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DSCR Cash-Out Refi Calculator

Calculate how much cash you can pull from a DSCR rental — gross proceeds, net to borrower, and effective LTV after the refi.

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Cash-Out Refi

How much can you pull out?

$

Estimated appraisal value

$
%
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$

Optional — check your note

Results

Net to borrower

$72,500

After payoff, closing costs

Effective LTV: 75.0%(standard DSCR cash-out)
New loan amount
$300,000
Less current balance payoff
($220,000)
Gross proceeds
$80,000
Less closing costs
($7,500)
Net to borrower
$72,500
Equity remaining post-refi
$100,000

Verify cash flow after refi

A higher new loan amount means a higher monthly P&I, which directly reduces your DSCR. Run the DSCR Calculator with the new loan details to confirm the property still qualifies before proceeding.

Why 75% is the standard DSCR cash-out cap

Most DSCR lenders limit cash-out refinances to 75% LTV — tighter than the 80% available on rate-and-term refis. This protects the lender's collateral position when equity is being extracted. A handful of programs go to 80% for high-DSCR files (1.25+) with strong credit (740+). The 75% cap is the working assumption for this calculator.

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How a DSCR cash-out refinance works

A cash-out refinance replaces your existing mortgage with a new, larger loan. The difference between the new loan amount and your current payoff balance — minus closing costs and any prepayment penalty — is the cash you receive at closing.

Net to Borrower = (New Loan × LTV) − Current Payoff − Closing Costs − PPP

For DSCR loans, most lenders cap cash-out at 75% LTV. On a $400,000 property, that's a max new loan of $300,000. If you owe $180,000 and closing costs run $7,500, your net proceeds = $300,000 − $180,000 − $7,500 = $112,500.

Why 75% is the standard DSCR cash-out cap

DSCR lenders typically cap cash-out refis at 75% LTV — tighter than the 80% available on purchase loans. The reasoning:

  • Equity cushion: When equity is being extracted, the lender requires a larger buffer against market value declines.
  • Seasoning risk: Cash-out often follows a value-add event (purchase + rehab) where the appraisal is new. The lender wants a margin of safety before that value is treated as permanent.
  • Payment shock: The new, higher loan means higher P&I, lower DSCR. The 75% cap helps ensure the property still cash-flows post-refi.

A handful of lenders go to 80% cash-out for exceptional files: 1.25+ DSCR post-refi, 740+ FICO, SFR or 2–4 unit, no prepayment penalty concern. This is the exception, not the rule.

Seasoning requirements — a key timing constraint

You typically need to own a property for 6–12 months before a DSCR lender will cash-out refinance it. Common policies:

  • 6-month seasoning: Standard for most DSCR cash-out programs; lender uses the lower of purchase price or appraised value for the first 6 months
  • 12-month seasoning: Required by some lenders for cash-out above 70% LTV or for properties with significant recent appreciation
  • Delayed financing exception: Some lenders allow cash-out within 6 months if you purchased all-cash — the proceeds are limited to your documented purchase price plus rehab costs

Cash-out refi in BRRRR strategy

Cash-out refinancing is the backbone of the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat). The model: buy a distressed property at a discount, rehab it to raise value, rent it out, then refinance at the new ARV to extract most or all of your invested capital. The extracted capital becomes the down payment for the next deal.

For BRRRR to work, the ARV must be high enough that 70–75% LTV exceeds your total all-in cost (purchase + rehab + holding + closing). Use the Rehab / ARV Calculator to model the full BRRRR equation, then use this calculator to verify the refi proceeds.

Prepayment penalties on DSCR loans

Most DSCR loans include prepayment penalties — fees for paying off or refinancing before a set period. Common structures:

PPP structure Year 1 Year 2 Year 3 Year 4 Year 5+
5-4-3-2-15%4%3%2%1% then 0%
3-2-13%2%1%0%0%
No PPP0%0%0%0%0%

On a $300,000 DSCR loan with a 5-4-3-2-1 PPP, a year-2 refi costs $12,000 in penalties before you even touch closing costs. Use the Prepayment Penalty Analyzer to model break-even timing.

Verify DSCR after the refi

The most important step before committing to a cash-out refi: run the DSCR Calculator with the new loan's projected P&I payment. A larger loan means higher P&I, which means lower DSCR. If post-refi DSCR drops below the lender's minimum (usually 1.0, sometimes 0.75), the deal won't fund regardless of LTV.

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Frequently asked questions

What is the maximum LTV on a DSCR cash-out refinance?
Most DSCR lenders cap cash-out refinances at 75% LTV. A small number of programs go to 80% for high-DSCR (1.25+), strong-credit (740+) borrowers on long-term rental SFR properties. The calculator enforces the 75% cap — if you want to model 80%, consult directly with lenders offering that program.
Why is the cash-out cap lower than the purchase LTV cap?
On a purchase, you're bringing a down payment — the lender knows you have cash in the deal. On a cash-out refi, you're withdrawing equity. Lenders require a larger equity cushion to remain in the position. The tighter LTV cap (75% vs 80%) is also a risk management tool: if the market drops, the lender's collateral position is better protected.
What's the difference between gross proceeds and net to borrower?
Gross proceeds = new loan amount minus your current payoff balance. Net to borrower = gross proceeds minus closing costs and any prepayment penalty. Closing costs on a refi are typically 2–3% of the new loan amount (origination, title, recording, appraisal). The net figure is what actually lands in your bank account.
What is a prepayment penalty (PPP) and when does it apply?
Many DSCR loans include a prepayment penalty — a fee for paying off the loan early. Common structures are '5-4-3-2-1' (5% of loan in year 1, declining by 1% per year) or a step-down over 3 years. If you're refinancing within the penalty window, the PPP comes directly out of your cash-out proceeds. Always check your note before modeling a refi.
How do I know if a cash-out refi makes financial sense?
Compare the net to borrower against the cost to carry the higher new payment. The new loan is larger, which means higher P&I, which reduces DSCR and cash flow. If the extracted capital can be deployed at a return higher than the additional interest cost, the refi makes sense. Run the DSCR Calculator with the new loan details to confirm the property still qualifies.
Does the property need to be seasoned before a cash-out refi?
Yes. Most DSCR lenders require 6–12 months of seasoning after purchase before a cash-out refi. Some require 12 months for cash-out above 70% LTV. If you bought recently and want to pull out equity quickly (common in BRRRR strategies), confirm the seasoning requirement with your lender before planning the timeline.
Can I do a cash-out refi to fund another property purchase?
Absolutely — this is one of the most common uses of DSCR cash-out refis. Extract equity from an appreciated or value-added property, use the net proceeds as a down payment on a new acquisition, repeat. The math works when you can DSCR-qualify both the refi'd property at the new, higher loan amount and the new acquisition at its rent-to-PITIA ratio.
What does 'effective LTV' mean in the calculator?
Effective LTV is the new loan divided by the current property value — it shows exactly where you'll sit after the refi closes. It's identical to LTV here because we're only modeling the first lien (no second lien). If there's a HELOC or second mortgage, use the CLTV Calculator to see the full picture.
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