The Quick Read: The best provider for your situation depends on your property, your hosting history, and how much equity the appraisal supports, not on a ranked list. Lendmire is a mortgage broker, so it shops a wholesale network of DSCR lenders and matches the file to the program that fits.
- Short-term rental cash-out tops out at 70% LTV on the strongest files, so the cash you pull is smaller than on a standard long-term rental.
- Expect a 640+ credit score and about 12 months of hosting history, subject to lender guidelines.
- Coverage is tested at 1.00 on a refinance, using the lender’s own method of counting short-term income.
- The refinance buys nothing by itself. The next house gets its own loan and its own review.
- Net proceeds after payoffs and costs, not the gross loan, are the number that funds the down payment.
What Is a Short-Term Rental Cash-Out Refinance?
It is a new loan on a property you already own that pays off the old loan and hands you the leftover equity in cash. On a short-term rental, the loan is sized against appraised value, and the lender tests whether the property’s income covers the new, larger payment.
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.
The cash does not buy anything on its own. You use it as the down payment, closing costs and reserves on a second purchase. That second purchase is a separate loan with its own approval. Coverage is tested on the new property alone, and the old property is tested separately on its larger payment. The usual minimum on both is 1.00, and a select-lender path below that level exists with leverage and terms adjusted.
Lendmire’s complete DSCR loans guide covers the basics of how property-income loans work. This article focuses on the cash-out-to-purchase sequence on a vacation or Airbnb-style rental.
Why Providers Can’t Be Ranked
A ranked list of lenders hides the fact that programs differ on the points that decide the file. One lender counts actual host history. Another leans on a market-data projection. A third uses only the long-term rent an appraiser reports. The ranking changes with your property.
That is why a broker’s job is matching. Across the wholesale network, the questions that sort lenders are:
- How do they count short-term income: actual history, projection, or long-term rent?
- What leverage do they allow on short-term collateral?
- What credit tier and hosting history do they expect?
- How do they treat reserves, seasoning and prior liens?
Lendmire arranges these loans through select lenders in its network. It does not lend, underwrite or approve. The lender reviews eligibility, and every file is underwritten individually.
How Underwriting Treats the File, Step by Step
Here is the sequence as it plays out inside a short-term rental cash-out file.
1. Pick the income method. Lenders generally look at about a year of actual platform history, a market-data projection, or the appraiser’s long-term rent. The lender decides which counts. The appraisal alone does not hand you short-term income.
2. Apply the haircut. Lenders commonly trim gross short-term income before running the ratio. Treat that as an illustration, since haircuts vary by lender.
3. Run the ratio. DSCR is qualifying income divided by the full monthly housing obligation: principal, interest, taxes, insurance and any HOA dues. On a refinance in this program, the floor is 1.00. A stronger ratio can open better terms.
4. Size the loan. The new loan is capped at a percentage of appraised value, up to 70% on short-term rental cash-out. From that cap, subtract the first-mortgage payoff, any second mortgage or equity line, and closing costs and prepaids. What is left is net proceeds.
5. Check the business-purpose paperwork. Expect a declaration that the loan is for investment, not personal use.
6. Fund, then season the cash. The lender on the next purchase reviews where your down payment came from. Keep the settlement statement and the account trail together.
7. Close the purchase as its own transaction. The new property is tested on its own income and the buyer’s credit and reserves.
Key Terms Defined
Cash-out refinance: A new, larger loan that pays off the old one and returns the difference as cash.
DSCR: Debt service coverage ratio, meaning qualifying rental income divided by the full monthly housing payment.
PITIA: Principal, interest, taxes, insurance and association dues, the full monthly obligation the ratio is measured against.
Haircut: A reduction a lender applies to gross short-term income before the ratio is run.
Net proceeds: Cash left after the payoff, liens and closing costs come out of the new loan.
Seasoning: The time you have held title or the time cash has sat in your account before the next lender counts it.
The Planning Math Before You Hunt for the Next House
Start with leverage. At a 70% cap on short-term collateral, the appraisal has to be well above your total payoff plus closing costs before any cash appears. A rough rule of thumb from Lendmire’s how much cash comes out of a DSCR cash-out refinance to pay off a second mortgage: at a 75% cap on a standard rental, the appraisal needs to be roughly 133% of payoff plus costs. A 70% cap raises that hurdle. If the appraisal falls short, the deal becomes a payoff-only refinance.
Then check coverage on the bigger payment. A property that cleared 1.00 on its old loan can slip once the balance grows. The cash-out loan has to cover itself on the lender’s counted income, not on your best booking month.
DSCR also compares income to PITIA only. Clearing 1.00 is not the same as positive cash flow. Repairs, vacancy, management, utilities and capex sit outside the ratio, so a file can pass the test and still leave you with thin cash flow.
A larger down payment on the next purchase lowers its payment and can lift its ratio. It does not erase leverage caps, credit floors, reserve rules or property eligibility. The strongest files clear both tests: enough equity and enough coverage.
Which Borrower Fits Which Path
| Situation | Typical path |
|---|---|
| 12+ months of host history, strong coverage | Short-term cash-out, up to 70% LTV |
| Short history, no full year of records | Long-term rent basis, or wait to season |
| Thin coverage after the bigger payment | Take less cash, or a select-lender path below 1.00 with leverage and terms adjusted |
| Owned under about 6 months | Sizing may fall to lower of cost or value |
| Existing loan has a prepayment charge | Net it out of proceeds before committing |
The credit picture matters too. A 640 score is the short-term program floor, and the stronger leverage tiers generally want more. Loan amounts run up to $3,000,000 on standard programs, subject to lender guidelines.
Where the General Rule Breaks
History versus no history. Lender practice varies. Some want 12 months of platform records matched to bank deposits. If both projected and actual income exist, a lender may use the lower supported figure.
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.
Ineligible property types. Manufactured homes (single- and double-wide), log homes and barndominiums are not offered in the network’s DSCR programs.
Paying off a second lien. A second mortgage on the old property comes out of proceeds. That shrinks the cash left for the down payment, sometimes sharply.
Reserves. Reserves vary by lender, leverage, loan size and transaction type, and the requirement is usually set in months of PITIA. Ask your broker for the figure that applies to your file, and confirm it before you count on the cash.
Personal use of proceeds. Business-purpose treatment can turn on how the money is used. Federal guidance on judging business purpose looks at factors like loan size, the income the property produces and the borrower’s involvement in managing it. Keeping proceeds on the investment side keeps the file clean. A law-firm paper on business-purpose lending makes the same point: business purpose does not mean exempt from every consumer-protection rule. Tax treatment varies; consult a qualified professional.
Refinance Before or After You Find the House?
Do the refinance first when the plan allows it. The purchase lender wants the cash funded, seasoned and traceable. A down payment that is still a projection invites questions.
The tradeoff is carrying cost. You take on the larger payment on the old property while you search. If the search runs long, that payment is real. Pull only the cash you need, not the maximum the cap allows.
Chaining deals works because the proceeds can fund the down payment, closing costs and reserves on the next purchase. The purchase lender then retests everything from scratch.
The Over-Leverage Check
Stress the plan before you sign. Ask what the old property’s coverage looks like if bookings drop and the lender’s counted income falls with them. Ask whether you can carry both payments through a slow season on reserves alone.
Short-term rentals get tighter leverage than long-term rentals, so each dollar of value yields less cash. That is the cost of income that swings. If the numbers only work at the maximum cash-out, the plan is thin. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
How to Vet a Provider
Because the best fit depends on the property, credit profile, leverage need and documentation, use this checklist when a broker or lender presents options:
- Do they count actual history, a projection, or long-term rent?
- What is the leverage cap on short-term collateral?
- How do they treat a second lien or equity line payoff?
- Is there a prepayment charge on the new loan?
- What reserves apply at your loan size?
- Do they allow the entity type you hold title in? LLC lending is subject to lender program eligibility.
A broker that shops multiple wholesale lenders can run one file against several guideline sets and match the program, instead of fitting you to one lender’s rules.
Frequently Asked Questions
Can I use a short-term rental cash-out refinance as a down payment on another house?
Yes, that is the common sequence. The cash comes from net proceeds after payoffs and costs. The cash has to be funded and traceable.
How much equity can I pull from a short-term rental?
Up to 70% LTV on the strongest short-term files, subject to lender guidelines. That is lower than the ceiling on a standard long-term rental. The loan amount has to cover your existing payoff, any second lien and closing costs before cash is left over.
Do I need a year of Airbnb history?
Expect about 12 months of hosting history on most short-term files. Lenders vary on how they count income, and some use the lower of actual and projected figures. A shorter history may push the file toward a long-term rent basis.
Does clearing 1.00 mean the property cash flows?
No. DSCR compares rent to PITIA only. Vacancy, repairs, management, utilities and capex are not in the ratio, so a property can clear 1.00 and still run thin.
What if my coverage is below 1.00 after the new payment?
Take less cash, or look at a select-lender path below 1.00 in the network, with leverage and terms adjusted. Eligibility depends on credit approval and property review.
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. Call 828-256-2183 or request a quote. Not a commitment to lend; all programs are 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.
For current guidelines and terms, see Lendmire’s DSCR loan programs page.
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. Hunton – Beware of “Business Purpose”
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 for an Out-of-State Investor · Short-Term Rental Cash-Out Refinance Lenders When Borrowing Through an LLC · Top Short-Term Rental Cash-Out Refinance Providers on a Free-and-Clear Rental
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.