Cash-out refinance seasoning requirements on a rental property

When people ask how long they have to wait before a cash-out refinance, they usually mean one thing: how long they have owned the property. Under the agency rules that is only half of it. There is a clock on your ownership and a separate clock on the mortgage you are paying off, and either one can be the thing holding a refinance back.

These are the cash-out refinance seasoning requirements published by Fannie Mae in Selling Guide section B2-1.3-03. Freddie Mac publishes its own version, and the two do not match line for line, so which channel a loan goes through matters.

If the refinance pays off an existing first mortgage, that mortgage must be at least twelve months old, measured from the note date of the existing loan to the note date of the new one.

This is the clock that catches people who refinanced recently for a lower payment and now want cash out. Their ownership may be long enough. The loan they would be paying off is not.

Everything above describes agency cash-out refinances. A business-purpose loan qualified on the property’s rent, which is what most investors use for a rental, is not governed by these rules. Those lenders set their own seasoning, and it differs from one lender to the next.

So the useful question is not only how long it has been, but which loan you are refinancing into. Send the purchase date, the current loan and what you want to take out, and the timing is quick to check. This is not a commitment to lend.