How it works
The new loan amount is the property value multiplied by the LTV you enter. Subtract the payoff on the existing loan to get gross cash, then subtract your estimate of closing costs to get net cash in hand. The optional coverage section computes the new principal and interest at the rate and term you enter and divides rent by the full housing expense, so you can see whether the bigger loan still qualifies on coverage.
Worked example
A rental is worth about $400,000. You owe $150,000, and you want to see what happens at an LTV of 70 — an LTV you choose to test, not a program limit. Closing costs are estimated at $8,000.
| Line | Math | Result |
|---|---|---|
| New loan | $400,000 × 0.70 | $280,000 |
| Gross cash | $280,000 − $150,000 | $130,000 |
| Net cash | $130,000 − $8,000 | $122,000 |
| Equity left in property | $400,000 − $280,000 | $120,000 |
Now the second test. The new $280,000 loan carries a larger payment than the old one. Enter the rent, your quoted rate and term, and the monthly taxes, insurance and HOA in the coverage section. If the ratio comes back thin, the property may support less than $280,000 regardless of value — and your real cash-out figure will be lower. The Max Loan by DSCR calculator finds that coverage-limited loan amount directly.
Things this estimate does not include
- Prepayment penalties on the existing loan, if any.
- Escrow set-up for taxes and insurance, which can add to cash needed at closing.
- Any reserves the lender requires you to keep after closing.
- Appraisal results below your value estimate, which reduce the loan dollar-for-dollar at a fixed LTV.