Washington DSCR cash-out refinance
TL;DR: A DSCR cash-out refinance replaces the loan on a Washington rental with a larger one and pays you the difference, qualifying on the property’s rent rather than your income. The cash must be for business purposes, the property must be non-owner-occupied, and the ratio has to work at the new, larger loan amount.
Years of Puget Sound appreciation have left many Washington landlords with significant equity. A DSCR cash-out refinance is one way to put it back to work.
Who it fits
- Landlords funding the next down payment from a seasoned rental
- Investors paying off short-term renovation financing after a property is leased
- Owners moving a rental into an LLC and refinancing at the same time
- Portfolio builders recycling equity from King County into East Side rentals
How the math looks
A Tacoma duplex earns $3,600 a month combined. At the proposed cash-out loan amount, the full payment would be $3,100.
$3,600 ÷ $3,100 = a DSCR of about 1.16.
The ratio still clears 1.00 at the larger loan, so the cash-out is worth pricing. At a larger loan the ratio would slip, which caps the cash available.
Illustrative numbers you would replace with your own. Not a loan offer or a quote of terms.
How it works
Check the ratio at the new loan size
A bigger loan means a bigger payment, so rerun the DSCR with the proposed loan amount before anything else.
Gather lease and costs
Current lease, rent history, tax bill, insurance declarations and any HOA statement.
We compare programs
Wholesale lenders differ on seasoning, maximum cash out and ratio minimums; we shop them side by side.
Appraisal
The appraiser sets the value that limits how much equity can be accessed and confirms market rent.
Close and fund
The lender pays off the old loan and the remaining proceeds go to you for business use.
What lenders will look for
- Seasoning rules on how long you have owned the property
- Leverage limits set by each lender and program
- A ratio test at the new loan amount, not the old one
- Signed business-purpose statements for the use of proceeds
Washington watch-outs
- Replacing a low-cost existing first mortgage can raise your overall cost of debt
- A higher loan can push a Seattle rental below 1.00
- Prepayment terms on DSCR loans vary; ask before you sign
- The proceeds cannot be for personal, family or household use
Questions investors ask
Can I do a cash-out refinance on a Spokane rental?
Often, yes, for business purposes. The amount depends on the appraised value, the program’s leverage limits, seasoning rules and whether the DSCR still works at the new loan amount.
Should I cash out or open a HELOC on my rental?
It depends on whether you want to keep the existing first mortgage. See our comparison of cash-out DSCR and a HELOC on a rental for the tradeoffs.
Can I use cash-out proceeds to remodel my own home?
No. Proceeds from a business-purpose DSCR loan must be used for business purposes, such as buying or improving investment property.
Other Washington DSCR options
Have a Washington rental in mind?
Send the scenario once. We shop business-purpose DSCR programs from wholesale lenders and come back with the options that fit the property, west or east of the Cascades.