The Quick Read: The best program for your situation is the one whose loan band, leverage, appraisal count, and treatment of the accessory dwelling all fit the file. On most files that means keeping the cash-out loan at or under $3,000,000, since no cash-out is typically offered above that size, with the ADU’s legal status deciding how much rent counts.
- Cash-out leverage steps down as the loan grows, with the highest leverage on smaller loans and the lowest between $1,500,000 and $3,000,000, through select wholesale programs and subject to underwriting.
- The loan amount, not the property value, sets which band you land in.
- A legal, permitted accessory dwelling unit (ADU) can add both value and rent. An unpermitted one is usually left out of both.
- Run the deal twice, once with the ADU counted and once without, before you apply.
- Two appraisals are typical above $2,000,000, and cash-out proceeds do not count toward reserves.
What Is a Super Jumbo DSCR Cash-Out Refinance?
A super jumbo DSCR cash-out refinance replaces your current loan with a larger one and hands you the difference in cash, with qualification resting on the property’s rent. The lender checks whether rent covers the full monthly payment. Your personal tax returns are not the center of the file.
“Super jumbo” is a trade label, not a regulated category. Most people use $3,000,000 as the marker, but each program sets its own lines. Across Lendmire’s wholesale network of investor lenders, the portfolio program runs from $150,000 to $10,000,000. The standard DSCR program stops at $3,000,000, and the larger ladder carries qualified investors past it.
DSCR loans are built for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage.
Three tests stack on top of each other here: loan size, the appraisal, and the ADU’s legal and classification status. Each one can cut your proceeds. The rest of this article takes them in order. For the basics of how the loan type works, Lendmire’s complete DSCR loans guide covers the foundation.
How Does Loan Size Change Cash-Out Leverage?
Leverage drops as the loan grows, and cash-out drops faster than purchase or rate-and-term. The table shows the best available cell in each band at coverage of 1.00 or higher. Every figure is a ceiling through select wholesale programs, subject to underwriting.
| Loan band | Purchase | Rate-and-term | Cash-out |
|---|---|---|---|
| $150K–$1M | 80% | 80% | 75% |
| $1M–$1.5M | 75% | 75% | 70% |
| $1.5M–$2M | 75% | 75% | 60% |
| $2M–$3M | 75% | 75% | 60% |
| $3M–$4M | 65% | 65% | — |
| $4M–$6M | 60% on review | 60% on review | — |
| $6M–$10M | 60% on review | 60% on review | — |
Read the bands as loan amounts, never purchase prices or appraised values. Multiply value by leverage first, then find the band that loan falls in. A very valuable property can still do a cash-out if the new loan stays under the $3,000,000 line.
The credit score is tied to the cell you want. The top cash-out cell on loans up to $1,000,000 needs 660 or better. The cell in the $1,000,000 to $1,500,000 band needs 700 or better. Between $1,500,000 and $3,000,000, the top cell needs 720 or better. The program floor is 660 on loans to $3,000,000. A lower score takes a lower-leverage cell inside the same band. Above $1,500,000, cash-out is not available at 680 or below.
Proceeds have their own rule on the cash-out side. Proceeds are unlimited at or below 60% loan-to-value (LTV, the loan as a share of value). Above 60% LTV, proceeds are capped at $1,500,000. Above $4,000,000, every request is reviewed case by case before submission, and it is purchase or rate-and-term only. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
One more size effect matters: reserves, meaning cash you hold after closing, run six months of the full payment on the subject property, or twelve for first-time investors. Cash-out proceeds cannot be used to meet them. Lendmire’s piece on super jumbo reserve requirements on a purchase versus a cash-out goes deeper on that. Every figure here varies by lender and program, since guidelines, property type, leverage, and credit profile all apply.
How Does Underwriting Treat the ADU, Step by Step?
Underwriting treats the ADU as an appraisal question first and a loan question second. The appraiser decides what the property is, what it is worth, and what it rents for. The lender then runs the coverage math on those findings.
1. The loan is sized against the band. The requested loan amount sets leverage, the credit needed, the appraisal count, and whether cash-out exists at all.
2. The appraisal is ordered with a rent opinion. Rent is documented on a rent-schedule form. Form 1007 applies to one-unit properties, and Form 1025 applies to two-to-four-unit properties, per the Fannie Mae Selling Guide. These are form names only. Fannie Mae’s loan rules do not govern DSCR files.
3. The appraiser classifies the property. A main house with an ADU may be treated as one unit with an accessory dwelling, or as a two-unit property. That call decides which form the report uses.
4. The appraiser values the ADU. Value usually comes from comparable sales of homes with similar accessory units. Cost to build is not the measure, and the ADU’s square footage is not simply added to the main house.
5. The rent figure is set. Many programs credit the appraiser’s market rent. Where a lease exists, many credit the lower of the lease and the market rent. The program’s own guideline controls.
6. Coverage is computed. Rent used for lender review is divided by the full monthly obligation: principal, interest, taxes, insurance, and any association dues.
7. Two ceilings are compared. One is value times the cash-out LTV for that band. The other is the largest loan the rent supports at the required coverage. The smaller one controls.
When Does ADU Rent Count and When Doesn’t It?
ADU rent counts when the unit is legal, the appraiser supports the rent, and the program accepts the documentation. Otherwise the ADU usually contributes nothing to value or coverage. The classification call is the pivot.
- a separate mailing address
- separate utilities and meters
- a private entrance
- whether the unit can be legally rented
- whether zoning allows a two-family
- how nearby properties are typically configured
Here is how that tends to play out on files.
| ADU status | Typical treatment on the file |
|---|---|
| Legal, permitted, separate access | Value and rent can both count |
| Legal but non-conforming | Program-specific; needs documentation |
| Unpermitted or unclear | Usually excluded from value and rent |
| Collected rent, no appraisal support | Collected rent alone may not count |
Actual rent is not the same as rent used for lender review. A tenant paying a high figure helps only up to the lower of the lease and the supported market rent. A tenant does not need to be in place for the appraiser’s rent opinion to count.
In day-to-day files, the unpermitted ADU is the most common surprise. The appraiser flags it, the lender follows the appraiser, and the rent that was supposed to carry the deal disappears. Gathering the permit, the final inspection or certificate of occupancy, and a rent roll that separates the main house from the ADU before you apply prevents most of those surprises.
Conforming loans have their own ADU rules, and they are restrictive. The Freddie Mac ADU fact sheet limits how much ADU rent counts and bars income from illegal units. DSCR programs set their own treatment. That difference is one reason investors look to them. Do not carry the conforming limits over to a DSCR file.
Worked Example: With and Without the ADU
Run the numbers this way, using modeled assumptions rather than market data. Picture a high-value rental where the main house alone covers the full monthly obligation at roughly 1.30x before any cash comes out. A legal ADU adds about 0.20x of coverage on top of that.
Now pull cash out up to the band’s leverage ceiling. The bigger loan means a bigger payment, so coverage falls. Say it lands near 1.10x with the ADU counted. If the ADU turns out to be unpermitted and gets excluded, coverage drops to about 0.90x. The main house is carrying the whole load.
At 0.90x, the file is no longer a full-leverage 1.00 file. Several paths may exist, each reviewed by the lender:
- A sub-1.00 path. Coverage from 0.75 to 0.99 is a real option through select programs to $2,000,000, with reduced leverage. LTV and terms adjust, subject to underwriting.
- Interest-only. A 120-month interest-only period is available on 30- and 40-year terms, up to 75% on interest-only, with coverage of 0.75 or better, qualified on the interest, taxes, and insurance (ITIA) alone.
- A smaller cash-out. Pulling less cash lowers the payment and lifts coverage.
None of this is a promise. Each path depends on credit, reserves, the appraisal, and the program.
Can a Short-Term Rental ADU Work?
It can, but it is a narrower path. Short-term rental files need coverage of 1.00 or higher, loan amounts to $2,000,000, and an experienced investor. That means twelve months owning income property in the last thirty-six. Income is based on twelve months of operating history on a refinance, counted at 80% of gross.
Form 1007 measures monthly long-term market rent, not nightly rates. So a short-term rental ADU needs its income documented by another method. 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. Permission to operate has to be documented for the specific property. Lendmire’s network never assumes it for a city or state.
What Does Best Program Mean for Your File?
No program is best in the abstract. The best program for your situation depends on the loan band you land in, how much cash you need, the ADU’s status, and your credit and reserves. That is why a broker that shops many wholesale lenders can be more useful than one lender’s sheet.
Lendmire is a mortgage broker, not a lender. It arranges financing through select lenders in its wholesale network, and the lenders that write this kind of loan differ on leverage, appraisal count, and how they handle ADU rent. These are the questions that separate programs:
| Criterion | Why it matters on an ADU file |
|---|---|
| Loan band and cash-out cap | Sets proceeds and whether cash-out exists |
| ADU rent treatment | Decides the coverage ratio |
| Appraisal count | Raises cost and scrutiny above $2M |
| Reserve rules | Cash-out cannot fund them |
| Entity vesting | LLC vesting is welcome, but layered entities are not |
Entity vesting is welcome on most of these programs, subject to program terms, and up to 20 financed properties can sit in the file. Other financed properties do not trigger extra reserves.
Where the General Rule Breaks
Several edge cases bend the rules above:
- Legal non-conforming ADUs. Some units predate the current zoning. Program treatment varies, and documentation carries the file.
- Blanket or portfolio loans. Rolling several properties into one loan can push the balance past the cash-out ceiling. Separate, smaller loans can keep each one inside a band.
- Acreage and rural land. Cash-out loans to $3,000,000 can carry up to twenty acres, and rural collateral of five acres or less reaches 75% on loans at or below $3,000,000. Above $3,000,000: no rural property, and no more than ten acres on a non-rural one.
- Condos and condotels. Non-warrantable condos run to 75% and $1,500,000. Condotels run to 75% on a purchase and 65% on a refinance at the same size cap, with $250,000 cash-in-hand.
- Appraisal reports. Format changes in appraisal reporting can shift how a report reads. That is a reporting matter, not a DSCR rule.
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.
What Should You Gather Before Applying?
Sequence matters. The appraisal is where ADU income is won or lost, so the paperwork goes in before the appraiser walks the property.
1. The permit and final inspection or certificate of occupancy for the ADU.
2. A rent roll that separates the main house from the ADU.
3. Current leases, if any, plus proof of rent received.
4. Proof of separate utilities, address, and entrance, if they exist.
5. Entity documents, if the property sits in an LLC, subject to program terms.
6. Evidence of reserves outside the cash-out.
Then model both cases. With the ADU counted and with it excluded, check that coverage and LTV still work.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rent used for lender review divided by the full monthly payment on the loan.
Super jumbo: a trade label for very large loans, usually above $3,000,000, defined differently by each program.
ADU (accessory dwelling unit): a separate, smaller living unit on the same lot as the main house, such as a guest house or garage apartment.
Cash-out refinance: a new, larger loan that pays off the old one and pays you the difference.
LTV (loan-to-value): the loan amount as a percentage of the appraised value.
Form 1007 and Form 1025: appraisal forms that document market rent on one-unit and two-to-four-unit properties.
PITIA: principal, interest, taxes, insurance, and association dues, the full monthly obligation.
Reserves: cash or liquid assets left after closing to cover payments.
Interest-only period: a stretch when payments cover interest alone, with no principal reduction.
Common Mistakes
- Assuming a big property always qualifies for cash-out. The loan amount sets the line.
- Treating build cost as value. Appraisers lean on comparable sales.
- Counting unpermitted rent. It is usually excluded.
- Planning to use cash-out proceeds as reserves. They do not count.
- Skipping the ADU-excluded model. A deal that only works with the ADU is fragile.
- Ignoring that coverage falls as cash-out rises.
Frequently Asked Questions
Can I take cash out above $3,000,000 on a property with an ADU?
Not typically. Through the programs in Lendmire’s network, no cash-out is offered above $3,000,000. Purchase and rate-and-term loans continue to $10,000,000, with leverage dropping and requests above $4,000,000 reviewed case by case. If you need cash from a very large property, a smaller cash-out loan that stays inside a band may be an option, subject to underwriting.
Does the ADU need a tenant in place to count?
Not always. The appraiser sets a market rent on the rent schedule, and many programs can use that figure. Where a lease exists, many credit the lower of the lease and the appraiser’s rent. The program’s own guideline decides.
What happens if my ADU is unpermitted?
Expect the appraiser to flag it, and expect the lender to follow the appraisal. The ADU’s value and rent are usually left out. The main house must then carry the coverage on its own, so model that case first.
Do I need two appraisals on a cash-out loan?
Above $2,000,000, two appraisals are typical. Below that, one is the norm. Appraisal count is worth comparing across programs because it affects cost and review.
Can short-term rental income from the ADU help?
It can on a narrower path: coverage of 1.00 or higher, loans to $2,000,000, experienced investors, and documented operating history counted at 80% of gross. Local permission has to be documented for the specific property.
Next Step
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage, and investor goals. Every figure here is a typical ceiling, subject to underwriting and lender guidelines, and none is a commitment to lend.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
About Lendmire
As a non-QM mortgage broker (NMLS# 2371349), Lendmire facilitates DSCR investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income instead of personal income documentation, subject to lender guidelines, serving LLC-structured portfolios and self-employed borrowers who don’t fit conventional boxes. A two-time Scotsman Guide Top Mortgage Workplace (2025, 2026).
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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. Fannie Mae
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: Best Super Jumbo DSCR Cash-Out Refinance Program to Buy Another Rental · Best Super Jumbo DSCR Cash-Out Refinance Program With an Interest-Only Period
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.