The Quick Read: It depends on the as-is appraised value, and the check can be smaller than a simple equity estimate suggests. On a short-term-rental cash-out, the new loan is capped near 70% of the damaged property’s as-is value, and the rental income has to support that loan too. Then the payoff, closing costs, and reserves come out before you see cash.
- The formula: cash equals the smaller of the value limit and the rent limit, minus the payoff, closing costs, prepayment charges, and reserves.
- The leverage cap: about 70% LTV on a short-term-rental cash-out, versus about 75% on a standard long-term rental cash-out.
- The storm effect: damage can lower the as-is value, hold up the appraisal, or leave insurance money in someone else’s hands.
- The usual requirements: expect a 640+ credit score, about 12 months of hosting history, and a 1.00 coverage floor on a short-term-rental refinance, subject to lender guidelines.
- The decision: repairing first often produces a bigger check than refinancing around the damage.
No regulator or trade body publishes a fixed cash-out figure for a storm-damaged short-term rental. Anyone quoting you one number is guessing.
DSCR Cash-Out Calculator
Run the cash-out numbers in your market
Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Nov 5, 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 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.
How Is the Cash Calculated?
Cash out is the new loan minus everything that has to be paid from it. The new loan is the smaller of two limits: a value limit (the LTV cap times the as-is appraisal) and a rent limit (the largest loan the discounted rental income supports at the coverage floor).
Across the wholesale network Lendmire places files with, the value limit on a short-term-rental cash-out refinance tops out around 70% LTV. A standard long-term rental cash-out tops out around 75% LTV. That five-point gap is the first reason a short-term rental produces a smaller check from the same equity. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The rent limit works through the DSCR, which stands for debt service coverage ratio. It divides the property’s monthly rent by its full monthly obligation: principal, interest, taxes, insurance, and any HOA dues. For a short-term rental, the lender first discounts the gross booking income, then runs the ratio against the new payment. A bigger loan means a bigger payment, so the ratio falls as you pull more cash.
One caution. Clearing the coverage floor is not the same as positive cash flow. Repairs, vacancy, management, utilities, and capital costs sit outside the calculation. A roof replacement is exactly that kind of cost.
Which limit binds depends on the file. A property with strong, documented booking income and thin equity is likely to hit the value limit first. A property with plenty of equity but soft or short income history is likely to hit the rent limit first. The lender sizes the loan to the lower of the two.
The Net-Cash Waterfall
Think of the check as a waterfall that starts at the appraisal and ends at spendable dollars. Each step takes a bite.
| Step | What happens |
|---|---|
| 1. As-is appraised value | Sets the starting point, damage included |
| 2. Multiply by the LTV cap | About 70% on a short-term-rental cash-out |
| 3. Apply the rent test | The loan shrinks if income cannot support it |
| 4. Subtract the existing payoff | The old mortgage is paid first |
| 5. Subtract closing and prepayment costs | Fees and any penalty on the old loan |
| 6. Set aside reserves | Commonly around 6 months of PITIA |
PITIA means principal, interest, taxes, insurance, and association dues. Reserves vary by lender, leverage, loan size, and transaction type. Whether the reserves come from your own accounts or from the proceeds depends on the lender, so ask before you plan the spending.
Closing costs deserve a realistic number. NerdWallet’s cash-out explainer puts refinance closing costs at typically 2% to 6% of the loan and notes they cut into the cash you receive. That range comes from consumer refinance content, not DSCR-specific data, so treat it as general context. On a small cash-out, it can eat a meaningful share of the check.
Worked Example: As-Is Versus Repaired
Run the numbers on one modeled property. These inputs are assumptions for illustration, not market data. Express everything as a share of the post-repair value, set at 100.
- Post-repair value: 100.
- As-is value with the roof damage: 90, a modeled assumption.
- Existing mortgage payoff: 50.
- Cap: 70% LTV on a short-term-rental cash-out.
- Closing costs: 2% to 6% of the new loan. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Refinance around the damage. The as-is loan is 70% of 90, which is 63. Subtract the payoff of 50 and you have 13. Closing costs of 2% to 6% of 63 take off roughly 1.3 to 3.8. The check lands near 9 to 12, before reserves and before the roof bill.
Repair first, then refinance. The repaired loan is 70% of 100, which is 70. Subtract the payoff of 50 and you have 20. Closing costs take off roughly 1.4 to 4.2. The check lands near 16 to 19, again before reserves.
The gap is real, but the repair has to be paid for. If insurance proceeds or savings cover the roof, the repair-first path often wins on cash. If neither covers it, the repair spending comes out of the same pocket the refinance was supposed to fill.
There is also a break-even point. Take the payoff, add closing costs, and divide by the cap. In this example, the as-is appraisal has to reach roughly 73% to 76% of the post-repair value before any cash comes out at all. Below that line, the file becomes a payoff-only refinance or needs cash to close.
The site’s illustrative calculator converts percentages like these into dollars for your own property. Treat its output as an estimate, not a quote.
What Do Different Pull Sizes Look Like?
You do not have to take the maximum. A smaller pull leaves room on both limits.
| Pull size | New loan vs. the cap | Coverage result |
|---|---|---|
| Small | Well under the 70% cap | Most cushion on the rent test |
| Medium | Partway to the cap | Ratio tightens, still workable |
| Maximum | At the cap | Thinnest margin on both tests |
The maximum pull is the one most likely to fail the rent test, because it carries the largest payment against discounted income. Size the pull to the roof bill plus costs and reserves, not to the ceiling. Many investors find that a modest pull that covers the repair beats a maximum pull that triggers a coverage problem.
How Does Storm Damage Change the Number?
Damage hits the check in three places. It can lower the as-is value, it can delay the appraisal until repairs are done, and it can leave insurance proceeds with someone else.
The appraisal. The as-is value drives LTV, and an appraiser can value the property as-is with the damage or subject to repairs. Lenders in the network generally want unrepaired damage addressed before or at closing. An active leak makes that likelier. Exact treatment depends on the lender’s guidelines, so there is no single rule to quote.
The income documentation. Appraisers use two standard forms: Form 1007 for one-unit rent schedules and Form 1025 for two-to-four-unit properties. Fannie Mae’s appraiser update says the 1007 must use monthly-lease comparables and cannot be used to estimate the nightly fee for a short-term rental. That is a contrast point only, since DSCR loans are not agency products. The practical lesson holds, though: a short-term-rental file leans on your hosting records or a short-term-rental income addendum, not on the standard rent schedule.
The booking history. Storm closures and repair periods leave gaps in trailing income. A lender may use the trailing history as it stands, and whether it normalizes a storm gap varies by lender. If your best months fell before the storm, the order of events matters.
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. A property that cannot legally operate as a short-term rental may not get to count that income at all.
What About the Insurance Claim?
File it, document everything, and treat the money as repair money. Forbes Advisor’s roof damage guide explains that a typical claim pays out after your deductible and recommends documenting the damage and limiting further loss, for example with a tarp.
Three claim details change the refinance picture.
- Settlement basis. A home can be on replacement cost while the roof sits on actual cash value or a payment schedule, as Better Choice Insurance describes. On an older roof, the payout can fall well short of a new one. The shortfall comes out of your equity or your savings.
- Timing of the money. Some policies pay actual cash value first and release the remaining depreciation after the repair is complete. If your claim works that way, the full payout may not exist when the appraisal happens.
- Who holds the check. If your current mortgage holder controls claim proceeds, ask how they are released before you set up the refinance. That is a lien question, not a DSCR rule, but it can stall a file.
An unresolved claim can also complicate things. Disputes over the amount of loss are common enough that many policies include an appraisal clause. If the claim is still open, the lender may want it resolved or the repair confirmed before it will size the loan.
Repair First, Claim First, or Refinance First?
Each sequence changes the as-is value, who holds the insurance money, and what the lender sees. The decision table below lays them out.
| Sequence | What it does | Trade-off |
|---|---|---|
| Tarp, then claim | Limits further loss, starts the payout | Roof still unrepaired |
| Repair first, then refinance | Restores value, cleaner appraisal | Repair paid from claim or savings |
| Refinance first | Pulls equity before repair | Lower as-is value, possible hold-back |
| Pay cash only | No refinance costs | Ties up your own capital |
Do not treat a claim payout as a bonus. Keeping insurance money while skipping the repair puts the property, the next claim, and the file at risk.
Where the General Rule Breaks
No hosting history. The network’s short-term-rental programs typically expect about 12 months of hosting history. A new host or a former second home may not have it. A few lenders in the network will review such a file on long-term market rent instead, usually with adjusted leverage and terms. Seasoning matters too: on a recently purchased property, a lender may size the loan off cost plus documented improvements rather than the appraisal.
A storm inside the trailing 12 months. Booking gaps from closure or repairs pull down trailing income. A lower number on the rent test can shrink the loan even when the LTV cap would allow more.
Income haircuts. Lenders discount gross short-term-rental income before running the coverage test. A larger loan can fail that test even when the leverage cap allows it. The network treats actual trailing history as the strongest evidence and projections as more heavily discounted.
Shortfalls. If the check falls below the repair cost, you have three choices: pull a smaller loan and cover the gap with cash, repair first with insurance money, or wait until the as-is value recovers. Borrowing more than the property supports is not on the list.
Large hosting-history exceptions. Some experienced operators get a lighter income discount. That is lender-specific, and it never removes the leverage cap.
Terms differ across the network, so the same file can read differently from lender to lender. The complete DSCR loans guide covers how the programs fit together.
Key Terms Defined
Cash-out refinance: a new, larger loan that pays off the old one and hands you the difference.
LTV (loan-to-value): the loan amount divided by the property’s appraised value.
As-is value: what the property appraises for in its current condition, damage included.
Seasoning: the waiting period a lender wants between buying a property and refinancing it, commonly around six months for cash-out.
Actual cash value (ACV): an insurance payout that subtracts depreciation from the replacement cost.
Hold-back: money a lender or insurer keeps until a repair is confirmed.
Coverage ratio: monthly rent divided by the full monthly obligation. 1.00 is where select programs start, and stronger ratios open better pricing and leverage.
What Documents Does the File Need?
A damaged short-term rental carries a longer paper list than a clean one.
- Trailing hosting records, such as platform earnings statements or a short-term-rental income addendum.
- The current mortgage statement, so the payoff is clear.
- The insurance policy declarations, including the roof settlement basis.
- The claim file: photos, adjuster notes, and any payout letters.
- A contractor estimate, or a completed-repair invoice and photos.
- Proof of reserves in liquid accounts.
- Proof of legal short-term-rental use where local rules require a registration or permit.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
Frequently Asked Questions
Can I do a cash-out refinance with an open roof claim?
Sometimes, but it depends on the lender and the condition of the roof. Lenders generally want unrepaired damage addressed before or at closing, and an active leak can hold a file until repair is confirmed. An appraiser may value the property as-is or subject to repairs. A closed claim and a finished repair make the file far simpler to review.
Why is my check not 70% of the value?
Because 70% is the ceiling on the new loan, not the amount you receive. The payoff, closing costs, prepayment charges, and reserves come out first. A small appraisal miss can turn a cash-out into a payoff-only file, which is why the break-even appraisal matters more than the headline cap.
Does a storm-related booking gap hurt my loan size?
It can, because trailing income drops when the property sits closed during repairs, and the rent test runs on that income after the lender discounts it. Whether a lender normalizes a storm gap varies, so ask before you assume it will. Strong income before and after the closure helps the file.
Can I use the proceeds to pay for the roof?
Cash-out proceeds are generally yours to use, including on the property itself. The catch is sequencing. If the damage lowers the as-is value, the loan sized on that value may be smaller than a loan sized after repair. Repairing first with insurance money and refinancing afterward often produces a larger check.
What if my short-term rental does not have 12 months of history?
The network’s short-term-rental programs typically expect about 12 months of hosting history, along with a 640+ credit score. A few lenders will review a newer host on long-term market rent instead, with leverage and terms adjusted. Standard long-term rental cash-out programs run up to about 75% LTV, so the long-term path can sometimes carry a higher cap.
Next Step
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 across 41 markets, including Washington, D.C. Programs change, every file is underwritten individually, and nothing here is a commitment to lend.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
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. NerdWallet, Cash-Out Refinance Explainer
2. Fannie Mae, Appraiser Update
3. Forbes Advisor, Roof Damage Insurance Claims
4. Better Choice Insurance, Roof Claims: ACV vs. Replacement Cost
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: Top Short-Term Rental Cash-Out Refinance Providers When the Appraisal Comes in Low · Does a Short-Term Rental Cash-Out Refinance Make Sense Instead of Selling the Rental?
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.