DSCR refi seasoning by lender type
By Austin Frangoules | Updated | 8 min read
Seasoning is how long you must own a property, or how old the loan being paid off must be, before a lender will refinance it on the new appraised value. Agency cash-out loans need six months on title and a first mortgage at least 12 months old. Many DSCR lenders will refi sooner but size the loan from your cost until six or twelve months pass. Portfolio banks set their own rules.
Two different clocks
- Title seasoning. How long you have owned the property, usually counted from the date you took title.
- Lien seasoning. How old the loan being paid off is. A hard money loan from purchase starts this clock on its note date.
A refi can pass one and fail the other. That is why the month you refi matters so much in a BRRRR.
Seasoning rules by lender type
| Lender type | Cash-out seasoning | Value used before seasoning |
|---|---|---|
| Fannie Mae cash-out (conventional) | At least 6 months on title; the first mortgage being paid off generally must be at least 12 months old | Not eligible for cash-out before then; see delayed financing |
| Fannie Mae delayed financing | Within 6 months of a cash purchase | Up to what you paid plus costs, documented; no extra cash from new value |
| DSCR lenders | Often 0 to 6 months; some 12 | Commonly the lower of cost (price plus documented rehab) or appraisal until 6 or 12 months |
| Portfolio banks and credit unions | Varies, often 6 to 12 months | Varies; some lend on the new appraisal sooner with a track record |
| Rate and term refi (no cash out) | Often little or none | Pays off the existing loan and costs only |
Why cost basis caps an early refi
Inside the seasoning window, many DSCR lenders size the loan as a percent of the lower of your cost or the appraisal. If you bought at $130,000 and put in $45,000, your cost is about $175,000. At 75%, the loan tops out near $131,250 even if the appraisal says $250,000. After seasoning, the same 75% applies to $250,000, or $187,500.
- Purchase plus rehab (cost)
- $175,000
- Appraisal after rehab
- $250,000
- Month 4 refi: 75% of cost
- $131,250
- Month 7 refi: 75% of appraisal
- $187,500
Against that, add about three more months of hard money interest. The BRRRR calculator checks every month and picks the one that leaves the least cash in.
Delayed financing for cash buyers
If you bought with cash, Fannie Mae's delayed financing exception lets you take cash out within six months of purchase, up to what you paid plus documented costs, subject to its rules. It returns your cash but does not pull out new equity from the rehab. It suits investors who buy with cash or a HELOC on another property.
How to plan your refi month
- List the programs you could use and write down each one's title and lien seasoning and the value basis before seasoning.
- Count months from your closing date and your hard money note date.
- For each month, figure the loan, payoff, closing costs and the cash left in.
- Add hard money interest for each month you wait.
- Pick the month with the least cash left in that still clears DSCR.
That is what the BRRRR calculator does, and the app adds a refi timeline with alerts 30 days before your best month. Also see BRRRR refinance seasoning rules and the DSCR calculator.
Questions
Can I do a DSCR cash-out refi right after a rehab?
Some DSCR lenders allow it with no seasoning, but many size the loan from your purchase price plus documented rehab until six or twelve months pass. Check the value basis, not just whether cash-out is allowed.
What is the 12-month rule on a cash-out refi?
For Fannie Mae cash-out loans, the first mortgage being paid off generally must be at least 12 months old, measured note date to note date, on top of six months on title.
Does seasoning start at closing or when the rehab ends?
Title seasoning usually starts when you take title at purchase. Lien seasoning starts on the note date of the loan being paid off.
For education only. Not legal, tax, lending or investment advice. Loan programs and guidelines change and vary by lender; confirm current terms with your lender.