The Quick Read: On a conventional cash-out refinance, the most you can borrow depends on how the home is used and how many units it has. A one-unit principal residence tops out at 80% of appraised value. Two- to four-unit principal residences, second homes, and investment property top out at 75%. Those caps count every lien on the home, not only the new first mortgage.
Key Takeaways
- Occupancy and unit count pick the cap. The appraisal sets the value the cap applies to.
- The cash-out cap is lower than the cap on a purchase or a no-cash-out refinance, because pulling equity out raises the lender’s risk.
- A duplex, triplex, or fourplex you live in gets a lower cash-out cap than a single-family home. It also gets a much larger gap between cash-out and no-cash-out leverage than a one-unit home does.
- Waiting periods and reserve rules can block a cash-out before the LTV cap does.
- Your cash in hand is the cap amount minus your payoff, closing costs, and any other liens paid off.
What Is LTV, and Why Does Cash-Out Get a Lower Cap?
LTV stands for loan-to-value. It is the loan balance divided by the appraised value of the home. A home with a balance at 60% of value has 40% equity.
Cash-out has a lower cap for a simple reason. You are turning equity into cash, so the cushion that protects the lender shrinks the day you close. A purchase starts with your down payment already in the house. A cash-out takes some of it back out.
Compare it with a rate-and-term refinance, which the industry also calls a limited cash-out refinance. That loan pays off your existing first mortgage and closing costs, with only incidental cash back. Across the wholesale programs I place files with, a one-unit principal residence can reach 95% on that kind of refinance. The same house on a cash-out tops out at 80%. That 15-point gap is the price of taking real cash.
One more definition matters here. A combined ratio, which Fannie Mae calls CLTV and Freddie Mac calls TLTV, adds every lien together: the new first mortgage plus any second mortgage or home equity line that stays in place. Freddie Mac’s Guide counts the full credit limit of an equity line in its home-equity version of the ratio, even if you have drawn nothing. So an unused line still eats room under the cap.
The Limits by Occupancy and Unit Count
Here is the grid I work from on conventional cash-out files. It matches the agencies’ published matrix for standard (non-HomeReady) loans, per the Fannie Mae Eligibility Matrix.
| Occupancy | Units | Cash-out max LTV |
|---|---|---|
| Principal residence | 1 | 80% |
| Principal residence | 2–4 | 75% |
| Second home | 1 | 75% |
| Investment property | 1–4 | 75% |
Three notes on the table.
First, the occupancy you declare on the application selects the row. It is not a label you can adjust later to get more cash. Occupancy is a statement lenders rely on, and misstating it is a serious problem.
Second, a second home is a one-unit property by nature, so the unit-count question rarely comes up there. Investment property sits in the table for completeness only. This article is about the home you live in, and occupancy decides the leverage there too.
Third, both agencies publish similar caps, so shopping between them does not usually buy you extra leverage. Your lender will confirm the exact figure for the product on your file.
Why a Duplex Gets Less Cash Than a Single-Family Home
This is where homeowners get surprised. Say you live in one unit of a fourplex. A purchase loan on that building can reach 95% leverage. A cash-out on the same building stops at 75%. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The reason is risk. Multi-unit properties tend to be harder to resell in a downturn, and the loss on one is larger. So the agencies leave a bigger equity cushion on cash-out. The cushion is 5 points larger than on a single-family home.
Compare two owners in practice. One owns a single-family home with a balance at 50% of value. The other owns a triplex with a balance at 50% of value. The first can borrow up to 30 more points of value before the cap. The second can borrow up to 25. Same equity, different room.
A recent change widened the gap. The agencies have raised leverage on purchases and no-cash-out refinances for two- to four-unit homes, but cash-out on those homes stayed at 75%. If a page tells you the higher multi-unit leverage applies to cash-out, it is mixing up loan types. Your lender can confirm the current treatment.
To work out your own number, use a three-step formula. Take the appraised value and multiply it by your cap. Then subtract everything the new loan has to pay: your current first mortgage, any liens you are paying off, and closing costs and prepaid items. What is left is the cash to you.
That last step is why a 75% cap does not mean 75% of your equity comes back. The cap is a ceiling on the loan, not a promise of proceeds. If you want to see how a cash-out compares with keeping your current loan, cash-out refinance programs at Lendmire can show you the equity each option reaches.
How the Loan Is Underwritten, Step by Step
Here is the path a cash-out file takes through the system.
1. Value is set by the appraisal. On a refinance, the appraised value is what counts. There is no “lower of price or appraisal” test, because there is no purchase price.
2. The loan is classified. Occupancy and unit count pick the cap. Whether it is cash-out or limited cash-out follows the agency’s definition of a cash-out transaction.
3. Eligibility is tested. The lender checks how long the loan being paid off has existed, how long you have been on title, and whether the home was recently listed for sale.
4. All liens are added up. The new first mortgage and any second lien or equity line that stays in place count toward the combined ratio.
5. Underwriting runs. The automated system issues a finding. Across the wholesale programs I use, conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. A higher score does not raise the LTV cap. It can help the file in other ways.
6. The loan closes and disburses. Your proceeds are the loan amount minus payoffs and costs.
The Waiting Periods That Can Stop You First
LTV is not the only gate. Under the Fannie Mae Selling Guide on cash-out refinance transactions, two seasoning tests apply.
- The first mortgage being paid off must be at least 12 months old, measured note date to note date.
- At least one borrower must have been on title for six months before the new loan disburses.
These are different clocks, and people mix them up. Six months of ownership alone does not get you there if you refinanced recently. A fresh refinance restarts the 12-month test on the loan, so you cannot cash out again until the new note is a year old.
The same guide also lists the following:
- Subordinate liens being paid off are not subject to the 12-month test.
- Buying out a co-owner under a legal agreement is exempt from the 12-month test.
- Delayed financing is an exception to the six-month title wait for someone who bought with cash and can document the source of funds. The cash-out cap still applies.
- A home that was listed for sale must be off the market by the disbursement date.
- Higher total debt ratios can trigger extra reserve requirements on automated files. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Where the General Rule Breaks
The grid covers most files. These are the named edge cases where it does not.
Manufactured homes. A manufactured home as a principal residence carries a lower cash-out cap than a site-built one. The agency matrix also restricts some single-width manufactured homes to purchase and limited cash-out only. Confirm the product with your lender before you plan around cash.
Texas homestead. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure. The wholesale lane that reaches higher leverage is not written there.
The higher-leverage, no-mortgage-insurance lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence, a conforming balance, and its own six months of seasoning. It is narrow. If your file fits, it is worth asking about. If it does not, the standard 80% cap governs. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Down-payment-assistance and affordable programs. HomeReady and Home Possible are built for purchases and limited cash-out refinances. They do not cover a cash-out. Community Seconds are not allowed on a cash-out either, per the Fannie Mae matrix.
Student-loan payoff. Fannie Mae allows a pricing exception when cash-out proceeds pay off eligible student loans. It changes pricing, not the LTV cap.
Combined liens. An existing second mortgage can stay in place if the lender re-subordinates it, but it counts toward the combined ratio. If that pushes you over the cap, the first mortgage has to be smaller.
Rounding. Freddie Mac calculates the ratio to two decimals and rounds up to the next whole number. A ratio a hair over the cap gets rounded above it, and the file fails the test. A tiny overage matters.
High-LTV refinance. Fannie Mae’s High LTV Refinance option is not a cash-out. It exists for borrowers whose loans sit above the limited cash-out maximum. It lowers the cost or term of the loan you have, but it does not put cash in your hand.
Why You See Different Numbers on Different Sites
If you have searched this topic, you have seen conflicting tables. A few things explain it.
- Loan type. Cash-out, limited cash-out, and purchase caps are different. Some pages mix them.
- Underwriting method. Automated and manual underwriting can carry different limits, particularly on multi-unit homes.
- Lender overlays. A lender can set a stricter cap than the agency. Condo and state rules often come from these overlays, not from agency rules.
- Occupancy rows. Some pages show investment property as a range and others as a single value. Occupancy and unit-count splits vary.
- Age. Matrices change. A page that is a year or two old may be out of date.
The agency matrix is the source of truth. Lender overlays can sit on top of it.
Mortgage Insurance and Cash-Out
Mortgage insurance is required above 80% LTV. You can request cancellation when your balance reaches 80% of the original value, assuming good payment history, no subordinate liens, and no decline in value. The servicer must terminate it automatically at 78%. Because the standard cash-out cap is 80%, most conventional cash-out loans do not carry it. The exception is the higher-leverage lane above, which reaches 89.99% without mortgage insurance. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What Do You Do When the Cap Is Too Low?
You have several paths when the cap leaves less cash than you need.
- Take less cash. Borrow only what the plan requires. Many cash-out loans are smaller than the cap, and the CFPB’s research found most cash-out refinances in a recent decade had LTVs below 80%, per the CFPB Office of Research.
- Check the narrow lane. If you have a 680 score and a primary residence at a conforming balance, the higher-leverage lane may fit.
- Wait for the clocks. If the 12-month or six-month test is what stops you, time solves it.
- Look at a second lien or equity line. It counts toward the combined ratio, so it does not get around the cap. It can still make sense when you would rather keep your current first mortgage.
- Consider the full cost. A cash-out replaces your current loan with new terms. It may lengthen your payoff time and raise your payment, and no equity product turns all of your equity into cash. Using the cash to pay off other debt moves that debt onto your home. The CFPB’s cash-out research warns that this can put the home at risk.
All figures here are subject to lender guidelines and a full file review. Nothing here is a commitment to lend.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the appraised value of the home.
CLTV / TLTV: The combined ratio that adds every lien on the home, including a second mortgage, to the first.
Cash-out refinance: A new first mortgage that pays off the old one and gives you extra cash from your equity.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the old loan and costs, with only incidental cash back.
Seasoning: The waiting time on a loan or on title before a lender will allow a cash-out.
Occupancy: How the home is used: principal residence, second home, or investment property.
Delayed financing: An exception that lets a cash buyer do a cash-out refinance without waiting for the usual title seasoning.
Frequently Asked Questions
Can I cash out all of my equity?
No. The cap leaves a cushion. On a one-unit home you live in, the cap is 80% of appraised value, so at least a fifth of the value stays as equity. Payoffs and closing costs come out of the loan amount too, so your cash is smaller than the cap alone suggests.
Why is a duplex lower than a single-family home?
A duplex you live in is capped at 75%, below the one-unit cap of 80%. Multi-unit homes carry more risk for the lender on resale, so the agencies require a larger equity cushion when equity is pulled out.
Can I do a cash-out on a second home?
Yes, in many cases, at a cap of 75% of appraised value. The occupancy on your application decides the cap. A second home must meet the lender’s occupancy and use tests.
Does a second mortgage or equity line count?
Yes. All liens count toward the combined ratio, and an equity line counts at its full credit limit under Freddie Mac’s definition, even if undrawn. An existing second can stay in place only if the lender can re-subordinate it and the combined ratio fits under the cap.
What if I refinanced recently?
You wait. The loan being paid off must be at least 12 months old, note date to note date, and a borrower must have been on title for six months. A recent refinance restarts the 12-month clock.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see conventional loan programs.
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References
1. Freddie Mac Guide Section 4203.1
2. Fannie Mae Eligibility Matrix
3. Fannie Mae Selling Guide: Cash-Out Refinance Transactions
4. Fannie Mae Selling Guide: High LTV Refinance Loan and Borrower Eligibility
5. CFPB: A Look at Cash-Out Refinance Mortgages and Their Borrowers
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Fannie Mae Cash Out Refinance LTV Investment · Refinance Appraisal Came In High: Can You Borrow More Or Drop PMI Sooner? · Conventional Refinance Debt-to-income Limits: 45%, 50% And The Compensating Factors
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.