Maryland Cash-Out DSCR Refinance for Investment Rentals

How cash-out DSCR works

The lender orders an appraisal for the current value and a rent estimate. The new loan amount is limited by the lender's leverage rules and by the DSCR: the rent has to cover the new, larger payment. Because the loan grows, the ratio usually falls compared with your existing loan, so a cash-out file needs a stronger rent-to-payment cushion than a straight refinance.

Many Maryland investors use cash-out to repay short-term rehab money after renovating a Baltimore rowhouse, or to pull equity from a long-held rental in the suburbs to fund the next purchase. In both cases, the proceeds must be for business purposes, and you will sign a business-purpose statement. See cash-out DSCR vs. a HELOC on a rental for an alternative.

Maryland items lenders and title ask about

• Seasoning. Lenders set how long you must own the property before they use a new appraised value instead of your purchase price plus documented improvements.
• Licensing. In Baltimore City and other licensing jurisdictions, expect questions about the current rental license.
• Lead registration. Pre-1978 rentals should be registered with the Maryland Department of the Environment.
• Ground rent. If the property is subject to ground rent, title will address it.
• Lease and rent. A current lease at market rent, or a supportable market rent, is the basis of the ratio.

Check the new payment before you apply

Enter the target loan amount and a quoted rate in the DSCR calculator with your current tax and insurance figures. If the ratio drops below what you want, a smaller cash-out amount often keeps the file in a better range. A rate-term refinance, covered on the rate-term refinance page, is the option when you only want to change the loan terms.