The Quick Read: The check is always smaller than the headline loan amount, because the new loan must first pay off the existing mortgage and closing costs, and only the remainder reaches the investor. On a standard rental condo, the new loan tops out around 75% LTV on a cash-out, subject to lender guidelines, and the rent test can hold it lower.
- Net cash equals the maximum new loan, minus the existing payoff, minus closing costs.
- Most programs in the wholesale network cap a standard-rental cash-out at 75% LTV; short-term-rental condo collateral typically sits lower, around 70%.
- HOA dues sit inside the payment, so higher dues shrink the coverage ratio and can shrink the loan.
- A non-warrantable condo or a condotel usually brings a lower cap, a loan-size limit, or tighter overlays.
- About 6 months of ownership, measured from the recorded deed, is the common seasoning expectation before cash-out is sized on appraised value.
Condo cash-out files are mechanically simple and practically fussy. The formula is the same as on a house. The friction is in the building: dues, project status, and the appraisal. This piece walks through the math, what shrinks the check, and how to estimate your own number before a file goes in. For the broader program picture, see Lendmire’s complete DSCR loans guide.
DSCR Cash-Out Calculator
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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.
Key Terms Defined
Cash-out refinance: a new, larger loan that pays off the old one and returns the difference to the borrower.
DSCR: the property’s monthly rent divided by its full monthly payment, which is principal, interest, taxes, insurance, and HOA dues.
PITIA: principal, interest, taxes, insurance, and association dues, the denominator in the coverage test.
Warrantable condo: a project that meets standard eligibility factors for owner mix, ownership concentration, litigation, and budget health.
Non-warrantable condo: a project that fails one or more of those factors, such as heavy investor concentration, one entity owning many units, active litigation, or HOA delinquency.
Seasoning: the ownership period a lender expects before it sizes a cash-out on appraised value instead of cost.
What Is the Formula for Cash Out on a Condo?
Net cash is the maximum loan minus the payoff minus closing costs. That is the whole formula. The maximum loan is the lower of two limits: the LTV cap times the value, and whatever loan size the rent can support.
Run the numbers on a modeled condo valued at $400,000 with a 70% cap. The maximum loan is $280,000. Say the existing payoff is $215,000. Gross cash is $65,000 before closing costs, and the net check lands below that. This is an illustration of the pattern, not a quote.
Notice what the 75% figure is not. It is the size of the new loan, not the cash. Investors who read “75% cash-out” and expect 75% of value in hand are mixing up the two. On a condo with a large remaining balance, the net check can be a small slice of the value.
Which Limit Binds on a Condo: Value or Rent?
Usually the LTV cap binds first on a low-dues building with strong rent. The rent test binds first when dues are high, rent is thin, or the loan is large. Both tests apply on every file, and the lower result sets the loan.
Here is why the rent test matters more on condos. DSCR compares rent to PITIA only, and HOA dues sit in that payment. A larger loan raises the payment. Dues add to it regardless of the loan size. So a condo with heavy dues has less room under the coverage floor than a comparable house, even at identical value and rent.
Most programs in the network want 1.00 coverage on a rental cash-out. That is where select programs start, not a universal rule. Stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted. Either way, clearing 1.00 does not mean the property cash-flows. Repairs, vacancy, management, utilities, and capex sit outside the calculation.
A fast way to read the interaction: if the LTV cap gives you a loan the rent can’t cover, the lender sizes down to what the rent supports. The cash shrinks to match. A bigger down payment or lower balance helps the ratio, but it never erases the leverage cap, the credit floor, or the reserve rules.
Worked Condo Example: Value Test and Rent Test Side by Side
The table uses modeled assumptions, not market data. It shows the pattern: same value, same payoff, different dues.
| Step | Lower-dues condo | Higher-dues condo |
|---|---|---|
| Appraised value | $400,000 | $400,000 |
| LTV cap used | 70% | 70% |
| Maximum loan by value | $280,000 | $280,000 |
| Existing payoff | $215,000 | $215,000 |
| Gross cash by value test | $65,000 | $65,000 |
| Dues in the payment | Modest | Heavy |
| Coverage at full loan | Clears 1.00 | Below 1.00 |
| Binding test | Value | Rent |
| Result | Cash stays near gross | Loan sized down |
In the second column, the same equity yields less cash. The lender backs the loan down until the coverage works, or the investor looks at a select-lender path that accepts coverage below 1.00, with leverage and terms adjusted. Closing costs then come out of whatever proceeds remain, which is why net always trails gross.
Payoff comes first. Any liens, unpaid HOA dues, or assessments owed at closing are settled out of proceeds before the borrower sees a dollar.
What Shrinks the Check on a Condo?
Dues, project status, payoff items, and the rental type all pull the number down. The table below lists the usual culprits and the direction each pushes.
| Factor | Effect on cash | Why |
|---|---|---|
| HOA dues | Lowers loan size | Raises PITIA, thins coverage |
| Special assessment | Lowers cash or blocks file | Adds cost or project concern |
| Unpaid dues at payoff | Reduces proceeds | Paid at settlement |
| Non-warrantable project | Lower cap or higher pricing | Tighter overlays |
| Condotel | Lowest cap, loan limit | Hotel-style features |
| Short-term-rental use | Cap near 70% | Lower STR cash-out leverage |
| Prepayment penalty on old loan | Reduces proceeds | Part of payoff |
| Reserves | Ties up cash | Commonly about 6 months PITIA |
Reserves deserve a note. They vary by lender, leverage, and loan size. Around 6 months of PITIA is common, and loans above $1,500,000 typically step up to about 9 months. Reserve documentation is a frequent source of file delays, so having statements ready matters.
Condo Type and Eligibility: Warrantable, Non-Warrantable, Condotel
Warrantability is a property-level label, not a verdict on the borrower or the unit. The same investor with the same equity can see different leverage in two different buildings.
| Condo type | Typical cash-out treatment |
|---|---|
| Warrantable | Standard rental cash-out, up to about 75% LTV |
| Non-warrantable | Select programs, tighter overlays, possible lower cap |
| Condotel | Lowest leverage, loan-size cap, cash-in-hand requirement |
| Short-term-rental condo | Cash-out near 70% on STR collateral |
A non-warrantable project can still finance through DSCR where a conventional lender would pass, but expect it to be priced higher, limited to select programs, or declined by some lenders.
Short-term-rental condos follow different leverage. Cash-out on STR collateral runs around 70% LTV, with a 640+ score expected, about 12 months of hosting history, and 1.00 coverage on a refinance. 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. Many condo declarations restrict nightly rentals outright, which is a project-level issue to settle before anything else. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Seasoning: Which Value Does the Lender Use?
Inside roughly 6 months from the recorded deed, the loan is sized on price plus documented improvements. After that, it is sized on appraised value. Seasoning is lender policy, not law, and it varies. Treat the network’s roughly 6 months as the planning figure.
This matters on condos bought below market. An investor who buys a dated unit, renovates, and refinances early gets cost-basis sizing, not the new appraised value. Wait out the window and the appraisal governs. Delayed financing on an all-cash purchase can shorten the wait, but it waives only the seasoning period. Rent test, appraisal, reserves, credit, and the cap all still apply.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
The Appraisal on a Condo
The appraiser uses a condo-specific report, the Individual Condominium Unit Appraisal Report, known as Form 1073. It looks at the unit and the project: ownership concentration, the budget, and comparable sales within the building. For small 2-4 unit properties the form is 1025. DSCR loans are not agency products, so this is a contrast point only: the form gives the appraiser a structure for documenting value and market rent, and the lender then applies its own program rules.
Comps inside the building drive most condo values. A thin sales history in a small project is a common reason a value comes in light. When that happens, a documented appraisal reconsideration request with recent in-building sales and unit condition adjustments is the routine fix.
How to Estimate Your Own Number in Five Steps
1. Pull the payoff. Get the current balance plus any lien, penalty, or past-due HOA amount.
2. Apply the cap to a realistic value. Use about 75% LTV for a standard rental condo or about 70% for STR collateral, subject to lender guidelines. Use cost basis if you are inside seasoning.
3. Subtract the payoff. That is gross cash by the value test.
4. Check coverage. Divide rent used for lender review by the full payment on the larger loan, dues included. If the ratio falls under 1.00, the loan likely sizes down.
5. Subtract closing costs and set aside reserves. What remains is the usable check.
The site calculator can show an illustrative version of this. It is an estimate, not a quote.
Where Condo Files Get Derailed
The HOA package is a common source of preventable gaps. An incomplete questionnaire, a stale budget, or a missing master insurance certificate stalls project review. Dues that changed since the last statement skew the coverage number. Entity documents for an LLC vesting have to match the title, subject to lender program eligibility. And a lease or rent schedule that doesn’t line up with the appraiser’s market rent invites questions.
Practical habits that keep a file clean: request the condo questionnaire and budget early, confirm current dues in writing, and compare the unit’s rent evidence to what the appraiser will likely use. Loan sizes run up to $3,000,000 on standard programs, and above $2,500,000 the network generally holds to 30-year fixed structures. Balances below the standard minimum route through select lenders. Credit floors start at 620 in parts of the network, with most programs wanting around 660 and 700+ unlocking the strongest leverage.
Not every building type is eligible. DSCR Investor Loans is not offered on manufactured homes, log homes, or barndominiums, and condo-style structures are no exception.
Frequently Asked Questions
Is cash-out 75% of the condo’s value?
No. The payoff and closing costs come out of the new loan first, so the net check is smaller, sometimes much smaller. Condo type, dues, and STR use can lower the cap further. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Do HOA dues reduce how much I can take out?
Yes, when the rent test binds. Dues are part of PITIA, so higher dues thin the coverage ratio and can force a smaller loan than the LTV cap would allow. When dues are low and rent is strong, the value limit is more likely to be the one that sets the loan.
Can I cash out of a non-warrantable condo or condotel?
Sometimes, through select lenders in the network. Expect tighter overlays, a lower LTV, possible loan-size caps, and higher pricing. Condotels are the tightest case, and some projects are simply not offered. Eligibility is decided project by project. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
Does a recent purchase change the value used?
Yes. Within about 6 months of the recorded deed, sizing generally uses price plus documented improvements rather than appraised value. After the seasoning window, appraised value governs. Delayed financing can relax the wait on cash purchases but not the other tests.
Can an LLC hold title on the condo?
Often yes, per lender program requirements. The entity documents must be complete and match the title and the loan application. Check the HOA’s rules on entity ownership too.
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. Reach the team at 828-256-2183 or request a quote.
Condo cash-out ultimately comes down to two questions that every file answers in order: how much equity the cap allows, and how much loan the rent can carry once the dues are counted.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
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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.
About Lendmire
Lendmire is a non-QM mortgage brokerage (NMLS# 2371349) arranging DSCR investor loans in 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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 Much Cash Comes Out of a Short-Term Rental Cash-Out Refinance on a Home They Own? · How Much Cash Comes Out of a DSCR Cash-Out Refinance on Rental Homes? · Top DSCR Cash-Out Refinance Providers on a Non-Warrantable Condo
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.