Mortgage Glossary
Cash-Out Refinance
A refinance that pays off the existing loan AND returns additional equity as cash to the borrower. The standard tool for pulling capital out of an appreciated rental.
What is a cash-out refinance?
A cash-out refinance is a refinance loan whose proceeds are LARGER than the payoff of the existing mortgage. The difference (after closing costs and escrows) is delivered to the borrower as cash. Mechanically: a new first-lien mortgage is originated at a higher loan amount than the old one; the old loan is paid off; the remaining funds go to the borrower.
Cash-out is typically used to extract appreciation that has built up in a rental property — deploying that equity into a new investment, paying off higher-cost debt, or funding a business. Because the loan-to-value goes up after a cash-out (you’re replacing a smaller loan with a bigger one), pricing is generally tighter than a rate-and-term refinance at the same LTV tier.
Cash-out is regulated differently from a rate-and-term refinance and is treated as a higher-risk transaction by lenders. Expect stricter cash-in-hand caps, slightly lower max LTVs at the top tier, and a 6-12 month seasoning requirement on the property before cash-out is eligible.
How cash-out refinance applies at Total Quality Lending
TQL’s DSCR cash-out tier caps at 80% LTV at the top tier (740+ FICO + ≤$2.5M loan). Cash-in-hand limits: $500,000 at LTV above 65%, $1,000,000 at LTV at or below 65%. Cash-out is available across DSCR, Multi-Unit DSCR, Foreign National DSCR, and Prime Time programs — each with its own LTV ladder and FICO thresholds.
FAQs
What's the max cash-out on a TQL DSCR loan?
Maximum cash-in-hand is $500,000 at LTV above 65%, and $1,000,000 at LTV at or below 65%. The total loan amount can go up to 80% LTV at the top tier (740+ FICO, $2.5M max loan).
Can I use cash-out funds for any purpose?
On investment-property DSCR cash-out, the funds can be used for new investment property acquisition, business purposes, property improvements, or general investor liquidity. The lender will ask the purpose at application and confirm at closing.
Is a cash-out refinance the same as a HELOC?
No. A cash-out refinance replaces your existing first mortgage with a new, larger first mortgage. A HELOC (Home Equity Line of Credit) is a second-lien revolving line of credit that sits behind your existing first. TQL specializes in first-lien cash-out refinances, not HELOCs.
Get a quote from a real human
Talk to a loan officer who can model cash-out vs rate-term across both DSCR and Prime Time.