Refinance your rental property to 80% Loan-to-Value.
This is for borrowers who own one or more rental properties and need to access the equity for various reasons. Common reasons to refinance a rental property include using the funds as a down payment towards another rental property, consolidating personal debt, upgrading rental properties, and more.
The maximum Loan-to-Value on rental refinances is 80%. The maximum amortization for this product is 25 years. Some lenders may allow an amortization of up to 30 years on exception.
Most lenders will require a Debt Service Coverage Ratio (DSCR) of at least 1.10 for rental properties. This ratio measures the property’s ability to cover its mortgage payments based on rental income. For example, if your rental income is $2,000 per month, and you incur $500 in expenses (e.g., property management fees, maintenance), and you have a $1,200 monthly mortgage payment, your DSCR would be 1.25. This is calculated as follows:
DSCR = (Rental income – Expenses) / Mortgage payment
DSCR = ($2,000 – $500) / $1,200 = 1.25
A DSCR above 1.0 indicates that the property generates enough income to cover the mortgage payments, which is a key factor in qualifying for a rental refinance.