The Quick Read: You can borrow against a short-term rental you own and use the cash as a flip’s down payment or rehab budget, but the loan usually comes from specialty investor lenders, not a typical bank branch. Each lender sets its own rules, so the right fit depends on your property’s income, your equity, and your credit.
- The collateral is your rental, and the flip is a separate property bought with the proceeds.
- Expect a 640 credit score and about 12 months of hosting history, with a leverage cap that is lower for cash-out than for a purchase.
- The lender checks whether the rental’s income covers its own new payment, and a minimum of 1.00 coverage is where these programs start.
- A DSCR loan is a long-term hold loan. It does not replace the short-term note most flips run on.
Which Banks Offer a Short-Term Rental Cash-Out Refinance to Fund a Flip?
No single list of banks exists, and a ranking would mislead you. This is a non-agency investor loan, meaning no government-backed mortgage buyer sets the rules. Each lender writes its own guidelines.
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.
Large retail lenders mostly build products for owner-occupants and long-term rentals. A nightly-rental property with volatile income usually lands with specialty lenders who underwrite the property itself. Lendmire is a mortgage broker, not a lender. It shops a wholesale network of DSCR lenders and matches the file to the program. DSCR means debt service coverage ratio: the rent the lender counts divided by the full monthly housing payment.
The program that fits you depends on your property type, credit profile, leverage need, and how you document the rental’s income. The lenders that write this loan also differ on income method and seasoning, which matters more than the brand name on the door.
Two Different Deals Hide Inside “Fund a Flip”
Investors use this phrase for two transactions. Mixing them up is the first mistake.
| Factor | A: Equity Harvest | B: Flip Becomes the Rental |
|---|---|---|
| Collateral | Your existing short-term rental | The renovated flip itself |
| Cash goes to | A separate flip purchase or rehab | Paying off the short-term note |
| Income basis | Your rental’s real history | Often no history yet |
| Common name | Cash-out refinance | The BRRRR exit |
Scenario A is the one this article centers on. You own a performing rental, pull equity from it, and put that cash into the next project. Scenario B is a refinance of a property you just rehabbed. It is less a flip than a decision to keep the house and rent it nightly.
How Underwriting Treats It, Step by Step
Here is how a lender works through Scenario A, in order.
1. The lender picks an income basis. Short-term rental income is volatile, so lenders handle it carefully. AirDNA’s financing guide notes that lenders may use more conservative income estimates for short-term rentals because of market volatility. Programs generally choose from three inputs:
- Trailing-12 income: a property manager’s statement or platform payout history covering the last year.
- A market projection from a rental-data provider.
- The appraiser’s long-term rent schedule, known as Form 1007 for one-unit homes and Form 1025 for two to four units.
Some programs take the higher of these numbers. Others take the lower. A few use short-term income only. Ask which method applies before you apply, because the same property can pass on one and fall short on another.
2. The lender runs coverage. The rent figure it counts is divided by PITIA, which stands for principal, interest, taxes, insurance, and association dues. The payment does not shrink when income does. On short-term rental files, the minimum coverage is 1.00 for both purchases and refinances. Stronger ratios open better pricing and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted.
3. The lender sizes the loan under two ceilings at once. One ceiling is coverage: does the counted rent carry the new payment? The other is leverage: does the loan stay within the LTV cap against the appraised value? LTV means loan-to-value, the loan as a percentage of the property’s worth. Cash-out on short-term-rental collateral tops out at 70% LTV, while standard long-term rentals reach about 75%. The lower of the two ceilings controls your cash. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
4. The lender checks the rest of the file. A 640 score is the usual short-term-rental floor, and about 12 months of hosting history is the common expectation. Reserves commonly run around 6 months of PITIA, though they vary by lender, leverage, loan size, and transaction type. Loan sizes run up to $3,000,000 on standard programs.
5. Seasoning gets checked. Seasoning is the waiting period between buying a property and cashing out of it. About 6 months of ownership is the common expectation for cash-out across most of the network.
Property type matters too. Manufactured homes, log homes, and barndominiums are not offered through these programs.
A Cash-Out Is Not a Cash-Flow Guarantee
Clearing 1.00 does not mean the rental makes money. The DSCR formula compares rent to PITIA only. Repairs, vacancy, cleaning, management fees, utilities, and capital expenses all sit outside the math.
Cash-out also raises the rental’s payment. The cushion that looked comfortable before the refinance gets thinner after it. Run your own expenses on top of the lender’s ratio before you decide how much to take.
Where the General Rule Breaks
Several situations bend the usual flow. Know them before you commit to a flip contract.
You have no hosting history on the property. This is the biggest break point, and it hits the refinance of a property you just rehabbed hardest. You cannot show 12 months of bookings on a house you just renovated. Programs differ on whether they accept a projection or an appraiser’s short-term analysis for a refinance. Others fall back to the 1007 long-term rent figure, which is often well below what a nightly-rental property can earn.
Picture a modeled example. A rental clears roughly 1.25x on trailing-12 income, but the 1007 schedule alone would put it near 0.90x. The first number supports a cash-out at normal terms. The second pushes the file toward a select-lender path below 1.00, where leverage and terms adjust, and your cash shrinks. These are illustrative ratios, not a market statistic.
You paid cash and want your money back. Delayed financing is a narrow exception to the seasoning wait for cash buyers. For contrast, Fannie Mae’s Selling Guide carries a delayed financing exception inside its cash-out rules. Cash-out pricing still applies, and the other cash-out requirements must still be met. DSCR loans are not governed by that guide, but some non-agency programs borrow the concept.
Their versions typically look for an arm’s-length original purchase and a settlement statement showing no mortgage. Proceeds are generally capped at documented investment plus closing costs. One loan-level review report filed with the SEC shows a non-agency program treating a short-term or hard-money payoff as allowable within delayed financing. That wording is program-specific, so do not assume your lender shares it.
Here is the catch for flippers. Delayed financing returns your cost, not the value your rehab created.
You borrowed to buy the flip. If the purchase was financed, even with a short-term note, most programs treat the refinance as plain cash-out and apply the normal seasoning wait. Some programs write a carve-out for short-term payoffs. Do not count on one without asking.
Seasoning exceptions exist. Some lenders waive seasoning when compensating factors are strong, such as an experienced investor. Treat that as proof exceptions exist, not as a plan.
The rental’s legal status is unclear. 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. If nightly stays are not allowed, a lender can fall back to the 1007 rent and ignore your projection.
The appraisal arrives after you have committed. You will not know whether coverage passes until the appraisal and rent schedule come back. A borrower who signs the flip contract first can end up holding the contract and no cash.
What the Investor Decision Looks Like
Before you choose this route, lay out three questions.
Which income method does the lender use? This drives loan size more than any other feature. A property with a strong trailing-12 statement fits programs that count actual income. A newly launched listing fits better where a projection is accepted.
Is there a cleaner source of cash? A DSCR cash-out gives you long-term money against a stabilized asset. A flip’s own purchase and rehab are normally financed on a short interest-only note. A DSCR loan funds neither of those. Match the loan to its job. Use long-term money for long-term holds and short-term money for short-term projects.
Can the rental carry the larger payment while the flip sits unsold? Stress the numbers. Assume a slow booking season, a flip that takes longer than planned, and both properties carrying costs at once. If that picture still works, the plan holds up.
The sequence matters. The refinance has to fund before the flip’s closing or draw deadlines. So line up the appraisal, the income documents, and the seasoning clock before you sign the flip contract, not after.
Here is how a broker approaches this. Lendmire’s team sorts lenders by how they treat short-term income, seasoning, and cash-out leverage, then matches your property to the programs where it fits. The calculation is similar across lenders, but the guidelines are not.
For documentation detail, see the complete DSCR loans guide. DSCR files qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
Key Terms Defined
DSCR: The rent a lender counts, divided by the property’s full monthly payment.
PITIA: Principal, interest, taxes, insurance, and association dues, the monthly payment DSCR measures against.
LTV: Loan-to-value, the loan amount as a percentage of the property’s appraised value.
Seasoning: The waiting period between acquiring a property and refinancing it for cash.
Delayed financing: A narrow exception that lets a cash buyer borrow soon after purchase, usually capped near documented cost.
Trailing-12: The last twelve months of rental income, shown through a manager’s statement or platform payouts.
Form 1007: The appraiser’s long-term rent schedule for a one-unit home.
Frequently Asked Questions
Do regular banks make this loan?
Usually not as a standard product. Large retail lenders mostly focus on owner-occupied and long-term rental loans. Short-term rental cash-out is typically written by specialty investor lenders, each with its own guidelines. A broker with access to several of them can match your property to the program that fits.
How much cash can I pull out of a short-term rental?
Leverage on short-term-rental collateral tops out at 70% LTV for cash-out, subject to lender guidelines. Your actual cash is the lower of what the LTV cap allows and what rental coverage supports. Existing mortgage balance, credit, and reserves all shape the final number.
Can I use the cash as a down payment on a flip?
Yes, in most cases. The proceeds are yours once the refinance funds, subject to the lender’s business-purpose terms. A DSCR loan does not finance the flip itself, so you still need a purchase and rehab plan. Sequence the refinance so the money is available when the flip contract needs it.
What if my rental has less than 12 months of history?
About 12 months of hosting history is the common expectation. Some programs accept a projection or appraiser analysis on a refinance, and others fall back to the long-term rent schedule. A lower counted rent can reduce your cash-out or move the file toward a select-lender path below 1.00 coverage, with leverage and terms adjusted.
Does a DSCR loan on my rental raise my debt-to-income ratio?
DSCR files qualify primarily on property-level rental income, not on your personal debt-to-income ratio. That is useful if you are scaling a portfolio. The new loan still adds a payment to that rental’s own coverage math, so a thinner cushion is the real tradeoff.
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. Its DSCR programs run through select lenders across 41 markets, including Washington, D.C. Call 828-256-2183 or request a quote. Programs change, every file is underwritten individually, and nothing here is a commitment to lend.
Investors weighing their equity options can start with Lendmire’s guide to cash-out refinance on an investment property.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. AirDNA: A Quick Guide to STR Financing
2. Fannie Mae Selling Guide, Cash-Out Refinance Transactions
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 Lenders When Borrowing Through an LLC · Short-Term Rental Cash-Out Refinance vs Long-Term Rental Loan When the Appraisal Is Low
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.