Cash out refinance on investment property

10 Replies

Hello BP friends,

I am currently trying to do a cash out refi on a investment property. It’s a duplex I bought couple years back and have done a good amount of renovations to it (roughly 30k, doing a lot of the Reno myself).

This was originally a house hack that I've moved out of after a year, it's currently under a FHA loan at 4.25% interest rate.

That being said, I'm having a lot of trouble finding a lender that will lend me a conventional loan at 80% LTV, I know this is hard to find but for some reason everyone I spoke to caps me out at 70% LTV, saying it's a guideline for penny Mac mortgages. While I hear all the time on BP podcast people can get 80%, is this true??

The ideal situation is that I get a 80% Cash out and take off the PMI. I still owe about 168k on it and I estimate it's worth about 250k. Can someone please advise on what can be done here and what's the best way to pull this money out so I can keep investing?

Please know I no longer live in this duplex and both sides are now rented out, considered as an investment property.

Thank you all for your time! If I missed anything or need to be more specific on something please let me know!


@David Niu , is your goal to take cash out on the refi or do you just want to lower your interest rate and payments?

I believe FHA offers a streamlined refinance where you don't even need an appraisal! You could get the rate lowered just by doing that and with much lower closing costs I would imagine.

@David Niu you won't find a lender to do more than 70% cash out on a investment property 2-unit, because that is the max LTV. This is set by Fannie Mae & Freddie Mac. You will not find a different answer from lender to lender. Your only option for a higher LTV is a different loan...other than Conventional. Period.

Best of luck!

David, the best we can do, is to see exactly what your situation is, and the way we can do that is to have you fill out our vetting info.  With this info we can tell you what we can do for you.  We need your email address.  Hope to hear from you.

Reggie Truss

Be very careful listening to podcast, especially from Bigger Pockets. They usually speak about issues and rules and exceptions to those rules that are hyper-specific to their area of the world.

It is NOT true that you can get a cash out refinance at 80% loan to value these days. I really don't like to be the bearer of bad news but if you get 75% loan to value that would be considered very lucky in my humble opinion.

however, if you refinance into a conventional loan without the cash-out component, you might be offered 80% loan to value by certain financial institutions, depending on a whole slew of other things like your credit score.

Certain commercial lenders might offer have different fee structures and LTV guidelines, but they are almost always significantly worse than a residential lender.

Perhaps it's worthwhile to hire an appraiser to get a rough idea of what another appraiser hired by your lending institution believes your duplex is worth. Don't bother asking realtors, they will look at it from one perspective and the only perspective you need is that of an appraiser.  

David, I have lenders in my network that can give you 80% LTV, but we need more info to see if you qualify. We will send you a vetting form, but to do that we need an email address. Hope to hear from you.

Reggie Truss