Rental Property Refinance Calculator

When Refinancing a Rental Property Makes Sense

A refinance makes sense when what you save over the time you keep the loan is more than what the refinance costs. The quick test is the break-even point: closing costs divided by the monthly payment savings. If you expect to hold the property and the loan past that month, the refinance starts paying you back.

Break-even alone can mislead, because a new 30-year term lowers the payment partly by stretching the debt. This calculator also totals the interest on both loans over your hold period and subtracts closing costs, so you see the net result in dollars.

Worked Example

A landlord owes $200,000 at 7.5% with 27 years left, a payment of $1,441 a month. A new 30-year loan at 6.5% costs $6,000 to close and drops the payment to $1,264, a saving of $177 a month.

Break-even is $6,000 divided by $177, or 34 months. Over a 7-year hold the current loan would cost $100,016 in interest and the new loan $87,020. After the $6,000 in closing costs, the refinance saves about $6,996.

Kept to payoff, the new loan costs $255,089 in interest against $267,036 remaining on the current one, even though the term restarts at 30 years. A full point of rate is enough to offset the restart here. With a smaller rate drop the restart can cost more than it saves, which is why the calculator shows both views.

What This Calculator Adds for Landlords

Most refinance calculators are built for homeowners and stop at the payment. A rental has to carry its own debt, so this one also shows monthly cash flow before and after the refinance, using your rent and operating expenses.

It shows the debt service coverage ratio (DSCR) before and after, which is net operating income divided by the loan payment. Many DSCR lenders look for 1.25x or higher. It also shows the new loan-to-value ratio, which decides whether a lender will approve the loan at all.

Rate-and-Term vs Cash-Out Refinance

A rate-and-term refinance replaces the loan to change the rate, the term, or both. Leave the cash-out field at 0 to model one. The question is simple: do the savings beat the costs before you exit?

A cash-out refinance replaces the loan with a larger one and pays you the difference. Enter the amount in the cash-out field. The payment usually rises, LTV rises, and total interest rises, so the result shows what the cash costs you over your hold. It is worth it only if the cash earns more than that, for example as the down payment on another rental.

How Refinancing a Rental Differs From Refinancing a Home

Lenders treat rentals as higher risk, so rates are usually higher and leverage is lower than on a primary residence. Fannie Mae's eligibility matrix dated December 10, 2025 lists a 75% maximum LTV for a limited cash-out refinance of a 1 to 4 unit investment property. For a cash-out refinance it lists 75% on a 1-unit property and 70% on 2 to 4 units.

Those are program limits, and individual lenders can set stricter ones. DSCR lenders qualify the loan on the property's income instead of your personal income, and set their own LTV and coverage minimums. Confirm the limits with your lender before paying for an appraisal.

Closing Costs and Rolling Them In

Refinance closing costs are commonly quoted at 2% to 6% of the loan amount and vary by state, lender and loan size. They include lender fees, any points, the appraisal and title work. Use the figure from your Loan Estimate when you have one.

You can pay the costs in cash or roll them into the new loan. Rolling them in keeps your reserves intact but raises the balance, so you pay interest on the costs. Switch the closing cost setting to see both versions.

Related Calculators

• Loan Payment & Amortization Calculator: See the full payment schedule for the new loan.
• Closing Costs Calculator: Estimate the costs to enter in this calculator.
• Loan-to-Value Ratio Calculator: Check how much equity you have before you apply.
• DSCR Loan Calculator: Test whether the rent supports the new loan.
• HELOC Calculator: Compare a cash-out refinance with a line of credit.
• Cash Flow Calculator: Build a fuller cash flow picture for the property.

Frequently Asked Questions

When does it make sense to refinance a rental property?

When the savings over the time you will keep the loan are larger than the closing costs. Divide closing costs by the monthly payment savings to get the break-even month. If you expect to hold past that month, and total interest plus costs is lower over your hold, the refinance pays off.

How do I calculate the break-even point on a refinance?

Break-even months equal closing costs divided by monthly payment savings. For example, $6,000 in closing costs divided by $177 in monthly savings is 34 months.

Is refinancing a rental property different from refinancing a home?

Yes. Lenders usually charge higher rates and allow less leverage on rentals. Fannie Mae's eligibility matrix dated December 10, 2025 lists a 75% maximum LTV for a limited cash-out refinance of a 1 to 4 unit investment property, and for a cash-out refinance 75% on 1 unit and 70% on 2 to 4 units. Individual lenders can be stricter.

What is the difference between a rate-and-term and a cash-out refinance?

A rate-and-term refinance replaces the loan to change the rate, the term, or both, without taking equity out. A cash-out refinance replaces it with a larger loan and pays you the difference in cash. Cash-out usually means a higher payment, a higher LTV and more total interest.

Should I roll closing costs into the new loan?

Rolling costs in keeps cash in your pocket at closing but raises the loan balance, so you pay interest on the costs for as long as you keep the loan. Paying in cash costs less overall if you have the reserves.

Can a lower payment still cost more?

Yes. Restarting a 30-year term spreads the balance over more years, so the payment can fall while the total interest rises. Compare interest over the period you expect to keep the loan, not only the monthly payment.