The Quick Read: A partner buyout funded by refinancing is treated as a cash-out refinance, because the new loan pays off the old mortgage and sends the rest to your departing partner. The cash-out leverage ladder therefore sets how much you can raise, and it steps down as the loan grows. Qualification runs primarily on property-level rental income covering the payment, subject to lender guidelines.
- Cash-out tops out at 75% LTV on loans to $1,000,000, 70% to $1,500,000, and 60% from there to $3,000,000, through select wholesale programs, subject to underwriting.
- There is no cash-out above $3,000,000. Above that size, a purchase or rate-and-term refinance is the path.
- Reserves come from a separate account, not from the proceeds.
- The coverage ratio is tested on the new, larger balance, so rent that covered the old payment may not cover the new one.
- Refinance first, then change title. Reversing that order can cause problems. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Two owners, one valuable rental, and one person who wants out. That is the setup. The question is whether the property’s own rent can carry a loan big enough to pay the partner. Sometimes it can. Sometimes the math stops you at the leverage cap. This guide walks through how a file like this is actually underwritten, step by step, and where it breaks. For the broader program basics, see Lendmire’s complete DSCR loans guide.
What a Super Jumbo DSCR Cash-Out Refinance Is
A super jumbo DSCR cash-out refinance is a large investor loan that replaces your current mortgage and returns cash, with cash-out available up to the standard program’s $3,000,000 ceiling. DSCR stands for debt service coverage ratio. It compares the property’s monthly rent to its full monthly payment: principal, interest, taxes, insurance, and any HOA dues.
“Super jumbo” has no official definition. Each lender sets its own line. Across the wholesale network Lendmire places files with, the portfolio investor program runs from $150,000 to $10,000,000, while the standard DSCR program stops at $3,000,000. Anything past the standard ceiling gets tighter treatment: lower leverage, stricter credit, a second appraisal. Loans above $3,000,000 are purchase or rate-and-term only, with no cash-out.
Cash-out means you borrow more than you owe and receive the difference. Rate-and-term means you borrow only what you owe, plus costs. That distinction matters here, because a buyout sends cash out the door.
Why a Partner Buyout Counts as Cash-Out
The new loan has three jobs. It pays off the old mortgage. It pays closing costs and any holdbacks. Whatever is left goes to your partner. Because money leaves the deal to a person rather than staying in the property, lenders classify it as cash-out.
This is not a technicality you can argue around. Cash-out has its own leverage cap, and that cap is lower than the purchase and rate-and-term caps at every size. Paying a departing co-owner in a portfolio buyout is generally an allowed use of proceeds, and the buyout agreement is the supporting document.
Requirements by Loan Size
The leverage ladder is the center of the whole file. These figures are ceilings through select wholesale programs, at coverage of 1.00 or higher, subject to underwriting. The bands are loan amounts, not purchase prices or property values.
| Loan amount | Purchase LTV | Rate-and-term LTV | Cash-out LTV |
|---|---|---|---|
| $150K–$1M | 80% | 80% | 75% |
| $1M–$1.5M | 75% | 75% | 70% |
| $1.5M–$2M | 75% | 75% | 60% |
| $2M–$3M | 75% | 75% | 60% |
| $3M–$4M | 65% | 65% | — |
| $4M–$6M | 60% (on review) | 60% (on review) | — |
| $6M–$10M | 60% (on review) | 60% (on review) | — |
Above $4,000,000, every request is reviewed case by case before submission. Treat any figure there as “on review,” never as a flat promise. The $3M–$4M row also sits under the super-jumbo overlay described at the end of this section, so its figures are ceilings that depend on meeting that overlay.
Credit works the same way. The 660 minimum applies on loans to $3,000,000, and 700 applies above that. But the top leverage in each band needs more. The 75% cash-out cell needs 660 or better. The 70% cell needs 700 or better. The 60% cash-out cells need 720 or better. A lower score generally means dropping to a lower cell inside the band. Borrowers at 680 or below get no cash-out above $1,500,000.
Other gates at this size:
- Appraisals: two are required above $2,000,000.
- Reserves: six months of the full payment on the subject property, twelve for first-time investors.
- Cash-out proceeds: these are unlimited at or below 60% LTV, and capped at $1,500,000 when the loan runs above 60% LTV.
- Interest-only: a 120-month interest-only period is available on 30- and 40-year terms, to 75% maximum, with coverage of 0.75 or better, subject to underwriting. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Above $3,000,000, the overlay also excludes rural property, allows no more than ten acres on a non-rural one, and requires 0x30x24 housing history and 48-month event seasoning. Borrowers must be citizens or permanent residents.
Does the DSCR Ratio Rise at Super Jumbo Size?
Usually not. The coverage ratio stays at 1.00 for full leverage and does not climb with loan size. What tightens is everything around it: leverage, credit, reserves, and the second appraisal. Many investors assume the ratio is the hard part. On a partner buyout it rarely is. The leverage cap binds first.
Coverage below 1.00 is a real path through select lenders in the network, at coverage from 0.75 to 0.99 up to $2,000,000. Understand the trade, though: LTV and terms adjust, subject to underwriting. A buyout file that needs reduced leverage is already the file with the least room.
Sizing the Buyout: Three Pieces and One Cap
The formula is simple. The new loan equals the old payoff, plus the partner’s payout, plus closing costs and holdbacks. Then you test that total against the cash-out cap for the band it lands in.
A few things trip people up.
The appraisal sets both numbers. If the buyout price is tied to appraised value, a low appraisal shrinks the loan and the partner’s price together. That is fair, but only if your agreement says. Many partnerships don’t write that down until it hurts. A written fallback, such as a second appraisal or an agreed split, saves a fight.
The check is not take-home. Payoff, costs, holdbacks, and any prepayment charge on your old loan come out first. What remains is what reaches your partner.
A worked example that fits
Say you own a rental appraised at $2,000,000 with a modest existing mortgage. A cash-out at 60% LTV would be a loan of $1,200,000, which falls in the $1M–$1.5M band. That band caps cash-out at 70%, so 60% sits inside it. The loan fits, as long as it covers the old payoff, your partner’s share, and costs, and as long as coverage on the new balance holds. This is a modeled illustration, not a quote. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A worked example that falls short
Now say the property is appraised at $6,000,000, you owe a large balance, and your partner’s half is a big number. The required loan could push past $3,000,000. There is no cash-out above that. The ladder cannot fund the buyout, no matter how good the rent is.
In that case the realistic fallbacks are:
- A phased buyout, where you pay the partner in stages.
- A partner note, where the departing owner is paid over time.
- A bridge loan, then refinance once the balance fits.
- A smaller cash-out, with the rest funded from other assets.
Each has tradeoffs. A phased buyout keeps the partner tied to the deal longer. A partner note adds a second obligation that you owe after closing. A bridge adds a second closing. The stronger play is often a smaller loan that fits the ladder plus a note for the gap, though a partner who wants a clean break may refuse it.
The Coverage Test After the Buyout
Cash-out raises the balance. A larger balance means a larger payment. A larger payment lowers your coverage ratio. So rent that cleared 1.00 comfortably on the old loan may sit well below it on the new one.
Here is the practical sequence. Run coverage on the bigger loan before you agree to a buyout number with your partner. Not after. A file can pass on equity and fail on rent, or pass on rent and fail on leverage. Whichever gate fails first decides the outcome.
If rent falls short, there are options. Interest-only reduces the payment and can lift the coverage ratio, up to 75% LTV with coverage of 0.75 or better, qualified on interest, taxes, and insurance. A lower loan amount helps. Sub-1.00 programs exist through select lenders, but LTV and terms adjust, subject to underwriting. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Short-term rentals work differently. They qualify on coverage of 1.00 or higher, loan amounts to $2,000,000, and experienced investors only. Income counts at 80% of gross, based on twelve months of operating history on a refinance. Municipal permission must be documented for the specific property, since 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.
Entity and Ownership Mechanics
Most buyouts involve an LLC. Entity vesting is welcome, subject to program eligibility, though layered entities are not.
The mechanics depend on how you hold the property:
- Partners on title personally: each departing owner signs a deed.
- LLC members: the departing member assigns their membership interest, and the entity papers are updated.
Either way, expect a personal guarantee. An LLC borrower does not mean you escape personal liability. The remaining owners typically sign as guarantors, and a release of the departing member is part of the file, subject to program terms. A deed alone does not remove a partner from the old note. The new loan paying off the old one does.
Refinance first, then change title
Don’t move the property into a new LLC right before you refinance. Federal law defines a due-on-sale clause as a provision that lets a lender call the loan when the property “or an interest therein” is transferred without consent. The protected transfers in that statute cover things like death and divorce decrees on residential property. A transfer into an LLC is not among them.
The cleaner sequence: refinance, then vest title at the closing.
Seasoning: A Buyout Does Not Waive It
Seasoning is the waiting period a lender wants between buying a property and cashing out. It is a program rule, not a federal one. A recently acquired property is generally off the table for cash-out, and a partner buyout does not waive the wait. Value can be cost-based early and appraisal-based after seasoning. If you bought recently, confirm the seasoning window with your broker before you promise your partner a date.
DSCR vs. conventional financing
There are two common ways to finance an investment property, and they qualify you differently — here’s how investors weigh them.
Why investors choose it
- Qualifies on the property’s rental income — no personal tax returns, W-2s, or pay stubs needed to document income.
- No personal debt-to-income ceiling to clear, so existing mortgages and obligations don’t cap your borrowing the same way.
- Can be closed in an LLC, keeping the property inside a business entity.
- Built for scaling — not held to the limit on number of financed properties that conventional financing applies.
- Underwriting centers on the deal: generally qualifies when the rent covers the payment, a 1.00x coverage ratio being a common baseline (confirmed in underwriting).
- Designed specifically for investment property, including long-term and, where the program allows, short-term rentals.
Where it’s strong
- Often the lowest ongoing financing cost for a buyer who fully qualifies on personal income — a fit for a first property or a cost-first purchase.
Trade-offs for investors
- Requires full personal income documentation and must fit within a debt-to-income limit — salary, existing debts, and other mortgages all count.
- Typically held in your personal name rather than a business entity.
- Caps how many financed properties you can carry, which can become a ceiling as a portfolio grows.
- Evaluates you as a borrower as much as the property, which usually means more paperwork.
How investors usually choose: a first or single property often optimizes for the lowest financing cost; portfolio builders often optimize for leverage, vesting in an LLC, and scaling past conventional caps. The right answer depends on your goals, the property, and current guidelines — both paths run through select lenders in Lendmire’s wholesale network, with eligibility and terms confirmed in underwriting.
Why DSCR Fits Business Partners
DSCR loans are designed for non-owner-occupied investment properties. Because they are business-purpose loans, they are reviewed differently from a standard owner-occupied mortgage.
For partners, the practical benefit is simple. The file qualifies primarily on property-level rental income covering the payment, subject to lender guidelines. Your personal income is not the qualifying basis. That helps an operator whose income is lumpy or entity-based. A full-documentation jumbo cash-out, by contrast, is underwritten on personal income, assets, and debt load. If your income is strong on paper, that route is worth comparing. If it runs through entities, DSCR is usually cleaner.
Business owners who prefer to qualify on deposits can read Lendmire’s piece on a super jumbo cash-out based on bank statements. For a side-by-side look at the two structures, see Lendmire’s article on super jumbo DSCR cash-out versus a portfolio DSCR loan for a partner buyout.
Documents to Prepare
Gather these before you talk numbers.
| Entity papers | Property papers |
|---|---|
| Operating agreement | Current mortgage statement |
| Buyout agreement | Leases and rent schedule |
| Member consent to refinance | Insurance declarations |
| Ownership and guarantor details | Appraisal access |
| Release terms for departing partner | Proof of reserves, separate from proceeds |
The operating agreement often already sets a valuation method, a right of first refusal, and notice terms. Read it before you negotiate. It can decide the price for you.
When Cash-Out Doesn’t Fit
| Situation | Better path | Tradeoff |
|---|---|---|
| Loan needed above $3M | Rate-and-term refinance plus separate funding | Payout funded elsewhere |
| Buyout exceeds cap | Phased buyout or partner note | Partner stays involved |
| Coverage falls short | Interest-only or a smaller loan | Lower proceeds |
| Property recently bought | Wait out seasoning | Delay |
| Strong personal income | Full-doc jumbo | Heavier documentation |
Key Terms Defined
DSCR: The monthly rent divided by the full monthly payment, used to test whether the property carries its own debt.
LTV: Loan-to-value, the loan amount as a percentage of the property’s appraised value.
Cash-out refinance: A new loan larger than the payoff, with the difference paid to you or, in a buyout, to your partner.
Seasoning: The waiting period between acquiring a property and cashing out on it.
Due-on-sale clause: A mortgage term letting the lender demand repayment if the property is transferred without consent.
Personal guarantee: Your individual promise to repay, even when an LLC is the borrower.
Reserves: Liquid funds held after closing, here six months of the subject property’s payment.
Step by Step
1. Fix the buyout price method in writing.
2. Order the appraisal and rent schedule.
3. Size the loan: payoff plus partner payout plus costs.
4. Test coverage on the full new payment.
5. Gather entity documents and the partner release.
6. Close the refinance, then record the deed or assignment.
Frequently Asked Questions
Is a partner buyout treated as a cash-out refinance?
Yes. The new loan pays off the old mortgage and sends the remainder to your departing partner, so the cash-out leverage cap applies. Paying a co-owner is generally an allowed use of proceeds, and the buyout agreement is the supporting document. All figures are subject to underwriting.
Can an LLC be the borrower?
Generally yes, subject to program eligibility. Entity vesting is welcome, though layered entities are not. Expect the individual members to sign personal guarantees, since an LLC borrower does not remove personal liability.
What if my buyout needs more than $3,000,000?
Cash-out is not available above $3,000,000. Options include a smaller loan that fits the ladder, a phased buyout, a partner note, or a bridge followed by a refinance.
Can the cash-out proceeds count toward reserves?
No. Reserves must come from a separate account, typically six months of the subject property’s payment. Proceeds that go to your partner obviously cannot double as your cushion.
Does the buyout waive the seasoning period?
No. Seasoning is a program rule, and a partner exit does not override it. Confirm the window before you commit to a closing date with your partner. Tax treatment of a partner’s proceeds varies; consult a qualified professional.
If you are buying or refinancing a high-balance rental property and want to see how the numbers work, Lendmire can help you compare super jumbo DSCR loan options based on the property income, the loan balance, credit profile, leverage, and investor goals. Lendmire is a broker arranging business-purpose financing through select wholesale lenders in 41 markets, including Washington, D.C. Nothing here is a commitment to lend.
Lendmire’s self-employed mortgages page presents both super jumbo programs, bank statement and DSCR, side by side.
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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.
For how equity extraction works on an investment property, see Lendmire’s guide to cash-out refinance on an investment property.
This article is part of Lendmire’s super jumbo DSCR loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get a Super Jumbo DSCR Cash-Out Refinance Through a Broker? · Super Jumbo DSCR Cash-Out Refinance Requirements Using an Automated Valuation · Super Jumbo DSCR Cash-Out Refinance Requirements Instead of Selling the Rental
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.