Equity
Refinancing a Second Home or Investment Property
The rules tighten when the home is not your primary residence. Here is what changes.
Refinancing a vacation home or a rental works much like refinancing your primary residence — with a few deliberate differences, because lenders view non-primary properties as carrying more risk.
What is different
- Slightly higher rates and pricing than a comparable primary-residence loan.
- More equity required, especially for a cash-out refinance on an investment property.
- More reserves, as lenders want to see you can carry the property through vacancies.
- Rental income can often help you qualify on an investment property, documented appropriately.
The investor’s alternative
If you are refinancing a rental and would rather not document personal income, a DSCR loan can qualify the refinance on the property’s own cash flow instead — the same logic that powers investor purchases, applied to a refinance.
Pro tip
If you own several properties, tell us the whole portfolio. The right structure across multiple rentals — which to refinance, which to leave, how to document income — can meaningfully change your returns.
Common questions
Can I take cash out of a rental property?
Yes, though lenders keep more equity in an investment property than in a primary home, so your maximum cash-out is lower. A DSCR refinance can let you do it based on the property’s rent rather than your personal income.
Are rates higher on a second-home refinance?
Typically a bit higher than on a primary residence, because lenders price in the added risk of a property you do not live in full-time. The difference is usually modest for a strong file.