If you’re struggling with a low credit score but own real estate, you might wonder: Can you refinance an investment property with bad credit in Texas in 2025?
The short answer is yes — but it takes the right strategy.
In this complete guide, we’ll cover everything you need to know about how to refinance an investment property with bad credit in Texas, including step-by-step advice, best lenders, and insider tips for 2025.
Table of Contents
Understanding Refinancing with Bad Credit
Is It Harder to Refinance an Investment Property with Bad Credit in Texas?
Minimum Credit Score Requirements in 2025
Top 5 Strategies to Refinance an Investment Property with Bad Credit
Best Loan Programs for Bad Credit Investment Property Refinancing
Documents Needed for Refinancing in Texas
Mistakes to Avoid When Refinancing Investment Property with Bad Credit
Top Lenders in Texas for Bad Credit Investment Property Refinancing
Frequently Asked Questions (FAQ)
Final Thoughts on Refinancing an Investment Property with Bad Credit in Texas 2025
Understanding Refinancing with Bad Credit
Refinancing involves replacing your existing investment property loan with a new one — ideally with better terms.
But if your credit score is below 620 (or even lower), traditional lenders might view you as a higher risk.
Still, it’s absolutely possible to refinance an investment property with bad credit in Texas if you know how to present your case, choose the right loan product, and work with the right lenders.
✅ Quick Tip: Focus on showing strong income, solid rental history, and high equity to offset your low credit score.
Is It Harder to Refinance an Investment Property with Bad Credit in Texas?
Short answer: Yes, but it’s not impossible.
Compared to primary residences, investment properties already have stricter rules.
When you add bad credit to the mix, lenders get even pickier.
Here’s what they will carefully review:
Your Loan-to-Value ratio (LTV) lower is better
Your debt-to-income ratio (DTI)
Cash reserves after closing
Property value trends in Texas (especially cities like Austin, Houston, Dallas)
Texas-specific lending laws also favor properties with strong rental potential, which works in your favor if you have steady tenants.
Minimum Credit Score Requirements in 2025
In 2025, here’s what most lenders will look for if you want to refinance an investment property with bad credit in Texas:
| Loan Type | Minimum Credit Score |
|---|---|
| Conventional Investment Refi | 640+ (ideal) |
| FHA Cash-Out Refinance (primary only) | 580+ |
| DSCR Loans (Investor loans) | 600+ |
| Portfolio/Private Lender Loans | 500+ (flexible) |
Important: Some portfolio lenders in Texas will consider scores as low as 500 if the property cash flows well.
Top 5 Strategies to Refinance an Investment Property with Bad Credit
Here are the best tactics for success:
1. Increase Your Equity
Lenders feel safer if you own a bigger chunk of the property.
Aim for at least 30%-40% equity in 2025 to improve your chances.
2. Choose a DSCR Loan
Debt-Service Coverage Ratio (DSCR) loans focus on property income, not your personal income or credit.
Perfect for bad credit refinancing.
3. Partner with a Co-Signer
Adding a partner with better credit can unlock better terms and lower rates.
4. Use Private or Hard Money Lenders
Private lenders specialize in “asset-based” lending — they care more about the property’s value than your FICO score.
5. Improve Your Credit a Little Before Applying
Even a small boost (say, from 570 to 620) could dramatically widen your loan options.
Best Loan Programs for Bad Credit Investment Property Refinancing
When looking to refinance an investment property with bad credit in Texas, these loan options are your best bet:
1. DSCR Loans
Focus on rental income
Less emphasis on borrower credit
Fast closing (sometimes within 2-3 weeks)
2. Portfolio Loans
Offered by small banks/credit unions
Custom underwriting
Can tolerate lower scores and higher LTVs
3. Private/Hard Money Loans
Short-term solutions
Ideal for fixing, flipping, or transitioning into a better loan later
Higher interest rates, but flexible terms
Documents Needed for Refinancing in Texas
Even if you have bad credit, preparing these documents increases your success rate:
Last 2 years of tax returns (personal and business if applicable)
Current rental lease agreements
Proof of property insurance
Bank statements (showing reserves)
List of assets and liabilities
Property appraisal report (may be required upfront)
Mistakes to Avoid When Refinancing Investment Property with Bad Credit
✅ Don’t apply to multiple lenders at once — too many credit pulls can lower your score even more.
✅ Don’t hide negative credit events — transparency is better.
✅ Don’t ignore closing costs — expect around 2%-5% of loan value.
✅ Don’t choose interest-only loans without understanding the risks.
Top Lenders in Texas for Bad Credit Investment Property Refinancing
Here are the best 2025 lenders that cater to bad credit scenarios:
Kiavi (specializes in DSCR loans)
Lima One Capital (great for private lending in Texas)
CoreVest (excellent for rental portfolios)
Angel Oak Mortgage Solutions (alternative lender focused on bad credit borrowers)
Local Texas Credit Unions (always worth checking for portfolio loans)
Frequently Asked Questions (FAQ)
Can I refinance an investment property in Texas with a 580 credit score?
Yes, but you will likely need a DSCR loan, private lender, or a portfolio loan.
How much equity do I need to refinance?
Ideally 30% equity or more. Some lenders may accept 25%, but 30%-40% gives you stronger negotiating power.
How long does refinancing take in Texas?
Typically 30-45 days, but private lenders may close in as little as 2 weeks.
Will refinancing hurt my credit even more?
A minor temporary drop happens due to credit inquiries, but if you lock better loan terms, your credit will likely improve over time.
Final Thoughts on Refinancing an Investment Property with Bad Credit in Texas 2025
Refinancing an investment property with bad credit in Texas in 2025 is challenging — but far from impossible.
By understanding your options (like DSCR loans and private lenders), preparing strong documents, and focusing on the property’s income potential, you can lock in better terms and grow your real estate portfolio even if your credit score isn’t perfect.
Don’t let bad credit hold you back.
Use the strategies in this guide to refinance smarter — and build your future wealth today.
