The Quick Read: For most investors, the best program for your situation is a DSCR cash-out refinance, a loan that qualifies primarily on the property’s rental income, with leverage up to 70% LTV on short-term-rental collateral and about 12 months of hosting history, subject to lender guidelines. A broker that shops a wholesale network matches your property, credit, and leverage need to the program that fits.
- On a short-term rental (STR), cash-out leverage tops out around 70% LTV. Standard long-term rentals reach about 75% on a cash-out.
- Expect a credit score of 640 or higher and roughly 12 months of host history.
- The bigger loan raises your payment, so coverage on the property you pull from drops. Retest it before you commit.
- The refinance and the next purchase are two separate loan files. Each one is underwritten on its own.
- DSCR loans are for investment properties. A home you will live in needs a different product. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
What Does “Best” Mean Here?
There is no single best program. The best one depends on your property, your hosting records, your credit, and how much cash the next deal needs.
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.
Across the wholesale network Lendmire works with, programs differ on leverage, history requirements, and how they count STR income. A broker’s job is to match your file to the lenders whose rules fit it. The goal is not to name a winner in advance.
Three questions sort most owners quickly:
1. Does the STR have a year of hosting statements?
2. Does the rent still cover the payment after the cash-out makes the loan bigger?
3. Is the next purchase an investment property or a home you will occupy?
If the answers are yes, yes, and investment, a DSCR cash-out is usually the first structure to price. If any answer is no, the sections below show where the path changes.
Key Terms Defined
Cash-out refinance: A new, larger loan pays off the old one, and the difference comes to you as cash.
DSCR (debt service coverage ratio): Monthly rent divided by the full monthly housing payment, meaning principal, interest, taxes, insurance, and any HOA dues. That payment is called PITIA.
LTV (loan-to-value): The loan balance as a percentage of the appraised value.
Seasoning: The waiting period a lender wants between buying a property and refinancing it. About 6 months is a common expectation.
Hosting history: Your record of bookings and income on Airbnb, VRBO, or similar platforms. Lenders usually want about 12 months.
Reserves: Cash you keep after closing to cover payments. Lenders count them in months of PITIA.
Two-file underwriting: The refinance and the next purchase are separate loans with separate reviews.
How Does a Cash-Out Refinance Work on a Short-Term Rental?
A cash-out refinance replaces your current loan with a larger one and pays you the difference. The CFPB’s home equity guide describes the same mechanic and flags the trade-off: you carry a bigger loan and a higher payment while keeping less equity.
How big does the new balance have to be to count as cash-out? Individual lender programs set their own lines, so a small cash-back amount can still price as a rate-and-term refinance on some files.
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.
On an STR, three limits apply at once:
- Leverage. Across most of the network, a cash-out on STR collateral tops out at 70% LTV. A standard long-term rental on a cash-out reaches about 75%.
- Credit. Expect a 640 score or higher on an STR. Most long-term rental programs want about 660, and 700 or higher opens the strongest leverage tiers.
- Coverage. A 1.00 floor applies to STR refinances. 1.00 is where select programs start, and stronger ratios open better terms. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Loan sizes run up to $3,000,000 on standard programs. Above $2,500,000, the network generally holds to 30-year fixed structures.
How Do Lenders Count Short-Term Rental Income?
Lenders count STR income more conservatively than a long-term lease. Operating costs on an STR run higher, so many programs credit only part of gross platform income. Treatment varies from lender to lender, which is a main reason to shop the file.
Three documentation routes show up most often:
- Trailing host statements. Twelve months of Airbnb or VRBO payouts are the strongest evidence on a refinance.
- The appraiser’s rent schedule. The appraisal includes a market rent estimate (the 1007 form). It often comes in below true STR income, so it works as a floor case.
- A market projection. This is used mainly on purchases, where no host history exists yet.
For a refinance, host history is the norm. If you have a full year of statements, the file is usually underwritten on that income, adjusted by whatever haircut the lender applies.
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.
Which Program Type Fits Which Owner?
The right structure depends on how you qualify and what you are buying next.
| Path | Fits | Income test | Next purchase |
|---|---|---|---|
| DSCR cash-out | STR or rental owner with host history | Property rent vs. PITIA | Investment property |
| DSCR cash-out on a long-term rental | No STR history yet | Lease or market rent | Investment property |
| Documented-income program | Owner whose rent is thin but personal income is strong | It is reviewed on documented income, subject to lender guidelines | Investment or other |
| Short-term bridge or private money | Needs funds before seasoning is met | Asset-based | Investment property |
Bridge or private money is a stopgap, not a destination. Most borrowers still refinance into a longer-term loan afterward.
Lendmire’s complete DSCR loans guide walks through how these structures compare in more depth.
What Is the Step-by-Step Sequence Before You Buy?
Refinance first, then buy. Running them in that order keeps both files clean.
1. Check your equity. Take the appraised value, apply the 70% STR cap, and subtract your current payoff. The remainder is the ceiling on proceeds, not what you will receive.
2. Gather hosting statements. Pull twelve months of platform payouts and your lease or booking records.
3. Retest coverage on the bigger loan. Run the haircut income against the new, larger PITIA. If coverage falls below 1.00, the loan amount shrinks or the structure changes.
4. Order the appraisal. It sets value for the LTV cap and supplies the rent schedule.
5. Net out the costs. Payoff, closing costs, reserves, and any prepayment charge on the old loan come out first. The cash that reaches you is less than the LTV math suggests.
6. Park the proceeds. Deposit them into an account in your name or your entity’s name, and keep the closing statement.
7. Apply on the next purchase. That lender will want to see where the down payment came from. Seasoned, traceable funds make the paper trail easy.
What if the sequence breaks? If the appraisal comes in low, the loan amount drops with it, and the cash drops further. If the purchase falls through, you are left holding a larger loan and idle cash, so size the cash-out to a purchase you are sure about.
Worked Example: The Coverage Squeeze
These inputs are modeled assumptions, not market data. Picture an STR owner with a modest existing loan, around 40% of the property’s value. Documented, haircut income covers the current payment at roughly 1.8x.
Now run a cash-out to 70% LTV. Principal and interest rise sharply, while taxes and insurance stay about the same. Coverage falls to roughly 1.2x, though these specifics are subject to lender guidelines and a full review of property, leverage, and credit.
That still clears the 1.00 floor. The same owner who pushed to the cap on a property with thinner income would not have fared as well. At 0.95x, the lender would trim the loan amount to restore coverage. Alternatively, the file might move to a select-lender path that takes coverage below 1.00, with leverage and terms adjusted.
This is why coverage, not equity, often sets the real ceiling. The strongest files clear both tests: enough equity and enough rental coverage.
Clearing 1.00 also does not mean the property cash flows. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside the calculation. An STR with heavy cleaning and platform costs can pass the ratio and still lose money each month. Run your own operating numbers before you pull cash.
Where Do the Rules Break?
Several situations bend the general path.
You have less than 12 months of hosting history. Many files fall back to the appraiser’s long-term rent estimate. Some owners wait for a full year of statements, then refinance. Programs differ, so ask before assuming.
You just bought the property. About 6 months of seasoning is the common expectation on a cash-out. Before that, a rate-and-term structure or a different strategy may fit better.
The property is free and clear. With no payoff, proceeds can be large relative to the equity at work. The coverage test still applies to the new loan, and it often becomes the limiting factor.
The property sits in an LLC. Entity-held properties can be eligible, subject to lender program eligibility. Vesting changes which lenders take the file, so decide on the entity before you apply, not after.
The property type is not offered. The network does not offer DSCR on manufactured homes (single- and double-wide), log homes, or barndominiums.
The cash-out pushes the payment close to the rent. The ratio can still pass while real cash flow disappears, as noted above.
Is It a Second Home or a Rental?
If you plan to occupy the property, it is not a DSCR file. A second home you stay in needs a different, occupancy-based product. DSCR is for investment properties.
The label matters. A vacation property that you also rent out can sit in a gray zone, and occupancy rules differ by program. Labeling an STR as a second home to get friendlier terms is a misrepresentation, and it puts the whole file at risk. If the property is truly an investment, finance it as one.
What Are the Alternatives to a Cash-Out?
Cash-out is one way to fund the next deal. Compare it honestly with the others.
| Option | Best when | Watch for |
|---|---|---|
| Cash-out refinance | Coverage holds after a bigger loan | Lower coverage, closing costs |
| Saving cash | The deal can wait | Slower growth, missed deals |
| Selling the property | You want out of the asset | Transaction costs, tax impact |
| Partner capital | You want to share risk | Shared control and returns |
When Should You Skip It?
Skip the cash-out in these cases:
- Coverage on the bigger loan would sit thin or below 1.00 with no plan to compensate.
- You have no firm plan for the cash.
- You expect to sell the property soon, so closing costs would not pay back.
- The proceeds would leave you short on reserves after the next down payment. Reserves vary by lender, leverage, and loan size, commonly around 6 months of PITIA, and they apply to both files.
Pre-Application Checklist
- Twelve months of host statements or a lease
- The current payoff statement
- Proof of insurance on the property
- Entity documents, if the property is held in an LLC
- A target amount for the next purchase, so the cash-out is sized to need
- Reserve funds, separate from the proceeds
Frequently Asked Questions
Can I use STR cash-out proceeds as the down payment on another rental?
Yes, in most cases, as long as the funds are traceable. The next lender will want to see where the money came from. Keep the closing statement and the account that received the proceeds. Proceeds are borrowed money, not income, so they support the down payment but do not count toward qualifying income.
How much leverage can I get on an STR cash-out?
Across the network, an STR cash-out is generally capped around 70% LTV, while a standard long-term rental reaches about 75%. Your appraised value, credit, and coverage all affect where a file lands. The loan amount is only the ceiling, not the cash you receive after payoff and costs.
What if my STR doesn’t have a full year of history?
Many programs fall back to the appraiser’s rent estimate in that case, which is often lower than real STR income. Waiting to build a full year of statements can raise your qualifying income. Ask a broker which lenders in the network treat short histories differently.
Do I need a 1.00 coverage ratio?
1.00 is where select programs start, and stronger ratios open better terms and leverage. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Eligibility depends on lender guidelines, credit profile, reserves, and property review.
Can I do the cash-out and the purchase with the same lender?
Sometimes, but it is not required. The two loans are separate files, and each can go to the lender whose guidelines fit it best. A broker can place them separately when that improves the terms.
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. Lendmire is a mortgage broker that arranges DSCR loans through select lenders in its wholesale network across 41 markets, including Washington, D.C. It is not a lender, and nothing here is a commitment to lend. Reach the team at 828-256-2183 or request a quote.
For the mechanics of pulling equity out of a rental property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage focused on DSCR investor financing, helping arrange programs through wholesale and investor-lending channels in 41 markets, including Washington, D.C. DSCR loans are evaluated by the lender on property cash flow rather than personal income, subject to lender guidelines, supporting LLC closings and accommodating investors with four or more financed properties. Scotsman Guide 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. CFPB: Using Home Equity Guide
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: DSCR Cash-Out Refinance Requirements Right After Buying · DSCR Cash-Out Refinance Requirements After Buying With Cash Using Delayed Financing · Short-Term Rental Cash-Out Refinance Requirements for Back-to-Back Cash-Outs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.