The Quick Read: The better option depends on which income you can document and how much cash you need back. A long-term rental loan fits a leased property, or a payoff-only refinance with little or no cash back.
- Short-term rental (STR) files typically expect about 12 months of hosting history and a 640 credit score.
- STR cash-out tops out around 70% LTV, while a standard long-term rental cash-out tops out around 75% across most of the network.
- Both tests apply: enough equity and enough rental coverage.
- A payoff-only refinance generally gets lighter treatment than one that returns cash.
- Clearing 1.00 coverage is not the same as positive cash flow.
If your property books nightly stays and you have a clean year of payouts, the STR route lets that income count. If it sits on a lease, or you are just retiring hard-money or bridge debt, the long-term route is simpler and the paperwork is lighter. The numbers below come from programs placed through a wholesale network of DSCR lenders, and all of them are subject to lender guidelines and are not a commitment to lend.
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.
A DSCR loan (debt service coverage ratio) qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Lendmire’s complete DSCR loans guide covers the basics if the term is new.
Key Terms Defined
Cash-out refinance: a new loan that pays off the old one and returns the leftover equity to you as cash.
Payoff-only refinance: a new loan that covers just the old balance and closing costs, with no cash to you.
PITIA: the full monthly housing payment: principal, interest, taxes, insurance, and any association dues.
DSCR: monthly rent used for lender review divided by PITIA. It measures rent against the payment, nothing else.
Seasoning: the waiting period a lender wants after you buy or refinance before it will lend against the property again.
LTV: loan-to-value, the loan balance as a share of the property’s value.
Side-by-Side
The column on the right reflects published industry norms for a long-term rental loan, with network figures where they apply. Pricing is left out on purpose. It lives in the calculator.
| Factor | STR cash-out refinance | Long-term rental loan |
|---|---|---|
| Income basis | Hosting history or projection, tested against market rent | Lease or appraiser’s market rent |
| Documentation | Platform payouts or manager statements, bank deposits | Lease, rent schedule |
| History expected | About 12 months of hosting | Lease in place or market rent opinion |
| Max cash-out LTV | Around 70% | Around 75% |
| Credit score | 640 minimum | Most programs want about 660 |
| Coverage floor | 1.00 | 1.00 is where select programs start |
| Reserves | Commonly around 6 months of PITIA | Varies by lender, leverage, and size |
| Timeline | Extra steps for income evidence | Fewer documents to gather |
| Property rules | Legal hosting use must be confirmed | Standard rental eligibility |
Entity vesting works the same way on both sides. Closing in an LLC is common, subject to lender program eligibility, and a personal guarantee generally still applies.
How the Income Gets Counted
Income is where the two options split. A long-term rental uses a signed lease or the appraiser’s market rent, and when both exist the lower figure is commonly used. That is the appraisal’s rent schedule for a single-family property (Form 1007) or the operating income statement for 2-4 units (Form 1025).
An STR is harder to prove. Those forms were built for monthly leases, so they miss nightly pricing and seasonality. Per Scotsman Guide, a non-QM trade article that describes typical practice and is several years old, lenders often start with the lower of the 12-month average of actual STR income and the appraisal’s market rent. The same article notes some non-QM lenders will review ratios below 1.00 when the borrower has compensating assets.
Across the network, a few lenders count a third-party projection or an STR appraisal form instead. Each method can produce a different loan amount on the same address. Some lenders won’t accept STR income at all, so the program choice is part of the outcome.
Where the Cash Actually Goes
A cash-out refinance does not hand you the whole equity pile. At closing the old payoff comes out first. Then come costs, reserves, and any prepayment charge on the old loan. Only the remainder reaches you.
Take a concrete scenario. Say you own a vacation rental with hard-money debt and a personal car loan you want gone. The new loan must retire the hard-money payoff, fund costs and reserves, and still leave enough to clear the car loan. At 70% LTV on STR collateral, the equity test may be your tighter limit. At 75% LTV on a standard long-term rental, you get a little more room, but only if the lease-based rent covers the larger payment.
Two tests run side by side. Equity limits the loan size. Coverage limits what the rent can carry. Whichever is tighter caps your proceeds.
Pulling cash out also raises the payment, which lowers the coverage ratio. A property that clears 1.00 on a payoff-only loan might fall short once you add cash back. A larger down payment on a purchase can lift coverage, but it never erases leverage caps, credit floors, reserve rules, or property eligibility.
When a Short-Term Rental Cash-Out Is the Better Fit
Pick the STR route when nightly income is real and provable. These are the signs that it fits:
- You have a 12-month ledger. Network STR programs typically expect about 12 months of hosting experience. Platform payouts tied to bank deposits make the file clean.
- Long-term rent would undersell the property. Converting to a lease just to refinance often cuts the qualifying income. The same loan can then fail coverage.
- The property is legally allowed to host. 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. If hosting is not allowed, STR income can’t support the loan.
- Your credit clears 640. That is the STR floor in the network.
The tradeoff is a lower leverage ceiling, around 70% on STR cash-out, and more documentation. Seasonal swings also matter. A strong summer can hide a thin winter, and the underwriter looks at the full year.
When a Long-Term Rental Loan Is the Better Fit
Pick the long-term route when the property sits on a lease, or when your goal is mostly payoff.
- You are retiring hard-money or bridge debt. A payoff-only refinance generally gets lighter treatment than one that returns cash. If any cash returns to you, it becomes cash-out and gets the stricter treatment.
- You lack hosting history. A property being converted to STR with no track record is usually underwritten on long-term rent anyway.
- You want fewer moving parts. A lease and a rent schedule are simpler than a year of platform ledgers.
- You want slightly higher leverage. Standard long-term cash-out reaches around 75% LTV across most of the network, with about 6 months of seasoning as the common expectation.
Most programs want around 660 credit, and 700+ unlocks the strongest leverage tiers. The cost is lower qualifying income when the property earns more as a nightly rental. Long-term rent is often well below STR gross revenue.
Paying Off Debt: What Neither Option Fixes
Debt type changes the math more than collateral type does.
Paying off hard-money or bridge debt is the cleanest use. The old loan is secured by the same kind of asset and usually has a short term. A DSCR refinance replaces it with a longer structure. The spine of the network is the 30-year fixed, with extended terms and interest-only periods available through select lenders.
Paying off personal or credit card debt is different. You are moving unsecured debt onto your property. If rents slip, the debt now has a lien behind it, and the loan term resets. DSCR does not test personal debt-to-income, per Scotsman Guide’s description of the segment, but the guarantee stays with you whether or not the loan reports to credit. That same piece warns that falling rents or rising vacancy mean the takeout isn’t guaranteed.
Use of proceeds also matters for loan classification. DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose investor loans, they are reviewed differently from a standard owner-occupied mortgage. Under Regulation Z’s business-purpose rule, credit on a non-owner-occupied rental is generally treated as business purpose, while owner-occupied rules use unit-count thresholds. Using proceeds for personal spending can conflict with that structure, so keep the purpose of the funds clear.
Check the old loan’s prepayment terms before you pick either path. A prepayment charge comes out of proceeds and can turn a decent refinance into a poor one.
Also keep expectations honest. DSCR compares rent to PITIA only. Repairs, vacancy, management, utilities, and capex sit outside it, so clearing 1.00 does not mean you have positive cash flow. If your debt payoff plan depends on cash flow, run that math separately.
A Quick Decision Check
1. Do you have 12 months of provable hosting income? If yes, STR is on the table. If no, expect long-term rent to drive the file.
2. Is any cash coming back to you? If no, a payoff-only refinance may carry lighter treatment. If yes, plan for seasoning and the tighter cash-out cap.
3. Does coverage hold on the larger payment? Test both income figures. The lower one governs when a lender uses a lower-of approach.
4. Is hosting legal and insured for nightly use? If not, the STR path closes.
5. Is the debt secured or unsecured? Moving unsecured debt onto the property raises your risk.
Coverage below 1.00 is available through select lenders in the network, with leverage and terms adjusted. That is a separate path from the 1.00 programs, not a lower floor on the same one.
The Balanced Verdict
Neither option wins on its own. The STR cash-out suits an owner with a documented track record, legal hosting use, and enough coverage to carry the larger loan. Expect the 70% ceiling and more paperwork. The long-term loan suits a leased property or a mostly payoff-focused refinance, with a slightly higher 75% ceiling on cash-out and a lighter file.
The deciding question is which income figure the lender will accept and how much cash you truly need back. If you only need to clear one expensive loan, the long-term structure asks for less paperwork.
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 broker arranging financing through select lenders in its wholesale network across 41 markets, including Washington, D.C.
Frequently Asked Questions
Can an STR cash-out refinance pay off debt on another property?
Generally yes, if the proceeds clear the program’s use-of-funds rules and the new loan still passes both the equity and coverage tests. The payoff and costs come out first, so the debt must fit inside the proceeds. Qualification is subject to lender guidelines.
Does a long-term rental loan need a lease?
Not always. The lender may use a signed lease or the appraiser’s market rent, and the lower figure is commonly used when both exist. A vacant property can often be underwritten on the appraisal’s market rent opinion.
How much hosting history does an STR refinance need?
Network STR programs typically expect about 12 months of hosting experience. With less history, underwriters often fall back to long-term market rent, and some lenders won’t count STR income at all.
Is clearing 1.00 the same as positive cash flow?
No. Coverage compares rent to the full payment only. Repairs, vacancy, management, utilities, and capex are outside the calculation, so cash flow can be thinner than the ratio suggests.
Which cash-out ceiling applies to me?
A 70% ceiling applies to short-term-rental collateral on a cash-out, and a 75% ceiling applies to standard long-term rentals. Your credit, reserves, and property type can narrow either one.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage focused on investor financing, arranging DSCR loans in 40 states plus Washington, D.C. — 41 markets total. Qualification is based on the property’s income rather than personal income documentation, subject to lender guidelines, making it a fit for LLC-held rentals and scaling portfolios. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 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
1. Scotsman Guide, Invest in Your Future
2. Scotsman Guide, Stalling Rents, Climbing Vacancies
3. CFPB, Regulation Z § 1026.3
4. bankersonline.com: Regulations
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 vs Long-Term Rental Loan at 75% Loan-to-Value · How Much Cash Comes Out of a Short-Term Rental Cash-Out Refinance to Buy Out an Ex-Spouse? · How to Do a Cash-Out Refinance on a Rental as an Investor
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.