Refinance Investment Property AZ 2026 | Roadrunner AZ
Refinancing an investment property in Arizona is a powerful strategic move for real estate investors. Unlike refinancing a primary home, an investment property refi is all about maximizing your ROI. Whether you want to pull cash out for your next purchase or simply lower your monthly payment, you have excellent options.
Why Refinance Your Arizona Rental?
There are two primary reasons to refinance an investment property:
- Rate-and-Term Refinance: The goal is simple: get a lower interest rate, a shorter loan term (like going from a 30-year to a 15-year), or both. This increases your monthly cash flow by reducing your mortgage payment.
- Cash-Out Refinance: This is the most popular option for investors. You take out a new, larger loan, paying off your old one and receiving the difference in a lump sum of cash. Investors use this "trapped" equity to fund renovations, buy another property, or build a cash reserve.
How to Qualify: Conventional vs. DSCR
This is where many investors get stuck. Qualifying for a conventional refinance on an investment property is even harder than a purchase. Lenders will scrutinize your personal Debt-to-Income (DTI) ratio, and most banks have a limit on the number of properties you can finance (often 4 or 10).
The Investor's Solution: The DSCR Loan Refinance
A DSCR (Debt Service Coverage Ratio) loan is the ultimate tool for refinancing rentals. Here’s why:
- No Personal Income Check: It doesn't use your W-2 or tax returns. Qualification is based on the property's rental income.
- No DTI Calculation: Your personal debts are not factored into the loan.
- Unlimited Financed Properties: DSCR lenders don't care if you have 4 properties or 40.
- Cash-Out for Investors: DSCR was *built* for cash-out refinances. Lenders understand you're pulling money out to reinvest.
As long as the property's rent covers the new, larger mortgage payment, you can likely get a cash-out refinance. This is how savvy investors scale their portfolios in markets like Phoenix, Scottsdale, and Tempe.
Cash-Out Refinance Example
Let's say you bought a Phoenix duplex 5 years ago:
- Original Purchase Price: $400,000
- Original Loan: $320,000
- Current Value: $650,000
- Current Loan Balance: $300,000
A DSCR lender might let you take cash out up to 75% of the current value ($650,000 * 0.75 = $487,500).
New Loan: $487,500
Payoff Old Loan: -$300,000
Cash to You (minus costs): $187,500
You just pulled $187,500 out of a single property, tax-free (consult your CPA), which you can now use as a 25% down payment on a new $750,000 rental property. This is how you scale.
Jonathan Moses
Senior Loan Officer | NMLS #2064741
This guide was prepared by Jonathan Moses (NMLS #2064741), the senior loan officer and founder of Roadrunner AZ Lending. With years of experience in the Phoenix and Scottsdale markets, Jonathan is dedicated to providing expert, transparent advice. Learn more about Jonathan.