The Quick Read: The best program depends on your property’s condition and how much equity you hold. Hard money cash-out refinances are short-term, interest-only loans sized on value, your plan, and your exit. A leased, stabilized rental often fits long-term DSCR financing better.
- Across Lendmire’s wholesale network, hard money cash-out refinances typically reach up to 65% of value, depending on the lender, property, and your experience.
- Terms typically run 6-18 months, interest-only, with no prepayment penalty.
- Credit starts around 620, with added conditions below 660. Underwriting stays asset-based.
- Collateral is non-owner-occupied residential property, one to four units.
- Vacant or unfinished properties lean toward hard money. Leased, stabilized rentals often lean toward DSCR.
This page separates them, walks the mechanics, and shows where the usual rules break.
Key Terms Defined
Hard money loan: A short-term, interest-only loan secured by real estate and sized on the property, the plan, and the exit rather than on your personal income.
Cash-out refinance: A new loan that pays off the old one and puts the leftover cash in your pocket.
Rate-and-term refinance: A new loan that covers only the old payoff and closing costs, with no meaningful cash back.
Seasoning: The waiting period, counted from when the deed was recorded, before a lender sizes a loan on current appraised value.
DSCR (debt service coverage ratio): Monthly rent divided by the full monthly housing obligation: principal, interest, taxes, insurance, and any HOA dues.
PITIA: That full monthly obligation, spelled out as principal, interest, taxes, insurance, and association dues.
Exit strategy: How the short-term loan gets repaid, usually by selling or refinancing into long-term financing.
What Does “Hard Money Cash-Out Refinance” Actually Mean?
It means one of two transactions. The first is refinancing out of a hard money loan into permanent financing. The second is taking a new hard money loan against a property you already own to pull equity out.
The first is the classic BRRRR exit (buy, rehab, rent, refinance, repeat). You bought and renovated with short-term debt, and a long-term loan now pays it off. The second is a standalone equity draw on a property you hold, often one that is vacant, mid-project, or not ready for a tenant.
The two products underwrite different things. A hard money lender looks at value, the business plan, and how you will repay. A DSCR lender looks at what the finished, rented property earns against its payment. Your property’s stage decides which logic fits.
How Is “Best” Defined Here?
No single best program exists. The best program for your situation comes down to four questions:
1. Is the property rent-ready?
2. How long have you held title?
3. How much equity do you have?
4. Does the rent clear the coverage test?
Lendmire is a mortgage broker, not a lender. It shops a wholesale network of lenders and matches your scenario to the program that fits. So this page does not rank companies. The lenders that write this loan differ on leverage, property type, and how they treat your experience, and that is the whole reason to compare.
| Your property situation | Usual best fit | Main watch-out |
|---|---|---|
| Vacant or unfinished | Hard money cash-out | Short term; exit must be planned |
| Leased, stabilized, rent covers payment | DSCR cash-out | Seasoning, reserves, coverage |
| Short-term rental with hosting history | DSCR (STR guidelines) | Lower leverage, booking history |
| Rent too thin for DSCR | Hard money, or a smaller DSCR draw | Carry cost and exit timing |
How Do Hard Money Cash-Out Programs Work?
Start with the numbers in our network. Cash-out and rate-and-term refinances on hard money typically reach up to 65% of value. That is lower than the cost-based leverage on purchases and rehabs, which can run higher because lenders measure it against project cost.
Loan amounts typically run up to $5,000,000, with larger loans by exception and smaller balances varying by lender. Terms run 6-18 months, interest-only, with no prepayment penalty. There are no multi-year options on the current program. If you need a longer runway, you refinance into long-term rental financing.
Credit typically starts at a 620 score, with additional conditions below 660. The lender still looks hard at the property, the plan, and the exit. Collateral is non-owner-occupied residential property, one to four units. Commercial, industrial, land, hospitality, and owner-occupied properties are not offered. All of this varies by lender, property, and experience, and none of it is a commitment to lend.
What Do the Mechanics Look Like Step by Step?
Underwriting follows a predictable path. Here is how it treats a refinance on a property you already own.
1. Classify the transaction. If you take meaningful cash at closing, it is a cash-out. If the new loan only covers the old payoff and costs, it is rate-and-term. Restrictions on leverage and seasoning often apply only to cash-out.
2. Check the clock. Seasoning is lender policy, not law. Before it runs out, a lender often sizes a cash-out on your cost basis plus documented improvements. After it runs out, appraised value takes over.
3. Order the appraisal. It does two jobs: it sets value, which drives leverage, and it sets market rent, which drives coverage. For one-unit rentals, the rent analysis typically comes through the Fannie Mae Form 1007 rent schedule. Small two-to-four unit properties use an income-focused form, and both are listed in Fannie Mae’s forms library. Those are agency form names used for the appraisal; DSCR loans themselves are not agency products.
4. Document the lease. If the property is leased, lenders typically credit the lower of the lease rent or the appraiser’s market rent. A finished rehab with a tenant but no signed lease and deposit proof is a common stall.
5. Run two tests. One test is loan against value. The other is rent against payment. Passing one does not pass the other.
6. Do the payoff math. Cash back equals the new loan minus the old payoff and costs. If the payoff is larger than the new loan, you bring cash to the table.
7. Fund. What you receive is net of payoff and closing costs.
What Does a Draw Look Like in Percentages?
Take a property worth 100 on a clean appraisal. A hard money cash-out at up to 65% of value gives you a new loan of 65. Say your existing balance is 50. You are looking at roughly 15 of value in cash before costs.
Now run the version that fails. You expected the same value, but the appraisal lands 10% lower. At 65% of the lower value, the new loan equals about 58.5 of your expected value. If your payoff is 62, you are short before closing costs. You would bring cash or extend the bridge.
This is why sizing a short-term loan near its ceiling is risky. Leave cushion for a low appraisal.
Where Does DSCR Cash-Out Beat Hard Money?
For a leased, stabilized rental, DSCR usually returns more cash and runs on a longer horizon. Hard money is sized differently from a DSCR cash-out refinance: bridge purchases are capped at roughly 65% of value, and cost-based tiers are measured as a share of project cost rather than value. About six months of seasoning is the common expectation across most of the network. For short-term rentals, cash-out typically runs around 70% of value, with about 12 months of hosting history and a 640+ credit score.
The coverage test works like this. Divide rent by the full monthly obligation, and a result near 1.0x means rent roughly equals payment. Many select programs start at 1.00. A separate path through select lenders in the network goes below 1.00, with leverage and terms adjusted. Stronger coverage opens better pricing and leverage.
One caution: clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital expenses all sit outside the calculation. Budget for them anyway.
Credit matters too. Most DSCR programs want a score around 660, with 620 as a floor in parts of the network and 700+ unlocking the strongest leverage tiers. Reserves vary by lender, leverage, loan size, and transaction type, and are commonly around six months of PITIA. For a deeper walk-through of coverage, credit, and reserves, see Lendmire’s complete DSCR loans guide.
A bigger down payment or lower leverage can lift coverage. It does not erase credit floors, reserve rules, or property eligibility. The strongest files pass both tests: enough equity and enough rental coverage. DSCR is also not offered on manufactured homes, log homes, or barndominiums.
Where Does the General Rule Break?
Four edge cases trip up investors most.
Hard money payoffs and seasoning. When a hard money loan funded your purchase and construction, a refinance can often pay off that balance right away. Extra equity-based cash on top is a different matter. It usually waits for seasoning. Investors who treat “hard money exit” as “no seasoning at all” run into this.
Vacant or unfinished property. A DSCR loan needs rent to measure. With no tenant and no lease, a bridge-style loan is often the intermediate step until the property is rent-ready.
Short-term rentals. The standard rent schedule was designed for monthly lease rent, not nightly bookings, according to the Fannie Mae Form 1007. So STR underwriting leans on booking history instead. 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.
Prepayment. The hard money program carries no prepayment penalty, which makes it easy to exit. An existing long-term loan you are refinancing may carry its own penalty, so read that note before you plan the payoff.
Can You Pull Your Original Cash Back Out?
Often partly, sometimes fully, and it depends on cost basis, appraised value, and leverage. If you bought and renovated with short-term debt, the key question is whether the new loan covers the payoff and your cash in the deal. Lendmire digs into that in its article Best Hard Money Cash-Out Refinance Program to Pull Your Original Investment Back Out.
What Decides Which Program Wins?
Here is the short list that sorts most files:
- Appraised value, or cost basis if inside seasoning. This sets the leverage ceiling.
- Market rent versus lease. The lower of the two typically counts.
- Property condition. Rent-ready properties open DSCR doors.
- Payoff balance. A large existing balance shrinks your cash back.
- Credit and property type. Short-term rentals and multi-unit properties follow their own guidelines.
- Experience. On hard money, completed projects can shift leverage tiers.
Many investors refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path.
Is It the Wrong Move?
Skip hard money cash-out when a stabilized rental clearly clears the coverage test and you can wait out seasoning. The longer DSCR runway and higher leverage usually return more cash.
Skip it too if you have no exit. A 6-18 month term ends whether or not the refinance is ready. Start the exit plan before you sign, and leave the term longer than the seasoning wait with room to spare. Every extra month on short-term debt adds carry cost, and a low appraisal can strand the payoff.
How Do You Compare Programs?
Ask each lender, through your broker, the same questions:
- What leverage applies to cash-out on this property type, and is it based on value or cost?
- How does the lender treat my seasoning and any documented improvements?
- What does the term allow, and what happens at maturity?
- What experience tier am I in?
- Are there prepayment penalties or extension terms?
- What documents does the file need?
A broker that shops multiple wholesale lenders can line these up side by side and match the scenario to the program. That fit matters more than any headline number.
Frequently Asked Questions
Can hard money do a cash-out refinance on a property I own free and clear?
Yes, subject to lender guidelines. Across the network, cash-out typically reaches up to 65% of value, depending on the lender, property, and your experience. The property must be non-owner-occupied residential, one to four units. Remember that the loan is short-term and interest-only, so the exit plan matters as much as the amount.
Is hard money or DSCR better for a rental that already has a tenant?
For a leased, stabilized rental, DSCR often fits better because it offers higher leverage on standard rentals and a long-term structure. Hard money typically fits when the property is vacant, unfinished, or has too little rent to clear coverage. The right answer depends on the property’s condition and your timeline.
Does the hard money loan have a prepayment penalty?
The hard money program typically carries none, which makes exiting easy. Whatever loan you are refinancing from may have its own terms, so check that note before planning the payoff.
What credit score do I need?
Hard money typically starts around 620, with additional conditions below 660. First-time investors can qualify at the lower leverage tiers. DSCR programs often want a score near 660 or higher. Underwriting stays asset-based and every file is reviewed individually.
What if the appraisal comes in low?
The loan amount shrinks with the value, so a payoff sized near the ceiling can fall short. You would bring cash, extend the bridge, or take a smaller draw. Model a lower value before you commit.
Next Step
If you are buying, rehabbing, or refinancing an investment property on a short timeline and want to see how the numbers work, Lendmire can help you compare hard money options based on the project, the exit plan, leverage, and your goals. Lendmire arranges these loans as a broker across 41 markets, including Washington, D.C., through select lenders in its wholesale network. Request a quote or call 828-256-2183.
A property that is only one tenant away from stabilized is often a single lease from a longer, cheaper-to-carry loan, so price the wait before you pay for the bridge.
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 Form 1007, Single-Family Comparable Rent Schedule
2. Fannie Mae Selling Guide Forms Library
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a Lender Counts Reserves on a BRRRR Cash-Out Refinance · DSCR vs. Conventional Cash-Out Refinance for a St. Charles MO Rental · Short-Term Rental Cash-Out Refinance Requirements When Your Mortgage Is Almost Paid Off
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.