The Quick Read: The cash is capped at about 70% of appraised value minus your payoff, liens, closing costs, and reserves, so the amount you receive is often well below the cap itself. On short-term rental collateral, most programs we place files with cap a cash-out at that 70% of appraised value, subject to lender guidelines. The rent test can shrink the loan further.
- The formula: new loan, minus mortgage payoff and liens, minus closing costs and reserves, equals net cash.
- The leverage cap: about 70% LTV on a short-term rental cash-out, against about 75% on a standard long-term rental.
- The income test: the rent has to cover the larger payment, with a 1.00 coverage floor on short-term rental refinances.
- Typical conditions: a 640+ credit score and about 12 months of hosting history.
- The catch: the cap limits the loan, not your cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
What Is the Basic Formula?
Net cash equals the new loan minus everything that has to be paid off or set aside first. That includes your current mortgage, any junior liens, closing costs, prepaid items, and required reserves.
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
Prefilled with starting assumptions — enter your property’s value, balance, taxes, and insurance for a more accurate picture.
Program parameters update from Lendmire’s centralized guideline source. Taxes and insurance are editable estimates.
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.
Say you own a short-term rental appraised at $500,000. At 70% LTV (loan-to-value, the loan as a share of appraised value), the maximum new loan is $350,000. If you owe $300,000, the gross ceiling is $50,000. This is an illustrative example, not a quote. Costs and reserves then come out of that $50,000, so the check you receive is smaller. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
A cash-out refinance pays off the old first mortgage and any junior liens. It then writes one new first lien. The leftover is yours. Lender guidelines drive every step, so programs differ.
For the wider picture, Lendmire’s complete DSCR loans guide covers how these loans work from purchase through refinance.
Why Does the 70% Cap Matter More on Short-Term Rentals?
Because the same equity produces less cash. On a standard long-term rental, most programs in the network top out near 75% LTV on a cash-out. Short-term rental collateral usually gets a lower ceiling, about 70% LTV on a cash-out refinance.
Don’t mix up the numbers. Short-term rental purchases can reach 75% LTV on the strongest files. A cash-out on the same property tops out lower. Applying the purchase figure to a refinance is a common planning error. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Consider two owners with identical $500,000 properties and identical $300,000 balances. The long-term rental owner faces a 75% ceiling. The short-term rental owner faces 70%. That gap is real money left on the table. It argues for documenting your history well, or for taking a smaller pull.
Which Limit Hits First: Equity or Rent?
Either one can. The cash you can take is set by the lower of two tests.
1. The equity test: appraised value times the LTV cap, minus your payoff.
2. The income test: how large a loan the property’s rent can carry at the program’s coverage floor.
DSCR (debt service coverage ratio) divides qualifying monthly income by the full monthly housing obligation. That obligation is PITIA: principal, interest, taxes, insurance, and any HOA dues. A bigger loan means a bigger obligation, so coverage gets thinner as you pull more cash.
Here is the part many owners miss. On short-term rentals, lenders typically trim gross platform income with an expense factor before running the ratio. Market commentary points to a trim of roughly 20% to 25%, and some experienced hosts may see none. That haircut shrinks only the top of the fraction. The payment on the larger loan does not shrink.
So a property with plenty of equity can still produce modest cash if coverage is thin. Picture a cash-out that sits within the 70% cap but produces a ratio just under 1.00. The loan fails the coverage floor even though leverage is fine. The fix is a smaller cash-out, not a bigger appraisal.
Clearing 1.00 also does not mean positive cash flow. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capital expenses sit outside the calculation.
Coverage below 1.00 is a separate path. It is available through select lenders in the network, with leverage and terms adjusted. It is a different program, not a looser version of the standard one.
What Comes Out Between the Payoff and the Wire?
Several items come out before any cash reaches you. Run through this checklist before you count on any number.
- Your payoff. The payoff quote often includes accrued per-diem interest, and some existing loans carry prepayment charges.
- Junior liens. Any second mortgage or line must be paid off, since the new loan takes first position.
- Closing costs. Appraisal, title, lender and broker fees, and recording charges all reduce the cash.
- Prepaids and escrows. Taxes and insurance may be collected up front.
- Reserves. Reserves are liquid cash you must still hold after closing, counted in months of PITIA. Commonly about 6 months on a cash-out, though they vary by lender, leverage, loan size, and transaction.
Some programs count cash from the refinance itself toward reserves. Others do not. Ask which approach applies before you plan around the proceeds.
How Does the Appraisal Change the Number?
The appraisal sets value, and value times the cap sets the maximum loan. A low appraisal lowers the ceiling by 70 cents for every dollar of shortfall in value.
The appraisal also affects income. Many appraisers use Form 1007, a single-family rent schedule that estimates long-term monthly market rent. McKissock Learning explains that the 1007 cannot document short-term rental rates, and that Form 1025 covers 2-4 unit income properties.
The alternative is an appraiser addendum. HousingWire and Class Valuation both describe a short-term rental projected income analysis added to the appraisal. Nightly rates multiplied by 30 are not an acceptable stand-in for the 1007’s market rent line.
Why it matters: if a program defaults to the long-term rent figure, a property that clears 1.00 on Airbnb income can fall short on paper. Income method changes both qualification and loan size.
How Much Cash Comes Out in Different Situations?
These scenarios use illustrative values and percentages only. They are not quotes, and none shows a payment.
| Scenario | Value / Balance | What limits the cash |
|---|---|---|
| High balance | $500,000 / $340,000 | Equity cap leaves little after costs |
| Moderate balance | $500,000 / $250,000 | Equity cap; rent test likely fine |
| Income-limited | $500,000 / $200,000 | Coverage fails above a smaller loan |
| Low balance | $500,000 / $10,000 | Same 70% cap; still a cash-out |
In the first row, a 70% cap means a $350,000 ceiling. With $340,000 owed, gross cash is only $10,000 before costs. That refinance probably does not make sense.
In the second row, the ceiling leaves $100,000 gross. Costs and reserves come out of that.
In the third row, equity is abundant. But if the rent covers only a thinner loan, the loan shrinks to what coverage supports. Equity is not the limit there.
In the fourth row, owing little does not change the rules. If any cash comes back at closing beyond payoff and costs, the transaction is reviewed as a cash-out with the same cap. A refinance that only pays the old loan and costs is usually reviewed as rate-and-term. That path returns no cash and can allow higher leverage on select programs.
Does Hosting History or Seasoning Affect Timing?
Yes. Most programs we place files with expect about 12 months of hosting history on a short-term rental refinance. Trailing platform or property-manager statements are typically the main proof of income on a refinance.
Seasoning is the waiting period between buying a property and refinancing it. On standard rentals, about 6 months from the recording date is a common expectation. Short-term rental expectations can differ, so confirm the rule for your file.
Other accepted income evidence can include a third-party projection such as AirDNA. Lenders differ here. Some do not lend on short-term rentals at all. Some want 12 months of history or qualify on long-term rent. Some accept projections. Across the wholesale network, you see the full spread, which is why shopping the structure matters as much as shopping the number.
What Documents Do You Still Need?
A file that qualifies primarily on property-level rental income covering the payment, subject to lender guidelines, still needs paperwork. Expect an appraisal, rent evidence, credit, entity documents, and reserves. Many investors misread “no personal income documentation” to mean no documents at all.
Credit matters too. For short-term rentals, a 640+ score is typical. Loan sizes run up to $3,000,000 on standard programs, with smaller balances routed through select lenders in the network.
Titling in an LLC is common, subject to lender program eligibility. Manufactured homes, log homes, and barndominiums are not offered in these DSCR programs.
What Do You Give Up by Refinancing?
Refinancing reprices the whole balance, not just the new cash. If your current first mortgage is good, replacing it is the main cost of getting the cash. The new loan is a different product on different terms.
That is why a cash-out refinance is not always the right tool.
Think about the debt, too. More leverage means a higher obligation against the same rent. A slow season can squeeze coverage you cleared on paper.
Key Terms Defined
Cash-out refinance: a new loan larger than your current balance, with the difference paid to you at closing.
LTV (loan-to-value): the loan amount divided by the appraised value.
DSCR: qualifying monthly income divided by the full monthly housing obligation.
PITIA: principal, interest, taxes, insurance, and any HOA dues.
Seasoning: the waiting period a lender wants between two events, usually buying and refinancing.
Reserves: liquid cash you must still hold after closing, counted in months of PITIA.
Form 1007: an appraisal form estimating long-term monthly market rent on a single-family home.
Frequently Asked Questions
Can I take out 100% of my equity?
No. The LTV cap limits the loan. On short-term rental collateral, most programs cap a cash-out at about 70% of appraised value. Your payoff, closing costs, and reserves then come out of what remains, so net cash is smaller than the ceiling suggests.
Does the 70% cap mean I receive 70% of the value in cash?
No. The cap limits the new loan, not your proceeds. Subtract your payoff first. On a $500,000 property with a $300,000 balance, the gross ceiling is $50,000 before costs and reserves. That example is illustrative only.
What if I owe very little, or nothing?
You still face the same cap, and a cash-out still needs the rent to clear coverage. Even a small payoff is treated as a cash-out if cash comes back at closing. With no balance, the ceiling is simply the cap times value, less costs and reserves.
Are cash-out proceeds taxable?
Credit Karma notes that cash from a loan generally isn’t taxable income. Tax treatment varies; consult a qualified professional.
Can I qualify with only a few months of hosting history?
It depends on the program. Many expect about 12 months of history on a short-term rental refinance. Some lenders accept projections, and others qualify the property on long-term rent. Ask which method applies before you apply.
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. Programs change, every file is reviewed individually, and nothing here is a commitment to lend.
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., through wholesale and investor-lending channels. DSCR loans are evaluated by the lender on rental income rather than personal income, subject to lender guidelines — a fit for LLC-owned portfolios, self-employed investors, and operators scaling beyond conventional loan caps. Recognized as a Scotsman Guide Top Mortgage Workplace in 2025 and 2026.
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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
2. HousingWire – STRs Breaking the Appraisal Playbook
3. Class Valuation – 1007 and STRs
4. Credit Karma – Cash-out refinance on an investment property
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 to Do a Cash-Out Refinance on a Rental as an Investor · How Much Cash Comes Out of a Short-Term Rental Cash-Out Refinance Right After Rehab? · Banks That Offer a Short-Term Rental Cash-Out Refinance to Consolidate Debt
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.