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 15th, 2026)

Cash-out refinance for investment properties

If you earn income from rental properties, a cash-out refinance can turn part of a property’s equity into cash, for example to pay for improvements. If today’s rates are lower than your current loan’s rate, you may also lower your rate, but a larger balance usually means a larger monthly payment.

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.

Fannie Mae and Freddie Mac cap cash-out refinances on investment properties at 75% of the appraised value for a one-unit property and 70% for two to four units.

To get cash out, you need more equity than the cap leaves in the home. For example, on a one-unit rental worth $400,000, a 75% cap allows a loan of up to $300,000. If you owe $200,000, that leaves up to $100,000 in cash before closing costs. If you owe $300,000 or more, there is nothing to take out.

Check your cash-out refinance interest rates. Start here (Nov 15th, 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.
• At least one borrower must have been on title for at least six months. Fannie Mae measures this to the new loan’s disbursement date, and Freddie Mac measures it to the note date. Fannie Mae’s delayed financing rules below are one exception.

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

For a rental-property cash-out refinance, lenders review your income, assets and other financed properties, including rental-income documentation when that income is used to qualify. Fannie Mae also applies loan-level price adjustments to investment property loans and cash-out refinances, so rates or upfront costs can be higher than on an owner-occupied refinance.

Fannie Mae’s Desktop Underwriter requires six months of reserves for an investment-property transaction and may require more based on its risk assessment. Additional reserves for other financed properties equal 2% to 6% of their applicable mortgage and HELOC balances, depending on the total number of financed properties. That balance calculation excludes the subject property, your principal residence, properties sold or pending sale, and accounts paid by closing or otherwise omitted under Fannie Mae’s rules. Cash proceeds from the subject property’s cash-out refinance cannot count toward reserves. Credit score minimums depend on the loan-to-value ratio, the number of units and the lender.

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). Freddie Mac’s mortgage-rate averages cover qualifying home-purchase loans, not investment-property cash-out refinances. Compare actual offers, closing costs and total repayment costs; a lower interest rate does not necessarily mean a lower total cost. Compare the options in cash-out refinance vs. HELOC.

Documents lenders ask for

For a Fannie Mae refinance using rental income from the subject property to qualify, lenders generally obtain your most recent federal income tax return, including the applicable schedules, and Form 1007 or Form 1025 to support rental income. Current leases and additional supporting documents are required when applicable; a lease is not an unrestricted substitute for tax-return documentation. 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 15th, 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.

DSCR loans and other non-QM options

If your rental doesn’t fit Fannie Mae or Freddie Mac rules, a DSCR loan is another option. A debt service coverage ratio loan qualifies you based on the property’s rental income compared with its monthly payment, including taxes and insurance, instead of your personal income. Lenders set their own minimum ratios, credit scores and loan-to-value limits.

Credit used to acquire, improve or maintain a non-owner-occupied rental property is generally treated as business-purpose credit outside the federal consumer ability-to-repay rule. Cash taken out for personal purposes doesn’t automatically count as business-purpose credit. Business-purpose loans may include prepayment penalties, so read the terms before you commit. See how non-QM loans work.

Cash-out refinance FAQ

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

Not for a non-owner-occupied investment property. An FHA cash-out refinance generally requires at least one borrower to have owned and occupied the home as a principal residence for the 12 months before FHA case-number assignment. An inheritance exception can waive the minimum occupancy period if the property has not been treated as an investment property since inheritance. A VA cash-out refinance must meet VA’s occupancy requirements. For a non-owner-occupied investment property, options include conventional, non-QM and portfolio loans.

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

Fannie Mae and Freddie Mac allow up to 75% of the appraised value for a one-unit investment property and 70% for two to four units, so you keep at least 25% to 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. Conventional loans that follow Fannie Mae or Freddie Mac rules allow cash-out refinances on investment properties within the limits above, and non-QM lenders offer DSCR and other options. Meeting the minimums does not guarantee approval.

How soon can you do a cash-out refinance on a rental property?

Under Fannie Mae rules, at least one borrower generally must have been on title for six months before the new loan’s disbursement date, and an existing first mortgage being paid off must be at least 12 months old, measured from its note date to the new loan’s note date. If you bought the property with cash, delayed financing may let you refinance sooner.

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 15th, 2026)