DSCR Cash-Out Refinance in Arizona: How It Works
A DSCR cash out refinance replaces the loan on an Arizona rental with a larger one and pays you the difference, and it qualifies on the property's rent instead of your tax returns. Pillar Mortgage Group in Scottsdale places these loans down to a 0.75 ratio, and the key is that the lender recalculates DSCR on the new, higher payment, so the rent has to support the loan you are asking for.
Quick facts
- Pillar Mortgage Group places DSCR loans down to a 0.75 ratio, and a refinance can close in an LLC (Pillar Mortgage Group, DSCR Loans, accessed October 25, 2026).
- No tax returns or W-2s; credit around 660 or higher; reserves of roughly 3 to 6 months (Pillar Mortgage Group, DSCR Loans, accessed October 25, 2026).
- Pillar Mortgage Group shops multiple wholesale DSCR lenders, with loan amounts up to $5 million (Pillar Mortgage Group, DSCR Loans, accessed October 25, 2026).
- The ratio is recalculated on the new loan's full PITIA, so a larger cash out lowers DSCR.
- For comparison, Fannie Mae conventional cash out requires at least one borrower on title for six months (Selling Guide B2-1.3-03, dated December 10, 2025).
What a DSCR cash out refinance is
A cash out refinance pays off your existing loan, or puts a first loan on a property you own free and clear, and sends the extra proceeds to you at closing. With a DSCR loan, the lender qualifies the new loan on the property's rent compared with its new payment, not on your personal income. That makes it a common tool for investors who bought with cash, a hard money loan or a bridge loan and now want long term financing, and for owners who want to pull equity from a rental that has appreciated. Read our overview of rental property cash out options for conventional and HELOC comparisons.
Seasoning: how long you must own the property
Seasoning is the time between when you acquired the property and when the new loan closes. It matters because it decides which value the lender uses. Shortly after a purchase, many lenders base the loan on what you paid plus documented improvements. After the seasoning period, the lender can use the new appraised value. Seasoning periods, and how they treat recent renovations, vary by lender and program, which is one reason we shop multiple wholesale DSCR lenders.
Conventional rules are a useful reference point. Fannie Mae requires at least one borrower to be on title for at least six months before the new loan's disbursement date, with a delayed financing exception for certain borrowers who purchased within the past six months (Fannie Mae Selling Guide B2-1.3-03, dated December 10, 2025). DSCR programs set their own seasoning terms.
How the DSCR is recalculated on a cash out
The lender divides the property's monthly rent by the new monthly PITIA: principal and interest on the new, larger loan, plus taxes, insurance and association dues. Rent usually comes from the current lease, the appraiser's market rent schedule, or both, and many lenders use the lower figure. Short-term rentals use documented booking income, as explained in DSCR loans for Airbnb and short-term rentals. The full formula is in how to calculate DSCR.
Here is an illustration with hypothetical numbers, not a quote:
| Line | Before refinance | After cash out |
|---|---|---|
| Monthly rent (lease) | $2,400 | $2,400 |
| Principal and interest | $1,350 | $1,900 |
| Taxes, insurance and HOA | $350 | $350 |
| Total PITIA | $1,700 | $2,250 |
| DSCR | 1.41 | 1.07 |
The rent did not change, but the bigger loan pushed the ratio from 1.41 to 1.07. To find your ceiling, divide rent by the minimum ratio. At Pillar Mortgage Group's 0.75 floor, $2,400 of rent supports a total PITIA of up to $3,200 a month, and at 1.00 it supports $2,400. The amount of cash available is also limited by the lender's equity requirements, credit and reserves, which vary by lender and program, so call us for the numbers on your property.
Common uses for DSCR cash out proceeds
| Use | Why investors do it | What to watch |
|---|---|---|
| Buy the next rental | Recycle equity into another down payment | Both properties need to support their own ratios |
| Pay off a hard money or bridge loan | Move from short term to long term financing | Seasoning and which value the lender uses |
| Renovate or upgrade | Raise rent and value | Rent gains only count once leased or appraised |
| Build reserves | Cushion for vacancies and repairs | Lenders verify reserves at closing |
| Consolidate higher cost debt | Simplify payments | A higher loan balance lowers DSCR |
If your plan is to repeat the cycle, see using a cash out refinance to buy another house, and ask your CPA about tax treatment; our cash out refinance taxes guide covers the basics. Investors buying from another state can use the same strategy, as covered in buying Arizona rental property from out of state.
Refinancing a rental held in an LLC
Many Arizona investors already hold rentals in an LLC. A DSCR refinance through Pillar Mortgage Group can close in the LLC's name (Pillar Mortgage Group, DSCR Loans, accessed October 25, 2026), which can avoid deeding the property out to an individual and back. Conventional loans sold to Fannie Mae must be made to natural persons, so the comparison matters; see DSCR vs conventional investment loans in Arizona and refinancing a rental property held in an LLC.
What to have ready
- Current leases and a rent roll, or 12 months of booking history for a short-term rental.
- The current mortgage statement, or proof the property is free and clear.
- Property tax bill, insurance declarations page and HOA statement.
- A list of improvements with receipts, especially on a recent purchase.
- LLC documents if the property is vested in an entity.
- Bank statements showing reserves of roughly 3 to 6 months of payments.
Rent and value data vary by market, so check our city guides for DSCR loans in Phoenix, DSCR loans in Mesa, DSCR loans in Gilbert, DSCR loans in Chandler, DSCR loans in Tempe, DSCR loans in Sedona and DSCR loans in Flagstaff. Planning to put the proceeds into another property? Browse listings on Arizona Luxury Property Search.
Cash out terms vary by lender and program. Book a call with Blake Hermann, Director of Lending, and bring your lease, mortgage statement and target cash amount, and we will show you what the rent supports. Program details are on our DSCR loans page.
Frequently asked questions
Can I do a DSCR cash out refinance on an Arizona rental?
Yes. Pillar Mortgage Group places DSCR cash out refinances that qualify on the property's rent instead of your tax returns or W-2s, with ratios down to 0.75 and LLC vesting allowed.
How is DSCR calculated on a cash out refinance?
The lender divides the property's monthly rent by the new monthly PITIA, which includes principal and interest on the new, larger loan plus taxes, insurance and association dues. Because the new loan is larger, the ratio usually drops.
How long do I need to own a rental before a DSCR cash out refinance?
Seasoning requirements vary by lender and program. Shortly after a purchase, many lenders base the loan on the purchase price plus documented improvements, and after seasoning they may use the new appraised value. For comparison, Fannie Mae conventional cash out requires six months on title.
How much cash can I take out with a DSCR refinance?
It depends on the rent, the minimum ratio, the lender's equity requirements, credit and reserves, all of which vary by lender and program. At a 0.75 ratio, $2,400 of monthly rent supports a total payment of up to $3,200. Call Pillar Mortgage Group for numbers on your property.
Can I use DSCR cash out money to buy another property?
Yes. Many investors use cash out proceeds for the next down payment, to pay off a hard money loan, to renovate, or to build reserves. Each new property needs to support its own ratio.
Sources
- Pillar Mortgage Group, DSCR Loans program page, accessed October 25, 2026. https://pillarmortgagegroup.com/dscr-loans
- Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions, dated December 10, 2025. https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions
- Fannie Mae Selling Guide B2-2-01, General Borrower Eligibility Requirements, dated September 3, 2025. https://selling-guide.fanniemae.com/sel/b2-2-01/general-borrower-eligibility-requirements
Written by Blake Hermann, Director of Lending, NMLS #2271358, Pillar Mortgage Group, Scottsdale, Arizona.
Equal Housing Opportunity. Informational only, not a commitment to lend. Programs subject to change and borrower qualification. Company NMLS #2700076.
