The Quick Read: A cash-out refinance on a rental has no down payment, because the equity already in the property does that job, and the real questions are how much equity must stay behind, which reserves you hold, and how a self-employed borrower documents income. The ceiling and the paperwork path decide your cash.
- Investment-property cash-out tops out around 75% LTV on most bank statement files, so roughly 25% of value stays as equity.
- Closing costs and holdbacks come out of your proceeds, so cash in hand is smaller than the headline number.
- Reserves are commonly around 6 months of the housing payment.
- A self-employed borrower can qualify on documented income from 12 months of bank statements, or on the property’s rent through a DSCR loan, subject to lender guidelines.
- Heavy tax write-offs hurt the first path far less than they hurt a tax-return underwrite, and they barely touch the second.
Why a Refinance Has No Down Payment
A down payment is cash you bring to buy a property. A refinance replaces a loan you already hold, so no purchase happens and nothing is owed up front. What the lender tests instead is how much of the property’s value you keep as your own stake once the new loan is in place.
DSCR Cash-Out Calculator
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Rate source: Freddie Mac 30-yr average via FRED® — Federal Reserve Bank of St. Louis · effective Oct 15, 2026
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As of Oct 15, 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.
That stake is the mirror image of the loan-to-value cap. If a program caps investment cash-out at 75% LTV, you must leave at least 25% of appraised value as equity. Think of it as a down payment you never took back. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Four things get mistaken for a down payment on a refinance:
| What it is | What it does | Who pays and when |
|---|---|---|
| Equity left in | Sets the LTV ceiling | Already yours; tested at appraisal |
| Closing costs | Reduce proceeds | Taken from loan funds |
| Reserves | Show post-close liquidity | Documented before funding |
| Ownership history | Sets the value basis | Checked from title records |
Keep these four apart. Borrowers who blur them tend to expect more cash than the file produces.
The Equity You Must Leave Behind
On an investment property, the cash-out ceiling across Lendmire’s wholesale network tops out around 75% LTV on a bank statement file. Owner-occupied cash-out runs higher: up to 80% LTV on a primary residence or second home. That 80% is a cash-out figure for owner-occupied property only. A rental does not get it. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Loan sizes on this lane run from roughly $125,000 to $3,500,000. All figures are typical ranges from select lenders, subject to lender guidelines, credit, and property review.
Here is the math in percentages. Say you own a rental where the existing mortgage equals 55% of appraised value. A 75% cap leaves 20% of value as headroom before costs. Payoff, closing costs, and any holdback come out of the loan first. What remains is your cash.
To find the break-even appraisal, add the payoff and the costs, then divide by the LTV cap. If the appraisal lands below that number, the loan cannot cover the payoff and costs, and no cash comes back.
The appraisal sets the stakes. Lenders run one on a rental, and many programs also want a rent schedule from the appraiser. A low value cuts your proceeds one for one with the cap. An appraisal reconsideration with recent nearby sales can help, though results depend on comps and underwriter review.
How Self-Employed Income Gets Documented
You have three main paths. Each reads a different piece of your finances.
| Path | What you provide | Watch-outs |
|---|---|---|
| Bank statement loan | 12 months of statements | Expense factors vary by lender |
| DSCR loan | Lease or rent evidence, appraisal | Rent must cover the new payment |
| Asset depletion | Liquid asset statements | Mostly a primary-residence tool |
Bank statements. Underwriters take 12 months of business or personal statements and average the deposits. Then they apply an expense factor to business accounts, and that factor differs from lender to lender. Across Lendmire’s network, no formula is universal, so do not assume the number a friend received will apply to your file. This path is reviewed on documented income under the applicable program, subject to lender guidelines.
Property income. A DSCR loan is reviewed primarily on property-level rental income covering the payment, subject to lender guidelines. The ratio is monthly rent divided by the full monthly obligation, including principal, interest, taxes, insurance, and any HOA dues. A ratio of 1.00 means rent covers the obligation with nothing to spare. Select lenders in the network will go below 1.00, but leverage and terms adjust when they do. Credit, reserves, and rent evidence are still reviewed. Lendmire’s complete DSCR loans guide walks through the ratio in more detail.
Asset depletion. Qualifying from liquid assets can run to about 80% LTV, but on a primary residence. Treat it as a different tool, not a rental option.
The Write-Off Problem
Business deductions are legal and smart. They also shrink the profit on a tax return. A conventional underwrite reads that smaller number as your income, so a strong business can look thin on paper.
Bank statement underwriting reads deposits instead, which sidesteps most of that distortion. A DSCR file goes further and sets personal income aside, since the property’s rent is the test. That means heavy write-offs no longer cap how much equity you can pull. The rent and the equity do.
Skipping the tax-return analysis does not mean skipping documents. Expect an appraisal, rent evidence, credit review, reserves proof, ID, the existing mortgage statement, and entity papers if an LLC holds title. Lendmire’s piece How To Cash Out Refinance A Rental Property Without Showing Income covers that file in more detail.
Why Occupancy Changes the Rules
Occupancy decides which rulebook applies, not the documentation type. An owner-occupied file is a consumer mortgage, and consumer disclosure rules apply to it. A loan on a non-owner-occupied rental, including a short-term rental, is a business-purpose loan and is generally exempt from those rules. That holds whether income is documented by bank statements or by the property’s rent.
Business-purpose investor loans are reviewed differently from a standard owner-occupied mortgage. The CFPB’s Truth in Lending guide treats credit to buy or improve non-owner-occupied rental property as business-purpose credit. The test looks at the purpose of the loan, not just the building, a point Compliance Alliance makes about occupancy, loan purpose, and unit count. If you plan to live in the property, tell your broker early. The file then moves to different leverage and a different disclosure regime.
Closing Costs, Reserves, and Prepayment
Closing costs usually come out of the loan funds. They do not require a separate check, but they reduce what you walk away with. A cash-out never guarantees cash.
Reserves are commonly around 6 months of the housing payment. Some programs let cash-out proceeds count toward reserves, while others want reserves held in separate accounts. Ask which one applies before you plan the next purchase.
Prepayment charges deserve a line in your math. Some DSCR-side programs carry step-down prepayment structures. If you plan to refinance again soon, compare the exit cost with the cash you expect to keep.
Term length follows each lender’s program sheet, so treat it as a question for your file, not a promise. Forty-year and interest-only structures are DSCR-side offerings, not bank statement features.
Seasoning and Ownership
Seasoning is how long you must own the property before a lender will size the loan off appraised value. It is lender policy, not law, and it varies across programs. A recent purchase often gets sized off cost basis, meaning the purchase price plus documented rehab. After the seasoning period, appraised value governs.
This matters for a quick refinance after a cheap purchase and rehab. The cost-basis rule can return less cash than the appraised-value math suggests. Delayed financing, a separate route for cash purchases, may recover purchase cash earlier, but eligibility depends on the lender and the program. Settlement statements document your purchase price and date, so keep them in the file.
A refinance covering only the payoff and closing costs is generally treated as rate-and-term. It becomes cash-out when money comes back to you. That label sets the leverage cap and the seasoning rule, so confirm which one your lender assigns.
Entity Ownership and Title
Title can sit with an individual, a revocable trust, or an LLC on a DSCR cash-out, subject to program eligibility. A personal guarantee usually sits behind the entity. Bank statement files tend to be more sensitive to how title is held, so state your vesting up front.
Entity documents are a quiet failure point. A missing operating agreement or an out-of-date certificate of good standing can stall review for reasons unrelated to equity. Gather them before you apply.
A HELOC is different. On Lendmire’s network, HELOCs cannot vest in an LLC, so a rental already in an entity needs a vesting change first.
Why More Cash Doesn’t Fix a Weak File
Four limits can bind: the LTV cap, the coverage ratio, credit, and reserves. The tightest one sets your cash. Borrowers often try to fix the wrong one.
Here is the DSCR trap. A bigger loan means a bigger payment, so coverage falls as you pull more cash. You may hit the 1.00 floor before you reach the LTV cap. Pulling less cash keeps the ratio healthier, and the file looks stronger.
On a bank statement file, the equivalent trap is deposit quality. Large one-time transfers between your own accounts can be excluded from the average. Clean, consistent statements help more than a higher LTV request.
Strong credit and larger reserves can earn the top of a range, but they cannot erase a cap. A lender cannot waive the appraisal, the equity requirement, or the occupancy rules because you offered extra cash.
Which Path Fits
Choose the bank statement path when your business deposits are steady and the property’s rent is modest. Choose DSCR when the rent covers the payment well and you want each property judged on its own. Many investors use both across a portfolio.
The DSCR advantage is scale. Each property is judged on its own rent, so your personal debt-to-income ratio does not cap how many you can add.
Remember that business-purpose DSCR files do not carry the consumer ability-to-repay protections. You carry the job of stress-testing the new payment against rent and vacancy.
Tax treatment can depend on how the funds are used and how the property is held. Keep clear records and speak with a qualified tax professional before relying on any deduction.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the property’s appraised value.
Seasoning: The period you must own a property before a lender sizes a loan off appraised value.
Reserves: Liquid funds you hold after closing, commonly counted in months of the housing payment.
Expense factor: The share of business deposits a lender removes before calculating qualifying income.
DSCR: Rent divided by the full monthly obligation on the property.
Cost basis: The purchase price plus documented rehab, used to size a loan on a recent purchase.
Frequently Asked Questions
Do I need a down payment for a cash-out refinance on a rental?
No. The equity you hold replaces it. What you must plan for is the equity that stays behind (about 25% on investment cash-out through most bank statement programs), closing costs, and reserves.
Can my closing costs come out of the loan?
Usually yes. Costs, the payoff, and any holdback come out of the loan first, so your cash is what remains. Run the number before you commit to a project that needs the money.
How do tax write-offs affect a bank statement refinance?
They matter less than on a tax-return underwrite, because the lender reads deposits rather than taxable income. Expense factors still reduce qualifying income, and they differ by lender, so one file’s result will not predict yours.
Does being self-employed change the 75% LTV cap on a rental?
Not by itself. The cap is set by occupancy and loan purpose, and credit and loan size can move it within the program range. Owner-occupied cash-out can reach 80% LTV, but a rental stays near 75%. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Can I close a rental cash-out in my LLC?
Often yes on a DSCR file, depending on program guidelines, with a personal guarantee behind it. Bank statement programs vary more on entity title, so confirm before you apply. A HELOC cannot vest in an LLC.
Next Steps
You can reach the team at 828-256-2183 or request a quote. Every file is underwritten individually, and nothing here is a commitment to lend.
For the mechanics of pulling equity out of a rental property, see 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. CFPB – Truth in Lending Act guide
2. Compliance Alliance – Reg Z and Investment Properties
This article is part of Lendmire’s bank statement loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Rental Cash-Out Refinance Requirements for 1099 Contractors · Cash-Out Bank Statement Loan vs Portfolio Loan for a Rental · Rental Cash-Out Refinance Down Payment for 1099 Contractors
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.