Equity financing
Free-and-clear DSCR cash-out for unencumbered rental property.
Model a rental property with no current mortgage by setting the payoff to zero, then connect value, requested proceeds, leverage, rent, ownership, and business purpose.
A free-and-clear rental property has no existing mortgage payoff. In the quote math, the current balance is zero, so the requested new loan generally represents the gross financing request before closing costs, prepaid items, escrows when applicable, and other transaction charges.
Free-and-clear cash-out mathGross requested proceeds before costs = new loan − $0 payoffActual proceeds depend on final loan amount, costs, title, taxes, insurance, and closing adjustments.
Illustrative free-and-clear scenario
Estimated property value$800,000
Existing payoff$0Free and clear
Illustrative new loan$480,00060% LTV
Gross proceeds before costs$480,000Not net cash to borrower
What the lender still needs to review
- Current ownership, vesting, and length of ownership.
- Property value, condition, type, occupancy, and rental status.
- Qualifying rent and program-specific PITIA or debt service.
- Requested loan amount, target leverage, and intended business or investment use of proceeds.
- Credit, liquidity, reserves, experience, entity documents, title, insurance, appraisal, and complete closing file.
Business-purpose equity uses
Investors may request proceeds for another acquisition, renovation, reserves, business liquidity, debt restructuring, or another documented business or investment objective. The lender must determine the transaction purpose and acceptable use based on the complete file.
Free-and-clear cash-out questions
Does free and clear mean I can borrow any percentage of value?
No. Available leverage varies by credit, DSCR, property type, loan size, state, ownership, seasoning, reserves, and current program. Free and clear only means the existing payoff is zero.
How should I enter the payoff in the quote path?
Choose the cash-out path, confirm the property is free and clear, and enter a current balance of zero. Then enter the requested cash amount or total requested loan as prompted.
Are the gross loan amount and net cash proceeds the same?
No. Net proceeds may be reduced by closing costs, prepaid items, title and insurance charges, taxes, escrows when applicable, liens, or other closing adjustments.
Investor education from the DSCR Loan Guru deskPrepared for FFC Mortgage Corp. dba NonQM123, NMLS #3252.
Updated July 23, 2026
Free-and-clear equity
Show the Guru the value, rent, and business-purpose request.
The connected quote path keeps a zero payoff from being confused with missing information.