How long do I have to own a rental before a DSCR cash-out refinance?

THE NUMBERS

ILLUSTRATIVE — published program floors, not a quote or a commitment to lend. Subject to underwriting, appraisal and final credit approval.

What are the seasoning tiers?

Under six months on title, the loan is sized against cost basis: what you paid plus improvements you can document. Between six and twelve months, treatment varies by lender — some go to full appraised value at six months, others blend, and a few hold basis until twelve. At twelve months and beyond, the appraised value governs everywhere and the question stops mattering. Silt works to the six-month standard, with a documented-basis path before that.

What is delayed financing?

Delayed financing is the reimbursement route for a property bought with cash. It returns your own funds — purchase price plus documented closing costs and improvements — without waiting out the seasoning clock, usually within the same 75% cash-out cap. You need the settlement statement showing no mortgage lien, proof the funds were yours, and receipts for anything you are adding to basis. It is a reimbursement, not a valuation event: it will not capture appreciation.

What counts as a documented improvement?

Capital work with a paper trail: roof, systems, kitchens, baths, windows, structural repairs, permitted additions. Contractor invoices with a scope, matching bank or card payments, and permits where the jurisdiction required them. Your own labour, estimated value of donated materials, and a rise in the neighbourhood do not count. Cosmetic turnover — paint and cleaning between tenants — is maintenance, and underwriters generally read it that way.

How does the desk document your basis?

The file carries three things: the closing statement from the purchase, a line-item improvement schedule, and the invoices and payment proof behind each line. The underwriter reconciles the schedule to the bank records, discards anything unsupported, and the surviving total becomes the basis the loan is sized against. Sending the schedule early is the single biggest time saver on a short-seasoning file — it turns a conditional approval into a priced one.

How much can you actually take out?

Cash-out is capped at 75% LTV on the sheet, and the DSCR test applies to the new, larger payment. A property that carried a 1.30 DSCR at 60% leverage can fall under 1.00 at 75% — so the binding constraint is usually the rent, not the seasoning rule. Price the payment at the leverage you want before you order the appraisal, and confirm with your CPA how the proceeds are treated in your books.

What can you do with the proceeds?

These are business-purpose loans. Proceeds fund the next acquisition, rehab on another door, paying off a bridge or hard-money note, or working capital for the rental operation. They cannot pay for a primary residence or anything consumer in nature — that is a hard stop, not a preference. Every borrower signs a business-purpose affidavit at closing stating how the funds will be used.

A worked example — 12 months on title

A 1.18 DSCR prices the +25 bps 1.00–1.19 band on top, so the working rate is 7.25% and the payment moves again. Dropping to 70% LTV lifts the DSCR back over 1.25 and takes 12.5 bps off instead. Illustrative only.

WHAT WE NEED FROM YOU

• Purchase settlement statement. The recorded deed date sets the seasoning clock.
• Improvement schedule. Line by line, with contractor invoices and matching payments.
• Lease or market rent evidence. The appraiser's rent schedule covers a vacant unit.
• Taxes, insurance and HOA. Current bills, not last year's estimate.
• Entity documents. Articles, operating agreement and EIN letter for the borrowing LLC.
• Two months of bank statements. Reserves are six months of PITIA.

FREQUENT QUESTIONS

Does the seasoning clock start at purchase or at completion of the rehab?

At the recorded deed date. Finishing the work later does not restart or shorten it.

Can I get cash out at three months?

Usually yes, sized off documented cost basis rather than the new appraisal — or through delayed financing if you bought with cash.

Does the property have to be leased?

No. A vacant unit can qualify on the appraiser's market rent schedule, typically at slightly lower leverage.

Is the maximum cash-out LTV different from a purchase?

Yes. The sheet allows 80% on a purchase or rate-and-term and 75% on cash-out.

Is a DSCR cash-out taxable?

Loan proceeds are generally not income, but treatment depends on your books — confirm with your CPA.

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