The Quick Read: Lenders size the loan by running two tests and keeping the lower result: the loan cannot exceed the cash-out LTV ceiling applied to the appraised value, and the combined rent from both units must still cover the larger payment at the program’s coverage minimum. Across most programs in the wholesale network Lendmire works with, the cash-out ceiling is about 75% LTV on a non-owner-occupied standard rental. On a thin-rent duplex, rent is often the tighter limit, not equity.
- The 75% figure is the ceiling on the total new loan (cash-out, investment property). It is not the cash you receive.
- Net cash is the new loan minus the payoff, closing costs, prepaids, any prepayment charge on the old loan, and any reserves the lender requires.
- Both units’ rent is added together and tested against one building’s PITIA (principal, interest, taxes, insurance, and any HOA dues).
- A duplex gets a rent test and an equity test. Triplexes and fourplexes follow the same logic. Five or more units usually move into commercial underwriting.
- Ownership of about 6 months, measured from title recording, is the common seasoning expectation before cash-out.
What LTV Means on a Duplex Cash-Out
LTV is the new loan divided by the property’s value. A cash-out refinance pays off your existing loan and hands you the difference as cash. The lender picks the maximum LTV, multiplies it by value, and that product is the largest loan the equity test allows.
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.
The cap is set by each lender’s guidelines, not by a single public rule. That is why you will see different numbers quoted around the internet. Programs differ, and a lender’s cap can shift with property type, credit, and loan size. Within Lendmire’s network, cash-out on a standard investment rental tops out around 75% LTV. A duplex through fourplex can sit at or below that figure depending on the program. Rate-and-term refinances, which return no cash at closing, can run higher: select programs reach up to 85% LTV on an investment-property rate-and-term refinance. The moment the refinance returns meaningful cash, it becomes a cash-out file and the lower ceiling applies.
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. The lender qualifies the file primarily on property-level rental income covering the payment, subject to lender guidelines. That is why rent shows up in the sizing, not just value.
The Sizing Sequence, Step by Step
Here is the order a lender follows on a duplex. Most files move through the same seven steps.
1. Confirm eligibility. The property must be a non-owner-occupied rental in an eligible type. You must meet the seasoning expectation and the credit minimum for the program.
2. Order the appraisal with a rent opinion. The appraiser establishes value and the market rent for each unit.
3. Run the equity test. Appraised value times the cash-out LTV ceiling gives the largest loan the equity supports.
4. Run the rent test. Add the rent from both units. Divide by the full PITIA on the new loan. The result is the DSCR, and it has to clear the program’s coverage minimum.
5. Take the lower result. Whichever test allows the smaller loan sets the loan amount.
6. Subtract the payoff. The existing loan comes out first, along with any second lien.
7. Subtract costs and holdbacks. Closing costs, prepaids, any prepayment charge on the old loan, and reserve requirements come out next. What remains is your net cash. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
A bigger loan means a bigger payment, so coverage falls as you pull more cash. That is the trade the rest of this article keeps returning to.
Two Tests, Lower One Wins
The equity test and the rent test answer different questions. The first asks whether the lender has enough cushion in the property. The second asks whether the property’s income carries the debt. A file has to pass both.
Run the numbers on a modeled duplex. These are assumptions, not market data. Say the existing loan is 50% of appraised value, and the full 75% LTV cash-out loan would leave coverage around 0.92x on the combined rent. Equity would allow the larger loan. Rent would not, because 1.00 is where many select programs start. The loan shrinks until coverage clears. Because taxes and insurance do not fall when the loan does, the loan has to come down by more than the coverage gap suggests. In this model it lands somewhere in the high 60s as a percent of value. The equity test said 75%, but the rent test set the loan lower. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Coverage below 1.00 is not a dead end. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Expect lower LTV and different pricing on that path. A no-ratio structure also exists, available only through select lenders, generally for borrowers who already own a primary residence. Both carry tradeoffs. Neither fits every file.
Now flip it. Say rent is strong and coverage clears comfortably at full leverage. The equity test governs, and the 75% ceiling becomes the real limit. Stronger coverage also opens better pricing and leverage tiers across most programs, which is why the strongest files clear both tests with room to spare.
Next, the reverse calculation, which is the one most owners actually need. Start with the cash you want. Add the payoff, the closing costs, and any reserves you must set aside. Divide that total by 0.75. The answer is the appraised value you need for the equity test to work. If the appraisal comes in below it, the file has to shrink or wait. Then check that the rent test supports the loan that value implies.
Reach out at 828-256-2183, or use the quote request page, if you want a broker to run both tests on your duplex before you order an appraisal.
How a Duplex Gets Valued
Value drives the equity test, so the appraisal matters as much as the cap. For two- to four-unit properties, appraisers typically use the Small Residential Income Property Appraisal Report, known as Form 1025. Fannie Mae’s Selling Guide describes it as the report for 2–4 unit properties, including those in condo, co-op, and planned-unit projects. The form itself, which is also known as Freddie Mac Form 72, collects rent unit by unit alongside the comparable sales.
Those are appraisal form names only. DSCR loans are not agency products, and agency lending rules do not set these caps. The form simply gives the lender a standard way to see each unit’s rent and the property’s value together.
A low appraisal is the most common way a plan to pull cash shrinks. The cap applies to the appraised number, not to what you paid or what you hoped for. Each lower dollar of value reduces the largest loan by 75 cents on the dollar, and the payoff stays the same. Cash is the part that takes the hit.
Another quirk surfaces in the seasoning window. Inside it, some programs size the loan on the lower of appraised value or your cost basis. That varies by program, so ask before you assume a fresh appraisal will carry the full amount. After the window, the appraised value is the basis. Waiting longer does not raise the cap percentage. It only changes which value the percentage is applied to.
What Moves the Number
Different factors push the final loan in different directions. This table shows the main ones.
| Factor | Effect on loan size |
|---|---|
| Appraised value | Sets the equity test directly |
| Combined rent | Sets the rent test and the coverage ratio |
| Credit score | Higher tiers open higher leverage |
| Loan size | Larger balances can step up reserves and tighten terms |
| Collateral type | Short-term rentals use lower caps |
| Existing liens | Payoff and any second lien reduce net cash |
Credit works in tiers. A 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage. Loan sizes run up to roughly $3,000,000 on standard programs. Reserves are commonly about 6 months of PITIA, and loans above $1,500,000 typically step up to about 9 months. Reserves vary by lender, leverage, loan size, and transaction type, so treat those as typical, not fixed.
Short-term-rental collateral follows its own lane. Cash-out on a short-term rental tops out at 70% LTV, versus 75% on a standard long-term rental. 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. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Vesting is flexible. You can hold the property personally or in an LLC. Loans to LLC-titled borrowers are available subject to lender program eligibility.
A pattern shows up across files. Duplex owners focus on the LTV headline and ignore the rent line. The deals that hit friction usually have rent that looks fine until taxes and insurance are added to the payment. Pulling the current insurance quote before the file goes to the lender prevents most surprises.
More Doors: Duplex, Triplex, Fourplex, and Five-Plus
More doors usually means more rent against one building’s payment. The mechanics stay the same, but the rent test gets more cushion. The table shows where each unit count sits.
| Units | Underwriting lane | Rent test |
|---|---|---|
| 2 (duplex) | Residential investor | Both units’ rent vs one PITIA |
| 3 (triplex) | Residential investor | Three units’ rent vs one PITIA |
| 4 (fourplex) | Residential investor | Four units’ rent vs one PITIA |
| 5 or more | Commercial multifamily | NOI vs debt service |
On a duplex through fourplex, DSCR is gross rent divided by PITIA. Commercial multifamily uses net operating income over debt service, which is a different formula with different inputs. The two get mixed up often. Form 1025 stops at four units, which matches the line between the two lanes.
Does a bigger building lift the cash-out cap? Not automatically. The ceiling can sit at or below the single-family figure on a multi-unit property, depending on the program. What more doors reliably changes is coverage. Each added unit brings rent without adding a second mortgage payment. That often supports a stronger ratio than a comparable single-family home, though taxes and insurance shrink capacity as much as rent does.
Where the General Rule Breaks
The 75% headline holds for most clean files. These situations bend it.
Owner-occupied units. If you live in one unit, this is not a DSCR file. DSCR cash-out generally becomes available once the whole building is a pure rental. Renting out the other unit does not change the lane.
Moving out. If you move out, the building becomes an investment property. At that point it can move into the DSCR lane, subject to seasoning and the usual requirements.
Rent below the payment. Coverage under 1.00 is available through select lenders in the network, with leverage and terms adjusted. Expect a lower LTV than on a file that clears the standard coverage test.
Second liens. If another loan sits behind the first, the lender looks at both balances together. The cap applies to the combined loan, and the rent test uses both payments.
First-time investors. Some programs trim leverage when you have no landlord history. Others do not. This varies lender by lender, which is one reason to compare programs.
Prepayment charges. Many programs carry a prepayment period. A charge on the loan you are paying off comes straight out of your net cash, so check it before you commit.
Ineligible property types. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered through these programs.
Should You Pull the Maximum?
The cap is a ceiling, and a ceiling is not a target. Higher leverage typically comes with tighter pricing and thinner coverage. Stopping below the cap is a legitimate choice, and sometimes the smarter one.
Ask three questions first. What will the cash do? Does that use earn more than the added cost of the larger loan? And how does coverage look if a unit sits vacant? A DSCR above 1.00 means rent covers PITIA on paper. It does not measure repairs, vacancy, management, utilities, or capital expenses. Clearing 1.00 is not the same as positive cash flow.
Think of it as two files at the same duplex. One takes a loan near the cap, nets the most cash, and runs thin coverage. The other stops several points lower, nets less cash, and carries a stronger ratio. The second file often qualifies for better terms and leaves room if a tenant leaves. Which one fits depends on whether you are using the cash for a down payment on the next property or just parking it.
If coverage is the problem, the levers are clear: higher rent, lower insurance cost, a lower loan amount, or a different term structure. The spine is the 30-year fixed. Select lenders in the network also offer 40-year terms and interest-only periods, and ARM structures exist for investors who want them. Above $2,500,000 the network generally holds to 30-year fixed structures. Reserves also matter: the cash you pull may need to stay partly in the bank, depending on the lender.
For the full mechanics of how these loans are built, see the complete DSCR loans guide.
Common Misconceptions
Seventy-five percent LTV does not mean you receive 75% of the value in cash. It is the total loan cap, and the payoff and costs come out first.
Passing the equity test does not mean approval. Rent must also cover the larger payment, and the tighter test governs.
A higher DSCR does not guarantee cash flow, as covered above. Waiting past the seasoning period does not raise the cap percentage, either. And every lender does not use the same cap. Programs vary, and your credit, property type, and loan size shift the numbers.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the property’s appraised value.
Cash-out refinance: A new loan that pays off the old one and returns the leftover equity to you as cash.
PITIA: Principal, interest, taxes, insurance, and any association dues, which together make up the full monthly obligation.
DSCR (debt service coverage ratio): Monthly rent divided by PITIA. A ratio of 1.00 means rent equals the payment.
Seasoning: The ownership period a program wants before it allows cash-out, commonly about 6 months from title recording.
Rate-and-term refinance: A refinance that changes the loan’s terms without returning meaningful cash at closing.
Net cash: What you actually receive after the payoff, costs, prepaids, and holdbacks come out of the new loan.
Frequently Asked Questions
How much cash will I actually get from a duplex cash-out refinance?
It depends on value, your payoff, and costs. The lender applies the cash-out ceiling, about 75% LTV on a standard investment rental, to the appraised value. It then subtracts your payoff, closing costs, prepaids, and any prepayment charge. The rent test can shrink the loan further, and reserves can reduce what you can use. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Why would a lender approve less than 75% when I have plenty of equity?
Because rent has to cover the larger payment. On a duplex with modest rents, the coverage test can cap the loan below the equity limit. The lender takes whichever test produces the smaller loan.
Does a duplex get a different LTV cap than a single-family rental?
It can. The ceiling on two- to four-unit properties sits at or below the single-family figure depending on the program. Check the cap for your specific property type before you plan the numbers around it.
Can I do a DSCR cash-out if I live in one of the units?
Generally not. DSCR loans are for non-owner-occupied investment property. A building where you live in one unit usually has to become a pure rental first. Moving out changes the lane.
Does a fourplex work the same way as a duplex?
Yes, up to four units. Rent from all units is tested against one building’s PITIA. Five or more units generally move into commercial multifamily underwriting, which uses net operating income instead.
Ready to Run Your Duplex Through the Numbers?
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. As a mortgage broker with DSCR investor programs across 41 markets, including Washington, D.C., Lendmire arranges financing through select lenders in its wholesale network. Every file is reviewed individually, and nothing here is a commitment to lend.
The calculator on this site gives an illustrative estimate, and it is a good place to test how added units shift coverage before you ever order an appraisal.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage brokerage specializing in DSCR investor loans, helping arrange financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. The model centers on property-level rental income reviewed by the lender rather than W-2 documentation, subject to lender guidelines, suiting entity-owned and multi-property investors. Lendmire holds Scotsman Guide Top Mortgage Workplace recognition for 2025 and 2026.
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References
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 Co-Owned Home · How Lenders Underwrite a DSCR Cash-Out Refinance in Your LLC’s Name · How Lenders Underwrite a Super Jumbo DSCR Cash-Out Refinance on Ten or More Rentals
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.