The Quick Read: It depends on what is left after the new loan, capped at 75% of the pooled appraised value, pays off the maturing note and covers closing costs and any prepayment charge, and only if the pool’s rent still covers the new payment. The lower of the value cap and the coverage test sets your number.
- The formula: new loan (up to 75% of pooled value) minus the maturing payoff, minus costs and any prepayment charge, equals your cash.
- The ceiling is a maximum. It is not a target, and coverage on the new payment can pull the loan below it.
- The old payoff comes first. Thin equity above the balloon balance means thin cash.
- Recent purchases add a second cap. Cost-basis rules can sit under the leverage ceiling.
- Terms are subject to lender guidelines. Every file is underwritten individually, and none of this is a commitment to lend.
What Is Actually Being Sized?
A maturing portfolio loan is one note secured by several rentals that is coming due. A bank balloon is the usual example. Here, “portfolio DSCR loan,” “blanket loan,” and “cross-collateralized loan” all mean the same thing: one note secured by several rentals. A bank’s “portfolio loan” can also mean a loan the bank keeps on its own books. That is a different sense of the word.
You do not renew a maturing note.
A cash-out refinance is simply a larger new loan that pays off the old one and lets you keep the difference. The federal consumer-finance regulator’s home equity guide describes the same mechanic, and notes that your balance and payment rise as a result.
Lenders treat cash back at a balloon payoff as cash-out, not as a plain rate-and-term refinance. A rate-and-term refinance returns no cash at closing. Where a small leftover amount flips a file from one category to the other depends on the program, so confirm that line before you assume you’re in the lighter category.
The Waterfall: From New Loan to Cash in Hand
The new loan is capped at 75% of pooled appraised value. That is the cash-out ceiling across most of the wholesale network, and it holds on a portfolio cash-out too. Then three things come off the top.
1. The payoff of the maturing loan. This is the first claim on the new money.
2. Closing costs and fees. These come out of the proceeds or get paid in cash.
3. Any prepayment charge on the old note. Your loan documents decide this one.
Run it in percentages of value. Say the pool appraises at 100 and the new loan hits the 75 cap. If the balloon payoff equals 52% of value, the gross cash-out is 23% of value, before costs and any prepayment charge. The final check is whether the pool’s rent covers the new payment at the program’s coverage floor.
That last test often decides the outcome. DSCR is the property’s rent divided by its full monthly housing payment: principal, interest, taxes, insurance, and any association dues. Corporate Finance Institute gives the general form as operating income divided by total debt service. In a DSCR loan file, the practical version uses rent against the full payment.
A bigger balance means a bigger payment, and that lowers the ratio. So if rents are modest, coverage can cap the loan below 75% of value. Same pool, less cash. The cap on the loan is whichever test is tighter.
| Test | What it limits | When it binds |
|---|---|---|
| Value cap | Loan to 75% of pooled value | Rents are strong, equity is modest |
| Coverage test | Loan size the pooled rent supports | Rents are thin against the payment |
| Cost-basis cap | Loan against what you paid | Properties bought recently |
| Reserves | Cash you must keep liquid | Large loans, thin liquidity |
Which Structure Are You Refinancing Into?
You usually choose between two paths, and the cash math differs between them.
The 30-year portfolio DSCR loan holds 2 to 20 properties under one note, with loan sizes typically from $300,000 to $5,000,000. It carries a 30-year term, which removes the balloon, and it offers fixed or adjustable options plus an interest-only period. Coverage is measured on the pool, so rent and debt service are totaled across all properties.
The rental portfolio term loan is built for five or more properties or units under one note. It runs fixed for terms of 3, 5, 7, or 10 years, with a balloon at the end. Its leverage tops out at 75% of value, and prepayment is typically yield maintenance. Non-recourse versions exist, with recourse limited to carve-outs such as fraud and bankruptcy. Small multifamily properties of five or more units are eligible only in this term structure.
A term loan can solve a deadline without solving the maturity problem. You end up with a new balloon in a few years. If your goal is to stop refinancing under pressure, the 30-year note is the cleaner exit. If you want a shorter runway for a planned sale, the term loan can fit.
Why Start Before the Deadline
Maturity pressure shrinks your options. The CFPB explains that a balloon is a large one-time payment at the end of the term, and that balloon loans generally run 5 to 10 years versus 15 to 30 for traditional mortgages. It also says refinancing before the balloon is due may be possible, but may not be if property value or your finances decline.
That is exactly the squeeze a cash-out sizing runs into. A falling appraisal shrinks the loan and the cash directly. Weaker rents lower coverage. Either one can leave you with less cash than the ceiling suggests, or with a payoff the new loan barely covers.
Start the appraisal and rent evidence well before the maturity date. A typical file includes:
- the payoff statement for the maturing loan;
- the appraisal with a rent schedule for each property;
- leases or other rent evidence;
- entity documents, if the properties sit in a special-purpose entity;
- title history, and for recent purchases, the settlement statement and proof of funds.
What If the Payoff Is Close to the Cap?
If the balloon balance already sits near 75% of value, almost nothing comes out. If it sits above, the refinance needs cash from you at closing. Appreciation matters here. A pool bought years ago with modest appreciation can show a payoff that eats nearly the whole cap.
Rate-and-term is a different product. It returns no cash, and across the network its leverage ceiling is higher than the cash-out cap, at up to 85% on a single rental. On the 30-year portfolio structure, leverage on a rate-and-term refinance goes up to 80% of value. If your only goal is removing the balloon, comparing this route against cash-out is worth the time. Take cash only if you have a use for it.
Recent Purchases and the Second Cap
Cash-out proceeds are available on seasoned properties. For a property owned about six months or less, the seasoning rule caps the cash-out amount further.
Inside the first six months, the loan is also capped at 90% of total cost (purchase price plus documented improvements). From six to twelve months, that cap rises to 100% of total cost. The leverage ceiling still applies, and the loan is the lower of the two. After twelve months, the appraised value alone is the basis. A rate-and-term refinance is not subject to the cost-basis cap.
This matters if your pool mixes old and new acquisitions. A recent purchase can drag down what the whole pool supports.
Agency programs have their own delayed-financing exception for a recent cash purchase. It is useful as a contrast only. DSCR loans are not agency products, and the network’s own cost-basis rules govern.
The Weak Property Problem
Coverage on the 30-year portfolio structure is measured on the pool. Stronger properties can offset weaker ones. A rental below 1.00 coverage can sit inside the pool, as long as underwriting tests the pooled coverage, the leverage, and the terms. The pool as a whole must still clear the program’s 1.00 floor.
If one property is dragging the pool, you have three options:
- Keep it in. Strong neighbors may carry it.
- Pay it down or fix its rent. A signed lease or an appraiser-supported market rent helps.
- Release it. Partial releases, substitutions, and sales out of the pool follow your loan documents and the lender’s release terms. The remaining pool must still cover its own debt service.
Each choice changes cash. A release pulls value out of the 75% calculation. It also may trigger prepayment terms on the old note.
Prepayment, Reserves, and Credit
Prepayment can quietly reduce proceeds. The maturing loan’s documents set the terms. Yield maintenance is common on longer fixed-term portfolio notes, though a note at or past its balloon date often carries little or none. Read the payoff letter, not the original summary.
Reserves vary by lender, leverage, loan size, and transaction type. On cash-out files they commonly run about 6 months of PITIA (the full monthly payment: principal, interest, taxes, insurance, and dues), and about 9 months on loans above $1,500,000. On the rental portfolio term loan, reserves are held for taxes, insurance, and capital expenditures. Reserves are cash you keep, so they cut into what you can spend.
On credit, portfolio programs commonly set the floor at 640, and some structures ask for 680 or 720. Properties that are owner-occupied, mixed-use, or commercial are ineligible in the pool.
Does Clearing 1.00 Mean the Pool Cash-Flows?
No. Coverage compares rent to the housing payment only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation. A pool can clear 1.00 and still lose money after those costs.
This is also why the cash-out ceiling is not a target. Pulling the maximum raises your balance and thins your margin. Size the loan from the cash you need, then check what is left.
The complete DSCR loans guide covers the program basics.
Key Terms Defined
Balloon payment: A large one-time payment due at the end of a loan term, after smaller payments that did not pay the loan off.
Cash-out refinance: A new, larger loan that pays off the old one and returns the difference to you as cash.
Pooled value: The combined appraised value of every property securing one portfolio note.
Seasoning: The waiting period a lender wants after you buy a property before it will size a loan on appraised value.
Yield maintenance: A prepayment charge that compensates the lender for interest it loses when you pay off early.
PITIA: Principal, interest, taxes, insurance, and association dues, the full monthly payment used in the coverage test.
Frequently Asked Questions
Is there a dollar cap on how much cash I can take out?
Not a fixed one. The cash-out ceiling is 75% of pooled appraised value, and the pool’s rent must cover the new payment. Whichever test is tighter controls the loan. Loan sizes on the 30-year portfolio structure typically run from $300,000 to $5,000,000, subject to lender guidelines.
Will the cash-out count as income?
Cash-out proceeds are loan proceeds, not rent, so they do not feed the coverage test. Tax treatment varies; consult a qualified professional.
Can I refinance a maturing note into a loan with no balloon?
Yes, if the pool qualifies. The 30-year portfolio DSCR loan runs a 30-year term, so the balloon goes away. The pool must clear the program’s coverage floor, and underwriting reviews credit, reserves, and property eligibility. A term loan instead creates a new balloon.
What happens if the appraisal comes in low?
The loan and the cash both shrink, because the 75% cap applies to the appraised number. If the appraisal falls far enough, the new loan may not cover the old payoff, and you would need to bring cash to closing.
Does a recent purchase in the pool change the math?
Yes. Inside the first six months, the loan is capped by a cost-basis rule that sits under the leverage ceiling. That cap eases between six and twelve months. After twelve months, appraised value alone is the basis.
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. As a mortgage broker with DSCR programs in 41 markets, including Washington, D.C., it arranges financing through select lenders in its wholesale network, and each file is underwritten individually. A maturing balloon is easiest to work with when the appraisal and rent evidence are in hand before the pressure hits.
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), a non-QM mortgage broker serving investors in 41 markets including Washington, D.C., helps structure DSCR scenarios commonly evaluated around a property’s rental income rather than personal income paperwork, subject to lender guidelines. A Scotsman Guide Top Mortgage Workplace in 2025 and 2026, Lendmire places loans through wholesale investor lenders and is not a direct lender.
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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
2. Corporate Finance Institute – Coverage Ratio Overview
3. CFPB: What Is a Balloon Payment When Is One Allowed
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: Super Jumbo DSCR Cash-Out Refinance vs Portfolio DSCR Loan on Rural Acreage · Is a Cash-Out Refinance Worth It on an Existing DSCR Loan? · DSCR Cash-Out Refinance vs Conventional Investor Loan to Build an Addition or ADU
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.