What Is a DSCR Cash-Out Refinance?
A DSCR cash-out refinance replaces your existing mortgage on an investment property with a new, larger loan, and returns the difference to you as cash. The key difference from a conventional cash-out: the loan qualifies on the property's rental income, not your personal income. No W-2s, no tax returns, no employment verification on any program.
Step 1: Calculate Your DSCR
DSCR stands for Debt Service Coverage Ratio. It measures whether the property's income covers the new loan payment. The formula:
DSCR = Monthly Gross Rent ÷ Monthly PITIA
PITIA = Principal + Interest + Taxes + Insurance + HOA (if applicable)
Example:
Monthly rent: $2,400
New loan PITIA: $1,800
DSCR: 2,400 ÷ 1,800 = 1.33 ✓
Minimum DSCR: 0.75 (expanded) · Standard minimum: 1.0
Step 2: Determine Your Maximum Loan Amount
Your loan is limited by two factors: whichever produces the lower loan amount:
- LTV limit: up to 80% of current appraised value with 680+ FICO on the standard program
- DSCR limit: the loan amount at which rent still covers 0.75x the new monthly PITIA
Example: property worth $300,000 at 80% LTV = $240,000 max loan. But if the DSCR calculation only supports a $210,000 loan before dropping below 1.0, the loan is sized at $210,000, unless you're using the expanded sub-1.0 program, where 0.75 DSCR qualifies.
Step 3: Submit Your Deal
Submit your deal summary including: property address, estimated value, existing loan balance, monthly rent or ARV (for BRRRR), and credit score range. No credit pull at this stage. We review and send your rate within 24 hours by text or email.
Step 4: Application and Appraisal
Once you approve the rate, you submit a formal application. We immediately order a third-party appraisal, typically 5–10 business days to complete. The appraisal confirms the property value and, if no executed lease exists, the appraiser also completes a market rent schedule to establish projected rental income.
Step 5: Underwriting
Underwriting reviews credit, appraisal, lease or market rent schedule, and entity documents for LLC closing. No income documentation is required at this stage. Typical underwriting timeline: 3–5 business days once the appraisal is received.
Step 6: Close and Fund
Closing is handled by a title company. You sign documents electronically or in person. The existing mortgage is paid off at closing and net proceeds are wired directly to you. Average total timeline from application to funded loan: 28 days.
What Can You Use the Cash For?
Any business purpose. Most investors use DSCR cash-out proceeds to acquire new investment properties, pay off hard money loans on other deals, fund renovations, or build cash reserves for future opportunities. There are no use restrictions on business-purpose DSCR loans.