The Quick Read: Fannie Mae will not close a cash-out loan with an LLC as the borrower or the titleholder, so an investor who holds a rental in an LLC must deed the property into their own name before closing, while time spent holding it in the LLC can still count toward the ownership requirement when the borrower owns the LLC outright. The loan is then underwritten on the individual, not on the property.
- The LLC cannot be the borrower on a loan sold to Fannie Mae.
- Title must sit in the individual borrower’s name when the loan funds.
- An LLC owned 100% by the borrower is an allowed way to have bought the property.
- Approval rests on personal income, credit, and debt, not on rental coverage.
- A DSCR loan arranged through a wholesale network can leave the LLC on title, subject to lender guidelines.
What Does the Fannie Mae Rule Say About LLC-Held Property?
The rule is simple on its face. The Fannie Mae Selling Guide section on cash-out refinance transactions says ownership must be transferred out of the LLC and into the name of the individual borrower or borrowers to close the refinance.
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The same section lists the ways a borrower may have originally acquired the property. The list includes a natural person, an eligible revocable trust, an eligible land trust, or an LLC or partnership in which the borrower or borrowers hold 100% individual or joint ownership.
Read those two points together. An LLC purchase does not disqualify you. The LLC just cannot be on title when the new loan closes.
Brokers see this misread in both directions. Some investors assume the LLC can sign the note. Others assume years of LLC ownership are wasted. Neither is right.
Key Terms Defined
Cash-out refinance: a new loan that pays off the old one and returns some of the equity to the borrower as cash.
Limited cash-out refinance: a refinance that pays off the old loan and costs, with little or no cash back, and carries its own ownership rules.
Seasoning: the minimum time the borrower must have owned the property before a cash-out loan is allowed.
Delayed financing: an exception that lets a borrower who bought with cash take out a cash-out loan without the standard waiting period, if the agency’s conditions are met.
Titleholder: the person or entity named on the recorded deed.
DSCR: the ratio of the property’s rent to its PITIA (principal, interest, taxes, insurance, and any association dues).
How Does Underwriting Treat an LLC-Held Cash-Out, Step by Step?
The process runs in a fixed order. The order matters because title has to be in the right name on the day the loan funds.
1. Confirm the borrower is a natural person. The LLC cannot be the borrower on a loan sold to Fannie Mae. The individual must meet the general borrower eligibility rules in the Selling Guide.
2. Check ownership and seasoning. Cash-out generally expects a holding period before the loan, commonly about six months. Because a 100% borrower-owned LLC is an allowed way of buying the property, time held in that LLC can count toward the period.
3. Check the delayed-financing exception. If you bought with cash, a cash-out loan may be possible inside the normal holding period when the agency’s conditions are met. The exact conditions sit in the same Selling Guide section, so read the current text before you plan around it.
4. Handle the source-of-funds condition. If the purchase was funded with an unsecured loan, or a loan secured by another asset, the settlement statement must show the cash-out proceeds paying off or paying down that loan. The Selling Guide states this directly.
5. Move title out of the LLC before funding. This is usually a deed from the LLC to the individual. It is recorded before closing, and the title company needs to see it.
6. Underwrite the individual. Fannie Mae reviews personal income, credit, and debt-to-income. The rental’s rent matters for the appraisal and income treatment, but the property is not the main qualifier.
7. Apply cash-out pricing. The Selling Guide confirms that cash-out pricing applies to these loans. Investment-property leverage is also lower than leverage on a primary residence.
8. Order the appraisal with rent data. Rental appraisals commonly use Form 1007 (single-family rent schedule) or Form 1025 (small residential income property appraisal).
What decides the outcome is whether title can legally move into the individual’s name before the closing date. After that, it comes down to personal qualification.
Does Time Held in the LLC Count?
Yes, when the borrower owns the entity 100%, individually or jointly. The Selling Guide’s list of allowed original-ownership forms includes that kind of LLC, so the holding period is not reset by the entity.
This is where files get tripped up. The borrower pulls title out of the LLC too early, or they move it in the wrong sequence, and the lender sees a recent deed into the individual’s name. A clean deed history helps. Operating agreement, formation documents, and membership percentages should all show the borrower as the sole owner or joint owners with the co-borrowers.
What Structures and Variations Exist?
The main variations are full cash-out, limited cash-out, a cash purchase under delayed financing, and a multi-member LLC.
Full cash-out versus limited cash-out. The limited cash-out section of the Selling Guide requires at least one borrower on the new loan to be on title at the time of initial application. Its LLC wording refers to an LLC majority owned or controlled by the borrower, and ownership must still move into the individual’s name. The two sections read differently, and practice on LLC-held property has varied. Treat the current Guide text as the controlling document, and ask the lender how it applies it.
Cash purchase. Delayed financing is the only route that gets cash out of a recent cash purchase without waiting out the holding period. It has its own conditions, so do not assume it applies.
Multi-member LLC. The cash-out section ties its LLC language to 100% individual or joint ownership by the borrowers. A minority owner who is not a borrower complicates the file. Do not assume that majority control is enough.
Freddie Mac contrast. The agency’s own guide requires at least one borrower to have been on title for six months before the note date. For an LLC or LP, a borrower must have been the majority owner or had control since the entity acquired the property, and title must move into the borrower’s name on or before the note date. Do not carry one agency’s rule over to the other.
Where Does the General Rule Break?
Several edge cases change the answer. The table summarizes how they usually play out.
| Situation | Usually works? | Main risk |
|---|---|---|
| Long-held rental, borrower owns 100% of LLC | Yes, after deed out | Deed timing |
| Recent cash purchase through LLC | Maybe, via delayed financing | Conditions not met |
| Loan-funded purchase, recent | Seasoning applies | Holding period too short |
| Multi-member LLC, one member not borrowing | Often no | Ownership mismatch |
| Limited cash-out on LLC-held property | Unclear | Title-at-application rule |
Other breaks are worth naming.
- Buyouts. Special buyout rules exist for co-owners of owner-occupied homes. They are not built for an LLC-titled rental, so do not borrow them.
- Owned free and clear. A new mortgage on a property previously owned free and clear is generally treated as a cash-out refinance. A paid-off LLC rental is a common example.
- Property count. Agency loans cap the number of financed properties a borrower can hold. Investors with larger portfolios often run into that cap before they run into the LLC issue.
- Existing agency loans. Moving a rental already financed with an agency loan into an LLC is a servicing question. Ask the servicer before you transfer anything.
What Does Moving Title Out of the LLC Cost and Risk?
The cost is more than the deed. Several practical items change with it.
- Liability separation. The LLC layer is gone while the property sits in your name. Many investors form the LLC for exactly that protection, so the gap matters.
- Insurance. The named insured must match the titleholder. Update the policy before closing, not after.
- Leases and rent flow. The landlord of record on the leases, the property manager agreement, and the bank account receiving rent may all point to the LLC. Ask your attorney whether they need updates.
- Existing loan. Moving title can trigger a due-on-sale clause on a loan that is still in place. The cash-out loan pays off that lien, but the order of events still matters.
- Recording and transfer charges. These vary by state and by deed type, and title insurance continuity depends on the title company.
- Re-titling afterward. Moving the property back into the LLC after closing can trigger the new lender’s due-on-sale clause. Get written comfort from the lender and counsel first.
None of this makes the agency route wrong. It makes it a structured decision with real tradeoffs.
When Does a DSCR Loan Fit Better?
A DSCR loan fits when the investor wants the LLC to stay on title, or when personal income or property count blocks an agency file. Agency loans qualify the individual. DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers the full program picture.
Across the wholesale network Lendmire works with, typical ranges look like this. They are guidance, not promises, and every file is underwritten individually.
| Factor | Agency cash-out | DSCR cash-out (network) |
|---|---|---|
| Borrower | Individual only | LLC allowed, subject to program |
| Reviewed on | Personal income and debt | Rent vs. PITIA |
| Cash-out LTV | Set by agency matrix | Up to 75% on standard rentals |
| Seasoning | Holding period applies | About 6 months typical |
| Coverage | Not a ratio test | 1.00 is where select programs start |
On the DSCR side, credit floors start at 620 in parts of the network, and most programs want around 660. A score of 700 or more opens the strongest leverage tiers. Loan sizes run up to $3,000,000 on standard programs, and reserves commonly run about six months of PITIA, stepping up to about nine months on loans above $1,500,000. A 30-year fixed is the spine. Extended terms and interest-only periods are available through select lenders in the network.
Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. That is a separate path from programs that start at 1.00.
One caution applies. Clearing 1.00 does not mean the property produces positive cash flow. DSCR counts rent against PITIA only, so repairs, vacancy, management, utilities, and capital expenses sit outside the ratio. Manufactured homes, log homes, and barndominiums are not offered on these programs.
What Does the Decision Look Like in Practice?
Picture an investor who bought a single-family rental through an LLC that she owns 100%. She has held it for well over six months and wants to pull cash out for the next purchase.
On the agency route, she deeds the property into her own name, updates the insurance, and is underwritten on her personal income and debt. Her other financed properties count against her. If her personal profile is strong and the property count is low, it can work.
On the DSCR route, the LLC stays on title, subject to program eligibility. The lender looks at rent used for lender review against PITIA. Say the rent clears roughly 1.2x. At up to 75% LTV on a cash-out of a standard rental, her available equity depends on that coverage, her reserves, and the credit tier she lands in. It is not a guaranteed cash figure. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
So the choice often comes down to three questions. Do you want to keep the LLC on title? Does your personal debt-to-income leave room? Are you near the agency’s financed-property cap? If any answer points away from the agency route, a DSCR file is worth pricing next to it.
Nothing here is legal or tax advice. Deed transfers, entity structure, and insurance changes depend on your state and facts, so consult a qualified attorney or CPA about your own situation before moving title.
Frequently Asked Questions
Can my LLC be the borrower on a Fannie Mae cash-out loan?
No. Loans sold to Fannie Mae go to individuals. The LLC can have held the property beforehand, but it must come off title before the loan closes.
Does the time I held the rental in my LLC count toward the ownership requirement?
It can, because the Selling Guide allows an LLC in which the borrower holds 100% individual or joint ownership as the original purchasing vehicle. The title still has to move to you for closing, and a clean deed history helps the file.
Is limited cash-out treated the same as full cash-out for LLC-held property?
No. The two sections of the Selling Guide are worded differently. Limited cash-out calls for a borrower to be on title at application, and practice on LLC-held property has varied. Check the current Guide text and ask the lender before you plan around it.
What if I bought the rental for cash through my LLC?
Delayed financing may let you take cash out without the standard holding period if the conditions are met. Read the current Selling Guide conditions closely, because a missed condition ends that route.
Can I keep the LLC on title and still pull equity out?
Often yes, through a DSCR cash-out loan, subject to lender program eligibility. Across the network, cash-out generally tops out around 75% LTV on standard rentals, with about six months of seasoning typical.
Next Steps
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 that arranges financing through select lenders in its wholesale network, covering 41 markets including Washington, D.C. You can reach the team at 828-256-2183 or request a quote.
A deeper walk-through of investment-property equity extraction lives in Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets — 40 states plus Washington, D.C. — with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
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References
1. Fannie Mae Selling Guide, Cash-Out Refinance Transactions (B2-1.3-03)
2. Fannie Mae Selling Guide, Limited Cash-Out Refinance Transactions (B2-1.3-02)
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: Best DSCR Cash-Out Refinance Program on Your Only Rental for a Roof · Best DSCR Cash-Out Refinance Program on a Newly Built Rental · Best Short-Term Rental Cash-Out Refinance Program as an LLC or Trust Owner
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.