Test one: leverage
The lender will cap the new loan at a percentage of appraised value. That cap varies by program, property type, credit profile and loan size, which is why our equity calculator asks you to enter the LTV yourself rather than assuming one. Try a few values to see how sensitive your proceeds are.
Test two: coverage
A larger loan means a larger payment. The rent still has to cover the new, bigger housing expense at an acceptable ratio. On many cash-out scenarios the coverage test, not the LTV cap, is what actually limits proceeds. Run the Max Loan by DSCR calculator alongside the equity calculator and use whichever number is lower.
Seasoning and timing
Most programs want to see that you have owned the property for some period before they will lend against a new appraised value rather than your purchase price. Requirements differ, so tell us your acquisition date and any rehab completed; it shapes which lenders we approach.
What the proceeds can be used for
Because these are business-purpose loans, the cash-out proceeds should serve a business purpose: buying or improving investment property, reserves for your rental operation, or similar uses. You will typically sign a business-purpose and occupancy certification at closing.
What gets reviewed
- Appraised value and the LTV cap for your profile
- Rent coverage on the new, larger payment
- Time owned and any documented improvements
- Existing lien payoff and title
- Credit, reserves and stated use of proceeds
We are a mortgage broker, not a lender. We arrange and shop this financing from wholesale lenders, and program availability, leverage and terms vary by lender and by scenario. Nothing on this page is a rate quote or a commitment to lend.