DSCR cash-out refinance guidelines
SEASONING
Some programs allow cash-out refinancing with no minimum seasoning. When owned under six months, value is based on the lesser of purchase price plus documented improvements or the appraisal. Other programs require 90 days up to six months of ownership. After 90 days, some programs place no restriction on purchase plus renovation, and the loan amount is based on the full appraised value. Subject to underwriting.
DELAYED FINANCING
Where a program uses delayed financing for a recent cash purchase, the new loan is limited to the borrower's documented initial investment plus closing costs, prepaid fees and points, and the purchase must be arm's length with the source of funds documented, subject to underwriting.
LOAN LIMITS
Cash-out proceeds may be capped at $1,000,000, or $500,000 for lower DSCR scenarios. Proceeds must be for business purposes and may count toward reserves, subject to underwriting.
LEASE AND OCCUPANCY
A lease is generally required for DSCR refinances. Unleased properties may face a 5% LTV reduction and vacancy limits on 2-4 unit properties. All loans are subject to underwriting.
WHAT TO SEND FOR A QUOTE
Send the property address, estimated value, current mortgage balance, target loan amount, rental details, current loan terms and any prepayment penalty. Final proceeds depend on the approved loan amount, payoff and closing costs.
SEASONING AND LISTING HISTORY
Shorter seasoning may be considered for property acquired by inheritance or a legal award in a divorce or separation, subject to underwriting. A new mortgage on a property owned free and clear is treated as a cash-out refinance. A property listed for sale in the prior six months may see a 5% LTV reduction on cash-out. Inherited property acquired within 12 months of closing is treated as cash-out.
MANUFACTURED HOMES
Single-wide and double-wide homes on owned land with a permanent, immovable foundation may be considered, subject to property and state eligibility. Second liens are not available on manufactured homes.
RATE-TERM OR CASH-OUT
A prior cash-out refinance within six months can make the next loan a cash-out. Other seasoning rules may apply to closed-end second mortgages, subject to underwriting.