The Quick Read: The product most investors actually use is a DSCR cash-out refinance, placed through a broker that shops a network of wholesale lenders. It runs as two separate loans: first the refinance on the short-term rental, then a purchase loan on the next house. Each file is underwritten on its own property income, subject to lender guidelines.
- Short-term rental cash-out refinance leverage across the network tops out at 70% LTV, with a 640 minimum score on the strongest files.
- Lenders typically expect about 12 months of hosting history, and the coverage floor on a refinance starts at 1.00 for select programs.
- The cash-out funds the down payment on the next house, but the next house must qualify on its own.
- A passing coverage ratio is not the same as positive cash flow.
- The best program for your situation depends on the property, your credit profile, and how much equity you want to pull.
Do Banks Offer This, or Is It Mostly Non-Bank Lending?
Big banks and other large depository institutions generally build their guidelines around personal income, tax returns, and steady lease income. A short-term rental produces lumpy, seasonal revenue with no lease behind it. That mismatch is why most investors end up in the non-QM channel instead.
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
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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.
Non-QM lenders write DSCR loans, which 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. The loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines.
Here is the catch with the question as phrased. No single bank is the answer. Lendmire is a mortgage broker, not a lender, and it works with a network of wholesale lenders. The lenders that write this product depend on your property type, credit profile, leverage need, and documentation. A broker that shops several of them can match the scenario to the program, rather than you applying one lender at a time.
Different lender types treat this product differently:
| Lender type | Short-term rental income | Typical fit |
|---|---|---|
| Large depository banks | Often hard to count | Borrowers with strong traditional employment income |
| Regional banks and credit unions | Case by case | Existing relationship borrowers |
| Portfolio lenders | Flexible, varies | Unusual properties |
| Non-bank DSCR lenders | Built to count it | Investors scaling a portfolio |
The first three rows describe tendencies, not rules. Some depository lenders do write investor loans, and some will surprise you. But for an investor who wants property income to carry the file, the non-bank DSCR lane is the one built for it. For the full picture of how these loans work, see the complete DSCR loans guide.
Key Terms Defined
Cash-out refinance: A new, larger mortgage pays off the old one, and you keep the difference as cash.
DSCR (debt service coverage ratio): Counted monthly rent divided by the monthly PITIA, meaning principal, interest, taxes, insurance, and any HOA dues.
Hosting history: The documented record of your bookings and revenue on the property, usually platform statements.
Seasoning: How long you must own the property before a lender allows cash-out against it.
Haircut: A percentage trimmed from gross short-term revenue before it counts toward coverage.
Delayed financing: A way to pull cash out soon after a cash purchase, usually capped near your documented cost basis. Bankrate explains the concept.
How Is a Short-Term Rental Cash-Out Refinance Underwritten, Step by Step?
The loan is sized at the lowest of three tests: the leverage cap, the coverage test, and the seasoning and reserve rules. Everything else is detail around those three.
Step 1: Establish the income number. Lenders usually look at three sources. One is actual booking history from platform statements. Another is a market projection from a rental-data provider, used when history is thin. The third is the appraiser’s long-term market rent, used as a conservative fallback.
Step 2: Choose how income is counted. Programs differ here. Some use the higher of documented short-term income and long-term rent. More conservative ones use the lower. Some apply a haircut to gross revenue. Confirm the method before you order the appraisal, because it changes the answer.
Step 3: Order the appraisal. One report sets the value, which drives LTV. It also supports market rent, which drives coverage. The one-unit rent schedule, Form 1007, documents monthly long-term rent only. Fannie Mae’s appraiser guidance notes that it does not capture nightly income and that nightly rate times 30 is not an acceptable method. Freddie Mac’s form describes the same rent schedule. These forms are used here only as appraisal formats, not as DSCR rules. Form 1025 covers 2-4 unit properties.
Step 4: Compute coverage. Counted rent is divided by the new PITIA. The refinance payment is larger than your current one, because the loan balance just grew. So coverage thins as more cash comes out.
Step 5: Apply the leverage cap. For short-term rental collateral, cash-out refinance leverage tops out at 70% LTV on the strongest files. On a standard long-term rental, cash-out reaches about 75%. A higher coverage ratio can improve pricing and terms. It does not lift the LTV cap. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Step 6: Meet seasoning and reserves. About 6 months of ownership is the common expectation across the network for cash-out. Reserves vary by lender, leverage, loan size, and transaction type, commonly around 6 months of PITIA. Loans above $1,500,000 typically step up to about 9 months.
Step 7: Fund the refinance first. Proceeds should land and be traceable before the next purchase closes. Lenders on the purchase will want to see where your down payment came from.
Where Do the Refinance Proceeds Go? The Two-File Chain
The cash-out refinance does not buy the house. It produces the down payment, closing costs, and reserves. The next house is a separate purchase file, reviewed on its own projected or documented income. A strong Airbnb cannot rescue a weak second property, because DSCR underwriting is per property.
Consider an investor holding a short-term rental valued at $600,000. At the 70% short-term rental cash-out cap, the new loan cannot exceed 70% of that appraised value, and the existing mortgage balance comes out of that amount first. If the property is already near that leverage, there is little or nothing left to pull. Equity, not income, is often the binding constraint.
Now the purchase side. Say the investor targets a house priced at $450,000. Most purchases across the network land at 75%-80% LTV, meaning 20%-25% down. If the new house is itself a short-term rental, purchase leverage tops out at 75%, with a 640 minimum score and a 1.00 coverage floor on purchases. Select high-leverage programs reach 85% LTV with roughly a 700+ score, but those are for standard long-term rentals, not short-term collateral. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
A larger down payment lowers the payment and can lift coverage. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Because every refinance and purchase starts its own seasoning clock, the chain has compounding effects. Retest both properties each time the portfolio grows.
What Does Hosting History Do to Eligibility?
Lenders on short-term rentals usually expect about 12 months of hosting experience. Twelve months matters because seasonality distorts shorter windows. A three-month stretch from peak season overstates typical income, so full-year data gives the underwriter a more reliable picture.
Newer or recently converted properties are the problem case. A home switched from a long-term lease to nightly bookings usually relies on a projection or the appraiser’s long-term rent. Files like that can fall short on coverage even when the property performs well on the platform.
The delayed-financing path is a separate edge case. If you bought the property with cash, some products treat a refinance up to your total cost basis as rate-and-term rather than cash-out. A hard-money lien at purchase generally defeats the cash-buyer test.
Where the General Rule Breaks
Several edge cases change the answer.
- Legal short-term use. 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 without permitted short-term use may not be able to count that income at all.
- Property type. 2-4 unit properties, condos, and condotels raise extra documentation questions. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in the network’s DSCR programs.
- Coverage below 1.00. A 1.00 floor is where many select programs start. A separate path through select lenders in the network takes coverage below 1.00, with leverage and terms adjusted.
- No-ratio structures. These are available only through select lenders, generally for borrowers who already own a primary residence.
- Prepayment terms on the current loan. If the loan you are paying off carries a prepayment penalty, that cost comes straight out of net proceeds. Ask before you commit.
- Appraisal standards. A coming appraisal data standard is reported to retire several legacy forms, including the 1007. How lenders document rent will likely shift, so confirm current practice at application.
Does Passing Coverage Mean the Property Cash Flows?
No. DSCR compares rent to PITIA only. Clearing 1.00 does not mean positive cash flow. Cleaning, platform fees, furnishing, utilities, management, vacancy, and capital repairs all sit outside the calculation.
This matters more on short-term rentals than on long-term ones, because operating costs are heavier. An investor who pulls the maximum cash out can end up with a property that passes coverage on paper and runs thin in practice. The stronger play is often to pull less than the cap allows. That leaves a cushion for slow months.
There is also a booking risk after both loans close. If bookings drop, the payment on the refinanced property does not. Stress-test the property at lower occupancy before you pull cash.
Credit, Loan Size, and Term Structures
Short-term rental programs expect a 640 minimum credit score. Other programs in the network set higher thresholds, and stronger scores generally open up the higher leverage tiers. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders). Above $2,500,000 the network generally holds to 30-year fixed structures.
The spine of the product is the 30-year fixed. Extended 40-year terms and interest-only periods are available through select lenders in the network, and ARM structures exist for investors who want them. Interest-only lowers the payment and can lift coverage, but it also means no principal paydown during that period.
What Are the Alternatives to a Cash-Out Refinance?
A cash-out refinance is not always the right tool. A comparison:
| Option | Wins when | Loses when |
|---|---|---|
| DSCR cash-out refinance | Equity is strong and income carries the file | Seasoning or hosting history is thin |
| Rate-and-term refinance | You want better terms without pulling cash | You need the proceeds |
| Sale | The property no longer fits the strategy | You want to keep the asset |
| Bridge or hard-money loan | Speed of acquisition outweighs cost | You need long-term stable financing |
For the mechanics of a cash-out refinance in general, it helps to compare rate-and-term and cash-out refinancing on a DSCR loan.
Questions to Ask a Lender Before You Apply
- How is short-term income counted: higher-of, lower-of, or with a haircut?
- How many months of hosting history are required, and which statements count?
- What is the seasoning requirement, and when does the clock start?
- What is the maximum LTV for short-term rental cash-out?
- What are the reserve requirements at my loan size?
- Does my current loan have a prepayment penalty?
- Does the property’s local permit status affect eligibility? Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
A broker can put these questions to several wholesale lenders at once. That is the practical advantage over applying one lender at a time.
Frequently Asked Questions
Can a short-term rental be cash-out refinanced at all?
Yes, through DSCR programs built to count property income. Across the network, short-term rental cash-out refinance tops out at 70% LTV, with a 640 minimum score and about 12 months of hosting history. Eligibility is subject to lender guidelines, credit approval, and property review.
Do I need tax returns?
DSCR loans qualify primarily on property-level rental income covering the payment, subject to lender guidelines. Personal income is not the main underwriting basis. Lenders still review credit, reserves, and the property, and you should expect to provide booking statements.
Can I use the proceeds to buy a house in another market?
Generally yes. The proceeds are your funds once the refinance is complete. The new house is a separate purchase file underwritten on its own income, so the target market needs to meet its own coverage test. Local short-term rental rules in that market also matter.
Does a higher DSCR raise my cash-out limit?
No. A stronger ratio may improve pricing and terms, but it does not lift the leverage cap. The 70% short-term rental ceiling stays the ceiling. Equity in the property is what limits proceeds.
What happens if the property has no hosting history?
The file usually leans on a market projection or the appraiser’s long-term rent, and coverage can fall short. Waiting until you have a full year of statements often produces a cleaner file.
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. Investors can request a quote or call 828-256-2183. Lendmire arranges DSCR investor loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. Programs change, and every file is underwritten individually.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a DSCR-focused mortgage broker that helps arrange investor financing across 41 markets, including Washington, D.C., through wholesale and investor-lending channels. DSCR eligibility is generally reviewed by the lender around the property’s rental income rather than personal income documentation, subject to lender guidelines — which works for self-employed investors, LLC operators, and portfolios above four financed properties. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 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
1. Bankrate: Delayed Financing
2. Fannie Mae: Appraiser Update
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: Short-Term Rental Cash-Out Refinance Requirements Before Buying a Second Home or Rental · Can You Get Approved for a Short-Term Rental Cash-Out Refinance With Interest-Only Period? · Banks That Offer a Cash-Out Refinance to Buy a Rental Without Selling Other Investments
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.