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A cash-out refinance works when the new payment still meets the debt service coverage ratio your lender requires. Start from that minimum, find the largest loan the rent can carry, subtract the payoff, and then see whether a loan-to-value cap cuts the check.
By RentalAnalytics Editorial Team · Published October 19, 2026
Divide net operating income by the lender's minimum coverage ratio. That quotient is the most principal and interest the rent can carry for a year. Turn the yearly figure into a monthly payment, then solve for the loan that produces it.
The DSCR calculator does this from the numbers you type. NOI is rent after vacancy, minus taxes, insurance, HOA, and other expenses. Debt service is principal and interest only. DSCR at current rates shows why taxes and insurance stay in NOI. The dollars below are an example. The 1.25 floor is the target the form opens with. Your lender may use another floor.
The rate in the example is 7.00 percent, and the term is 30 years, or 360 months. The fully amortizing payment is the loan amount times the monthly rate, divided by 1 minus (1 plus the monthly rate) raised to the power of minus 360. The monthly rate is 0.07 divided by 12.
The largest whole-dollar loan whose payment, rounded to the cent, is still $1,800.00 is $270,554. Annual debt service is $21,600. Coverage is $27,000 divided by $21,600, which is 1.25 on the nose.
Subtract the payoff from the new loan. That difference is the cash-out before closing costs.
The example payoff is $210,000. The DSCR-sized loan is $270,554. Gross cash-out is $60,554. Closing costs the lender nets from the loan come out of that check. This example does not assign a fee, because the fee belongs on the lender's disclosure.
On a $400,000 value, $270,554 is 67.64 percent of value. In this example the rent limit binds before a 75 percent loan-to-value cap does. Change the rent, the expenses, the rate, or the payoff and the binding limit can flip.
Not in this example. A one-unit investment cash-out at 75 percent of the $400,000 value is a $300,000 loan. At the same illustrative 7 percent rate and 30-year term, the cent-rounded payment is $1,995.91. Annual principal and interest is $23,950.92.
Coverage is $27,000 divided by $23,950.92, or 1.13 when rounded to the nearest hundredth. That is below the 1.25 floor used here. The extra loan would raise the cash-out before costs from $60,554 to $90,000, and the ratio would miss the minimum. The rent, not the appraisal, is the tighter constraint.
Put that loan, rate, and term into the amortization calculator for the payoff date and total interest. The tool rounds each month's interest to the cent. It opens on a $250,000 loan at 7.40 percent, with a payment of $1,730.95.
On the standard Desktop Underwriter table of the Eligibility Matrix dated March 4, 2026, investment-property cash-out is capped at 75 percent for one unit and 70 percent for two to four units. That table excludes High LTV Refinance, HomeReady, HomeStyle Renovation, and manufactured housing. A condo review can require a lower ratio. Community Seconds are not permitted on investment properties or on cash-out refinances.
Those caps are for loans delivered to Fannie Mae. B2-1.3-03, dated December 10, 2025, qualifies the borrower on debt-to-income. A DSCR loan uses the property's income, and the matrix does not set that lender's cap. See DSCR loans: terms, lenders, and your rate and DSCR explained for rental investors. A Fannie Mae cash-out is a new first mortgage that pays off the old loan, or a new loan on a free-and-clear property. Proceeds can pay off an eligible first mortgage, cover closing costs, clear subordinate liens, or come out as cash.
The first mortgage being paid off generally must be at least 12 months old, from note date to note date. Subordinate liens, and a co-owner buyout under a legal agreement, are exempt. One borrower needs six months on title, with exceptions for inheritance, a divorce award, time in a borrower-controlled LLC once title is transferred, time in a trust if the borrower is the primary beneficiary, and delayed financing on a purchase within six months when every requirement of that exception is met. Debt-to-income above 45 percent on a Desktop Underwriter file requires six months of reserves. A listed property must be off the market by disbursement. Ask a DSCR lender for its own seasoning in writing.
Use the rate on your loan quote. The example's 7.00 percent is a round figure for the arithmetic.
Freddie Mac's Primary Mortgage Market Survey put the average 30-year fixed-rate mortgage at 7.40 percent as of October 15, 2026, unchanged from the prior week. A year earlier that average was 6.27 percent. Freddie Mac limits the average to weekly conventional single-family originations within conforming loan limits. It is not a DSCR, portfolio, or hard-money quote. The DSCR calculator fills its rate box from that survey and leaves the box editable. A HELOC is a different way to pull cash, usually as a second line beside the first mortgage, with its own draw payment and repayment jump.
On this site's calculator it is annual NOI divided by annual principal and interest. Rent is reduced by vacancy. Taxes, insurance, HOA, and other operating costs come out of NOI, not out of the payment.
Divide NOI by the minimum ratio, divide by 12, and solve for the principal that produces that payment. Here, $27,000 divided by 1.25 supports $1,800 a month, which fits $270,554 at 7 percent for 30 years.
It applies to a one-unit investment cash-out on the standard Desktop Underwriter table. Two to four units on that table are capped at 70 percent. A DSCR loan is not delivered under that matrix.
On a Fannie Mae cash-out, one borrower generally needs six months on title, and the first mortgage being paid off generally needs to be 12 months old. The guide lists exceptions, including delayed financing. A DSCR lender's seasoning is separate.
Use it only as the conventional conforming benchmark Freddie Mac reported as of October 15, 2026. Type the rate on your quote. The example's 7.00 percent is illustrative.
Put your rent, vacancy, taxes, insurance, and other expenses into the DSCR calculator, set the coverage target your lender actually uses, and read the largest loan that meets it. Subtract your payoff. If that loan is larger than the lender's loan-to-value cap, the cap wins. Then build the payment in the amortization calculator before you lock.
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