Is it impossible to cash out refi a TX rental property if you live out of state?

[Fay Chen]

I'm looking to cash out refi a SFR rental property in Irving, TX. I live in WA. So I've been rejected by several national lenders now. Is it pretty much impossible? If not, please show me how. Thank you!

[Lauren Robins]

Hi Fay!

It's not impossible to do a cash-out refinance on your single-family rental (SFR) property in Irving, TX while living in Washington, but it can be challenging. The main reason you're facing rejections from national lenders likely comes down to a combination of factors: it's a non-owner-occupied property, you're an out-of-state investor, and you're seeking a cash-out refinance—all of which tend to raise red flags for many lenders, particularly those with strict underwriting policies.

Some national lenders simply don't work with investment properties, or if they do, they have stricter terms and lower loan-to-value (LTV) limits—usually topping out around 70–75%. Others won't lend to borrowers who don't live in the same state as the property, citing concerns about asset management or risk. Additionally, Texas has some unique lending laws, particularly around cash-out refinances (notably the Texas Section 50(a)(6) loan rules), which, although primarily intended for primary residences, still make some lenders more cautious overall about doing cash-outs in Texas.

That said, there are definitely viable paths forward. One option is to work with local or regional lenders based in Texas. These lenders are often more comfortable with Texas law, may be more flexible with investor clients, and are less likely to have blanket policies rejecting out-of-state borrowers. Another option is to look into DSCR (Debt Service Coverage Ratio) lenders. These are non-QM (non-qualified mortgage) lenders that base loan approval on the property's rental income rather than your personal income. They tend to be more investor-friendly, allow cash-out refis, and are often okay with out-of-state ownership—though their interest rates and fees are usually higher than conventional loans.

Portfolio lenders are also worth exploring. These lenders keep loans in-house instead of selling them to Fannie Mae or Freddie Mac, which means they set their own underwriting rules. If you can find one that caters to investors, you may have better luck. In general, your best move may be to work with a mortgage broker who specializes in investment properties and has access to these kinds of lenders. A good broker can shop your loan around and match you with lenders who are more likely to say yes, saving you a lot of time and hassle.

Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.