The Quick Read: It depends on the lowest of two ceilings, the leverage cap on appraised value and the rent coverage the lender counts, minus your existing payoff, closing costs, and held-back reserves, and both short-term rental collateral and foreign-national status push the first ceiling down. A borrower who owns the property outright with a clean appraisal sees the most cash. A borrower with a large existing balance may see little or none.
- On short-term rental collateral, cash-out tops out around 70% LTV across the network’s programs.
- Foreign-national files are generally underwritten at lower leverage than U.S.-borrower files, so the real ceiling sits below 70%.
- Rent coverage has to clear the program floor, which is 1.00 on short-term rental refinances. A bigger loan means a bigger payment, so coverage falls as cash-out rises.
- Lenders also look at how long you have owned the property and how long you have hosted it, so timing matters before you apply.
- Cash-out proceeds are loan funds, not sale proceeds, which matters for the withholding question covered below.
What Sets the Size of the Check?
The check equals the new loan minus the old loan’s payoff, closing costs, and any reserves the lender holds back. The new loan is capped by whichever test is tighter: appraised value times the maximum LTV, or the largest payment your counted rent can support.
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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.
Think of it as three gates. Gate one is leverage. On short-term rental collateral the cash-out ceiling is around 70% of appraised value, so a property appraised at 100 units of value cannot produce a loan above 70 units, whatever the rent looks like. Gate two is coverage. The rent the lender counts, divided by the full monthly obligation (principal, interest, taxes, insurance, and any HOA dues), has to reach at least 1.00 on a short-term rental refinance. Gate three is deductions: payoff, costs, and reserves come out of whatever the first two gates allow.
The lower of gates one and two wins. A strong coverage ratio improves pricing and terms, but it does not lift the leverage cap. A property with plenty of equity and thin rent coverage gets limited by coverage.
Clearing 1.00 also does not mean the property cash-flows. Repairs, vacancy, management, utilities, and capital spending all sit outside the calculation.
How Does a Lender Count Short-Term Rental Income?
Lenders count either trailing hosting history or a market-data projection, and they usually apply a discount. Across the network, most programs want about 12 months of hosting history on a short-term rental refinance, shown through platform payouts or a property manager’s report. Some lenders also use a projection from a market-data provider as support or as a cross-check.
The appraisal matters here. DSCR files typically include an appraisal with a rent schedule, Form 1007 for a single-family home or Form 1025 for a 2-4 unit property. Those forms are built around long-term rent, so the figure can land well below what a busy Airbnb actually earns. If a program defaults to that number, a property that clears 1.00 on platform income can fall short on paper.
One more filter applies before any math. A property without legal short-term use may not be able to count short-term income at all. 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.
Why Does Foreign-National Status Shrink the Cash-Out?
Foreign-national borrowers are generally underwritten at lower leverage than U.S. borrowers, so the same property releases less cash. The lender has no U.S. credit history to lean on, has less ability to pursue assets abroad, and tends to hold more back through leverage caps, reserves, and documentation.
Do not stack one blended percentage on top of the 70% short-term ceiling. Foreign-national terms are lender-specific, and the exact cap depends on the program, the property type, and the borrower’s profile. Condos, condotels, and 2-4 unit properties often carry lower caps than a single-family home. Pull the current figure from a program sheet rather than a rule of thumb.
Credit and reserves matter too. On short-term rental files, the network typically looks for a 640+ score, and reserves are commonly around 6 months of the full monthly obligation. Foreign-national files can see stricter reserve expectations, depending on the lender, leverage, and loan size. Loan amounts run up to $3,000,000 on standard programs. Eligibility is subject to lender guidelines, credit approval, and property review.
A larger down payment or more equity can lower the payment and lift coverage, but it never erases leverage caps, credit floors, reserve rules, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Three Scenarios: Which Limit Binds?
The table below uses modeled percentages of appraised value, not market data, and it assumes a foreign-national cap somewhat below the 70% short-term ceiling.
| Scenario | Binding limit | What it means for the check |
|---|---|---|
| Large equity, solid rent | Leverage cap | Cash is sized by value times the cap |
| Moderate equity, discounted rent | Coverage | Loan shrinks until rent covers the payment |
| Appraisal lands low | Leverage cap | Lower value cuts the loan at any ratio |
Run the first scenario with simple modeled numbers. Say the lender’s foreign-national cap on this property is 60% of value, and the existing payoff is 40% of value. Gross cash before costs is about 20% of value. Costs and reserves then reduce it.
In the second scenario, the property could carry a high loan on paper, but the lender counts a discounted rent figure. Coverage falls below the floor at the full cap, so the loan must shrink until the ratio clears. The trade-off is plain: the lower loan fits the rent, and the check gets smaller.
In the third scenario, a low appraisal leaves the investor with the same debt but a smaller ceiling. Investors who expect that outcome should ask the broker how the appraisal gets ordered and whether a short-term income addendum is available before committing.
What Comes Out Before You Get Paid?
The check you receive is smaller than the loan minus the payoff, because several items come out first.
| Deduction | What it is |
|---|---|
| Existing payoff | Balance on the loan being replaced, plus accrued interest |
| Prepayment charge | Any penalty on the old loan, if it carries one |
| Closing costs | Appraisal, title, lender, and broker charges |
| Reserves | Funds the lender requires you to show or hold back |
Prepayment terms and reserve rules vary by lender, leverage, and loan size. On conservative files at modest leverage, reserves may be waived on some programs, and loans above a certain size typically step up to roughly 9 months. A broker comparing several lenders can show how those choices move the net number before you commit, which is where the real differences between programs show up.
What Does a Foreign-National Borrower Need to Have Ready?
Plan on a valid passport, an entity structure if the property sits in an LLC, and proof of foreign registration if the LLC was formed outside the U.S. Some borrowers also hold an ITIN, which is a tax-processing number and does not by itself settle residency or eligibility.
Practical items add friction. International wires need to be arranged, a U.S. bank account is commonly expected, and the hosting records have to be clean and traceable. The sooner the platform payouts and manager reports are assembled, the easier the file is to review.
Seasoning matters on a refinance. The common expectation is about 6 months of ownership, measured from the recorded deed, plus about 12 months of hosting history. A property bought recently with no hosting record is usually a different conversation than a seasoned listing with a full year of payouts.
Is the Cash Taxable or Subject to Withholding?
Loan proceeds from a refinance are generally borrowed funds rather than income, and a refinance is not a sale. The withholding rules concern sales: the IRS explains FIRPTA withholding as applying when a foreign person disposes of a U.S. real property interest. A later sale is a separate event, and per Taxes for Expats the buyer generally withholds 15% of the amount realized and reports it on Form 8288. The National Association of Realtors offers background on the law and its forms. 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.
When a Cash-Out Doesn’t Make Sense
A cash-out is the wrong tool when the payoff already consumes most of the allowed loan, because costs and reserves can eat what little remains. It is also the wrong tool when the investor only wants a different term or structure and not extra funds.
The flip side is when the cash has a clear use. Many short-term rental investors pull equity to fund the next down payment, which makes the cash-out a deal-sizing step instead of a payout. The question to test first is whether the next property’s own coverage works at its own leverage cap, because a refinance that funds a weak purchase just moves the problem.
Longer terms, interest-only periods, and ARM structures exist through select lenders in the network for investors who want to shape the payment profile. Each one changes the coverage ratio in its own way, so they are worth modeling before choosing.
Key Terms Defined
Cash-out refinance: A new loan that pays off the old one and releases the remaining equity as cash.
LTV (loan-to-value): The loan balance divided by the property’s appraised value.
DSCR (debt service coverage ratio): Counted monthly rent divided by the monthly principal, interest, taxes, insurance, and HOA dues.
Seasoning: The minimum time you must have owned the property before a cash-out refinance, commonly about 6 months.
Net proceeds: The cash you actually receive after payoff, costs, and reserves.
Form 1007: The appraisal rent schedule for a single-family home, built around long-term rent.
Frequently Asked Questions
Can a foreign national do a cash-out refinance on a short-term rental at all?
Yes, through select lenders in the network, subject to lender guidelines and property review. Qualification runs primarily on the property’s rental income covering the payment, so U.S. income documents are not the center of the file. Expect lower leverage than a U.S. borrower would see, plus passport and entity paperwork, and reserves that can run higher.
Does a higher coverage ratio increase how much cash I can take out?
Not past the leverage cap. A stronger ratio can improve pricing and terms, but short-term rental cash-out leverage still tops out around 70% LTV, and foreign-national status typically lowers the working ceiling further. Coverage becomes the binding limit only when the counted rent is too low to support the loan the cap would otherwise allow.
What if the rent the lender counts is below 1.00?
Then the loan generally has to shrink, or the deal works to a different path. On short-term rental refinances, 1.00 is the floor for the programs described here. Select lenders in the network may offer lower-coverage options, with leverage and terms adjusted, which usually means less cash, not more.
Will the appraisal reflect my Airbnb income?
Not automatically. The standard rent schedule is built around long-term rent and often sits below short-term potential. Whether a lender will use platform history, a market-data projection, or an appraiser’s short-term addendum depends on the lender, so the choice of program shapes the number.
Can I use the proceeds to buy another rental?
Yes, and many investors do. The cash can fund the next down payment, which is typically 25% on a short-term rental purchase on the strongest files, since purchase leverage can reach 75% there. Cash-out refinances are the lower case at 70%. The new property still has to qualify on its own rent and leverage, subject to lender guidelines.
Sizing the Cash Before You Apply
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 arranging DSCR financing through select lenders in its wholesale network across 41 markets, including Washington, D.C. This is not a commitment to lend. For the full framework behind these programs, see the complete DSCR loans guide, or reach the team at 828-256-2183.
Knowing your equity, counted rent, and payoff before you apply lets you predict the outcome far better than guessing.
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 non-QM mortgage broker serving real estate investors in 41 markets, including Washington, D.C., through DSCR investor loan programs. Qualification is generally reviewed around the subject property’s rental income, not the borrower’s W-2 history — a practical fit for LLC-titled portfolios and self-employed investors. All scenarios remain subject to lender review and program guidelines. Two consecutive Scotsman Guide Top Mortgage Workplace recognitions (2025, 2026).
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References
3. NAR – Foreign Investment in Real Property Tax Act (FIRPTA)
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: Short-Term Rental Cash-Out Refinance Requirements Before Buying a Second Home or Rental · Can You Get Approved for a Short-Term Rental Cash-Out Refinance With Interest-Only Period? · Best DSCR Cash-Out Refinance Program for a Short-Term Rental Owned by a Foreign National
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.