Investment Property Cash-out Refinance | 2026 Guidelines

Putting investment property equity to work

Cash-out refinancing is common for primary residences (owner-occupied homes). Many lenders also offer a cash-out refinance for an investment property or second home.

Lenders offer investment property owners the chance to cash in on their non-owner-occupied homes’ equity. The rules are stricter than for a home you live in.

Check your cash-out refinance interest rates. Start here (Nov 1st, 2026)

Cash-out refinance for investment properties

If you generate income from rental properties, a cash-out refinance could be a useful strategy. Cash-out refinancing could help you grow your rental income, for instance, if the cash is for home improvements. Many cash-out refinance applicants lower their existing mortgage interest rate while taking cash out, improving their positive cash flow.

Here’s what you need to know about cash-out refinance rules for investment properties and whether you’re a good candidate.

Do you have equity in your rental property?

As with most cash-out refinancing programs, more home equity puts you in a better position to qualify. It also puts you in a better position to benefit from a new loan.

For a non-owner-occupied refinance, most lenders will loan up to 75 percent of the home’s appraised value. That is the maximum set by Fannie Mae. In rare instances, you could find lenders that will go up to 80 percent. These are probably the bank’s proprietary mortgage loan programs, which charge a higher rate.

In other words, in order to make a cash-out refinance loan worth your while, you’ll need to have a certain amount of equity. Rental properties with 30 to 40 percent equity are well suited for cash out. Homeowners who purchased years ago might even drop their rate while taking cash out.

Check your cash-out refinance interest rates. Start here (Nov 1st, 2026)

Non-owner-occupied cash-out refi rules

Here are some recent eligibility requirements and guidelines for cash-out refinances on rental properties as set by Fannie Mae:

• The maximum loan-to-value ratio is 75% for 1-unit properties and 70% for 2- to 4-unit properties.
• A property that was listed for sale must be off the market on or before the disbursement date of the new loan.
• If you are paying off a first mortgage, that loan must be at least 12 months old. This is measured from its note date to the note date of the new loan.
• The property is not eligible for a cash-out refinance if it was purchased within the last six months. There is an exception for properties that meet the Delayed Financing guidelines.

Delayed Financing Rule: A rental property purchased within the last six months is eligible for a cash-out refinance if:

• The new loan amount is no more than your investment in the purchase plus closing costs and points on the new loan. It must also stay within the cash-out LTV limit, based on the current appraised value.
• The buyer did not use a mortgage to buy the home, and the title search shows no liens. You may have paid with a loan secured by another property, such as a HELOC. If so, you must use the cash-out proceeds to pay that loan down.
• The transaction was arms-length. This means the seller did not have a pre-existing relationship or financial interest in the sale besides the sale itself.
• The buyer has a final Closing Disclosure (final settlement statement) showing the purchase price and other details of the transaction.

Investment property cash-out refinance qualifications for above-average applicants

Cash-out loans are risky business for lenders, especially when borrowers do not live in the homes they are refinancing. That’s why qualifications are rigorous. You can expect more paperwork than you would from an owner-occupied or no cash-out refinance.

For example, candidates need a strong credit score and cash reserves. Fannie Mae’s automated underwriting requires six months of payments on the rental property you are refinancing. It requires more reserves if you own other financed properties. Cash you take out in the refinance does not count as reserves.

For qualifying borrowers, a cash-out refinance can turn home value into cash without a second mortgage, such as a home equity loan or a home equity line of credit (HELOC). The interest rates on a cash-out refinance can be far more affordable than the rates associated with credit cards or personal loans.

Applicants will also have to present tax information, rental lease agreements, property value, and other property income information. Fannie Mae allows up to 10 financed properties (including your own home) on an investment property loan underwritten through Desktop Underwriter. Some lenders set a lower limit.

Check your investment property refinance rates. Start here (Nov 1st, 2026)

Is a cash-out refinance right for your investment property?

You may think you have ample equity, meet borrower requirements, and will benefit from a lower interest rate. If so, consider a few more things before you move forward with cash-out refinancing.

For starters, work out how much your mortgage payment will increase, if any, by adding principal to your existing loan balance. Will your rental income be able to cover the increase?

Also, consider whether you will purchase more rental properties. Taking on additional debt could shift your debt-to-income ratio (DTI) in a way that affects your eligibility for future loans.

It will take time to see an income return on your refinancing. Be sure your cash-out loan will help you in the long run, beyond providing some cash in the short term.

You also need to carefully go over the terms of the loan to be sure it makes sense for your investment goals. For example, it will now take longer to pay off the mortgage on your property.

Different lenders will have varied loan terms for non-owner-occupied refinances, including adjustable-rate mortgages versus fixed-rate. If you opt for an adjustable-rate mortgage, you have to be very confident that you will be able to handle fluctuations that may arise. This is why most property owners choose a fixed-rate mortgage when real estate investing.

Cash-out refinance FAQ

Can I get a cash-out refinance with an FHA loan or a VA loan?

Both the Federal Housing Administration (FHA) and Veterans Affairs (VA) loan programs offer cash-out refinance programs. However, neither program is intended to be used to purchase or refinance a second home or investment property.

What is the max LTV for investment property cash-out refinance?

Most cash-out loans for investment properties have a maximum LTV ratio of 70-75%. That means you can borrow up to 70-75% of the home’s value, and you must keep 25-30% of the value as equity.

What is the maximum loan-to-value ratio for a one-unit investment property?

The maximum LTV ratio for a one-unit property is 75%.

Can I get a cash-out refinance for an investment property?

Yes, there are refinance programs that will allow you to convert the equity you have in a second home or investment property to cash.

Where to apply for a rental property cash-out refinance

Once you factor all of the above into your decision, you may find that a cash-out refinance on your investment property can help. You could use it to buy more rental homes or make improvements on existing properties.

The key with this option, as with any refinancing, is the outcome of the new mortgage. It should either lower your monthly payments right away or put more cash flow into your pocket over time. If a non-owner-occupied cash-out refinance has one of those outcomes, speak with a lender who specializes in these loans.

Most of today’s lenders offer cash-out refinances on rental properties at similar terms. You can get started on your application now. A loan officer can pre-qualify you and give you a rate and payment quote. That is the first step to making sure this type of mortgage refinance is the right move.

Check your cash-out refinance interest rates. Start here (Nov 1st, 2026)