You've decided to refinance your rental property. Now what?
Here's the step-by-step process, what to gather, how to boost your odds, and the mistakes I see investors make over and over.
I'm Bill McCoy, California mortgage broker (CA DRE #01212512) and rental property owner.
The Refi Process: 8 Steps
1. Define Your Goal
Are you chasing a lower rate? Pulling cash for another deal? Ditching an ARM? Your goal determines which loan type fits best.
2. Check Your Property Value
Get a rough estimate from Zillow, recent comps, or a real estate agent. Then calculate your LTV:
- Property value: $700,000
- Loan balance: $500,000
- LTV: 71% — room to cash out to 75%
3. Shop Multiple Lenders
Get quotes from your current lender, a mortgage broker (Better Offers Inc shops 20+ lenders), and a couple of direct lenders. Compare rates, fees, and LTV limits.
4. Gather Your Documents
For conventional refis:
- Last 2 years of tax returns (with Schedule E)
- Last 2 months of bank statements
- Current lease agreement
- Homeowners insurance info
- Current mortgage statement
For DSCR refis:
- Current lease or rent roll
- Property insurance info
- Current mortgage statement
- That's it. No tax returns.
5. Submit Your Application
Lender pulls credit, orders the appraisal, and starts underwriting.
6. Appraisal
An appraiser inspects the property and determines market value.
Pro tip: Give your tenants advance notice. A messy property can hurt the appraisal number.
7. Underwriting
The lender verifies income (conventional) or reviews property cash flow (DSCR) and clears any conditions.
8. Closing
Sign docs, pay closing costs (or roll them into the loan), and fund the new loan.
Typical timeline: 30-45 days.
5 Ways to Improve Your Approval Odds
Boost your credit. Pay down credit cards, fix errors on your report, avoid new inquiries for 90 days before applying.
Show strong rental income. Document consistent rent collection. Late-paying tenants hurt your case.
Reduce other debt. Pay off car loans or credit cards to lower your DTI. Every $500/month in debt you eliminate can qualify you for $60,000+ more in loan amount.
Build reserves to 12 months. Lenders require 6 months minimum, but 12 months makes you a stronger borrower. More properties = more reserves needed.
Consider DSCR if income is the problem. If your personal income is the limiting factor, switch to a DSCR program that qualifies on the property's cash flow instead.
Common Mistakes I See
Not shopping lenders. Rates and fees vary more than you'd think. Always get 2-3 quotes minimum.
Get Your Free Rate Quote
See current rates and get a personalized quote in minutes. No credit check required.
CA DRE #01212512 | Free, no-obligation quote
Maxing out LTV. Just because you can go to 75% doesn't mean you should. Leave yourself a cushion for market dips.
Ignoring cash flow impact. If the refi increases your payment and kills your cash flow, that "lower rate" isn't actually helping.
Draining reserves for closing costs. You still need 6-12 months of reserves after closing. Don't wipe out your savings.
Refinancing too often. Each refi costs $5,000-$8,000 in closing costs. Don't chase tiny rate drops every 12 months.
Broker's Tip: If you own multiple properties, ask about blanket refinances — one loan secured by several properties. Some portfolio lenders offer this, and it can cut your overall rate and simplify your payments.
FAQ
Can I refinance a vacant property?
Yes, but it's harder. DSCR lenders will use market rent from the appraisal instead of actual rent. Conventional lenders won't count any rental income.
What if the property is in an LLC?
Most conventional lenders require your personal name on the loan. Some portfolio and DSCR lenders allow LLC ownership.
How many investment properties can I finance?
Fannie Mae allows up to 10 financed properties including your primary. Beyond that, you'll need portfolio lenders.
You Might Also Like
- →
How to Refinance an Investment Property in California
Investment property refinance basics: rate differences, LTV limits, refi types, and when it actually makes sense. California landlord guide 2026.
- →
DSCR Refinance vs. Conventional: Which Is Right for Your Rental?
DSCR refi vs. conventional investment property refinance: rates, credit requirements, documentation, and which one fits your situation in 2026.
How long do I need to own the property first?
Most lenders require 6-12 months of seasoning. Exception: if you paid cash and have significant equity, some lenders will refi sooner.
Can I refinance a fix-and-flip?
If you're holding it as a rental, yes. If you're mid-flip, most lenders won't touch it until it's stabilized.
Get a Free Investment Property Refi Quote
I'll compare conventional and DSCR options to find the best fit.
Read next: Investment property refi overview | DSCR vs. conventional refi
Better Offers Inc | CA DRE #01212512