These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The Quick Read: Usually much less than three-quarters of the value, because a 75% LTV cash-out on a standard rental sets the new loan at 75% of appraised value, and you keep only what remains after your existing payoff and closing costs, with rent coverage able to cap the loan lower still. The formula is simple. Appraised value times 0.75, minus your payoff, minus costs, equals your cash.
- A cash-out refinance on a standard rental tops out around 75% LTV across most of our wholesale network.
- The 75% is the size of the new loan, not the size of your check.
- A free-and-clear rental returns roughly three-quarters of its value before costs. About 25% stays in the property.
- Rent has to carry the bigger loan too, so coverage can shrink the loan before equity does.
- A lower appraisal shrinks your cash faster than it shrinks the value. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
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As of Oct 15, 2026 · General Freddie Mac market benchmark, not a Lendmire loan offer. Rent, nightly rate, occupancy, taxes, and insurance are editable estimates. Short-term rental figures are estimates only and vary significantly by season, property type, management approach, and local short-term-rental rules — confirm local regulations before relying on them. Qualifying income for short-term rentals varies by program — some use appraisal market rent, others use documented STR history or projections — and is confirmed in underwriting. 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
Cash-out refinance: a new loan that pays off your old one and hands you the difference in cash.
LTV (loan-to-value): the loan balance divided by the property’s appraised value, shown as a percentage.
Payoff: what you still owe on the existing loan, plus any other liens, on the day the new loan funds.
PITIA: principal, interest, taxes, insurance, and association dues. It is the full monthly obligation on the property.
DSCR (debt service coverage ratio): monthly rent divided by PITIA.
Seasoning: how long you have owned the property before a lender will refinance it.
The Formula, Step by Step
The math has five steps, and each one removes cash from the number you hoped for. Here is the order underwriting follows.
1. Value is set. An appraiser sets market value from comparable sales. That value is the denominator for LTV. The appraiser also completes a rent schedule, using Form 1007 for one unit and Form 1025 for two to four units.
2. The cap is applied. Value times 75% gives the maximum new loan on a standard rental.
3. The payoff comes out. The new loan first retires your existing mortgage and any other liens.
4. Costs come out. Closing costs and any prepaid items reduce what is left.
5. The remainder is yours. That is the cash.
Across the wholesale network we place files with, the cash-out ceiling on a standard rental sits at about 75% LTV. Market surveys describe a wider general range for investment-property cash-outs. Credit Karma cites 70% to 80%. In our network, the working number for a standard rental is 75%. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
What Does the Math Look Like?
A percentage table is more honest than one dramatic example, because your payoff drives the whole answer. The table below indexes the appraised value to 100. The 3 for closing costs is a modeled assumption, not a market figure.
| Payoff (% of value) | New loan at 75% | Modeled costs | Net cash (% of value) |
|---|---|---|---|
| 0 (free and clear) | 75 | 3 | 72 |
| 25 | 75 | 3 | 47 |
| 50 | 75 | 3 | 22 |
| 60 | 75 | 3 | 12 |
| 70 | 75 | 3 | 2 |
Look at the last row. A rental with a payoff at 70% of value is already near the ceiling, so almost nothing comes out. If the payoff reaches 75% or more of value, a 75% cash-out returns no cash at all. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The free-and-clear case needs one clarification. The check is not 100% of your equity. About 25% of the value stays in the property no matter how much equity you hold. No amount of equity raises that ceiling.
Why Your Cash Is Smaller Than Your Equity
Equity is a paper number. Cash is what survives the deductions. Equity is value minus what you owe. Cash is the loan, up to the cap, minus what you owe, minus costs.
Three things separate the two:
- The retained cushion. At 75% LTV on a standard rental, at least 25% of value must remain as equity after the new loan.
- Junior liens. A second mortgage or line of credit has to be paid at the closing table, and it reduces your proceeds dollar for dollar.
- Costs and reserves. Closing costs come out of the loan. Reserves, commonly around six months of PITIA but varying by lender, leverage, loan size, and transaction type, are cash you must show in the bank. They are not cash you get to spend.
This is why a 75% LTV does not mean 75% of the value in your pocket. It means a loan of that size, before your old mortgage is paid off. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The Second Test: Can the Rent Carry the Bigger Loan?
Equity is only half the screen. Rent is the other half. The loan is the lower of what equity allows and what rent supports.
Pulling cash raises the loan balance, so the monthly obligation rises and coverage falls. Take an illustrative case. A rental that covers its existing loan at about 1.35x can drop toward 1.05x when the balance is pushed to the 75% ceiling. That is still above 1.00, but the cushion is thin.
For a thin file, the lender may reduce the loan until rent can carry it. In that case, rent caps your cash before the LTV does.
On coverage, 1.00 is where many select programs start. A separate select-lender path takes coverage below 1.00, with leverage and terms adjusted. Stronger ratios open better pricing and leverage.
One caution matters here. Clearing 1.00 is not the same as positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A smaller pull often leaves a stronger file and more room for your next loan.
What Changes the Number?
Several factors move your cash up or down. Here are the ones we see most often.
Property type and use. Short-term-rental collateral generally sits lower. The cash-out ceiling on short-term rentals is around 70%, versus 75% on standard rentals. Expect a 640 or higher credit score and about 12 months of hosting history. Coverage of 1.00 is the floor on refinances. 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.
Loan size. Very large balances generally step down in leverage. Loans above $2,500,000 are generally held to 30-year fixed structures, and the standard programs run up to $3,000,000. Reserves also tend to rise on the larger files, to about nine months of PITIA above $1,500,000.
Appraisal. A lower value hits your cash harder than it hits your loan. Here is a modeled example, indexed to 100, with a fixed payoff of 60 and costs of 3.
| Appraised value | Loan at 75% | Net cash |
|---|---|---|
| 100 | 75 | 12.0 |
| 95 | 71.25 | 8.25 |
| 90 | 67.5 | 4.5 |
A 10% drop in value cut net cash by more than half. Improvements may support a higher appraised value, depending on comps and underwriter review, but the appraiser has the last word.
Credit. A 620 floor exists in parts of the network, and most programs want around 660. A score of 700 or higher unlocks the strongest leverage tiers.
Seasoning. About six months of ownership is the common expectation for a cash-out. It is a lender overlay for DSCR loans rather than a federal rule. Seasoning decides when you can refinance. It does not decide how much you get once you can.
Ineligible properties. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered in these programs.
Interest-only structures. Select lenders in the network offer interest-only periods, which lower the payment used in the coverage test. Size and leverage limits still apply.
What About 80% or 85%?
Those numbers are real, but they usually belong to a different transaction. On a rate-and-term refinance of an investment property, where you take no meaningful cash, the ceiling can reach 85%. On a purchase, most files land at 75% to 80% LTV, and select high-leverage programs reach 85% with roughly a 700 or higher score.
A refinance that returns cash is a cash-out, and a cash-out on a standard rental sits at 75%. Investors get tripped up by quoting a purchase or rate-and-term figure when planning a cash-out.
Cash-out files are also less forgiving on the way up. On many files, a lower LTV prices better, so 75% is a ceiling and not a target.
Reverse Math: Working Backward From a Target
Say you want a specific check, such as a down payment on the next rental. Run the formula backward. Your maximum payoff is the 75% cap, minus costs, minus the cash you want.
Using a modeled 3% for costs, a target of 20% of value in cash requires a payoff at or below 52% of value. A 30% target requires 42%. A target of 40% requires a payoff of 32% or less.
You will need a lower payoff, a higher value, or a smaller goal. Check the coverage test too, because a bigger loan needs rent that can carry it.
Cash-Out vs. the Alternatives
A cash-out is not the only way to reach equity. It replaces your first lien, so the whole loan resets. An investment-property HELOC leaves your first lien in place and adds a line behind it. Those lines cap at $500,000 total.
Selling converts the equity and ends the income. A rate-and-term refinance can reach a higher LTV but returns essentially no cash. Lendmire’s piece How Much One Rental Cash-Out Refinance Can Clear at Closing walks through the closing-table deductions in more detail.
Tax treatment can depend on how the funds are used and how the property is held; investors should keep clear records and speak with a qualified tax professional before relying on any deduction.
If you want the full picture of how these loans work, our complete DSCR loans guide covers coverage, credit, and reserves in one place. Program terms change, and every file is underwritten individually, subject to lender guidelines.
Frequently Asked Questions
Does 75% LTV mean I get 75% of my home’s value in cash?
No. The loan is 75% of appraised value, and that amount first pays off your existing mortgage. Your cash is what remains after the payoff and closing costs. On a free-and-clear rental, that is roughly three-quarters of value before costs. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
How much equity do I need left after a cash-out?
At least 25% of value on a standard rental at the 75% ceiling. A short-term rental at a 70% ceiling leaves 30%. Larger loan sizes can step leverage down further, depending on the program.
Can rent limit my cash-out even if I have plenty of equity?
Yes. The lender runs two tests, equity and rent coverage, and the smaller result wins. A bigger loan means a bigger monthly obligation, so coverage drops. If rent cannot carry the loan, the loan shrinks until it can.
Does a lower appraisal change my cash a lot?
Yes, and more than the percentage drop suggests. Your payoff does not shrink when the value does. In the modeled example above, a 10% lower value cut net cash by more than half.
Can I cash out right after I buy?
Usually not. About six months of ownership is the common expectation, measured from the deed recording date, and it is a lender overlay. Cash buyers may have a different path through delayed financing, which removes the waiting period but not the value ceiling.
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 broker that arranges financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. This is not a commitment to lend.
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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References
1. Credit Karma: Cash-Out Refinance on Investment Properties
This article is part of Lendmire’s DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Much Cash-Out a DSCR Lender Releases on a Paid-Off Rental · VA Cash-Out Occupancy Requirements When the Home Becomes a Rental · Is a $6 Million Rental Too Large for DSCR Cash Out?
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.