Investors often refinance a rental to pull cash out and buy the next one. It is a common move, but the fee behind it is bigger than most people expect, because two separate charges stack on the same loan.
Two fees, stacked
A cash-out refinance already prices higher than a purchase loan on Freddie Mac’s own grid. That is true before an investment property even enters the picture. Add the investment-property add-on covered in what an investment property actually costs in fees, and the two fees stack directly. That is Freddie Mac’s own rule: credit fees are cumulative.
Here is what that looks like on a $320,000 loan, a 740-759 credit score, and 80% loan to value. This compares a straight purchase against a cash-out refinance on the same investment property.
| Fee | Purchase loan | Cash-out refinance |
|---|---|---|
| Base grid fee | 0.875% ($2,800) | 2.375% ($7,600) |
| Investment property add-on | 3.375% ($10,800) | 3.375% ($10,800) |
| Combined total | 4.25% ($13,600) | 5.75% ($18,400) |
Pulling cash out of a rental costs almost twice what buying it did in the first place, in fees alone. That is before the higher cash-out rate on top.
That $18,400 is a one-time fee, called a credit fee in price. It is not your interest rate. A lender can price it into your rate, into your closing costs, or split it between the two, the same way the purchase-side fee works. Ask for the line item on its own. Do not take a lender’s word for how it landed in your quote.
The line where the option disappears
The cash-out base grid and its investment-property add-on both run through 80% loan to value. Above that line, Freddie Mac’s own grid marks cash-out on an investment property as not eligible at all. That is not a pricing penalty you can pay your way past. It is a hard eligibility limit. This specific loan program stops offering the product above 80% loan to value.
That matters for how you plan a cash-out. Say pulling out enough cash would push your new loan above 80% of the property’s value. Then this grid has no price for that loan, because there is no loan to price. A DSCR cash-out product might go higher, at Non-QM pricing this page does not cover. A home equity line of credit against the rental is a separate path worth asking a lender about. Neither one is the same product as the agency cash-out refinance priced above.
Why the base grid alone costs more
It helps to separate the two pieces of this fee. They come from different underwriting logic. The investment-property add-on exists because the property is a rental, not a primary residence. That holds true no matter why you are refinancing. The cash-out base grid prices higher because pulling equity out raises the loan balance and the risk the loan buyer takes on. That pattern holds even on a primary residence, just at a lower fee level than the stack shown here.
Put together, an investor refinancing a rental for cash pays for two things at once: the riskier transaction type, and the riskier occupancy type. Neither fee is optional once the loan is priced.
Why investors do this anyway
Even with an $18,400 fee on this example loan, a cash-out refinance still funds the next purchase for many investors, because the alternative is often saving that same amount in cash from scratch, which can take years. Pulling equity out of a rental that has gained value, or one that has been paid down for a while, turns money that is otherwise locked in the property into a down payment for the next one. The fee shown here is the price of that speed. Whether it is worth paying depends on what the next property is likely to earn, and how long you plan to hold both properties, questions this page cannot answer for you.
It is also worth asking whether a cash-out refinance is the right tool at all, versus simply financing the next purchase with a smaller down payment and leaving the current rental’s loan untouched. A cash-out refinance resets your rate and your loan term on the property you already own, on top of the fee shown above, so run both paths before assuming refinancing is the cheaper route.
What this costs against the loan’s full life
On this page’s $320,000 example loan at 6.5%, with 1 point, the illustrative principal and interest payment comes to about $2,023 a month. Held over 5 years, this example loan’s combined interest, points, and fees run about $104,112. Over the full 30 years, that figure is about $411,342. An $18,400 one-time fee is real money, but weigh it against the loan’s full cost, not just against the cash you pull out today. Run your own refinance numbers, including your current rate and how long you plan to keep the loan, on the refinance breakeven calculator.
What this grid does not cover
- This is agency pricing only. DSCR cash-out products, home equity lines, and portfolio-lender refinances are priced differently. None of them are on this grid.
- It does not include your new interest rate. Cash-out refinances typically carry a higher rate than a rate-and-term refinance on the same property, on top of this fee.
- It expires. This grid is effective 09/09/2026 under Bulletin 2026-H. Check the source link for the current version before you rely on it for a refinance closing later than that. The 80% eligibility line is exactly the kind of detail that can change on a future bulletin.
What this means for you
Before you plan a cash-out refinance on a rental, figure out your resulting loan to value first. If it lands at or under 80%, expect a combined fee in the range shown above, and confirm the exact figure with a lender using your real credit score and loan-to-value band. If it would push you above 80%, this specific agency program will not offer the loan at all, and you will need to look at a smaller cash-out amount, a DSCR cash-out product, or a home equity line instead.