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Yes, you can refinance your investment property  if you renovated it without a current tenant and get cash-out if you meet both of the following conditions:

  • Long-Term Rental Ready To Rent: The property can be recently renovated but needs to be listed for rent.
  • Short-Term Rental Staged or Listed for Rent Online: The property has been renovated and has been listed for rent on platforms such as Airbnb, VRBO, etc.

Investors looking to refinance their rental properties without an occupying tenant often find it difficult with traditional conventional loans. Conventional loans are backed by Fannie Mae and Freddie Mac and have stricter, fixed guidelines to qualify that mortgage lenders must abide by. Said guidelines often state that a borrower must have income documentation for the current and previous months to qualify for a refinance on their investment property. These strict requirements limit borrowers and their options to refinance an investment property without a tenant.

The good news is that borrowers have options! There are some lenders—Non-QM lenders like Newfi!—that do not have the same requirements as traditional conventional lenders. Because we offer loan products that are not backed by Fannie Mae and Freddie Mac, we have more flexible solutions for investment property lending.

No Tenant? No Problem!

At Newfi we offer an alternative lending solution for investors looking to refinance their rental properties called a Debt Service Coverage Ratio (DSCR) loan. A DSCR loan is an investment property mortgage that borrowers qualify for based on the cash-flow of the rental property. But what does that really mean?

It means that we look at the location of your property and what other rental properties in that area bring in on a yearly basis, then qualify you on that calculated amount. We refer to this as your expected market rent, or your cash-flow. DSCR loans have no personal income requirements, require less documentation, and offer borrowers a quicker process on their investment property transactions.

Why Would You Need to Refinance Without a Tenant?
Investment property refinancing solutions by Newfi with DSCR loan options.

An investment property owner—we’ll call them “Z”—has decided to take cash out of their rental property after renovating. Z thinks that it’s a great time to take cash out because their project is finished and they’re looking to invest in a new investment property! They decide to go to a local agency lender and explore their refinance options. Z is hoping to be able to take cash out of their renovated investment home. However, the local agency lender cannot qualify Z for a refinance because the investment property is not currently bringing in revenue.

Z leaves the local agency lender frustrated. They know that their recent renovations increased the property’s value, will likely result in a higher rental income for them in the future and should be a good time to access the home equity in the property. Z isn’t sure what to do next.

Thankfully, Z comes to Newfi because they specialize in investment property financing. One of our Senior Loan Advisors recommends Z look at a DSCR loan because borrowers qualify for the loan with their expected market rent, not personal income. With this solution, Z won’t have to worry about showing current proof of income from their rental property and instead rely on a 1007.

This means Z will be able to take cash out of their current mortgage on the property while it is still newly listed for rent! Since our process is quick, Z can also access the home equity quickly and move forward with their goals and investment strategy.

Simplify Your Refinance Process
No tenants but ready to rent? No problem. Let us handle the paperwork.
Speak with a Loan Officer Today.

Other Benefits to Refinancing with a DSCR Loan
Refinance investment property without a tenant using DSCR loans by Newfi.

Generate More Cash-Flow Month Over Month

Newfi offers 30- and 40-Year Interest Only payment options with our DSCR loan. These loan terms can lengthen the repayment period on your mortgage, provide interest-only payments on the first 10 years of the loan, and therefore lower your monthly payment obligation. With these options, we put more of the monthly rent you collect in your pocket! We prioritize the cash flow on your rental properties.

Newfi Only Asks for What We Need

We understand that what our borrowers want is to access to take cash out of their home.

At Newfi, we think these are simple asks. So, we’ve created a simple qualifying process. We don’t ask for proof of income, your employment, personal debt, or heavily detailed information on the other properties in your real estate portfolio. That means you need to provide less information on your personal finances and can have a smoother mortgage process.

The Quicker Process

We always want our borrowers to be able to refinance and begin renovations as soon as possible. With our DSCR loan, that’s possible! We’re able to get you access to your equity faster because our loan process is shorter than a typical conventional loan and doesn’t have mandatory waiting periods.

How Property Value and Appraisal Affect Your Investment Property Refinance

When refinancing your investment property, the property value is a key factor lenders consider. This value is typically determined through a professional appraisal, which helps assess how much your property is worth in the current market. The appraisal results directly impact:

  • Loan options: The higher your property’s value, the more refinance options you may have.
  • Interest rates: A higher appraised value may help you secure a lower interest rate, which can reduce your monthly payments.
  • Cash access: If your property has appreciated significantly, you may be able to unlock more equity through a cash-out refinance.

For example, if you’ve recently renovated your property and it has increased in value, a professional appraisal will reflect that. With a higher appraisal, you could access more cash, which can be used for property upgrades or other investments. Additionally, you may qualify for a more favorable interest rate, potentially reducing your closing costs and increasing your returns.

At Newfi, we offer competitive interest rates based on both your property value and credit score, helping you maximize the potential of your investment property refinance.

Amortization and Its Impact on Your Cash-Out Refinance

Another critical factor in refinancing your investment property is the amortization schedule. This schedule determines how your loan will be repaid over time, and it directly impacts your monthly payments and long-term costs. With options like 30-year and 40-year interest-only payment plans, you can reduce your monthly obligations while freeing up more cash for further investments in the initial part of the loan. This flexibility is particularly beneficial if you’re using a cash-out refinance to fund property upgrades or repairs.

  • Interest-Only Payment Plans: These plans allow you to pay only the interest for a specified period, which lowers your monthly payments. This can give you more breathing room to handle renovations or other property-related costs.
  • Longer Amortization: While a longer amortization period means you’ll pay more in interest over the life of the loan, it provides lower monthly payments, which can ease cash flow during property improvements.

Newfi’s DSCR loan gives you options to tailor your amortization and interest payments based on your investment goals. Whether you want to lower your monthly payments or pay off your loan faster, we can help structure the loan that best suits your needs.

Get Cash Out from Your Investment Property and Reduce Monthly Payments

One of the primary advantages of refinancing your investment property is the ability to access the equity you’ve built over time. A cash-out refinance allows you to unlock this equity, giving you the opportunity to reinvest in your property, fund upgrades, or even diversify your real estate portfolio.

By refinancing with a cash-out refinance, you can:

  • Reinvest in your property: Use the funds to make property upgrades, which can increase the rental property value and overall market value.
  • Maintain cash flow: Flexible loan options, such as the DSCR loan, mean you don’t need to provide extensive documentation or proof of personal income. This can make it easier to refinance without disrupting your cash flow.

Newfi offers DSCR loan options with fewer restrictions, allowing you to refinance your investment property with competitive interest rates and minimal closing costs. This means you can keep more money in your pocket while boosting the value of your property.

DSCR Loans: The Answer to Refinancing Without a Tenant
Investment property refinance options with Newfi, featuring flexible DSCR loan terms.

Why Work with Newfi?

At Newfi Lending, we understand the challenges of refinancing an investment property without a tenant. Unlike some lenders who require tenant occupancy to qualify for a refinance, we offer more flexible loan options designed to meet the unique needs of real estate investors. Our DSCR (Debt Service Coverage Ratio) Loan allows you to refinance based on the expected market rent of your property, not your personal income. This means you can access cash from your property even when it’s vacant, and without the stress of documentation-heavy requirements.

Questions about refinancing your investment property with our DSCR loan? Get a quote or talk to one of our senior loan advisors today at https://app.newfi.com/loancenter/dscr!

Want to know if Newfi’s really up for the test? Read any of our 1,900+ reviews and see what our past clients have to say!

Frequently Asked Questions (FAQ)

  1. Can I refinance without a tenant in my investment property?

Yes, with Newfi’s DSCR loan, you can refinance even if your property is vacant if it is listed for rent and in rent-ready condition. We base our approval on the expected market rent rather than tenant occupancy or personal income.

  1. What is a DSCR loan?

A Debt Service Coverage Ratio (DSCR) loan is a type of investment property mortgage where the qualification depends on the property’s cash flow (rental income) rather than the borrower’s personal income. It’s a great option for investors who want to refinance their investment properties quickly and with minimal documentation.

  1. What are the benefits of refinancing with a DSCR loan?

With a DSCR loan, you can:

  • Refinance without needing proof of personal income or providing extensive documentation of each of the properties in your portfolio
  • Access more cash for renovations
  • Take advantage of lower monthly payments with Interest-Only loan options
  • Avoid traditional lender restrictions like financing short-term rental properties
  1. How does a property appraisal affect my refinance?

A property appraisal determines the current value of your investment property. A higher appraisal can unlock more equity, allowing you to access more funds through a cash-out refinance. It may also help you secure a lower interest rate.

  1. How quickly can I get approved for a DSCR loan?

At Newfi, we aim for a faster approval process compared to conventional lenders. Our streamlined procedures help you access funds quicker, so you can begin your property upgrades without delay.