Cash-Out Refinance Calculator

How a cash-out refinance works on a rental

• New loan amount = current value × LTV. Most conventional investment property lenders cap LTV at 75% for a cash-out refi (80% max for a primary residence). DSCR loan lenders typically allow up to 75–80% LTV with no income verification.
• Cash-out proceeds = new loan − existing loan balance. This is the cash you receive at closing before subtracting closing costs (typically 2–5% of the new loan; not modelled here).
• DSCR after refi: the refinance increases your debt service, so DSCR falls. Most lenders require a post-refi DSCR of at least 1.20–1.25. If the result is below 1.0, the property will not cover its debt after the refinance.
• Common use cases: fund a down payment on a next acquisition, consolidate renovation costs, pay off higher-rate debt. The key discipline is deploying the proceeds into assets that generate a higher return than the new loan's after-tax cost.

Worked example

A rental property worth $400,000 with a $250,000 loan balance and $20,000 annual NOI. Current equity: $150,000 (37.5% equity, 62.5% LTV). You refinance to 75% LTV: new loan $300,000, cash-out proceeds $50,000. New rate 7.25% over 30 years: monthly payment $2,047, annual debt service $24,564. Post-refi cash flow: $20,000 − $24,564 = −$4,564 (negative). DSCR = 0.81 — below the 1.25 threshold. The property does not cash-flow after the refi. To make it work, NOI needs to increase (higher rents, lower expenses) or the target LTV must come down.

Frequently asked questions

What LTV can I get on a rental property cash-out refi?

Most conventional lenders allow up to 75% LTV for a single-family rental cash-out refinance and 70% for 2–4 units. DSCR lenders offer 75–80% LTV. Some portfolio lenders go higher but at significantly higher rates. LTV limits tighten if you already have multiple financed properties.

How do closing costs affect the proceeds?

Closing costs on a refinance typically run 2–5% of the new loan amount, covering origination fees, title insurance, appraisal and escrow. This calculator shows gross cash-out; subtract estimated closing costs to get net proceeds. You can sometimes roll closing costs into the new loan, reducing cash out but also reducing out-of-pocket cost.

When does a cash-out refi make sense?

When the cost of the new debt (rate × new loan amount) is less than the return you can earn deploying the proceeds. If you can pull $50,000 at 7% and invest it in a deal earning 12% cash-on-cash, the spread works in your favour. If the proceeds sit in savings at 5% while the new debt costs 7%, you are losing ground.

Does a cash-out refi affect my taxes?

Loan proceeds are not taxable income. However, the new loan creates a larger interest deduction (good), and if you pull equity from a property, you reduce your equity basis and will have a larger gain when you eventually sell. Refinancing into a higher balance also resets the depreciation deduction timeline for any points paid.

Formulas last reviewed October 20, 2026. Results are estimates for educational use; not financial advice. Methodology →