The Quick Read: Usually about 25% of the property’s appraised value must stay in the property on a standard cash-out refinance, because most DSCR programs in Lendmire’s wholesale network cap cash-out at roughly 75% loan-to-value, subject to lender guidelines. Rate-and-term refinances, short-term rentals and larger loans all shift that number.
- Standard rental, cash-out: the ceiling is typically 75% LTV, so you keep at least 25% equity.
- Short-term rental, cash-out: the ceiling drops to about 70% LTV, so you keep roughly 30%.
- Rate-and-term, no cash back: select programs reach higher LTV on an investment property, and strong files need less retained equity.
- Two gates: the property needs enough equity and enough rent coverage, and the lower of the two sets your loan.
- Seasoning: about six months of ownership is the common expectation, and the clock runs from the recorded deed.
The Equity Math by Refinance Type
Equity needed is simply 100% minus the LTV ceiling. A 75% ceiling means 25% stays behind. The ceiling changes with the goal, the property type and the program.
DSCR Cash-Out Calculator
Run the cash-out numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
Prefilled with starting assumptions — enter your property’s value, balance, taxes, and insurance for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
As of Oct 15, 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.
| Refinance goal | Typical LTV ceiling | Equity left in the property |
|---|---|---|
| Cash-out, standard rental | About 75% | At least 25% |
| Cash-out, short-term rental | About 70% | About 30% |
| Rate-and-term, select programs | Up to 85% | As little as 15% |
Treat these as typical ranges, not promises. Across the wholesale network, each lender sets its own overlays, and credit, reserves and loan size move the ceiling up or down. A 700+ score unlocks the strongest leverage tiers. Most programs want around 660, and a 620 floor exists in parts of the network at tighter leverage.
Outside surveys land in the same neighborhood. BiggerPockets says lenders typically want investors to hold at least 25% equity before refinancing. That matches what most files in the network look like on a standard cash-out.
How Do You Calculate Your Own Equity?
Start with the appraised value, not your purchase price. Follow four steps:
1. Estimate current value. The lender’s appraisal replaces your number. Yahoo Finance notes that you should expect a real appraiser, and that you pay for it.
2. Divide your payoff balance by that value. The result is your current LTV.
3. Subtract that LTV from the program ceiling. The gap is the equity you can borrow against, before costs.
4. Subtract closing costs. What remains is cash to you.
Run it as percentages of value. Say your payoff sits at 55% of the appraised value and the program cap is 75%. The gap is 20% of value. Closing costs come out of that. If your payoff sits at 70% instead, the gap is only 5% of value, and costs may consume most of it. That is a refinance worth questioning.
The 25% is what you leave behind. Cash comes only from equity above that line. Plenty of owners assume the reverse, and then wonder why a property with healthy equity produces so little cash.
What If the Appraisal Comes In Low?
A low appraisal shrinks the loan ceiling dollar for dollar. A 5% miss on value cuts the maximum loan by about 5% too. Rehab projects are where this bites hardest. Investors often project an after-repair value that the appraiser’s comparable sales don’t support, and the lender sizes the loan on the appraisal, not the projection. An improvement may support a higher appraised value, depending on comps and underwriter review. Plan around the low end of your estimate.
Equity Is One Gate
Rent Is the Other.
The loan is sized by whichever test is tighter. DSCR divides monthly rent by the full monthly obligation: principal, interest, taxes, insurance and any association dues. A coverage of 1.00 is where many select programs start. Stronger ratios open better pricing and more leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
Here is how the two gates interact. Say you have plenty of equity, but the rent only barely covers the debt. The lender will shrink the loan until the coverage works. Your equity was never the limit. The reverse also happens. Rent can be strong while equity sits right at the cap, and then the cap sets the loan.
Clearing the coverage test is not the same as cash flowing. The ratio compares rent to the housing payment only. Repairs, vacancy, management, utilities and capital expenses sit outside it. A refinance that passes at 1.00 can still leave you with thin real-world margins. Before pulling the maximum, check that rent still covers the larger obligation with room to spare. The same logic applies to short-term rentals, where the hosting income has to hold up too.
What Shifts the Requirement
A handful of variables move the retained-equity number up or down:
- Transaction type. Cash-out sits near 75% on a standard rental. Rate-and-term can run higher on select programs.
- Property use. Short-term rentals sit on a lower tier. Cash-out and refinance run around 70%, and expect a 640+ score and about 12 months of hosting history. On a short-term-rental purchase, leverage tops out at 75%.
- Credit. Higher scores buy higher leverage. A 700+ file sees the best tiers.
- Loan size. Standard programs run up to $3,000,000. Above $2,500,000 the network generally holds to 30-year fixed structures.
- Reserves. They vary by lender, leverage and transaction type. Commonly it is around six months of PITIA. Conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived. Loans above that size typically step up to about nine months.
- Ownership. Many conventional lenders prefer properties titled personally. DSCR programs generally accommodate LLC titling, subject to lender program eligibility. Lendmire’s piece How Much Equity an LLC Rental Cash-Out Refinance Releases for a Buyout covers that wrinkle.
- Property type. Manufactured homes (single- and double-wide), log homes and barndominiums are not offered in these programs.
A larger down payment on the original purchase lowers the payment and can lift the coverage ratio. It never erases a leverage cap, a credit floor, a reserve rule or a property eligibility limit. The strongest files clear both tests: enough equity and enough rental coverage.
Seasoning: When Can You Refinance at All?
Most programs expect about six months of ownership before a cash-out refinance. That is lender policy, not law, and it runs from the date on the recorded deed. BiggerPockets likewise notes that a lender may impose a six-month wait after a recent mortgage.
Inside the seasoning window, many lenders size the loan on the lower of your cost basis or the appraisal. That matters for rehab investors. If you bought low and renovated, your new value may not count toward the loan until the window passes. A few lenders in the network recognize the appraised value sooner, but they are not the norm. Ask which approach a lender uses before you choose one.
Seasoning does not start when the rehab ends. It starts at the deed.
Why Agency Numbers Don’t Apply Here
Conventional agency rules are a different system, and the figures only look similar. The Fannie Mae eligibility matrix shows investment-property limited cash-out at 75% for one unit and 85% for a purchase. Fortune adds that agency cash-out drops to 70% on two-to-four-unit properties, that only 75% of gross rent counts toward qualifying, and that a borrower is limited to 10 financed properties. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Those are agency caps for loans sold to the agencies. They qualify you on personal income, credit and debt-to-income. DSCR files qualify primarily on property-level rental income covering the payment, subject to lender guidelines, and each lender sets its own caps.
That difference is why active investors drift toward DSCR. Once you carry a handful of financed properties, the agency lane narrows. Lendmire’s complete DSCR loans guide lays out the full comparison.
If You Don’t Have Enough Equity
You have five realistic options:
- Wait. Scheduled paydown and appreciation both widen the gap over time.
- Pay down the balance. A lump-sum payment can bring the LTV under the cap. Do the math first, because it may cost more than the cash you’d extract.
- Improve rent. Higher rent lifts coverage. It doesn’t lower the equity requirement, but it can stop coverage from being the binding limit.
- Choose a different product. An investment-property HELOC line caps at $500,000 total. A second lien leaves your first mortgage in place, but combined leverage must still fit the ceiling.
- Rethink the amount. If you only need a small sum, a refinance may not be worth the cost.
If coverage is the problem, look at structure before blaming the property. Interest-only periods, extended terms of 40 years and ARM structures are available through select lenders in the network. They change how the numbers read, not what the property earns.
Is the Refinance Worth It?
A refinance has to recover its own cost. Compare your closing costs against what you gain. For a rate-and-term deal that is the savings. For a cash-out it is the return on the capital you redeploy.
Cash-out makes sense when every dollar has a productive use, such as a down payment on the next rental, or paying off short-term debt. It makes less sense when the new payment pushes coverage toward 1.00 and the rent has little cushion. Pulling the maximum is a choice.
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.
Key Terms Defined
Loan-to-value (LTV): the loan balance divided by the property’s appraised value.
Equity: the appraised value minus what you owe on the property.
Seasoning: the time you must own the property before a lender allows a cash-out refinance.
DSCR: the monthly rent divided by the monthly principal, interest, taxes, insurance and dues.
Rate-and-term refinance: a new loan that replaces the old balance without paying you cash.
Frequently Asked Questions
Can I refinance a rental with less than 25% equity?
Yes, in some cases. On a rate-and-term refinance, select programs allow higher leverage on an investment property, so less equity can work. A cash-out on a standard rental typically stops at 75% LTV, so you will need at least 25% remaining. Credit, reserves and property type still apply.
How much cash can I actually pull out?
Only the equity above the retained-equity line, minus closing costs. If your payoff is already close to the cap, the cash is small. The rent also has to support the larger loan, so coverage can reduce the amount even when equity is available.
Does owning the rental in an LLC change the equity requirement?
Not by itself. DSCR programs generally accommodate LLC ownership, subject to lender program eligibility. Some conventional lenders refinance only individually titled properties, which is one reason investors with entity-held portfolios use DSCR.
Do short-term rentals need more equity?
Yes. Cash-out on a short-term rental typically tops out around 70% LTV, so about 30% stays in the property. Expect a 640+ credit score and about 12 months of hosting history. 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.
How soon after buying can I refinance?
Around six months is the common expectation for cash-out, counted from the recorded deed. Inside that window, loans are often sized on the lower of cost or appraisal.
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. Reach the team at 828-256-2183 or request a quote. Lendmire is a broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C., and qualification remains subject to lender guidelines and credit approval.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 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. BiggerPockets: How to Refinance Your Mortgage
2. Yahoo Finance: Refinance a Rental Property
3. Fannie Mae Eligibility Matrix
4. Fortune: Investment Property Cash-Out Refinance
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a VA Cash-Out Refinance Fund a Rental Down Payment? · How to Prepare a Rental Property for a DSCR Appraisal · How to Recycle Equity Into the Next Rental With DSCR Cash-Outs
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.