The Quick Read: Freddie Mac caps a cash-out refinance on an investment property at 75% of value for a one-unit rental and 70% for a two- to four-unit rental, so the unit count sets how much equity you can pull before income, credit, or seasoning even come up. The cap is a ceiling, not a promise of cash. Your payoff, closing costs, and any other liens come out first.
- Agency cash-out caps on investment property: 75% for one unit and 70% for two to four units, per the Freddie Mac Seller/Servicer Guide.
- Agency seasoning: six months on title, plus a 12-month minimum age on any first lien you pay off.
- Agency underwriting: your personal income, debts, assets, and credit are all reviewed.
- Network DSCR cash-out: tops out around 75% LTV on standard rentals and 70% on short-term-rental collateral, with about six months of seasoning, subject to lender guidelines.
- Coverage still matters: a larger loan after cash-out means rent has to cover a larger payment.
What Counts as Cash-Out on a Rental
A refinance is cash-out when the new loan returns more than incidental cash to you or pays off more than the limits for a no-cash-out refinance allow. A rental owned free and clear is treated as cash-out too, because the new loan puts a lien on a property that had none. Freddie Mac’s cash-out rules in Guide §4301.5 spell out that treatment.
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.
The label matters because the caps differ. A no-cash-out refinance gets a higher ceiling than a cash-out refinance on the same building, so the two should never be planned around a single number.
The Agency Caps by Property Type
The agency table splits investment property by unit count. A one-unit rental gets a higher cash-out ceiling than a two- to four-unit rental, and both sit below the no-cash-out ceilings. The Guide’s maximum LTV table in §4203.1 sets these figures.
| Investment property | Cash-out max | No-cash-out max | Equity left in |
|---|---|---|---|
| 1 unit | 75% | 85% | 25% on cash-out |
| 2–4 units | 70% | 75% | 30% on cash-out |
Two details change how you read that table.
First, the ceiling counts subordinate financing too. Any second lien on the property counts against the same cap, so existing junior debt shrinks your room.
Second, 80% is not an investment-property cash-out number. Some consumer pages quote it, but the Guide does not support it for a rental. Treat 80% as a primary-residence figure.
Freddie Mac’s 2- to 4-unit product page defers to the same Guide chapter for LTV. It also lists a minimum Indicator Score of 620 unless the Guide says otherwise. The tables cover one- to four-unit buildings. Larger apartment buildings sit outside them.
The agency limits are set by unit count and occupancy, with no separate cap for condos, townhomes, or planned developments. Check the Guide table for your exact collateral before you count on a figure.
How Underwriting Builds the Number, Step by Step
Agency underwriting follows a fixed order. Each step can shrink the cash you receive.
1. Classify the transaction. The lender decides whether the loan is cash-out, no-cash-out, or special-purpose. Special-purpose cash-out, such as construction-to-permanent or renovation, follows its own section of the Guide.
2. Apply the property-type cap. Take appraised value times 75% for one unit or 70% for two to four units. That product is the largest total loan allowed.
3. Subtract what must be paid off. The first lien comes out, then any junior liens the loan must clear.
4. Subtract costs. Closing costs and fees come out next.
5. Review the borrower personally. The agency path looks at your income, debts, assets, and credit. The reviewer checks that your total debt load still works after the new, larger payment.
6. Review the property. The appraisal supports value. Rent schedules such as the 1007 for single-family and the 1025 for small income properties support rental income.
What is left after step four is your net cash. Here is the shape of it. Say a one-unit rental appraises at 100 units of value. The agency cap is 75, an existing first lien is 50, and costs run a few points. That leaves roughly 20 points of value as cash, before any junior liens. On a two- to four-unit building the cap is 70, so the same math leaves five fewer points.
Run it with your own numbers. The cap tells you the ceiling, but payoff and costs decide the check.
Seasoning Clocks That Block Early Cash-Out
The agency path has two separate clocks, and investors often remember only one. Per the reproduced §4301.5 text, at least one borrower must have been on title for six months. If the proceeds pay off a first lien, that lien must be at least 12 months old, counted from note date to note date. A compliance vendor’s bulletin summary confirms the 12-month first-lien rule came from a Freddie Mac bulletin.
The second clock catches people who buy with short-term money. Picture an investor who buys a distressed duplex with a bridge loan and renovates it. The title clock may be satisfied at six months. The first-lien clock is not, because the bridge loan is the first lien. Refinancing that loan into a new loan first would restart the 12-month age instead of helping.
The network’s DSCR cash-out programs use one common expectation instead: about six months of ownership, measured from title recording. Individual lenders can set their own overlays, so confirm that on the specific file.
Where the General Rule Breaks
The caps above are the rule. These are the places the rule bends or snaps.
Delayed financing. A cash buyer can get an exception to the six-month title rule, but only with heavy documentation. The loan is still priced and capped as cash-out.
Inherited property and special-purpose loans. The same Guide section lists exceptions for inherited property and certain construction or renovation loans. Each has its own conditions.
Financed-property limits. Conventional investor loans cap how many financed properties one borrower can hold. That limit is a practical wall for investors who keep scaling. It is a reason many shift to property-level underwriting once they have several loans.
Owner-occupied units. An owner who lives in one unit of a duplex or fourplex is not an investor in the agency’s table. A primary residence gets different caps, and the primary cash-out cap for two to four units is its own number. Occupancy flips the table, so state it correctly at the start of the application.
Property types the network does not offer. Manufactured homes (single- and double-wide), log homes, and barndominiums are not offered through the DSCR programs in Lendmire’s network. That is a property-eligibility line, not a leverage line, and a bigger down payment or more equity does not move it.
Short-term rentals. Agency rules do not address vacation or hosted rentals the way a DSCR program does. In the network, short-term-rental cash-out tops out around 70% LTV, with a 640+ score expected, about 12 months of hosting history, and a 1.00 coverage 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. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
How Network DSCR Cash-Out Compares
DSCR loans are not agency products. Freddie Mac sets no DSCR rules, and each lender sets its own. Lendmire is a broker that arranges these loans through select lenders in its wholesale network, across 41 markets including Washington, D.C. Because these are business-purpose loans on non-owner-occupied rentals, they are reviewed differently from a standard owner-occupied mortgage.
Across the network, qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines. The numbers below describe typical ranges, not promises.
| Factor | Agency | Network DSCR |
|---|---|---|
| Cash-out cap, standard rental | 75% 1-unit; 70% 2–4 | Around 75% LTV |
| Cash-out cap, short-term rental | Not addressed | Around 70% LTV |
| No-cash-out cap | 85% 1-unit; 75% 2–4 | Up to 85% LTV, no cash back |
| Underwriting basis | Borrower income and debts | Property rent vs. payment |
| Seasoning | 6 months title; 12-month lien | About 6 months of ownership |
| Credit | 620 Indicator Score minimum | 620 floor; most want ~660 |
A few mechanics matter more than the headline cap.
Coverage. The coverage ratio is monthly rent divided by the full monthly obligation: principal, interest, taxes, insurance, and any HOA dues. The ratio of 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 generally open better pricing and leverage.
Credit. A 620 floor exists in parts of the network. Most programs want around 660, and 700+ unlocks the strongest leverage tiers.
Reserves. They vary by lender, leverage, loan size, and transaction type. About six months of the monthly obligation is common, and files above $1,500,000 typically step up to about nine months.
Loan size. Standard programs run up to $3,000,000.
Terms. The spine is the 30-year fixed. Extended terms and interest-only periods are available through select lenders in the network, and adjustable structures exist for investors who want them.
One caution belongs here. Clearing 1.00 is not the same as positive cash flow. The coverage ratio counts the payment only. Repairs, vacancy, management, utilities, and capex sit outside it. Cash-out makes this sharper, because pulling equity enlarges the loan and lowers coverage on the same rent.
A bigger down payment or more equity can lift the ratio. It never erases leverage caps, credit floors, reserve rules, or property eligibility. Strong files clear both tests: enough equity and enough rental coverage. For the full framework, see the complete DSCR loans guide.
What the Decision Looks Like in Practice
The right path depends on the investor profile. Here are three common ones.
The W-2 owner with one or two rentals. If your personal income is strong and your tax returns show clean numbers, the agency cash-out can fit. A one-unit rental gives the higher 75% ceiling. Expect to document your personal finances in full. If the seasoning clocks line up, the agency path may carry a lower cost than a non-agency loan.
The scaling investor with several financed properties. Financed-property limits and personal-income underwriting start to bind. A DSCR cash-out puts the property’s rent at the center of the file. The tradeoff is that the new, larger payment must still be covered by rent. Equity pulled to buy the next building only helps if that building’s coverage works too.
The two- to four-unit owner. The agency’s 70% cap for investment property leaves 30% equity behind. The network’s DSCR cash-out ceiling is 75%. That five-point gap can matter on a fourplex, though coverage after the larger loan decides whether the loan works.
Whichever route you pick, decide the use of proceeds first. Buying another rental that covers its own payment is a different decision than funding a project with no rent behind it.
One flip point is worth naming. If your income is strong, your property count is low, and seasoning is already met, the agency path may be the better tool. If a clock, a cap, or a count blocks you, DSCR becomes the practical path.
Key Terms Defined
Cash-out refinance: a new loan that pays off the old one and returns extra cash to you, secured by the same property.
No-cash-out refinance: a refinance that pays off the old loan and costs without returning meaningful cash to you.
TLTV / HTLTV: the combined loan-to-value ratios that include any junior liens, used by the agency to cap total debt against value.
Seasoning: the minimum time you have owned the property, or held the loan being paid off, before a cash-out refinance is allowed.
DSCR: the debt service coverage ratio, which divides monthly rent by the full monthly obligation of principal, interest, taxes, insurance, and any HOA dues.
Delayed financing: an agency exception that lets a cash buyer refinance before the normal title clock runs out.
Frequently Asked Questions
Does Freddie Mac let you cash out 80% on a rental property?
No. The Guide caps an investment-property cash-out at 75% for one unit and 70% for two to four units. The 80% figure belongs to primary residences. Check the Guide’s LTV table before you plan a refinance around any higher number. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Can I cash out right after buying a rental?
On the agency path, usually not. One borrower must be on title for six months, and any first lien you pay off must be 12 months old. Delayed financing is an exception for cash buyers with full documentation. Network DSCR cash-out programs expect about six months of ownership, subject to lender guidelines.
Is a no-cash-out refinance capped the same as a cash-out?
No. The agency allows 85% on a one-unit investment property and 75% on two to four units for a no-cash-out refinance. Cash-out is lower. In the network, a no-cash-out refinance can go to 85% LTV, with no cash back at closing. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
What happens to my cash-out if I have a second lien?
The second lien counts against the same cap on the agency path. If it must be paid off, it comes out of your proceeds first. The same principle applies on DSCR files: payoff of existing debt reduces what you receive.
Does the network offer DSCR cash-out on every property type?
No. Manufactured homes, log homes, and barndominiums are not offered. Eligible one- to four-unit rentals can be reviewed. Short-term-rental collateral has its own terms, with cash-out around 70% LTV, a 640+ score, and about 12 months of hosting history.
Your 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. You can reach the team at 828-256-2183 or request a quote. Qualification is subject to lender guidelines and is not a commitment to lend.
Unit count, not the building’s rent roll, is what Freddie Mac uses to set the ceiling, and that is why a fourplex and a single-family rental sitting side by side can pull noticeably different amounts of equity.
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. DSCR eligibility is generally reviewed around property-level rental income rather than personal income, subject to lender and program guidelines, a fit for self-employed investors and LLC-owned portfolios. Lendmire was recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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References
1. Freddie Mac Seller/Servicer Guide §4203.1
2. Freddie Mac mortgages for 2- to 4-unit properties
3. homebuyer.com: Cash Out Refinance Mortgages
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: How Much Down Payment a Rental Cash-Out Refinance Can Cover · How to Do a Cash-Out Refinance on a Rental as an Investor · Best Portfolio DSCR Cash-Out Refinance Program to Tap Rental Property Equity
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.