The Quick Read: It depends on where the score lands inside the fair band. A fair score runs 580 to 669, so a borrower near 660 can meet a typical program floor while a borrower near 580 cannot. Even at the floor, leverage, reserves, and pricing tighten.
- Parts of the wholesale network start at a 620 score, most programs want around 660, and 700 or higher opens the strongest leverage tiers.
- Cash-out on a standard rental tops out around 75% LTV, and about 6 months of ownership is the common expectation. On short-term-rental collateral the cash-out ceiling is 70%.
- The rent has to cover the full monthly payment. Select programs start at a 1.00 coverage ratio, and stronger ratios open better terms.
- Reserves commonly run about 6 months of the full payment, and larger loans can require more.
- A score below the floor usually means a rate-and-term refinance, a lower-leverage file, or a plan to build credit first.
What Does “Fair” Credit Mean to a Rental Lender?
Fair credit means a FICO score of 580 to 669. myFICO defines the band that way and notes that many lenders will still approve loans at a fair score. Experian gives the same FICO range, puts the VantageScore fair band at 601 to 660, and classes fair as subprime.
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(If you landed here wondering whether a fair score will get you an apartment lease, this is a different topic. This article is about an owner pulling equity out of a rental they already hold.)
The band matters because it straddles the credit floors that investor programs use. Our network has a 620 floor in some programs, and most want around 660. So a 665 borrower and a 590 borrower are both “fair,” yet they face very different conversations. The first can often get a file in front of a lender. The second usually cannot, at least not for cash-out.
A 700 score changes the picture again. Across the lenders we place files with, 700 and above is where the strongest leverage tiers sit.
Which Score Does the Lender Actually Use?
Lenders typically pull a three-bureau credit report and use the middle score. That means they drop the highest and lowest and keep the one in between. It is why the number on your banking app can differ from the number on the file.
When two people sign as guarantors, the common method takes each person’s middle score. The file then runs on the lowest of those. A stronger partner does not lift a weaker one. Methods vary by program, and Lendmire’s piece How a Lender Picks the Credit Score on a Rental Cash-Out Refinance walks through the details.
Scoring models matter too. A 665 is fair on the FICO chart but sits in the good range on some VantageScore charts. Mortgage underwriting pulls specific FICO versions, so the consumer score in an app is only a rough guide.
What Else Does a Lender Check Besides the Score?
The score is one gate on a file with several gates. A DSCR (debt service coverage ratio) loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. Credit then sets how much you can borrow against that income.
| Factor | What the lender looks at | How a fair score interacts |
|---|---|---|
| Credit score | Middle of three bureau scores | Sets eligibility tier and leverage |
| Coverage ratio | Rent divided by full payment | A higher ratio can offset a thinner score |
| LTV | Loan against appraised value | Lower leverage helps a borderline file |
| Reserves | Months of payment in liquid funds | Often more expected at lower scores |
| Seasoning | Time since you took title | About 6 months is common for cash-out |
| Property type | Collateral and use | Short-term rentals ask for more credit |
The coverage ratio uses PITIA, which is principal, interest, taxes, insurance, and any HOA dues. Divide monthly rent by that total. A result of 1.00 means rent matches the payment exactly.
One caution: clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A property can pass the ratio and still feel tight.
The appraisal normally includes a market-rent schedule, which is where the rent figure comes from. Appraisers use Form 1007 for single-family rentals and Form 1025 for two to four units. A low appraisal shrinks the cash released as well, so value matters as much as credit.
How Does a Fair Score Change Your Terms?
A fair score rarely produces a flat no. More often it produces a smaller, pricier, more heavily reserved version of yes.
Three things tend to move together:
- Leverage. The 75% cash-out ceiling on a standard rental is the top of the range. Lower credit tiers can sit below it, so the cash you can pull shrinks.
- Pricing. Credit tiers drive pricing across the network. Weaker tiers cost more, and the calculator can show the illustrative effect on your numbers.
- Reserves. Reserves commonly run about 6 months of PITIA. Some conservative rate-and-term files at modest leverage under $1,500,000 can see them waived, while loans above that size typically step up to about 9 months. Fair-score files rarely get the waiver.
Equity available is never a guaranteed figure. It depends on rent used for lender review, the payment, reserves, and the leverage ceiling working together.
Two Borrowers, Same Fair Score, Different Outcomes
The same score can lead to different results. Run the numbers on two modeled borrowers, each at a 665 middle score. These are illustrative assumptions, not market data.
Borrower A owns a long-term rental with 8 months of ownership. Modeled rent covers the full payment at about 1.25x. The new loan would sit near 60% LTV, and the borrower holds about 6 months of reserves. A 665 sits just above the 660 mark most programs use, and the file shows strength in every other category. This is the kind of file a lender will review seriously for cash-out, subject to guidelines and credit approval.
Borrower B has the same score and the same property type. Coverage is closer to 1.00x, the requested loan sits near the 75% ceiling, and reserves are thin. Nothing here is disqualifying alone, but the combination leaves no cushion. A small drop in appraised value could shrink the proceeds. A lower-leverage structure or a rate-and-term refinance may fit better.
The lesson: a fair score is not a verdict. It is one input, and the rest of the file can pull the outcome either way. The strongest files clear both tests, enough equity and enough rental coverage.
Does a DSCR Loan Ignore Credit?
No. Rent sets the coverage ratio, but your credit sets eligibility, leverage, and pricing.
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. Federal business-purpose credit rules generally exempt this kind of lending from consumer mortgage requirements, as the regulation text lays out. That is why lenders look at credit, rent, equity, and reserves instead of a personal debt-to-income test. It does not mean there are no rules. Lender guidelines still apply, and use of proceeds and occupancy still matter.
Entity ownership does not remove the credit pull either. A borrowing LLC can hold title, subject to lender program eligibility, but the individuals who sign as guarantors are the ones whose scores are checked.
Edge Cases That Change the Answer
The score sits on the line. A 660 to 669 score is labeled fair but can meet a typical floor. A 640 to 659 score may work for some purchases but fall short for cash-out under many programs. Both depend on the specific lender.
The property is a short-term rental. These files ask for more. Expect a 640 or higher score and about 12 months of hosting history. Cash-out on short-term-rental collateral is capped at 70%, and coverage starts at 1.00. 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.
Coverage is below 1.00. Select lenders in the network offer programs below 1.00 coverage, with leverage and terms adjusted. A fair score combined with thin coverage stacks two soft spots, so expect the strictest version of those adjustments. That path is separate from the standard 1.00 programs.
Compensating factors exist. A lender can sometimes trade a weaker score for lower leverage, stronger coverage, or deeper reserves. They help at the margin and do not erase a hard floor.
The property type is ineligible. Manufactured homes, log homes, and barndominiums are not offered in these DSCR programs, whatever the credit score.
Many investors assume a bigger equity cushion fixes everything. It helps the payment and can lift coverage. It does not remove credit floors, reserve rules, or leverage caps.
What a Working Broker Sees on Fair-Score Files
Across the files we place, fair-credit cash-out requests tend to fail in a few predictable ways. The score is usually not the only cause. A borrower sits a few points under a program floor and has also bought recently, so seasoning is short. Or the score passes but the appraisal lands low, which trims proceeds below what the borrower planned around. The strongest fair-score files arrive with a documented lease, recent payment history clean, and reserves already seasoned in the account.
Apply Now, Improve First, or Choose Something Else?
| Your situation | Likely best move |
|---|---|
| Score 660 or higher, 6+ months owned, solid coverage | Apply and compare programs |
| Score 620 to 659, strong coverage and equity | Apply, expect trimmed leverage |
| Score 580 to 619 | Build credit before cash-out |
| Score near the floor, need only a lower balance | Consider a rate-and-term refinance |
| Under 6 months of ownership | Wait out seasoning, then reassess |
Waiting is not wasted time. Experian’s guidance is simple: pay on time and keep card balances low. Moving from fair to the program floor can matter more than anything else on the deal. For a closer look at what scores still work, see Lendmire’s article Cash-Out Refinance for Fair Credit: What Score Still Works.
Steps and Documents for a Fair-Score File
1. Check your scores. Pull your credit reports and note the middle score across the three bureaus.
2. Confirm seasoning. Count from the date title recorded.
3. Gather property documents. Expect the lease or rent history, insurance, and entity paperwork if an LLC holds title.
4. Document reserves. Statements should show liquid funds covering the months of payment the program expects.
5. Compare programs. Ask which score the lender pulls and how credit tiers affect leverage.
6. Plan for the appraisal. Its value and rent schedule drive proceeds.
Cash to you equals the new loan minus the payoff and closing costs.
The most common reasons fair-score cash-out requests stall are a score under the program floor, coverage below the program minimum, thin reserves, short ownership, and a value that does not support the amount requested. Each has a fix. For the full picture of how these loans work, see the complete DSCR loans guide.
Key Terms Defined
- Fair credit: a FICO score of 580 to 669, below the national average but still approvable at many lenders.
- Middle score: the score left after the highest and lowest of three bureau scores are dropped.
- Guarantor: an individual who personally backs the loan, even when an LLC holds title.
- Cash-out refinance: a new loan that pays off the old one and returns the extra equity as cash.
- LTV: loan-to-value, the loan amount divided by the property’s appraised value.
- Seasoning: the waiting period after you take title before a lender allows cash-out.
- Reserves: liquid funds, counted in months of payment, that you keep after closing.
- PITIA: principal, interest, taxes, insurance, and HOA dues, the full monthly payment used in the coverage ratio.
Frequently Asked Questions
What is the lowest credit score for a rental cash-out refinance?
Some programs in the network start at 620, and most want around 660. Higher scores unlock more leverage, with 700 and above reaching the strongest tiers. Short-term-rental files expect a 640 or higher score. Every file is reviewed individually, subject to lender guidelines.
Will a 640 score work for a cash-out refinance on a rental?
Sometimes, but it is a narrower path. A 640 clears the 620 floor in parts of the network, yet many programs want 660 for cash-out. Expect lower leverage, stronger reserve requirements, and a closer look at coverage. A rate-and-term refinance may fit more easily if you do not need the cash. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Can a partner with better credit help me qualify?
Usually not. The common method takes each person’s middle score and runs the file on the lowest of them. Methods vary by program, so ask before adding someone as a guarantor.
Does a strong rent coverage ratio make up for a low score?
It helps within a tier but cannot lift you over a floor. A high ratio can improve terms for a borrower who already qualifies. It does not rescue a score below the program minimum, and a high score does not rescue a property whose rent fails the ratio.
Can I use a cash-out refinance if I own the rental through an LLC?
Often yes, subject to program terms. The LLC can hold title, but the guarantors’ personal credit is still pulled and scored. Lender requirements for entity paperwork vary.
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. Lendmire is a broker arranging financing through select lenders across 41 markets, including Washington, D.C., and nothing here is a commitment to lend.
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. 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.
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References
1. myFICO – What Is a FICO Score
2. Experian – What Is a Fair Credit Score
3. CFPB – Regulation Z § 1026.3
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: Can a Rental Portfolio Get DSCR Cash-Out on Rent Instead of Income? · How to Document the Use of Proceeds on a Large DSCR Cash-Out · Super Jumbo DSCR Cash-Out Use of Proceeds Rules and Documentation
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.