The Quick Read: Usually the same amount as with a tenant who pays on time, unless the unpaid rent changes the rent figure the lender is willing to count. Cash is the new loan minus the payoff of your old debt, closing costs, and any holdbacks. The loan is capped by leverage on the appraised value and by whether rent used for lender review covers the new, larger payment.
- Cash is a leftover, not a percentage of your equity.
- Back rent is a debt the tenant owes you. It is not future rent, and it does not raise your coverage.
- A tenant who is behind but still paying differs from one who has stopped paying.
- Cash-out leverage tops out around 75% LTV on a standard rental, subject to lender guidelines.
- When rent evidence is shaky, rent coverage, not equity, often caps your proceeds.
Picture a landlord with a duplex, a lease in place, and a tenant two months behind. Does the lender walk away? No. The lender asks a narrower question: what rent can this file prove?
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?
The cash you receive equals the new loan minus the payoff of existing debt, closing costs, and holdbacks. The loan itself is the smaller of two limits: a value limit and a rent limit. Equity alone never sets the number.
Here is the formula in plain steps:
1. Value limit. The appraised value times the maximum cash-out LTV. LTV, or loan-to-value, is the loan balance divided by the property’s value. Across most of the wholesale network, a cash-out on a standard rental tops out around 75% LTV.
2. Rent limit. The largest loan whose payment the rent used for lender review can cover. DSCR, or debt service coverage ratio, is the monthly rent divided by PITIA. PITIA is principal, interest, taxes, insurance, and any HOA dues.
3. Take the lesser of the two.
4. Subtract the payoff of your current loan, closing costs, and holdbacks. What remains is your cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A common mistake is reading 75% LTV as “I get 75% of the value in cash.” The cap applies to the loan. Payoff and costs come out first, so on many deals the cash is a modest slice of the new loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The calculator on this page can give you an illustrative estimate. Treat it as a sketch, not a quote.
Does Back Rent Count as Income?
No. Unpaid rent is a debt the tenant owes you, and neither the arrears balance nor a repayment plan’s installments raise the rent used for coverage. The lender looks at what rent the property can reliably produce going forward.
That distinction trips up many landlords. A tenant who owes four thousand dollars feels like four thousand dollars of income on the way. Underwriting does not see it that way. A repayment plan documents the debt. It supports collectibility only when recent bank deposits actually match the lease.
The rent that counts is generally the lower of two figures: what the lease says and what an appraiser says the unit would rent for on the open market. Lenders usually test that rent against the full new payment, which is larger after a cash-out.
Which Rent Does the Lender Use?
The lender typically uses the lower of the in-place lease rent and the appraiser’s market rent. A lease above market is capped at market. A lease below market is capped by the lease. Proof of payment decides whether the lease figure holds at all.
The appraiser’s number comes from a rent schedule attached to the appraisal. For a one-unit property that form is the Single-Family Comparable Rent Schedule, known as Form 1007, which Fannie Mae’s Selling Guide lists among its appraisal report forms. The form’s stated purpose is to give the appraiser a format for estimating a property’s market rent, as the Freddie Mac version of the form explains. DSCR programs borrow the form for its purpose. They are not governed by that guide.
For two-to-four unit properties, the appraisal uses a different operating income form, Form 1025. The idea is the same: an independent rent opinion sits next to your lease.
So the appraisal does two jobs. It sets value for the LTV test, and it sets market rent for the coverage test.
What Happens at Each Stage of a Late-Paying Tenancy?
How hard the file gets hit depends on where the tenancy stands. A tenant who is behind but paying on a lease is usually still counted at the lower-of figure. Months of non-payment, a filed eviction, or an ended lease can be treated like a vacancy.
| Tenancy stage | Rent the lender leans on | Effect on cash | Proof needed |
|---|---|---|---|
| Late, still paying | Lower of lease or market | Usually none | Deposits matching lease |
| Behind, repayment plan | Lower of lease or market, if deposits match | None to modest | Plan plus recent deposits |
| Months unpaid, no evidence | Market rent alone, or little | Can shrink loan | Ledger, notices |
| Eviction filed or lease ended | Often treated like vacancy | Often shrinks loan | Filings, status |
| Vacated, rent-ready | Market rent alone | Depends on coverage | Appraisal rent |
| Month-to-month or expired | Often market rent | Depends on coverage | Lease history |
Two things stand out. First, a vacant, rent-ready unit can look cleaner than a unit in arrears, because the delinquent rent is promised but unpaid. Second, a conflict between the lease, the deposits, and your arrears record is a red flag on its own. Unevidenced rent is rent the lender will not count.
A Worked Comparison: One Property, Three Treatments
Here is an illustrative scenario with modeled assumptions, not market data. Take a single rental with a payoff on the existing loan and a request at the 75% LTV cap on a cash-out. Hold the appraised value and the payoff constant. Change only the rent treatment. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
| Treatment | Rent used for lender review | Coverage on new payment | Likely result |
|---|---|---|---|
| Tenant paying, deposits match lease | Lower of lease or market | Around 1.2x | Full 75% LTV loan supported |
| Tenant behind, partial deposits | Lower of lease or market, limited to what deposits evidence | Near 1.0x | Loan may need trimming |
| Unit treated as vacant, no evidenced rent | Market rent, tested cautiously | Below 1.00x | Smaller loan or adjusted terms |
In the first row, rent coverage is comfortable, so the 75% LTV ceiling is the only limit left and the cash is whatever remains after the payoff and reserves. In the second, the rent limit starts to bite, and a smaller loan lifts coverage. In the third, coverage falls below 1.00x, and the cash figure usually shrinks as leverage and terms are adjusted. Qualification stays subject to lender guidelines, credit approval, and property review.
Notice the pattern. Same house, same equity. The cash changed because the supportable rent changed.
When Does Rent, Not Equity, Cap Your Cash?
Rent caps your cash when the larger post-refinance payment pushes coverage below what the program wants. A cash-out enlarges the balance and the payment, so the same rent covers less than it did before. A shaky rent figure makes that worse.
Most standard programs we place files with start at a 1.00 coverage floor. That is where select programs begin, not a universal rule. Stronger coverage opens better pricing and leverage. A separate select-lender path takes coverage below 1.00 with leverage and terms adjusted.
Credit and reserves also shape the amount. A 620 score is the floor in parts of the network, and most programs want around 660. A 700 or higher score unlocks the strongest leverage tiers. Reserves, meaning cash left in the bank after closing, commonly run around 6 months of PITIA, stepping up to about 9 months on loans above $1,500,000. Reserves vary by lender, leverage, and loan size.
One more point investors miss (and lenders notice). Clearing 1.00x is not positive cash flow. DSCR compares rent to PITIA only. Vacancy, repairs, management, utilities, and capital expenses sit outside the calculation.
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.
Cure, Re-Lease, Trim the Draw, or Wait?
You have four levers when coverage is thin, and each trades cash for time or effort. The honest answer is that no single move wins in every file. It depends on how far behind the tenant is and how much equity you have.
- Cure the arrears. If the tenant catches up and deposits resume, the lease figure becomes provable again. Cost: time, and a tenant relationship that may or may not recover.
- Regain possession and re-lease. A fresh lease at market rent gives the file clean evidence. Cost: vacancy while you turn the unit, plus any legal process, which varies by location.
- Request a smaller loan. A smaller balance means a smaller payment and a higher ratio. A modest cash-out request often clears when the maximum does not.
- Wait. Seasoning, the waiting period between buying a property and refinancing it, keeps running whatever the tenant does. About 6 months of ownership, measured from title recording, is the common expectation for cash-out. Waiting can fix both clocks at once.
If you need cash now, trimming the draw is the lever that works soonest. If you can wait, curing first or letting seasoning run may support a larger draw later. What does not work is applying with a lease the deposits contradict.
Short-term rentals follow different rules. On those, cash-out tops out around 70% LTV, and lenders expect about 12 months of hosting history and a 640 or higher score. The appraisal side differs too. 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. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
What Documents Should You Assemble?
A delinquent-tenant file moves best when the paper trail agrees with itself. Gather these before you apply:
- the signed lease
- a rent ledger from the start of the arrears to today
- bank deposits that match the lease amounts and dates
- any written repayment plan
- a rent roll, for multi-unit or portfolio files
- eviction filings, if any exist
Disclose the delinquency up front. If the lease says one thing and the ledger says another, sort that out before the appraiser visits, not after.
Multi-unit and blanket loans add a wrinkle. A delinquent unit may be re-rated, for example to market rent or zero, with the pooled coverage retested, depending on the lender. You may cure the unit, re-lease it, or carve it out of the package.
Edge Cases Worth Knowing
- Above-market lease. The premium is ignored. The appraiser’s market rent caps it.
- Month-to-month or expired lease. Often treated at market rent, sometimes with payment history as support. Weaker file, not a blocked one.
- No tenant at all. A renter does not need to be in place on every program, though some lenders add pricing for unleased properties.
- Recent all-cash buyers. Some lenders treat a recent cash purchase like a refinance for leverage purposes. That is lender-dependent, and the network’s about-6-month seasoning expectation is the baseline to plan around.
- Not offered. DSCR loans on manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in the network.
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. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines.
Cash-out proceeds are loan proceeds, not income. Tax treatment varies; consult a qualified professional.
For the full picture of how these programs fit together, see the complete DSCR loans guide.
Key Terms Defined
- DSCR (debt service coverage ratio): monthly rent used for program review divided by the full monthly payment.
- PITIA: principal, interest, taxes, insurance, and any HOA dues.
- LTV (loan-to-value): the loan balance as a percentage of the property’s value.
- Cash-out refinance: a refinance that returns cash beyond the old loan payoff and costs.
- Seasoning: the waiting period between buying a property and refinancing it.
- Holdback: money the lender withholds from proceeds until a condition is met.
- Form 1007: the appraisal rent schedule that estimates market rent on a one-unit property.
Frequently Asked Questions
Can I do a cash-out refinance if my tenant is behind on rent?
Yes, in many cases. Tenancy is not a qualifier by itself, but proof of rent is. A tenant who is late but still paying on a lease is usually still counted at the lower of lease rent or market rent, with deposits as support. Longer non-payment can change the rent figure and shrink the loan. Terms vary by lender and every file is reviewed individually.
Does a repayment plan raise my rent used for eligibility review?
No. A repayment plan documents a debt. It does not turn arrears into future rent. It helps only if recent deposits match the lease, because that shows the rent is actually being collected.
Will 75% LTV give me 75% of the value in cash?
No. The cap applies to the new loan, not the cash. Payoff of your current loan, closing costs, and holdbacks come out first. On many deals the remaining cash is a small fraction of the loan. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Do I need to evict the tenant before I refinance?
No. Eviction is not required, though a filed eviction or ended lease can make the lender treat the unit like a vacancy. Re-leasing at market rent often produces the cleanest evidence for coverage.
What if I only need a little cash?
A smaller request is often easier to place. A smaller loan means a smaller payment and a higher coverage ratio, which can matter when your rent evidence is imperfect.
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. A quote request or a call to 828-256-2183 starts that conversation, and Lendmire arranges financing as a broker through select lenders in its wholesale network across 41 markets, including Washington, D.C.
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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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
2. Freddie Mac version of the form
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 DSCR Cash-Out Refinance to Scale a 2-10 Door Portfolio? · Should You Do a DSCR Cash-Out Refinance to Fund an Adoption? · Does a DSCR Cash-Out Refinance Work When You Live Overseas and Rent Out Your Old Home?
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.