DSCR Cash-Out Refi Calculator

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:

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.

Continue planning

• Verify post-refi debt service coverage: DSCR Calculator
• Model a full BRRRR cycle: Rehab / ARV Calculator
• Check for prepayment penalty timing: Prepayment Penalty Analyzer
• Get live refi quotes: Lender matching