The Quick Read: The loan that pays off hard money on a short-term rental is usually a DSCR cash-out refinance, and investors get it through a broker with a wholesale network of DSCR lenders, a direct DSCR lender, or a marketplace that routes the file to one, subject to lender guidelines and property review. Qualification runs primarily on property-level rental income covering the payment. The file depends on appraised value, documented short-term-rental income, and enough seasoning.
- On a cash-out refinance, standard non-owner-occupied rentals top out around 75% LTV, while short-term-rental collateral tops out around 70%. Seasoning is about 6 months from title recording.
- Coverage of 1.00 is where many select programs start. A separate select-lender path goes below 1.00, with leverage and terms adjusted. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Key Terms Defined
Seasoning is the ownership period a lender expects before it allows cash-out, usually counted from the recorded deed.
DSCR (debt service coverage ratio) is monthly rent divided by the full monthly payment: principal, interest, taxes, insurance, and association dues.
Payoff-only refinance means the new loan covers the hard money balance plus closing costs and nothing more.
Cash-out refinance means the new loan exceeds the payoff and costs, and the difference returns to the borrower.
After-repair value (ARV) is your own projection of value after rehab. The new lender’s appraisal, not your ARV, sets the loan.
DSCR Cash-Out Calculator
Run the cash-out numbers in your market
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.
What This Refinance Actually Is
This transaction is the exit leg of a BRRRR: buy, rehab, rent, refinance, repeat. AirDNA’s BRRRR explainer notes the strategy works for vacation rentals and Airbnb hosts, and it advises working with lenders who understand BRRRR. Hard money is built to be short. Terms typically run 6 to 18 months, interest-only, with no prepayment penalty, though all of that varies by lender, property, and experience. A long-term loan has to replace it.
That replacement is typically a DSCR loan. Investors can refinance out of hard money into long-term DSCR financing once the property is stabilized, and Lendmire brokers that path through select lenders in its wholesale network across 41 markets, including Washington, D.C. The hard money exit refinance program page covers that route in more detail.
The label on the new loan matters. If proceeds cover only the payoff and closing costs, the refinance is payoff-only. The moment proceeds exceed that, it becomes cash-out and picks up the tighter leverage cap and the seasoning requirement. The two are different products, and the DSCR loan treats them differently. The complete DSCR loans guide covers the basics.
Who Writes This Loan?
Four provider types handle this request, and they differ mostly in how they treat property income.
| Provider type | How it works | Fit for this payoff |
|---|---|---|
| Broker with wholesale network | Compares several DSCR programs | Strong when STR income needs a program match |
| Direct DSCR lender | One program set, one rulebook | Good if your file fits its rules |
| Big bank or retail lender | Usually personal income and DTI | Weaker fit when property income is the story |
| Online marketplace | Routes the file to partner lenders | Depends on the lenders behind it |
Here is where the choice flips. A conventional cash-out is reviewed on traditional employment income and debt-to-income. If you hold few financed properties, earn strong personal income, and cannot document the rental’s income cleanly, a conventional loan may be the better tool. If the property itself is your cleanest evidence, or you hold properties in an entity, DSCR tends to fit better.
How Underwriting Treats the File, Step by Step
1. Plan the exit before the bridge closes. The new loan is sized from the new lender’s appraisal. Three gates must clear: value, rent, and timing. The hard money note has to last through seasoning, lease-up, appraisal, and underwriting.
2. Seasoning. The clock is lender policy, typically counted from the recorded deed and not from rehab completion. Across the network, about 6 months is the common expectation. Delayed-financing exceptions that let a cash buyer skip seasoning generally do not help here, because the property itself secured the hard money. Ask each lender how it counts a hard money exit.
3. Appraisal and the rent schedule. For a single-family home the appraiser typically completes a Form 1007 rent schedule. For two to four units the form is the 1025. The non-QM market borrows both from Fannie Mae, yet DSCR loans are not agency products, and each program sets its own rent rules.
4. Income for a short-term rental. This step is where STR files differ. Fannie Mae’s appraiser update, hosted by the Nevada Real Estate Division, explains that the 1007 documents monthly market rent from comparable monthly leases and was not designed to appraise short-term rentals. McKissock adds that assessing business income is out of scope for the form. Class Valuation points to a separate narrative income analysis and notes that a new appraisal data standard will retire legacy forms.
Short-term-rental income is therefore qualified another way. Common routes are an appraiser’s STR addendum, platform or bank records covering about 12 months, or a data-provider projection. On a refinance, programs lean on actual booking records. Lenders also commonly haircut gross revenue for turnover, platform fees, and furnishings before they run the ratio.
5. Build the payment. DSCR uses the full payment on the whole new balance, including any costs rolled into the loan. A bigger cash-out means a bigger balance, a bigger payment, and thinner coverage.
6. Apply both ceilings. Coverage (rent against payment) and leverage (loan against value) both apply. The lower of the two sets the loan. Clearing 1.00 does not mean the property cash flows, because repairs, vacancy, management, utilities, and capex sit outside the calculation.
7. Payoff and cash. Title pays the hard money lender from proceeds. Whatever remains, after closing costs and reserves, is yours.
Sizing the Payoff: A Worked Illustration
The numbers below are index units, an illustration of the mechanics and not market data. Say the lender’s appraisal comes in at 100 and the hard money payoff, including accrued interest and fees, is 65.
On a cash-out refinance of a standard non-owner-occupied rental at 75% LTV, the loan is 75. Exit costs of 3 leave 72. After the 65 payoff, 7 comes back. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Now suppose the appraisal lands at 90. The 75% loan is 67.5. After costs of 3 and the 65 payoff, cash back is about zero. A 10% appraisal miss erased the entire cash-out.
Run the same property as short-term-rental collateral on a cash-out refinance at about 70% LTV, and the loan on a 100 appraisal is 70. After costs and payoff, roughly 2 remains. The lower ceiling alone shrinks the cash-out. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Extra months on the bridge also push the payoff up through interest, extension fees, and any exit fee, so a delayed refinance eats equity from both sides.
Short-Term Rental vs. Standard Rental Collateral
| Factor | Standard rental | Short-term rental |
|---|---|---|
| Cash-out LTV ceiling | About 75% | About 70% |
| Income proof | Rent schedule or lease | Booking history or STR analysis |
| Hosting history | Not applicable | About 12 months |
| Credit | 620 floor, with higher tiers at 660, 680, and 700 | Same 620 floor and tiers |
On a DSCR loan, the strongest leverage tiers open up at 700 and above. Reserves vary by lender, leverage, and loan size. They commonly run around 6 months of PITIA, and loans above $1,500,000 typically step up to about 9 months. Standard loan sizes run up to $3,000,000. Manufactured homes, log homes, and barndominiums are not offered.
The appraisal values the house, not the business. A short-term rental appraises the same as an identical long-term rental, so the premium income never raises the leverage base. Only the documentation of income changes.
Where the General Rule Breaks
The 1007 default. If a program defaults to the 1007 rent schedule, a property that clears 1.00 on Airbnb income can fail on long-term rent. Programs differ on whether they can qualify income from booking history or a data-provider projection instead. Ask before you apply.
Thin hosting history. A new build or a recently furnished property may not have 12 months of records. Without history, a lender relies on an appraiser’s STR value or a projection, and fewer programs accept that on a refinance. Sparse comps make an appraiser’s job harder, particularly on higher-value homes.
Projection misses. A loan sized on projected occupancy shrinks if actual bookings come in lower. Fixed costs do not fall with income, so coverage drops faster than revenue does.
Seasoning exemptions. Some lenders outside the network advertise exemptions for hard money exits. Treat any exemption as program-specific and confirm it in writing before you rely on it, since about 6 months is the common expectation here.
The bridge matures first. Start the refinance well before the balloon date. If time runs short, the options are a bridge extension, a payoff-only refinance, or bringing cash to closing.
Coverage below 1.00. Programs below 1.00 are available through select lenders in the network, with leverage and terms adjusted. The levers that help include a smaller loan, more cash to close, an interest-only period through select lenders, stronger rent documentation, and a bridge extension. Whether to use a sub-1.00 structure is the real question. If every neighborhood you screen needs it, the problem is usually the deal, not the loan type.
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.
Matching the Loan to Your File
Start with what you need. If you only need to retire the bridge and cash back is irrelevant, a payoff-only refinance can run at the higher rate-and-term leverage cap of 85% LTV on a non-owner-occupied rental. If you want cash for the next acquisition, the cash-out caps and seasoning apply. Check that the new balance still clears coverage after you add the cash.
Then match the provider to the evidence. If you have a full year of booking records, most DSCR programs can work from them. If your history is short, the number of programs shrinks, and comparing several lenders matters more. If your personal income is strong and your property count is low, price a conventional cash-out alongside the DSCR option.
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.
Frequently Asked Questions
Can I take cash out while paying off a hard money loan on a short-term rental?
Yes, if the new loan exceeds the payoff and closing costs and the property meets seasoning. That is a cash-out refinance, so it takes the cash-out ceiling of about 70% LTV on short-term-rental collateral or about 75% on a standard non-owner-occupied rental, plus about 6 months of seasoning from title recording. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Does my after-repair value set the new loan amount?
No. The new lender’s appraisal sets it. Your ARV is a planning figure, and a lower appraisal can turn a comfortable payoff into cash needed at closing.
Will the appraisal count my Airbnb income?
Not through the 1007 rent schedule, which measures monthly long-term rent. Short-term-rental income is typically qualified through booking records, an appraiser’s STR addendum, or a projection, depending on the program.
What if my DSCR comes in below 1.00?
Select lenders in the network offer sub-1.00 paths with leverage and terms adjusted. You can also reduce the loan, bring cash to closing, add an interest-only period through select lenders, or document rent more strongly.
Does paying off hard money count as a rate-and-term refinance?
Only if no cash comes back. A payoff-only refinance can reach 85% LTV on a non-owner-occupied rental. Once any cash returns beyond costs, it is cash-out and takes the lower cap. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
About Lendmire
A DSCR-focused mortgage broker, Lendmire (NMLS# 2371349) places investor financing across 41 markets, 40 states plus Washington, D.C., with DSCR eligibility generally reviewed by the lender on property cash flow instead of tax returns, subject to lender guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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. McKissock
This article is part of Lendmire’s hard money loan program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: What Is a Short-Term Rental Cash-Out Refinance Without a Seasoning Wait After Purchase? · Where to Get a DSCR Cash-Out Refinance When Comparing It to a Hard Money Loan on a Rental · Can You Get a Portfolio DSCR Cash-Out Refinance to Pay Off an LLC-Held Rental Loan Faster?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.