Cash-out refinance on an investment property: 75% LTV, seasoning and a $120,000 example
Yes, you can do a cash-out refinance on an investment property. Fannie Mae and Freddie Mac allow a new loan of up to 75% of the property’s value on a one-unit rental and 70% on a two- to four-unit property, compared with 80% on a one-unit home you live in. You need six months on title, a first mortgage at least 12 months old, and usually six months of reserves, and the rate is typically higher than on a primary home.
Below are the limits, how lenders count rent, what investor pricing costs in dollars, a $120,000 example and where DSCR loans fit. LenderMatch lets you describe the rental once and compare what several lenders offer.
Maximum LTV for a cash-out refinance on an investment property
Most conventional loans follow Fannie Mae or Freddie Mac rules, and both publish the same caps for cash-out on a rental:
| Property | Max LTV |
|---|---|
| Investment property, 1 unit | 75% |
| Investment property, 2 to 4 units | 70% |
| Second home, 1 unit | 75% |
| Home you live in, 1 unit | 80% |
Source: Fannie Mae Eligibility Matrix, Desktop Underwriter limits (August 5, 2026). Freddie Mac’s published limits (accessed October 22, 2026) match for rentals: 75% for one unit, 70% for two to four. Lenders may set lower limits.
The cap covers the whole new loan, and the matrix applies it to the combined total of all liens, so any second mortgage or HELOC you keep counts against it too. A refinance that takes no cash out is capped at 75% for one to four units.
Cash-out refinance on investment property: Fannie Mae seasoning rules
Beyond the cap, Fannie Mae’s Selling Guide (B2-1.3-03) sets the timing rules. They are the same for rentals as for homes you live in; our guide to cash-out refinance seasoning covers them in depth.
- Six months on title. At least one borrower must have been on title for six months before the new loan is disbursed. If an LLC you control owned the property, the time the LLC held it can count, but ownership has to move from the LLC to you to close.
- A 12-month-old first mortgage. A first mortgage being paid off must be at least 12 months old, note date to note date.
- Off the market. A property listed for sale must be taken off the market by the disbursement date.
- Bought with cash? Fannie Mae’s delayed financing exception allows cash out within six months of a cash purchase, up to your documented investment plus closing costs, within the usual limits. The guide does not limit it to homes you live in.
- Up to 10 financed properties. For a second home or investment property loan, Fannie Mae’s automated system allows up to ten financed properties (B2-2-03).
How much reserves do you need?
Reserves are savings left after closing, counted in months of the property’s full payment. Fannie Mae’s reserve rules (B3-4.1-01) for loans run through its automated system require:
- Six months of payments for an investment property transaction.
- Plus a share of your other mortgages if you own other financed properties: 2% of their combined unpaid balances for one to four financed properties, 4% for five or six, and 6% for seven to ten. The rental being refinanced and your own home are left out of that total.
Example: two other financed rentals with $300,000 in combined balances add $6,000 (2%) to the six months on the property you are refinancing.
How lenders count rental income: Form 1007 and Schedule E
Fannie Mae’s rental income rules (B3-3.8-02, September 2, 2026) use your tax return first:
- Schedule E. If the rental is on your latest return, cash flow is the net amount on Schedule E plus depreciation, interest, HOA dues, taxes and insurance, averaged by month.
- Lease or rent schedule. If it is not on your return yet, the lender takes 75% of the lease amount. The appraiser’s Form 1007 (one unit) or Form 1025 (two to four units) supports the market rent.
The lender then subtracts the property’s full new payment (principal, interest, taxes, insurance and dues). A positive result can count as income if you have at least 12 months of experience managing rentals; a negative one is added to your monthly debts. Fannie Mae’s debt-to-income cap is 50% for loans run through its automated system (B3-6-02).
Cash-out refinance investment property rates: why they run higher
Fannie Mae charges lenders upfront fees called loan-level price adjustments (LLPAs), and a lender may pass them on to you through the rate or points. Its LLPA matrix (September 30, 2026) adds a charge for investment properties on top of the charge that applies to every cash-out loan:
| Fee | Percent | Dollars |
|---|---|---|
| Cash-out refinance, by score and LTV | 1.625% | $4,387.50 |
| Investment property add-on | 2.125% | $5,737.50 |
| Total on a rental | 3.750% | $10,125.00 |
Calculated by LenderMatch from the LLPA matrix. A two- to four-unit property adds 0.375% at this LTV; a lower LTV lowers both charges.
For reference, the Freddie Mac 30-year average was 7.32% and the 15-year 6.68% (week of October 22, 2026). Freddie Mac describes that survey’s borrower as having good to excellent credit and 20% down on a home purchase they will live in, so it is a benchmark, not a rental cash-out quote. See our mortgage rates page for the weekly trend.
Worked example: $120,000 from a $360,000 rental
Say you own a single-family rental worth $360,000 and owe $150,000. Your current payment is $900 principal and interest plus $450 for taxes and insurance. Last year’s Schedule E showed $3,000 of net income after $9,000 of depreciation, $6,500 of mortgage interest, $3,600 of taxes and $1,800 of insurance.
| Item | Amount |
|---|---|
| New loan: $360,000 × 75% | $270,000 |
| Payoff of current loan | −$150,000 |
| Cash before closing costs | $120,000 |
| New P&I, 30 years at an assumed 8.00% | $1,981/mo |
| New full payment with taxes and insurance | $2,431/mo |
The rent math. Schedule E cash flow is $3,000 + $9,000 + $6,500 + $3,600 + $1,800 = $23,900 a year, or about $1,992 a month. Against today’s $1,350 payment, the rental adds about $642 a month to your qualifying income. Against the new $2,431 payment, it shows a loss of about $440 a month, and that loss counts as debt. The rest of your income has to carry the difference within the 50% DTI cap.
A duplex works the same way at 70%: on a $500,000 two-unit property with $200,000 owed, the maximum loan is $350,000 and the cash is $150,000 before costs.
Calculated by LenderMatch. The 8.00% rate and the property figures are assumptions for illustration, not quotes. Closing costs come out of the cash; see home equity closing costs.
Try your own numbers in the cash-out refinance calculator.
DSCR cash-out refinance
A DSCR (debt service coverage ratio) loan is an investor mortgage outside the Fannie Mae and Freddie Mac programs. One national mortgage lender’s explainer (updated June 23, 2026) describes the basic calculation as monthly rental income divided by the monthly housing payment, and says approval does not center on W-2 income, tax returns or your personal debt-to-income ratio, though there is still documentation and underwriting. It adds that DSCR loans “can cost more than standard agency or conventional investor loans,” and that minimum ratios and pricing vary by lender.
Federal Truth in Lending rules (Regulation Z, comment 3(a)-4) treat credit to buy, improve or maintain a rental you don’t live in as business-purpose credit, so some consumer-loan disclosure rules may not apply. Read the note’s terms closely before you sign.
Cash-out refinance on investment property: tax implications
IRS Publication 527 (2025) says you can deduct mortgage interest you pay on your rental property. When you refinance for more than the old balance, “the portion of the interest allocable to loan proceeds not related to rental use generally can’t be deducted.” A tax professional can confirm how your use of the cash is treated.
Cash-out refinance or HELOC on a rental?
A cash-out refinance replaces the whole first mortgage. If the current loan carries a rate well below today’s, all of it moves to the new rate. A HELOC on the rental leaves the first mortgage alone, but fewer lenders offer one and caps often sit at 70% to 80% combined; see HELOC on an investment property. The blended rate calculator compares keeping your first mortgage plus a second loan with refinancing everything, and cash-out refinance vs HELOC explains the trade-offs.
In Texas, the Section 50 home equity rules cover your homestead, not a rental; see Texas cash-out refinance rules.
Frequently asked questions
Can I do a cash-out refinance on my rental property?
Yes. Fannie Mae and Freddie Mac both buy cash-out refinances on investment properties, up to 75% of the value for a one-unit rental and 70% for two to four units. You also need six months on title, a first mortgage at least 12 months old, and cash reserves.
What is the maximum LTV for a cash-out refinance on an investment property?
75% for a one-unit property and 70% for a two- to four-unit property under Fannie Mae’s Eligibility Matrix (August 5, 2026) and Freddie Mac’s published limits. Lenders can set lower caps, and loans outside those programs, such as DSCR loans, follow each lender’s own limits.
How soon can you do a cash-out refinance on an investment property?
Under Fannie Mae’s rules, at least one borrower must be on title for six months, and a first mortgage being paid off must be at least 12 months old. Time the property was held by an LLC you control can count toward the six months. A cash purchase may qualify sooner under delayed financing.
How much reserves do you need for a cash-out refinance on a rental?
For loans run through Fannie Mae’s automated system, six months of payments on the rental, plus 2% of the balances on your other financed properties if you have one to four (4% for five or six, 6% for seven to ten). Your own home is not counted in that percentage.
Is a cash-out refinance on a rental property tax deductible?
Interest is deductible as a rental expense to the extent the money relates to the rental. IRS Publication 527 says that when you refinance for more than the old balance, interest on the part not related to rental use generally can’t be deducted. Ask a tax professional.
Does LenderMatch check my credit?
No. LenderMatch never pulls your credit. A lender you choose may check it, with your permission, when you apply.
Compare cash-out offers on your rental →
Sources
- Fannie Mae, Eligibility Matrix (August 5, 2026).
- Freddie Mac, “Maximum LTV/TLTV/HTLTV Ratio Requirements for Conforming and Super Conforming Mortgages” (accessed October 22, 2026).
- Fannie Mae Selling Guide, B2-1.3-03 “Cash-Out Refinance Transactions” (December 10, 2025).
- Fannie Mae Selling Guide, B2-2-03 “Multiple Financed Properties for the Same Borrower” (November 5, 2025).
- Fannie Mae Selling Guide, B3-4.1-01 “Minimum Reserve Requirements” (August 7, 2024).
- Fannie Mae Selling Guide, B3-3.8-01 “General Rental Income Information” and B3-3.8-02 “Rental Income from the Subject Property” (September 2, 2026).
- Fannie Mae Selling Guide, B3-6-02 “Debt-to-Income Ratios” (April 2, 2025).
- Fannie Mae, Loan-Level Price Adjustment Matrix (September 30, 2026).
- Freddie Mac, Primary Mortgage Market Survey: 30-year fixed 7.32%, 15-year fixed 6.68% (week of October 22, 2026).
- A national mortgage lender’s DSCR loan explainer (updated June 23, 2026).
- CFPB, Regulation Z (12 CFR 1026), Official Interpretation of section 1026.3(a), comment 3(a)-4 (accessed October 22, 2026).
- IRS, Publication 527 (2025), Residential Rental Property.
Examples are illustrations, not offers or approvals. Last reviewed October 22, 2026.