Cash-Out Refinance vs HELOC for Investors: Which Is Better?

Cash-Out Refinance vs HELOC for Investors: which is better?

Bottom lineInvestors with a low existing rate should keep it and add a HELOC for flexibility. Investors with a high rate or who want a large lump sum for the next purchase often do better replacing the loan with a cash-out refinance.

Reviewed by Juan Fernando Romero, NMLS 2557318Updated October 14, 2026

Side by side

	Cash-Out Refinance	HELOC for Investors
Existing mortgage	Replaced with a new loan	Kept in place
Access to cash	Lump sum at closing	Revolving line you draw as needed
Interest rate	Usually fixed	Usually variable
Closing costs	Full refinance costs	Lower, sometimes zero
Best when	Current rate is high or you need a large sum	Current rate is low or needs are ongoing
Investment use	Down payment on next rental	Ongoing rehab or reserves

Figures are typical market ranges as of October 2026. Actual terms depend on the lender, your credit, the property and the program, and are confirmed on your Loan Estimate or term sheet.

Explore each option

Home loan

Cash-Out Refinance

A cash-out refinance replaces your current mortgage with a larger one and pays you the difference in cash, commonly up to 80% of your home’s value on a primary residence.

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Home loan

HELOCs & Home Equity Loans

A HELOC (home equity line of credit) and a home equity loan both let you borrow against your home while keeping your current first mortgage.

Learn more ›

Frequently asked questions

Can investors get a HELOC on a rental property?

Yes, though fewer banks offer them on investment properties than on primary homes, and terms are tighter: lower max loan-to-value and higher rates.

How much cash can I pull out with a cash-out refinance?

On investment properties, most programs cap at 70 to 75 percent loan-to-value. On a primary home, up to 80 percent with conventional.

Will a cash-out refinance hurt my DSCR on future purchases?

It increases your monthly debts, which can affect DTI-based loans. DSCR loans qualify on property rent, so the impact is smaller there.

Is the interest tax deductible?

Interest on funds used to buy, build, or improve a rental is generally deductible as a rental expense. Consult your tax advisor for your situation.