The Quick Read: The best program for your situation is the one that allows cash-out on the rental you already own, counts short-term-rental income on the Airbnb you want to buy, fits your ownership timeline, and still leaves enough equity, coverage, and reserves after both payments stack up. The refinance and the purchase are two separate loans, and each is underwritten on its own. Lendmire is a mortgage broker, so it matches that scenario to a program across a wholesale network of lenders instead of selling one product.
- Cash-out on a standard long-term rental typically tops out around 75% LTV. On short-term-rental collateral, cash-out typically tops out around 70% LTV.
- An Airbnb purchase can reach up to 75% LTV on the strongest files. Short-term-rental programs typically expect a 640 credit score and about 12 months of hosting history.
- Coverage floors differ by transaction. Short-term-rental purchases start at 1.10, and short-term-rental refinances start at 1.00.
- The cash you pull out has to cover the down payment, closing costs, and reserves on the new property.
- Clearing the coverage test does not mean the property makes money after repairs, vacancy, and management.
All figures are typical ranges from select lenders in the network and are subject to lender guidelines. They are not a commitment to lend.
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 Oct 29, 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 Oct 29, 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
DSCR (debt service coverage ratio): monthly rent divided by the full monthly housing payment, so a 1.10 means rent covers the payment with 10% to spare.
PITIA: principal, interest, taxes, insurance, and any association dues, which together make up the monthly payment a DSCR loan tests rent against.
LTV (loan-to-value): the loan balance as a percentage of the property’s appraised value.
Seasoning: the waiting period between buying a property and refinancing it, usually counted from the date the title was recorded.
Cash-out refinance: a new, larger loan that pays off the old one and hands you the difference in cash.
Prepayment penalty: a fee some loans charge if you pay them off or refinance them inside a set window.
Reserves: liquid savings, usually counted in months of PITIA, that you hold after closing.
What Makes a Program the Best Fit for This Move?
A good program does four things at once. It allows cash-out on your rental type, accepts short-term-rental income on the purchase, matches how long you have owned the first property, and keeps leverage and reserves workable across two payments. No single lender wins on every point, which is why the fit depends on your file.
The table below is the scorecard Lendmire uses when it shops a scenario across the network.
| Factor | What to look for | Why it matters |
|---|---|---|
| Cash-out on your rental | Allowed for your property type | Source of the down payment |
| STR income on the purchase | Accepted with a documented method | Sets the Airbnb’s coverage |
| Seasoning | Fits how long you have owned | Sets when cash-out opens |
| Leverage | About 75% standard, 70% STR cash-out | Sets how much cash comes out |
| Reserves | Months of PITIA required | You carry two properties |
| Prepayment terms | Length of any penalty | Limits your exit options |
Most programs Lendmire places files with agree on the broad shape. They differ at the edges: how they count short-term income, how they treat a recently bought property, and how reserves step up with loan size. A borrower who fits one lender’s edge case may miss another’s. That is the practical reason to compare programs before you commit to one.
How Does the Two-Loan Chain Work?
The refinance does not buy anything. It turns equity in a rental you own into cash, and that cash then funds the purchase. The two loans never touch each other in underwriting. The old property is tested on its own rent against its own new payment. The Airbnb is tested on its own income.
That separation is why buying in another market works. The lender on the refinance cares about the collateral it is lending against, not where your next purchase sits. The purchase lender cares about the new property and its legal use. Your home market never enters the math.
The sequence usually runs in five steps:
1. Pick the equity source. Choose a rental you own that is past the lender’s seasoning window. Around 6 months is the common expectation across most of the network.
2. Order the appraisal. It sets the value used for LTV and the rent used for coverage. The rent schedule is Fannie Mae Form 1007 for single-family and Form 1025 for two-to-four unit properties. Those are appraisal form names only. DSCR programs set their own rules for when a rent schedule is required, and Fannie Mae’s own requirement applies to agency loans, not to these files.
3. Retest coverage. Check the old property against its new, larger payment before you spend any cash.
4. Move the cash. The proceeds should land in your account, stay documented, and be traceable to the purchase.
5. Underwrite the Airbnb. The purchase loan tests the new property on its own short-term income and its own leverage cap.
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.
If you plan to repeat the move, each refinance is evaluated fresh on current rent and current value.
How Much Cash Can You Actually Pull?
You get the smaller of two numbers. One is the value-based loan: appraised value times the LTV cap. The other is the loan your rent can support at the required coverage. Your payoff, closing costs, and any prepayment penalty come out of the proceeds first.
| Limit | What it measures | Binds when |
|---|---|---|
| Equity cap | Value times the LTV cap, minus payoff | Your payoff is already high |
| Coverage cap | Loan size the rent can support | Rent is thin against taxes and insurance |
Here is a modeled example using percentages only. Say your rental has a payoff equal to 55% of its value. At a 75% cash-out cap on a standard long-term rental, the new loan can reach 20 points of value above the payoff. That is before closing costs. If the same property were run as a short-term rental, the 70% cap would leave only 15 points. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Now match that to the purchase. An Airbnb bought at 75% LTV needs 25% down, plus closing costs and reserves. In the 20-point example, the source rental would need to be worth about 1.25 times the Airbnb’s price just to cover the down payment alone. That gap is why many investors size the cash-out before they make an offer, not after. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
More cash out also means a bigger payment on the old property. Taxes and insurance stay put, but principal grows, so coverage thins. A rental that ran near 1.3x might land closer to 1.1x after a full cash-out. That is a modeled illustration, not a market figure.
Coverage is not always a hard wall. Many select programs start at 1.00. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios generally open better pricing and higher leverage.
A larger down payment on the purchase lowers the new payment and can lift the coverage ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
How Is the New Airbnb Underwritten?
The purchase is tested on short-term income, with leverage that tops out at 75% LTV on the strongest files. Short-term-rental purchases typically need a 1.10 coverage ratio, a 640 credit score, and about 12 months of hosting experience, subject to lender guidelines. Refinances on short-term collateral start at 1.00. Those two floors are separate, so never blend them into one number.
Lenders accept several kinds of income evidence. Which one counts depends on the program:
- An appraiser’s short-term-rental analysis.
- A 12-month statement from a property manager.
- Twelve months of platform history or bank deposits.
- A projection report from a data provider, usually for purchases with no history.
- The long-term rent schedule, as a conservative fallback.
Projection tools deserve a careful read. They typically build estimates from nearby comparable listings and often assume the property is available all year. A lender may haircut the result. AirDNA defines revenue as the nightly rate plus the cleaning fee, minus discounts and platform service fees. That is host revenue, not profit. Expect a lender to see through peak-season annualizing.
A property with no booking history is not dead on arrival. Some programs lean on the appraiser’s analysis or the long-term rent schedule instead. Those paths may lower the income the lender will count, so the coverage ratio can come in lower than a projection suggests.
Legal use matters 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. Where a permit is required, no permit usually means no countable short-term income. A seller’s permit that cannot transfer to you is treated as no permit.
Property type matters as well. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered through the network’s DSCR programs.
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.
Where Do the Rules Bend?
Several situations change how the cash-out is sized. These are the ones that come up most often.
A recently bought property. Inside the seasoning window, the lender may size the loan on your cost basis plus documented improvements, not on appraised value. A rental you renovated and bought four months ago will not support a value-based cash-out.
An all-cash purchase. Delayed financing is a narrow exception to the seasoning wait. Proceeds are generally limited to your documented cost, and the coverage test still applies. It does not size on appraised value, and it does not credit rehab value. It generally fails if financing was recorded at purchase. The idea has an agency cousin, but agency rules never govern a DSCR file.
A bridge or hard-money purchase. If the refinance only pays off the short-term loan, it may be treated as rate-and-term. If cash comes back to you, it is a cash-out, and seasoning applies. Check any prepayment penalty on an existing DSCR loan before you plan to refinance it early.
A lost or missing permit. If the permit fails after closing, the property reverts to long-term economics while the loan stays sized for short-term income. That mismatch is the failure mode to model before you buy.
Different leverage by use. The same house can carry a 75% cash-out cap as a long-term rental and about a 70% cap as a short-term rental. Check which one your source property will use. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Reserves. Requirements vary by lender, leverage, loan size, and transaction type. About 6 months of PITIA is common. Some conservative rate-and-term files at modest leverage under $1,500,000 can see reserves waived, and loans above that size typically step up to about 9 months. Remember that you are carrying two properties.
Entity and out-of-state mechanics. Many investors hold the new property in an LLC, subject to lender program eligibility. An LLC may also need to register in the property’s state, so talk to an attorney about that.
Does Passing the Coverage Test Mean Positive Cash Flow?
No. DSCR compares rent to PITIA only. Repairs, vacancy, management fees, utilities, furnishing, and capital replacements all sit outside the calculation. A 1.00 or 1.10 is a program minimum, not proof the property makes money.
Stacking loans makes this more important, because each cash-out raises the payment on the old property and the new Airbnb adds its own. Short-term income is seasonal and swings with demand. Plan for both properties to hold coverage in a slow stretch, and keep reserves in place for the months the Airbnb runs light.
Who Should Skip This Path?
This path is wrong for you if:
- The source rental has little equity after payoff.
- Its coverage would fall too low after a full cash-out.
- You cannot show about 12 months of hosting experience and the program requires it.
- The new market restricts short-term rentals in a way you cannot confirm.
- A prepayment penalty on the old loan would cost more than the move earns.
If any of those fit, a larger down payment from savings or a partner may serve you better than stacking debt.
Frequently Asked Questions
Can I use cash-out from one rental to buy an Airbnb in a different state?
Yes, subject to lender guidelines. The two loans are separate files. The refinance is tested on the source property’s rent and equity, and the purchase is tested on the new property’s income and legal use. The program you choose has to lend in the state where the new property sits.
How long do I need to own the first property?
Around 6 months of seasoning is the common expectation across most of the network, counted from the date the title was recorded. Inside that window, sizing may rely on cost basis plus documented improvements. An all-cash buyer may qualify for delayed financing, which is limited to documented cost.
What if the new Airbnb has no booking history?
Programs handle it in different ways. Some accept an appraiser’s analysis or a projection report. Others fall back on the long-term rent schedule. Short-term-rental programs typically expect about 12 months of hosting experience from you, so a first-time host faces a harder file.
Should I hold the new property in an LLC or in my own name?
Many investors use an LLC, subject to lender program eligibility. Eligibility depends on the program, and an LLC may need to register in the property’s state. Which structure fits you is a question for a lawyer and your lender together.
Does the new market change the loan on my old property?
No. The old property is tested on its own rent, value, and payment. The new market affects only the purchase file, mainly through the property’s short-term income and legal use.
What to Do Next
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 arranges investor financing across 41 markets, including Washington, D.C. Call 828-256-2183 to talk through your scenario. For background on how these loans work, read the complete DSCR loans guide.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
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.
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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. Fannie Mae Form 1007 for single-family and Form 1025 for two-to-four unit properties
2. Fannie Mae’s own requirement
3. AirDNA Help: how revenue is calculated
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: Best DSCR Cash-Out Refinance Program for a Large Balance on an Investment Property · Best Portfolio DSCR Cash-Out Refinance Program as a Foreign National on a U.S. Rental · Best DSCR Cash-Out Refinance Program on a Duplex or Triplex 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.