The Quick Read: Freddie Mac caps the whole new loan, and its Guide sets the cash-out ceiling for an investment property at 75% on a one-unit rental and 70% on a two- to four-unit rental, with higher caps for refinances that return no cash. That is an agency rule, not a DSCR rule. Across the wholesale network Lendmire places files with, DSCR cash-out tops out around 75% on standard rentals, subject to lender guidelines.
- The ratio is the new loan divided by appraised value, and every lien on the property counts toward it.
- Unit count moves the cap: one-unit rentals get a higher ceiling than two- to four-unit rentals.
- The cap is a ceiling, not your payout. Payoff, costs, and reserves come out first.
- Ownership clocks can block you before the ratio ever matters.
- DSCR cash-out is tested on rent against the payment, so you must clear equity and coverage together.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the property’s appraised value, shown as a percentage.
Cash-out refinance: A refinance that pays off the old loan and hands you extra cash from your equity.
No-cash-out refinance: A refinance that changes the loan’s terms but returns little or no cash at closing.
TLTV (total LTV): The ratio that adds second liens to the first mortgage, so every loan against the property counts.
Seasoning: The waiting period a lender wants between buying or financing a property and refinancing it.
DSCR (debt service coverage ratio): The property’s rent divided by its full monthly obligation: principal, interest, taxes, insurance, and any association dues.
PITIA: That full obligation, spelled out: principal, interest, taxes, insurance, and association dues.
DSCR Cash-Out Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 29, 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 29, 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.
What the Freddie Mac Ratio Actually Measures
The ratio compares one loan amount against one value. Freddie Mac divides the new loan by the appraised value, and the appraisal sets the denominator. A low appraisal shrinks your maximum loan dollar for dollar.
Underwriting runs in a fixed order:
1. Classify the transaction. A refinance that pays off a first lien and returns more than a small allowance of cash counts as cash-out. So does a new loan on a property with no mortgage.
2. Classify the property. Occupancy and unit count pick the row in the cap table. A rental is an investment property.
3. Establish value. The appraisal fixes the number the cap multiplies.
4. Count every lien. A second mortgage raises the total ratio, and the total is tested against the same cap.
5. Apply the ownership clocks. Title time and prior-loan age can disqualify the file before the math matters.
6. Run the arithmetic. Maximum new loan equals value times the cap. What you receive is that amount minus the payoff, closing costs, and anything else the file requires.
Freddie also layers a credit fee in price that rises with LTV, per its cash-out refinance product page. So a higher ratio costs more even when it sits under the cap.
The Caps by Rental Property Type
The cap steps down as the property gets riskier to the lender. Freddie Mac’s Guide, Section 4203.1, shows these investment-property ceilings:
| Freddie Mac investment property | Cash-out cap | No-cash-out cap |
|---|---|---|
| 1 unit | 75% | 85% |
| 2 to 4 units | 70% | 75% |
Read the table across and you see the cost of taking cash. On a one-unit rental, the same property carries a cap ten points lower once you pull equity out. On a two- to four-unit rental, the gap is five points.
Read it down and you see the unit-count penalty. A duplex, triplex, or fourplex gets five points less cash-out room than a single-family rental. Lenders treat multi-unit rentals as harder to resell and more exposed to vacancy across several leases.
Why Unit Count and Cash-Out Move the Cap
Think of the cap as a cushion. At 75%, you keep at least 25% equity after the refinance. At 70% on a two- to four-unit rental, you keep at least 30%.
That cushion protects the lender if values fall or the property sells under pressure. Cash-out raises the risk because you are borrowing against equity you already built. Extra units raise it again because one vacancy hits a bigger share of the income.
From the Cap to Cash in Your Pocket
The cap is the ceiling on the new loan, not on your payout. You can see this in percentages of value alone.
Say your rental is a one-unit property under the 75% cash-out cap, and your current loan sits at 55% of appraised value. The cap leaves about 20 points of value to work with. Closing costs and any required items come out of that 20 points. What remains is your cash. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Now flip it into a reverse question. If you want a specific amount of cash, you need enough appraised value that the cap clears your payoff plus that amount plus costs. A tight appraisal is the usual reason the numbers fall short.
The same logic applies to a two- to four-unit rental, just with 70% as the multiplier. The calculator on this site can convert these percentages to dollars as an illustrative estimate. This article stays in ratios on purpose.
Where the General Rule Breaks
The cap table is the headline. These edge cases change the outcome.
Second liens count. The ceiling applies to total debt, not only the first mortgage. If you owe on a second loan against the rental, your maximum new first loan shrinks by that balance.
Two ownership clocks. The product page lists a 12-month gap between the old note date and the new note date when you pay off a first lien. It also requires six months on title before the new note date. A compliance summary of Freddie’s bulletin traces the 12-month first-lien rule to the agency’s 2022 bulletin. That rule can stall a fast buy, fix, and refinance plan if the purchase loan is younger than a year.
Delayed financing. A cash buyer can skip the six-month title wait under a narrow exception. The loan is still priced as cash-out. Read Freddie’s conditions closely before you plan around it.
Free-and-clear rentals. A rental with no mortgage still counts as cash-out when you put a new loan on it. Freddie’s own definition treats it that way, so the cash-out cap applies.
The 80% mix-up. Some pages claim 80% cash-out on a one-unit rental. The Guide table shows 75% for investment property. The 80% figure belongs to owner-occupied homes, so never apply it to a rental. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Special-purpose cash-out. Freddie handles these loans under a separate Guide section, so do not assume the standard table fits them.
Why Many Investors End Up Comparing DSCR
Freddie underwrites you. Personal income, debt-to-income, and the count of financed properties all sit in the file. An investor with several rentals, or rentals held in an LLC, often hits a wall on those tests before LTV matters. LLC vesting is subject to lender program eligibility on the DSCR side as well, so confirm it up front.
DSCR loans work differently. They are business-purpose loans for non-owner-occupied investment property, and a file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Here is how the two sides compare on a standard rental:
| Factor | Freddie Mac agency loan | DSCR network |
|---|---|---|
| Cash-out cap, 1 unit | 75% | Around 75% |
| Cash-out cap, 2-4 units | 70% | Around 75%, by lender |
| Seasoning | 6 months on title, 12 on first lien | About 6 months from recording |
| Main test | Borrower income and DTI | Rent against PITIA |
Treat the DSCR cells as typical ranges. Programs differ by lender, credit, and property, and every file is underwritten individually.
What the DSCR Cash-Out Side Looks Like
Across the wholesale network, a DSCR cash-out refinance on a standard rental typically tops out around 75% LTV. A refinance that returns no cash can reach 85% LTV, but once cash comes back, the 75% ceiling governs. For short-term rentals, the cash-out ceiling is 70% LTV, a separate line from the 75% on standard rentals.
Coverage is the second gate. Many select programs start at a 1.00 floor, meaning rent roughly equals the full monthly obligation. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios usually open better pricing and leverage.
Because coverage compares rent to the whole payment, a bigger cash-out can drag the ratio down. Pulling more equity means a larger loan, and a larger loan means a larger payment against the same rent. So the strongest files clear both tests: enough equity and enough rental coverage.
Clearing 1.00 does not mean the property cash flows. The calculation leaves out repairs, vacancy, management, utilities, and capex. Budget for those separately.
Other typical ranges across the network:
- Credit: A 620 floor exists in parts of the network. Most programs want around 660, and 700 or higher unlocks the strongest leverage tiers.
- Reserves: Commonly around 6 months of PITIA, stepping up to about 9 months above $1,500,000. They vary by lender, leverage, and loan size.
- Loan size: Up to $3,000,000 on standard programs. Above $2,500,000 the network generally holds to 30-year fixed structures.
- Seasoning: About 6 months of ownership, measured from title recording.
- Property types: Manufactured homes, log homes, and barndominiums are not offered.
A larger down payment lowers the payment and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The complete DSCR loans guide covers the full qualification picture.
Which Limit Hits You First?
Work through the gates in this order. The first one that fails is your real limit.
1. Ownership clocks. Too little time on title or on the existing loan stops the file outright.
2. LTV cap. Your payoff plus any second lien must sit under the cap times appraised value.
3. Borrower tests (agency) or rental coverage (DSCR). Income and DTI govern on the agency side. Rent against PITIA governs on the DSCR side.
4. Credit and reserves. Scores set leverage tiers, and reserves set how much liquid cash you must show.
5. Property eligibility. Ineligible property types end the conversation regardless of the numbers.
An investor with strong equity but thin rent usually hits coverage first. An investor with strong rent but a recent purchase usually hits seasoning first. Knowing which one binds saves you from chasing the wrong fix.
Frequently Asked Questions
Does Freddie Mac allow 80% cash-out on a one-unit rental?
These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
No. The Guide table caps cash-out on a one-unit investment property at 75%. The 80% figure applies to owner-occupied homes, so it does not carry over to rentals.
Do second liens count toward the cap?
Yes. The ceiling applies to total debt on the property, so a second lien reduces how much new first-mortgage balance fits under it. Pay attention to this if you borrowed against the rental before.
Is cash-out LTV the same on a duplex as on a single-family rental?
Not under Freddie Mac. A two- to four-unit investment property has a 70% cash-out cap, against 75% on one unit. Across the DSCR network, most programs sit near 75% on standard rentals, though leverage can adjust by lender and property.
How long must I own a rental before a DSCR cash-out refinance?
About 6 months of ownership, measured from title recording, is the common expectation across the network.
If I pull more cash, does my DSCR change?
Yes. A bigger loan raises the monthly obligation, and the same rent then covers less of it, which lowers coverage. Run the ratio at the loan size you actually want, not just at the maximum.
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. It arranges these loans as a broker through select lenders across 41 markets, including Washington, D.C.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a DSCR-focused mortgage brokerage, NMLS# 2371349, placing investor loans across 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed by the lender around a property’s rental income rather than personal income documentation, which fits LLC-held rentals, self-employed investors, and portfolios scaling past conventional financed-property limits. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Seller/Servicer Guide, Section 4203.1
2. Freddie Mac cash-out refinance product page
3. DocMagic summary of Freddie Mac Bulletin 2022-25
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: How Lenders Underwrite a Short-Term Rental Cash-Out Refinance on a Two-to-Four Unit Rental · How to Plan and Use a Short-Term Rental Cash-Out Refinance for Repairs Without Contractor · Can a DSCR Cash-Out Close Without a Spouse in Community-Property States?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.