, Regulation Z does not cover them, and no federal rule sets their maximum LTV. The equity requirements are program overlays, which is why they differ from lender to lender and why comparing several programs matters.
Edge Cases Where the General Rule Breaks
- Delayed financing for cash buyers. If you bought with cash, the new loan is generally capped near documented cost. A hard-money or bridge lien usually breaks eligibility.
- Short-term rentals. Coverage must be 1.00 or higher, loans stop at $2,000,000, and income counts at 80% of gross, using twelve months of operating history on a refinance. Municipal permission must be documented for the specific property, and 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 files are not available on the no-ratio path.
- Condos and rural property. Non-warrantable condos run to 75% and $1,500,000. Rural property on five acres or less can reach 75%, and ten acres is the maximum above $3,000,000.
- Entity vesting. LLC vesting is welcome, with no layered entities, subject to lender program eligibility.
What the Decision Looks Like in Practice
Start with the cash you need, then work backward. If you need $1,500,000 for the next acquisition and your property would support 70% LTV, check whether the proceeds cap or the rent test binds first. Sometimes the better answer is a smaller refinance paired with a second source of funds. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
For investors who plan to use proceeds on a rental purchase, Lendmire’s article on whether super jumbo cash-out can cover a rental down payment covers that specific move. 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.
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire, a DSCR-focused mortgage broker arranging investor loans across 40 states plus Washington, D.C., can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage, and investor goals.
Frequently Asked Questions
Is there a minimum down payment on a super jumbo cash-out refinance?
There is no down payment in the purchase sense. The requirement is retained equity, which equals 100% minus the maximum cash-out LTV. At $1,500,000 to $3,000,000, that means about 40% equity stays in the property, subject to underwriting. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Can I take cash out on a $3,500,000 loan?
No. Cash-out is not available above $3,000,000 through the network’s programs. Rate-and-term and purchase run up to 65% from $3,000,000 to $4,000,000, but a rate-and-term refinance returns no meaningful cash. A smaller new balance may bring cash-out back into reach.
Can I use the proceeds to meet reserve requirements?
No. Reserves of about six months of PITIA on the subject property must come from other liquid assets, and cash-out proceeds never satisfy them. First-time investors typically need 12 months.
What credit score do I need?
Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Above $3,000,000, 700 is typical, with a clean mortgage history. Credit of 680 or below shuts off cash-out above $1,500,000.
Does a lower DSCR change my down payment?
Often, yes. Coverage of 1.00 or higher earns full leverage. Coverage from 0.75 to 0.99 is a select-program path up to $2,000,000, with LTV and terms adjusted, subject to underwriting. Interest-only structures can help coverage on large balances.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
Self-employed borrowers can learn more about their financing options on Lendmire’s self-employed mortgages page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. FHFA Conforming Loan Limits
2. CFPB Truth in Lending / Reg Z compendium
This article is part of Lendmire’s super jumbo DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Founder Use Super Jumbo DSCR Cash-Out Proceeds as a Down Payment? · Super Jumbo DSCR Vesting Rules for an LLC Cash-Out Refinance · Super Jumbo DSCR Pledged-Asset Rules on a Purchase vs Cash-Out Refinance
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.