DSCR Cash-Out Refinance: 70-75% LTV, No Tax Returns

Loan Programs

Equity sitting in a stabilized rental earns nothing. A DSCR cash-out refinance converts it into deployable capital without a sale, without a taxable event, and without documenting your personal income.

Cash-out terms

70–75% LTV on 1–4 units; 65–70% on 5–8
Six months of ownership seasoning standard; day-one available at a premium
Proceeds are loan proceeds — generally not taxable income
Six months of PITIA in reserves typical; proceeds may satisfy the requirement
No limit on how the capital is used, provided the purpose is business

When the math works

The test is not whether you can pull cash out. It is whether the capital earns more in its next use than the refinance costs you in this one.

Worked example. A property worth $480,000 with a $210,000 balance at 5.75%. A 75% cash-out at 7.25% produces a $360,000 loan and roughly $138,000 net after costs. Your payment rises from about $1,226 to $2,456 — $1,230 a month. If that $138,000 is the down payment on a property clearing $900 a month after all expenses, the trade is negative. If it funds two acquisitions clearing $800 each, it is positive.

Note the second effect people miss: refinancing a 5.75% note at 7.25% repriced the entire balance, not just the new money. The $138,000 you extracted effectively cost far more than 7.25%, because you also gave up a below-market rate on the original $210,000. When the existing note is meaningfully cheaper than current pricing, a second position or a portfolio line is often the better instrument.

What underwriting checks

Item	Standard	Notes
Seasoning	6 months	Deed recording to application. Day-one at +25 to +50 bps.
Max LTV, 1–4 unit	70–75%	Against appraised value once seasoned
DSCR	1.00+	Calculated on the new, larger payment
Reserves	6 months PITIA	Cash-out proceeds often count
Lease	In place preferred	Vacant is financeable using Form 1007 market rent
Prepay on existing note	Check first	A step-down penalty can erase the benefit entirely

The DSCR test running on the new payment is what most often caps the draw below the LTV limit. A property at 1.35 DSCR on its current loan may fall to 0.98 at maximum cash-out — in which case the loan sizes to the ratio, not to the 75%. Run the new payment through the DSCR calculator before you decide how much to request.

Delayed financing

If you bought all cash within the last six months, delayed financing lets you recover capital without waiting out seasoning. Proceeds are capped at the lesser of the standard LTV against appraised value or your original purchase price plus documented closing costs — so it recovers what you spent rather than harvesting appreciation. You will need the settlement statement from the original purchase and proof the funds were yours rather than borrowed.

The tax point, stated carefully

Loan proceeds are borrowed money, not income, and are generally not taxable when received. That is the well-known part. Two qualifications matter and both should go to your CPA rather than to a lender:

Deductibility of interest on the extracted portion typically depends on how the funds are used — interest-tracing rules apply, and using proceeds for a personal purpose changes the treatment.
Cash-out refinancing does not change your basis. Repeatedly refinancing an appreciating property can leave the debt exceeding the basis, which has consequences on an eventual sale or foreclosure.

See what your equity supports

Send the address, current balance, rate, and rent. We will size the maximum draw and show you where the ratio caps it.

Get a term sheet Run the numbers

Business-purpose loans on non-owner-occupied investment property. Nothing here is tax or legal advice — consult your own CPA on the treatment of refinance proceeds and interest deductibility. Not a loan commitment.