The Quick Read: A short-term rental cash-out refinance fits a landlord whose property already has about a year of hosting history and income that supports a lower leverage cap, while a long-term rental loan fits a landlord who wants a simpler income test and a higher leverage ceiling on standard rental collateral. Both qualify primarily on property-level rental income covering the payment, subject to lender guidelines.
- Short-term rental (STR) cash-out: up to 70% LTV, about 12 months of host experience, a 640 credit score minimum, and a 1.00 coverage floor on refinances.
- Long-term rental (LTR) cash-out: tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation.
- Income basis is the real split: booking history or projections for STR, a lease or appraiser’s market rent for LTR.
- Clearing 1.00 coverage is not the same as positive cash flow. Repairs, vacancy, management, and utilities sit outside the ratio.
- A first-time landlord with no hosting history generally cannot meet the STR experience expectation yet, which points toward the long-term side.
The STR cash-out is for the owner who already runs the property as a short-term rental, can document it, and wants equity out based on that income. The long-term rental loan is for the owner who has a tenant in place, or plans one, and wants the cleaner file. Neither is “better.” They test different income, and a first-time landlord’s history decides which one is even available.
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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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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.
Side-by-Side
The table below uses the network’s parameters for the short-term column and describes the long-term column by the same network’s standard rental programs. Programs change, and every file is underwritten individually.
| Factor | STR Cash-Out | LTR Loan |
|---|---|---|
| Review basis | Property income from hosting | Lease or market rent |
| Income evidence | Booking history, platform reports, bank deposits | Lease or appraiser rent schedule |
| Host or landlord history | About 12 months typical | No landlord track record needed |
| Cash-out LTV | Up to 70% | Around 75% |
| Minimum credit score | 640 | 620 floor in parts of network; most want about 660 |
| Coverage floor | 1.00 on refinance | 1.00 where select programs start |
| Reserves | Vary by lender, leverage, loan size | Commonly around 6 months of PITIA, varies |
Two notes on the table. Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted, but that is a separate path from the 1.00 floors shown. And reserves vary: conservative rate-term files at modest leverage under $1,500,000 can see reserves waived, while larger loans typically step up to about 9 months.
How the Income Test Differs
The income basis is the structural difference. The appraiser pulls comparable rentals, adjusts them, and reports a rent figure. The forms behind that work have names worth knowing: the Fannie Mae appraiser forms list names Form 1007, the single-family comparable rent schedule, and Form 1025, the small residential income property report. DSCR loans are not agency products, so those forms matter here only as the standard way rent gets documented.
On a short-term rental, the income evidence comes from a different place. It may be the property’s historical operating income, an appraiser-determined rent, or a third-party projection. That is why the roughly 12 months of hosting history matters so much. It gives the lender a record instead of a forecast.
Here is the catch for first-timers. A market-rent schedule on a vacation-style property often comes in well below what the booking history shows. If a lender uses only the long-term rent figure, an STR that performs well as an STR may not clear the ratio. If the lender uses booking history, the same property may clear with room. Which test applies depends on the program, which is why the property type and the file’s documents get sorted out before anyone orders an appraisal.
The ratio itself is monthly rent divided by the monthly obligation: principal, interest, taxes, insurance, and any HOA dues. A cash-out refinance raises the loan balance, so the obligation rises and coverage falls. That squeeze is the main reason cash-out amounts get limited by coverage before they hit the leverage cap.
When Short-Term Rental Cash-Out Is the Better Fit
STR cash-out is the better fit when the history already exists. Picture a landlord who bought a cabin-style rental, hosted it for over a year, and kept clean platform reports and bank deposits. Booking income is the strongest evidence that file has. Forcing it onto a long-term rent schedule would understate the property and shrink the proceeds.
It also fits when the owner wants to keep operating the property as a short-term rental after the refinance. Converting to a lease just to fit a loan changes the business plan.
The trade-offs are real:
- Lower leverage. STR cash-out tops out at 70% LTV, compared with around 75% on standard rental collateral. Less cash comes out against the same value.
- History requirement. About 12 months of host experience is the typical expectation. A property with three months of bookings is usually not ready.
- Credit floor. A 640 score is the STR minimum. Standard rentals have a 620 floor in parts of the network, though most programs want about 660, so the gap on credit is small.
- Income volatility. Seasonality and vacancy swing booking income. Lenders may apply an expense factor to gross STR income before running the ratio. In this network, program terms are set by the lender and the file.
- Local rules. 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.
When the Long-Term Rental Loan Is the Better Fit
The long-term rental loan is the better fit when the file is thin on history. A first-time landlord with a signed lease, or a property that will carry one, has what the program asks for: a lease or a market-rent schedule. There is no landlord track record to prove, because the test is the property’s income against the payment.
It also gives more room on leverage. Cash-out tops out around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation. Seasoning is the minimum ownership period before cash-out is available. Files that assume seasoning away get kicked back. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Credit works differently here, with no clear advantage over STR. A 620 floor exists in parts of the network, most programs want around 660, and 700+ unlocks the strongest leverage tiers. Loan sizes run up to $3,000,000 on standard programs (smaller balances available through select lenders), and above $2,500,000 the network generally holds to 30-year fixed structures.
A long-term loan also suits the landlord who wants predictable income and fewer moving parts. A lease is one document. A booking history is dozens of statements.
The limit: a property that really operates as an STR may appraise on a rent schedule that undersells it. That mismatch is the main cost of choosing the LTR path for the wrong property.
The Business-Purpose Frame
Both options are business-purpose loans on non-owner-occupied investment property. Under Regulation Z §1026.3, credit to acquire, improve, or maintain non-owner-occupied rental property is deemed business purpose, whatever the number of units. That is why both files are reviewed on the property’s rental income rather than a personal-income test.
That status depends on the property actually being a rental. A landlord who may move back into the home is in a different situation. Raise it before the file is built, not after.
What a First-Time Landlord Does Before the History Exists
Timing matters more than which loan sounds better. Here is how the sequencing usually works.
1. Pick the operating plan first. Decide whether the property will run as an STR or carry a lease. The loan follows the plan, not the other way around.
2. Start documentation on day one. For an STR, keep platform reports and bank deposits clean and separate from personal accounts. For a long-term rental, keep the lease and rent receipts.
3. Decide on vesting early. If the property will sit in an LLC, set that up before the refinance, subject to lender program eligibility. Entity documents that arrive late can leave the borrower of record unclear and slow the file.
4. Check seasoning and hosting history against the file. About 6 months of ownership is the common expectation for standard rental cash-out. About 12 months of host experience is the usual STR expectation.
5. Run the coverage ratio on the new balance. The cash-out raises the obligation. If the ratio only clears before the cash-out, the proceeds shrink.
An owner under 12 months of hosting has two paths: wait and document, or refinance on a long-term rent basis now and revisit later. Which one makes sense depends on the prepayment terms of the loan taken. Many DSCR loans carry prepayment structures that step down over the first several years, so a refinance now can make a second one later more expensive. Ask for those terms in writing.
Coverage Is Not Cash Flow
Passing the ratio does not mean the property makes money. DSCR compares rent to PITIA only. Repairs, vacancy, management fees, utilities, and capex all sit outside it. A first-time landlord who treats 1.00 as break-even is skipping the costs that actually drain a rental.
This matters most on STRs, where utilities, cleaning, supplies, and platform fees are the owner’s problem, and where income swings by season. Build your own operating budget separately from the lender’s ratio. The ratio decides whether a lender can review the file. It does not decide whether you keep money at the end of the month.
A larger down payment or lower leverage can lower the obligation and lift coverage. It does not erase credit floors, reserve rules, leverage caps, or property eligibility. The strongest files clear both tests: enough equity and enough rental coverage.
Property Types and Eligibility
Single-family homes, condos, and small multifamily are the usual collateral. Form 1025 is the appraisal form for 2 to 4 unit properties, and that is where many first-time landlords with a duplex or fourplex land.
Some property types are not offered in the network: manufactured homes (single- and double-wide), log homes, and barndominiums fall outside these programs. If the property is one of those, neither option here applies.
Term structures work the same for both. The spine is the 30-year fixed. Extended terms such as 40-year and interest-only periods are available through select lenders in the network, and ARM structures exist for investors who want them.
Key Terms Defined
DSCR (debt service coverage ratio): monthly rental income divided by the monthly principal, interest, taxes, insurance, and any HOA dues.
LTV (loan-to-value): the loan amount as a percentage of the property’s appraised value.
Seasoning: the minimum period you must own a property before a lender allows cash-out against it.
Cash-out refinance: a new, larger loan that pays off the old mortgage and returns the difference to the borrower as cash.
Reserves: liquid funds, usually counted in months of PITIA, that a borrower must show after the loan.
The Verdict
Choose by evidence, not by preference. If the property already has about a year of documented hosting income, the STR cash-out gives the file a fair read of that income, at a lower 70% leverage cap. If it does not, the long-term rental loan gives a simpler file and a higher ceiling around 75%, at the cost of valuing the property on lease rent. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The first-time landlord’s usual path is long-term first, short-term documentation in parallel, and a second look once history exists. Reviewing both through the network’s lenders is how a file gets matched to the right program. The complete DSCR loans guide covers the program basics.
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. Qualification is subject to lender guidelines and is not a commitment to lend.
Frequently Asked Questions
Can a first-time landlord get an STR cash-out refinance?
Sometimes. The STR program expects about 12 months of host experience, so a property with only a few months of bookings usually is not ready. A first-timer who has hosted the property for a year with clean records can be reviewed, subject to lender guidelines, at up to 70% LTV with a 640 minimum credit score.
Which option allows more cash out?
The long-term rental cash-out, which tops out around 75% LTV across most of the network. STR cash-out caps at 70%. The coverage ratio can shrink either amount, because a bigger loan raises the monthly obligation. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Does passing the 1.00 coverage floor mean the property cash flows?
No. The ratio compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex are not in it, so a property can clear the ratio and still lose money.
What if my coverage comes in under 1.00?
Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. It is a separate path from the programs that start at 1.00, not the same program with a lower floor.
Can I hold either loan in an LLC?
Often yes, subject to lender program eligibility. Entity documents, including formation papers and operating agreement, become part of the file, and the borrower of record should be settled early so disclosures match the vesting.
Is a DSCR loan the same as a commercial loan?
No. It is a business-purpose loan on residential collateral, reviewed primarily on the property’s rental income rather than personal income, subject to lender guidelines.
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
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 Qualify and Apply for a Short-Term Rental Cash-Out Refinance on a Home You Own · How to Qualify and Apply for a DSCR Cash-Out Refinance on a Rental With a Section 8 Tenant · Best DSCR Cash-Out Refinance Program Above the Conforming Loan Limit
Brandon Miller
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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.