The Quick Read: A Fannie Mae cash-out refinance on a rental releases the appraised value times the loan-to-value cap, minus the payoff on existing liens and any financed closing costs, and personal income and debt-to-income can cut the amount further.
- The cap applies to the new loan against appraised value, not to your equity.
- Existing liens, financed costs and points come out before you see a dollar.
- The agency path tests the borrower: personal income, DTI, reserves and financed-property count.
- A DSCR cash-out tests the property instead, topping out around 75% LTV across most of the Lendmire network, subject to lender guidelines.
A common first question is how much equity you can pull. The better question is how big a new loan the appraisal supports, and what is left after the old loan and the costs are paid. This piece walks through that math for the agency path, shows where it breaks, and explains when a property-income loan is the cleaner fit.
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Nov 5, 2026
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As of Nov 5, 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 Is a Fannie Mae Cash-Out Refinance on a Rental?
It is a new first mortgage that pays off the existing mortgage on the same property and puts the leftover money in the borrower’s hands. Fannie Mae’s Selling Guide, section B2-1.3-03 defines it that way. It also covers a new mortgage on a property that has no lien at all.
The test is whether proceeds exceed the payoff plus costs. If they do, the loan is cash-out. If the refinance returns no meaningful cash, it falls under limited cash-out, which the Fannie Mae Eligibility Matrix lists separately with its own caps.
Fannie Mae loans are agency loans. DSCR loans are a different product, built for non-owner-occupied investment property and reviewed differently from a standard owner-occupied mortgage. The agency numbers below are contrast, not a description of how DSCR files work.
How Is the Amount Released Calculated?
Cash released equals appraised value times the LTV cap, minus the payoff of existing liens, minus financed closing costs, points and prepaids. That is the whole formula.
For two-to-four unit properties the cap is lower.
Here is a modeled example, stated in percentages of the appraised value. Assume a 75% cap on a one-unit investment cash-out. Assume the existing payoff equals 45% of value and financed costs equal 2% of value. The cash left to the borrower is 75% minus 45% minus 2%, or about 28% of the appraised value. Those are modeled inputs, not market data.
Three things follow from the formula:
- The appraisal sets the dollar ceiling. A low value shrinks proceeds dollar for dollar, and a 75% cap magnifies the miss.
- Payoff comes first. Thinking of the check as 75% of your equity is the wrong mental model. The cap is on the total new loan.
- Costs are not free. Anything financed into the loan reduces the check. The loan is also priced as cash-out, so pricing adjustments apply on top.
How Does Underwriting Treat the File, Step by Step?
Agency underwriting runs in order: title seasoning, appraisal, personal income and DTI, then reserves. A file can clear the LTV cap and still stall at any later step.
1. Title seasoning. A refinance is ineligible if at least one borrower bought the property within about six months before disbursement, measured from title recording. Fortune’s investor explainer reports the same six-month ownership requirement.
2. Appraisal and rent schedule. The value comes from an appraisal. One-unit properties use a single-family comparable rent schedule (Form 1007). Two-to-four unit properties use the small residential income property report (Form 1025), as described in Enact’s rental income training deck.
3. Personal income and DTI. The borrower is underwritten personally. Under Enact’s rental income worksheet, lease or appraiser market rent counts at 75% of gross, with the rest absorbed by vacancy and maintenance. Where there is rental history, Schedule E is used, with depreciation added back.
4. Reserves and property count. Fortune reports that investment cash-out typically needs at least six months of reserves, and more with several financed properties. It also reports a limit of 10 financed properties, counting a financed primary residence.
5. Closing. Proceeds go to the payoff first, then costs, then the borrower.
Step three is where the check shrinks without anyone touching the LTV cap. A bigger new payment cuts net rental income or pushes up DTI. The ceiling you see in the matrix is a maximum, not a promise of what you will be offered.
Where Does the General Rule Break?
The rule breaks at the six-month window, at the borrower’s income, at the entity, and at the property count. Each is a named edge case.
Delayed financing for cash buyers. Section B2-1.3-03 lets a borrower who bought within the past six months still do a cash-out refinance if the exception conditions are met. The new loan cannot exceed the documented initial investment plus financed closing costs, prepaids and points. It stays subject to the cash-out LTV cap on current appraised value, and it is still priced as cash-out. The paper trail is the settlement statement and source-of-funds records. Whether a bridge or hard-money purchase counts as cash is something to confirm in the guide before assuming it does.
Entity ownership. Conventional cash-out is built around individual borrowers. Fortune notes DSCR can make sense when an investor exceeds the 10-property limit, owns in an LLC, or struggles to qualify on personal income. LLC-titled loans are subject to lender program eligibility.
Short-term rentals. Agency treatment of short-term rental income leans on Schedule E history. Enact’s deck references a two-year Schedule E history on refinances. 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.
Heavy write-offs. Because Schedule E drives usable income, an investor who depreciates and deducts aggressively can show less qualifying income than the property actually produces.
Surprise shortfalls. One BiggerPockets thread describes a borrower who expected 75% and was offered less. Replies pointed to DTI and automated underwriting rather than an LTV rule. The thread is old, so read it as an illustration of the pattern, not a current rule.
Key Terms Defined
LTV (loan-to-value): the new loan divided by the appraised value.
Payoff: the balance on existing liens that the new loan must retire at closing.
Delayed financing: an exception that lets a recent cash buyer refinance within the six-month window, capped at the documented investment plus costs.
Seasoning: the time a borrower has held title before a cash-out refinance is available.
DTI (debt-to-income): monthly debts divided by monthly income, which on the agency path includes the new payment.
DSCR (debt service coverage ratio): monthly rent used for lender review divided by the monthly principal, interest, taxes, insurance and any HOA dues.
What Does the Investor Decision Look Like?
The investor decision comes down to whether the file is limited by the property or by the person. If the property is strong and the borrower’s personal profile is the constraint, the agency path may leave money on the table.
Agency cash-out tests personal income, DTI and property count. A DSCR cash-out tests the property: rent used for lender review against the full monthly obligation. Fortune frames them as two paths to the same cash.
Here is how the two compare for a rental owner:
| Factor | Agency cash-out | DSCR cash-out |
|---|---|---|
| What is tested | Borrower income and DTI | Property rent vs. PITIA |
| Rental income counted | 75% of gross rent | Rent used for lender review vs. payment |
| Property-count limit | Up to 10 financed | Not tied to that limit |
| Reserves | Six months plus, with more per property | About 6 months, more above $1,500,000 |
The DSCR column reflects typical ranges across most of Lendmire’s wholesale network, subject to lender guidelines and not a commitment to lend. Across the network, cash-out on a standard rental tops out around 75% LTV, with 1.00 coverage where select programs start. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Credit floors start at 620 in parts of the network, most programs want around 660, and 700+ opens the strongest leverage tiers. Standard loan sizes run up to $3,000,000.
Two cautions. Clearing 1.00 is not the same as positive cash flow, because repairs, vacancy, management, utilities and capex sit outside the calculation. And more equity in the property helps a cash-out file only up to a point: it never erases the 75% leverage cap, the credit floor or the reserve rules. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Property type matters too. Manufactured homes, log homes and barndominiums are not offered through the network’s DSCR programs.
For a BRRRR investor, the sequence is the same either way: the refinance only releases what the appraisal supports after repairs. The complete DSCR loans guide lays out the full program picture.
Run the numbers on a one-unit rental both ways. On the agency side, the appraisal times 75% sets the loan, payoff and costs come out, then DTI decides whether the full amount is offered. On the DSCR side, the same value times the cash-out cap sets the loan, and rent used for program review against the full payment decides eligibility. Same property, different gate.
Frequently Asked Questions
Can I pull out 75% of my equity on a Fannie Mae cash-out refinance?
No. The 75% cap applies to the total new loan against appraised value on a one-unit investment property, per the eligibility matrix. Existing liens, financed costs and points come out of that loan first, and what remains is your cash.
Does delayed financing turn the loan into a rate-and-term refinance?
No. It stays a cash-out loan with cash-out pricing and the cash-out LTV cap. The new loan is also limited to the documented initial investment plus financed costs, prepaids and points.
Does rent count at 100% when I qualify?
No. Lease or appraiser market rent is counted at 75% of gross on the agency path, with the remainder covering vacancy and maintenance. That treatment, plus the new payment, drives DTI.
Is the 10-property limit a limit on loans?
It counts financed properties, not loan files. Fortune notes the count includes a financed primary residence, so an investor with several rentals can reach it sooner than expected.
What if the agency limits leave me short?
A DSCR cash-out refinance is the usual alternative. It qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, and tops out around 75% LTV on a standard rental across most of the Lendmire network. Tax treatment varies; consult a qualified professional.
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.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. Fannie Mae Selling Guide B2-1.3-03
2. Fannie Mae Eligibility Matrix
3. Fortune investment cash-out refinance explainer
4. Enact rental income training deck
5. Enact’s rental income worksheet
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: Banks That Offer a DSCR Cash-Out Refinance on a Newly Built Rental · Short-Term Rental Cash-Out Refinance Requirements Before Buying a Second Home or Rental · Short-Term Rental Cash-Out Refinance vs Long-Term Rental Loan to Move a Rental to an LLC
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.