Investors seeking to maximize the value of their real estate portfolios often turn to cash-out refinancing as a powerful financial strategy. By leveraging the equity in their properties, investors can secure additional funds for house renovations, new acquisitions, or even debt consolidation solutions. But with so many mortgage lenders and loan options available, how do you determine which cash-out refinance loan best suits your investment property strategy?
Top 5 Cash-Out Refinance Loans for Investment Properties in 2025
The RefiGuide has been working with the trusted banks and lenders many years that offer competitive cash out refinancing on investment and rental properties.
Let’s explore the top five cash-out refinance loans for investment properties in 2025 and see how they can propel your financial growth.
1. Fannie Mae’s Cash-Out Refinance Loan
Fannie Mae’s cash-out refinance program is a go-to option for many real estate investors due to its favorable terms and accessibility.
Key Benefits:
- Competitive interest rates for qualified borrowers
- Loan-to-value (LTV) ratios up to 75% for single-unit investment properties
- Fixed and adjustable-rate mortgage options
- Extended loan terms to help reduce monthly payments
Why settle for a high-interest loan when you can secure financing backed by one of the largest mortgage institutions in the country? With Fannie Mae, you gain stability and flexibility to expand your portfolio strategically.
2. Freddie Mac Investment Property Cash-Out Refinance
Freddie Mac offers a similar yet distinct refinance program tailored to real estate investors looking for favorable loan structures.
Key Benefits:
- Maximum LTV of 70-75% depending on property type
- Competitive interest rates to enhance cash flow
- Allows for refinancing multiple properties at once
- Offers fixed-rate and adjustable-rate loan structures
Whether you’re refinancing a single-family home or a multi-unit property, Freddie Mac’s program provides the leverage needed to boost your investment potential.
For investors who don’t meet traditional lending criteria or prefer more flexible financing solutions, portfolio loans from private lenders can be a game-changer.
Key Benefits:
- No strict credit score requirements
- Higher LTV ratios, sometimes up to 80%
- More lenient income verification standards
- Faster approval and funding process
Why jump through hoops with conventional lenders when private lenders offer the flexibility and speed investors need? With fewer restrictions and customized loan structures, portfolio loans cater to investors seeking rapid capital deployment.
4. DSCR Loans
Debt-Service Coverage Ratio loans are specifically designed for real estate investors whose income primarily comes from rental properties. Instead of using traditional income verification, these loans focus on a property’s cash flow to determine loan eligibility.
Key Benefits:
- No personal income verification required
- Loan approvals based on rental income rather than W-2 income
- LTV ratios of up to 75-80%
- Ideal for investors with multiple rental properties
If your rental properties generate steady income, why let traditional income limitations hold you back? DSCR loans ensure that your assets, not just your tax returns, dictate your borrowing potential.
5. HELOC on Investment Property
A HELOC is an alternative to traditional cash-out refinancing that allows investors to access property equity on an as-needed basis. Instead of receiving a lump sum, you get a revolving line of credit to withdraw from whenever necessary.
Key Benefits:
- Flexible access to capital
- Interest-only payments during the draw period
- Competitive variable interest rates
- Retains your primary mortgage structure
Why take out more cash than you need when a HELOC allows you to draw funds when necessary, minimizing interest costs and maximizing liquidity? This solution is perfect for investors seeking on-demand financial flexibility.
Cash-out refinance loans are a powerful way for investors to unlock their property’s equity and fuel their real estate ambitions. Whether you choose Fannie Mae, Freddie Mac, private portfolio loans, DSCR cash out loans, or a HELOC, each option offers unique advantages suited to different investment strategies.
So, which cash out refi will you choose to grow your portfolio in 2025? The answer lies in aligning your financial goals with the loan that best meets your needs.
Smart investing is about leveraging opportunities, and a well-planned cash-out refinance can be your key to exponential real estate growth.
12 Key Benefits of Cash-Out Refinance Investment Property Loans
Investing in real estate can be a powerful way to build wealth, but unlocking liquidity within your property can be a challenge. This is where a cash-out refinance on investment property loans comes in—a financial tool that allows investors to leverage their property’s equity for greater financial gains. But why should you consider this strategy? What makes it a game-changer for investors looking to scale their real estate portfolios? Let’s explore the 12 key benefits of cash-out refinance investment property loans and see how they can work in your favor.
1. Access to Capital for Further Investments
One of the most significant advantages of cash-out refinancing is the ability to tap into your home’s built-up equity. Instead of letting that wealth sit idle, you can reinvest it into additional properties, thereby compounding your returns and expanding your real estate holdings.
2. Lower Interest Rates Compared to Other Financing Options
Compared to personal loans, credit cards, or even hard money loans, cash-out refinances often come with lower interest rates. Why pay exorbitant rates on unsecured loans when you can leverage your existing asset for better terms?
3. Increased Cash Flow for Renovations
Whether you want to upgrade a rental property or add value through renovations, using cash-out refinance proceeds can be a strategic move. Enhancing a property’s appeal can lead to higher rental income, increased market value, and a more competitive edge in the rental market.
4. Debt Consolidation and Improved Financial Health
If you have multiple high-interest debts, a cash-out refinance can help you consolidate them into one manageable loan with a lower rate. This can reduce your overall financial burden and improve your credit score over time as you eliminate outstanding obligations.
5. Tax Advantages for Real Estate Investors
In many cases, interest paid on loans used for investment purposes may be tax-deductible. This means you could potentially deduct the interest on a cash-out refinance loan, reducing your taxable income and increasing your after-tax profits.
6. Flexible Use of Funds
Unlike some financing options that come with restrictions on how the money can be used, cash-out refinance loans allow investors to use the funds as they see fit. Whether it’s for expanding your portfolio, covering operating costs, or handling unexpected expenses, the choice is yours.
7. Opportunity to Secure a More Favorable Loan Term
Refinancing doesn’t just provide cash—it also gives you the chance to secure better loan terms, such as a lower interest rate, a fixed-rate mortgage instead of an adjustable-rate, or a different loan duration that better fits your financial goals.
8. Potential for Increased Property Value
Reinvesting the extracted cash into renovations and upgrades can significantly increase a property’s value, allowing you to build even more equity over time. This can be particularly beneficial in competitive real estate markets.
9. Hedge Against Inflation
As inflation rises, the real value of borrowed money decreases. A cash-out refinance allows you to capitalize on today’s lower-value dollars while acquiring more appreciating assets in a rising market.
10. Avoiding the Hassle of Selling
Selling a property comes with costs, taxes, and the challenge of reinvesting profits into another property quickly. Instead, a cash-out refinance lets you retain ownership while still accessing equity, maintaining your portfolio and avoiding capital gains tax implications.
11. Stronger Position in a Competitive Market
Real estate investors often need to act fast to seize profitable deals. With liquidity readily available from a cash-out refinance, you can move quickly on opportunities that require immediate funding, giving you an edge over competitors who need traditional financing.
12. Long-Term Wealth Building Strategy
Ultimately, real estate is about long-term growth, and a cash-out refinance supports this strategy by enabling portfolio expansion, increasing cash flow, and boosting investment returns over time. By leveraging existing assets wisely, investors can create sustainable wealth.
Final Thoughts on Cash Out Refinancing on Investment Properties
A cash-out refinance investment property loan is not just a financial tool—it’s a strategic advantage that can propel investors toward their long-term real estate goals. Why let equity sit dormant when it can be working for you? With the right approach, this financing strategy can unlock new opportunities, enhance cash flow, and accelerate wealth creation.
If you’re considering a cash-out refinance, carefully evaluate your financial position, market conditions, and investment goals to ensure it aligns with your broader wealth-building strategy. Because in real estate, the smartest investors aren’t just buying properties—they’re maximizing their potential.
FAQ on Investment Property Cash Out Refinances
How much equity do you need for a cash-out refinance on an investment property?
Most lenders require at least 25-30% equity in the property to qualify for a cash-out refinance. This means your loan-to-value (LTV) ratio should typically be 70-75% or lower after the refinance. The exact amount depends on the lender and your financial profile, but maintaining sufficient equity ensures you qualify for competitive rates and better loan terms.
What DTI do you need for a cash-out refinance on an investment property?
Lenders usually require a debt-to-income (DTI) ratio of 43% or lower for a cash-out refinance on an investment property. However, some lenders allow higher DTIs, especially if you have strong credit and a history of profitable real estate investments. The lower your DTI, the better your chances of securing favorable loan terms.
What refinance costs are tax-deductible for rental property?
For rental properties, certain refinance costs may be tax-deductible, including loan interest, origination fees, and points paid to lower the interest rate. However, closing costs, such as appraisal and title fees, are generally not deductible upfront but may be amortized over the life of the loan. Always consult a tax professional to maximize your deductions and ensure compliance with IRS regulations.
About RefiGuide
Bryan Dornan is a financial journalist and currently serves as Chief Editor of RefiGuide.org. Bryan has founded several mortgage and marketing companies and has worked as a loan officer and mortgage broker in the industry for over 25 years and has a wealth of experience in providing mortgage clients with the highest level of service in the industry. Bryan's continual focus is to promote affordable home-ownership to consumers like you across the United States. He also writes for RealtyTimes, Patch, Buzzfeed, Medium and other national publications. Find him on Twitter, Muckrack, and Linkedin
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