Cash-Out Refinance on an Investment Property

A cash-out refinance replaces your current loan with a larger one and gives you the difference in cash, turning built-up equity into capital you can redeploy. On an investment property, it is one of the most powerful tools for scaling.

How does it work on a rental?

If your property is worth more than you owe, a new loan pays off the old balance and returns the extra equity as cash. With a DSCR cash-out refinance, the new loan qualifies on the property's rent, so you can pull equity without your personal income limiting you.

When investors use it

• The final leg of a BRRRR deal, recovering your original capital.
• Pulling equity from a stabilized rental to fund the next purchase.
• Replacing a short-term bridge loan with long-term debt and taking cash out at the same time.

What you can pull

The amount depends on the property's value, the loan-to-value limit, and, for DSCR, whether the rent supports the new payment. A higher value and stronger rent let you pull more.

When you want to keep your current first

A cash-out refinance reprices the whole balance. If your current first mortgage has a rate you want to keep, a second mortgage on an investment property adds a loan behind it, as a lump sum or a line of credit, and leaves the first as it is. If the rental is owned free and clear, USA Mortgage can also lend on it in first lien position. Check your first mortgage documents for limits on junior liens before you count on it, and run the numbers in the second mortgage calculator. Typical terms: $50,000 to $1,000,000, a fixed rate from 6.99%, up to 80% CLTV on investment property, a prepayment penalty of 0 to 5 years, subject to underwriting.