Refinancing Tips · March 10, 2025
Refinancing Investment Properties: What's Different
Investment property refinancing has different rules, higher rates, and stricter requirements than owner-occupied. Here's the complete picture.
Refinancing a rental or investment property requires understanding a different rulebook.
Rate Premium
Investment property rates run 0.5%–0.875% above comparable owner-occupied rates. On a $400,000 loan this adds $100–$175/month. Shopping multiple lenders (which only a broker can do efficiently) is critical.
Equity Requirements
- Standard refinance: Maximum 75–80% LTV (25–20% equity required)
- Cash-out refinance: Maximum 70–75% LTV
Credit and Income
- Credit: 700+ preferred; 680 minimum at most lenders
- Income: Lenders use net rental income from Schedule E of tax returns
- Reserves: Often 6–12 months PITI reserves per investment property owned
DSCR Refinances: No Income Documentation
DSCR loans qualify on the property's rental income: DSCR = Monthly Gross Rent ÷ Monthly PITI
This is transformative for self-employed investors whose tax returns show low income, or investors with many properties hitting conventional DTI limits.
Portfolio Limits
Conventional Fannie/Freddie limits financing to 10 properties. Beyond that, DSCR and portfolio lenders step in without the conventional property count restriction.
HMS specializes in investor-friendly financing. Call 309-222-8286 to explore your options.