Michigan rentals offer some of the best price-to-rent ratios in the Midwest, from Detroit and its suburbs to Grand Rapids, Lansing and Kalamazoo. A DSCR cash-out refinance lets you pull equity using the property's rent.
In short: LendingStreet offers DSCR cash-out refinances on Michigan rentals of 1 to 8 units, lending up to 75% of appraised value and qualifying on rent, not W-2s or tax returns. Loans start at $150,000 and the standard minimum DSCR is 1.0x. In Michigan, the property tax line on a rental is higher than on a primary residence, and moving a property into an LLC can change the tax bill, so plan both before you apply.
A cash-out refinance replaces your existing loan with a larger one. The appraisal sets the value, the program caps the loan at up to 75% of it, and whatever is left after the payoff and closing costs comes to you.
Approval rests on the rent, not your income. Divide the monthly rent by the new principal, interest, taxes, insurance and HOA dues; on standard programs that ratio needs to be at least 1.0x after the new, higher balance is in place. Credit, reserves and the property itself still matter, but your personal income does not.
Metro Detroit is the largest rental market, from Detroit's brick single-family homes and two-family flats to suburbs such as Warren, Dearborn, Ferndale, Royal Oak and Southfield. Grand Rapids has grown steadily, with older homes near downtown and newer suburbs like Wyoming and Kentwood.
Lansing and East Lansing have state government and Michigan State, Ann Arbor has the University of Michigan and high rents, and Kalamazoo, Flint, Saginaw and Muskegon offer lower prices. Northern Michigan and the lakeshore have vacation rental demand with local rules.
Michigan's state and county real estate transfer taxes are charged on deeds when property sells, not on a refinance. There is no state mortgage tax. Expect title, settlement, appraisal, recording and escrow deposits on a cash-out.
Your term sheet and closing disclosure list lender costs separately from title, recording and government charges, so you can see exactly what the cash-out costs and how much of the equity reaches you.
| Closing item | How it usually works in Michigan |
|---|---|
| State and county transfer tax | Paid on deeds when property sells; not on a straight refinance |
| Mortgage tax | None at the state level |
| Register of deeds | County fees to record the new mortgage |
| Title and settlement | Lender title policy and closing fees |
| Escrow setup | Deposits for summer and winter tax bills and insurance |
Michigan caps annual increases in a property's taxable value, but the cap resets, or uncaps, when ownership transfers. The principal residence exemption (PRE) removes most school operating millage on a home the owner lives in, and rentals do not get it, so rental bills are noticeably higher.
Here is the trap: deeding a property from your own name into an LLC can count as a transfer of ownership and uncap the taxable value. If you plan to move the rental into an LLC as part of the refinance, ask the assessor or a tax adviser how it will be treated.
Michigan insurers look at roofs, basements and older electrical and plumbing, especially on early twentieth-century homes. Basement flooding from heavy rain has been a recurring issue in parts of metro Detroit, so ask about sewer backup coverage.
Lakefront and riverfront properties can sit in mapped flood zones. Get a current quote and flood determination before you apply.
This example is illustrative and not a quote. An investor owns a Grand Rapids single-family rental appraised at $310,000 with $125,000 owed on the current loan. Rent is $2,250 a month and non-homestead property taxes and insurance come to $450 a month.
At 75% LTV the new loan is $232,500. Paying off the $125,000 balance leaves $107,500 before closing costs. On a 30-year term, principal and interest is about $1,586, so the full payment is about $2,036 and the DSCR is about 1.11x, above the 1.0x standard minimum.
Put another way, rent would have to fall below about $2,036 a month before this loan dropped under 1.0x, a cushion of roughly $214 a month. Running the same check on your own numbers shows how much cash the rent can actually support.
| Item | Amount |
|---|---|
| Appraised value | $310,000 |
| Loan at 75% LTV | $232,500 |
| Existing loan payoff | $125,000 |
| Cash before closing costs | $107,500 |
| Principal and interest | About $1,586 |
| Taxes and insurance | $450 |
| Total monthly payment | About $2,036 |
| DSCR at $2,250 rent | About 1.11x |
Detroit requires landlords to register rentals and obtain a certificate of compliance after inspection, and the city has tied rent collection to compliance in some situations. Grand Rapids, Lansing, Ann Arbor and other cities run their own rental certification programs.
A current certificate supports the rent you list and avoids questions during underwriting. If the property is in process, tell us up front so the file can be timed around it.
If you bought or finished a rehab recently, the seasoning rules matter. Depending on the program, a recent purchase may qualify on the appraised value right away, or the loan may be held to cost plus documented improvements for the first several months.
Your cash is the smaller of what 75% LTV allows and what the rent can carry at 1.0x or better. Larger loans and 5-8 unit buildings can have lower LTV caps, which vary by program.
If you are unsure which limit applies to you, send the purchase date, rehab costs and rent through the form below and we will run both.
Having these ready shortens the timeline and avoids surprises at the appraisal.
Yes. We finance DSCR cash-out refinances on non-owner-occupied 1-8 unit rentals throughout Michigan, up to 75% LTV, starting at $150,000.
It can. A deed from you to an LLC may be treated as a transfer of ownership that uncaps taxable value. Ask the assessor or a tax adviser before you deed it.
Rentals do not get the principal residence exemption, so they pay school operating millage that homesteads mostly avoid.
An underwriter may ask whether the rental is registered and compliant. Having the certificate in hand avoids delays.
No. The loan qualifies on the property's rent. You will still need a 620 or higher credit score, reserves and entity documents if the property is held in an LLC.
It depends on the program. Some allow cash-out shortly after purchase; others require several months of ownership or limit the loan to cost plus documented improvements. Our seasoning guide covers the details.
You can take a smaller loan to bring the ratio up, or look at sub-1.0 DSCR programs, which exist for some properties and borrowers with stronger profiles.
Yes. With no existing loan to pay off, proceeds are up to 75% of appraised value less closing costs, still subject to the rent covering the new payment.
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