The Quick Read: Only through one specific wholesale lane, not through a standard agency cash-out. On a standard conventional cash-out, the leverage cap is a hard ceiling, and mortgage insurance cannot buy you past it. One wholesale lane does reach just under 90% of home value with no mortgage insurance, but only for a narrow borrower profile, subject to lender guidelines and full file review.
Key Terms Defined
Six terms do most of the work here. Here they are once, in plain words.
- Cash-out refinance: A new mortgage that pays off your current first mortgage and hands you the leftover money as cash.
- LTV (loan-to-value): The new loan amount divided by the home’s appraised value, shown as a percentage.
- The cap: The highest LTV a program allows for a given transaction. On a cash-out, it is the limit on how much of your home’s value you can borrow against.
- Mortgage insurance: A policy that protects the lender, not you, if the loan goes bad. You pay for it through the monthly payment, at closing, or both.
- Limited cash-out refinance: A refinance that pays off your existing loan and costs but gives back only small, incidental cash. Lenders also call it a rate-and-term refinance.
- Seasoning: The waiting period a lender wants before you can refinance, counted from when you took the loan or the title.
What Does “the Cap” Mean on a Cash-Out?
The cap is the most a program will lend against your home’s value. For a one-unit primary residence, a conventional cash-out tops out at 80% LTV. That means you must keep at least 20% equity after the new loan funds. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Smaller homes and different uses carry a lower ceiling. Across the wholesale programs Lendmire places files with, a cash-out on a two- to four-unit primary residence is capped at 75%. Second homes and investment property also sit at 75%. Occupancy decides the leverage, and that is the only time the rental side comes up here.
Compare that with buying. A purchase of a one-unit primary residence can reach 95%, or 97% for a qualifying first-time buyer with a fixed rate. Many borrowers see those numbers and assume a refinance works the same way. It does not.
A cash-out is treated as riskier because you are pulling equity out rather than building it. The lender asks for more cushion in exchange. If you want to see how these limits fit together, Lendmire’s cash-out refinance programs page lays out the program structure for homeowners.
The cap applies to a few ratios at once, not just the first mortgage. Lenders add up the first loan, any second lien that stays in place, and any home equity line. The highest result has to fit under the cap. So a homeowner with a small leftover second lien has less room than the first mortgage balance alone suggests.
Why Can’t Mortgage Insurance Raise a Standard Cash-Out Cap?
Mortgage insurance and the cap are two separate rules that happen to share a number. Insurance makes a high-leverage loan acceptable to the lender. It does not make a loan eligible if the program forbids that leverage in the first place.
Here is how the two rules line up for a one-unit primary residence.
The first rule is that a conventional first mortgage above 80% LTV needs mortgage insurance. Fannie Mae’s Selling Guide says the lender must obtain primary mortgage insurance above that line, unless another approved credit enhancement is in place. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The second rule is the cash-out cap itself. Fannie Mae’s Eligibility Matrix lists 80% as the maximum for a one-unit principal-residence cash-out. It lists 75% for two to four units and for a second home. Those same tables allow far higher leverage on a purchase and on a limited cash-out.
Put the two together. At or below 80%, no mortgage insurance is required. Above 80%, insurance would be required, but the cash-out is no longer eligible anyway. The insurance tables apply to loans that are otherwise eligible. They do not widen what a cash-out may borrow.
That is why “I’ll just pay mortgage insurance and borrow 90%” does not work on a standard conventional cash-out. It works on a purchase. It works on a limited cash-out, covered below. It does not work here.
One more point on the insurance itself. It protects the lender, not you. The CFPB says so directly, and it is a cost you carry whether or not you ever need the protection.
Is There Any Route Above the Cap With No Mortgage Insurance?
Yes, in one narrow lane. Across the wholesale programs Lendmire places files with, one lane reaches 89.99% LTV on a cash-out with no mortgage insurance. It exists because it sits outside the standard agency cash-out box, so the agency cap does not govern it. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The fit is tight. As a rule, the profile looks like this:
- A primary residence, not a second home or rental.
- A thirty-year fixed rate.
- A conforming loan balance, meaning a loan at or under the county’s conforming limit.
- A 680 credit score at minimum.
- A total debt ratio of 50% or lower.
- Six months of seasoning of its own. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Miss one of those and the lane is likely closed. A 660 score, an adjustable rate, or a balance in jumbo territory takes you out of it.
There is also a geographic catch. In Texas, a cash-out on a homestead is capped by the state constitution at the standard agency figure. That wholesale lane is not written there. A Texas homeowner stays inside the 80% cap on a cash-out.
All of this is subject to lender guidelines and full file review. A lane existing is not the same as your file fitting it. Nothing here is a commitment to lend, and Lendmire is a mortgage broker that arranges these loans through wholesale lenders, not the lender itself.
Is it still a “conventional” loan?
Yes, it is conventional, meaning it is not an FHA or VA loan. But conventional and conforming are not the same word. A conforming loan follows the Fannie Mae and Freddie Mac rulebook. A conventional loan simply is not government-backed. This lane is conventional and uses a conforming balance, while the leverage rule is set by the wholesale lender rather than the standard cash-out matrix.
Where Does the Cost Go If There Is No Mortgage Insurance?
It moves into the pricing of the loan. A lender taking on 89.99% leverage still carries that risk. If it does not bill a separate insurance premium, the cost of that risk lands elsewhere in how the loan is built and priced. “No mortgage insurance” describes the line on your statement, not the total cost of the loan. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
That matters for one reason in particular: permanence. Mortgage insurance has an exit. The CFPB explains that you may request cancellation when your balance is scheduled to reach 80% of the original value, and the servicer must end it automatically at 78% if your payments are current. Pricing built into the loan itself does not follow that path. It stays with the loan until you refinance or pay it off.
Neither structure is automatically cheaper. The answer depends on your credit profile, how long you hold the loan, and how soon you expect to refinance again. The Loan Estimate you receive is where you compare the two on equal terms. Look at the full cost, not just whether an insurance line appears.
Here is how three common structures compare side by side.
| Factor | Standard cash-out | Limited cash-out | Wholesale no-MI lane |
|---|---|---|---|
| Top LTV, one-unit primary | 80% | 95% (97% in some cases) | 89.99% |
| Mortgage insurance | Not needed at the cap | Required above 80% | None billed separately |
| Cash back to you | Yes, after payoffs | Only incidental | Yes, after payoffs |
| MI cancellation path | Not applicable | At 80%/78% | Not applicable |
The middle column explains a lot of the confusion. A limited cash-out can reach 95% or 97% because it gives almost no cash. The moment a payoff of non-purchase liens enters the picture, the loan converts to a cash-out and the lower cap applies.
How Much Cash Do You Actually Get?
Less than your equity suggests. The cap sets the largest loan the lender will make. From that maximum loan, the new loan must pay off your current mortgage, any liens being cleared, closing costs, and prepaid items. What remains is your cash.
Run it in percentages of value. Say your home appraises at 100 units of value, and you owe 60% of it on your current first mortgage. Under an 80% cap, the maximum new loan is 80% of value. That leaves 20% of value on paper before costs.
Closing costs and prepaids come out of that 20%, and so does any lien you pay off. The cash in your hand is what is left, not the full 20%.
Now try the 89.99% lane on the same home. The maximum loan climbs to just under 90% of value, so the room before costs is roughly 30% of value. That is a real difference. It is also only available if your file meets every condition in the lane above.
Reaching the cap also does not guarantee you receive that amount. The loan still has to fit your income, debts, credit and reserves. A home with plenty of equity can still fall short on the new payment, and the lender sizes the loan to what you can carry. Lenders also set the value through an appraisal, so a lower appraisal shrinks every number above.
Which Rules Trip Borrowers Up?
Three timing and eligibility rules cause most of the surprises on a conventional cash-out.
Seasoning. On a standard cash-out, the first mortgage you are paying off must be at least 12 months old, counted note date to note date. You also need to have been on title for 6 months. There are exceptions for delayed financing, inheritance and legal awards. Fannie Mae’s cash-out rules describe the delayed-financing exception for a recent cash buyer. Even there, the new loan stays under the cash-out cap based on the current appraised value.
Credit and ratios. The wholesale conventional programs start at a 620 decision score. Most files are decided by the automated finding, with a total debt ratio ceiling of 50%. The no-mortgage-insurance lane asks for more: a 680 score and that same 50% ceiling. Waiting periods after credit events are agency rules. They run four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.
Loan size. The lane needs a conforming balance, and that limit differs by county and by unit count. The FHFA conforming loan limit release explains that the limits are set county by county, with higher ceilings in high-cost areas. Check your county’s current figure before you plan around a number. Above the conforming limit, the jumbo lanes take over, with their own rules.
There is a quieter trap too. Student loan cash-out features exist, but they change pricing adjustments, not the leverage cap. An exception to one rule rarely rewrites the others.
Government programs follow different rules, and they are separate products. FHA and VA cash-out do not use the conventional cap, so a comparison between the two has to start from scratch.
Should You Take the Maximum?
Not automatically. Borrowing the most you can is a choice, not a goal, and the cap leaves you a margin for a reason. Here is a practical way to weigh it.
Take the maximum when the cash pays off something costlier than the new loan, or funds a repair that protects the home’s value. You also want a stable income and a plan to stay in the loan long enough for the structure to pay off.
Stay below it when your equity cushion matters more than the extra cash. Less leverage also keeps more options open if you refinance again, and it keeps the loan out of the tighter credit and ratio conditions of the higher-leverage lane.
Consider a different tool when you need a smaller amount and your current first mortgage is worth keeping. A second lien or home equity line can leave the first loan untouched. That is a different product with its own cost and risk, so compare it on the Loan Estimate.
A few questions help before you commit to any structure:
1. Is mortgage insurance billed separately, built into pricing, or absent for a reason you can name?
2. Is the loan fixed, and for how long?
3. What are the full closing costs after the payoffs?
4. How long do you expect to keep this loan before refinancing or selling?
If the answer to the first question is vague, ask for it in writing. Lendmire’s separate piece Do You Pay Mortgage Insurance on a Cash-Out Refinance? covers that question in more depth.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What Is the Next Step?
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. The first step is a look at your appraised value, your payoff and which lane your file fits, subject to lender guidelines and full file review.
Frequently Asked Questions
Can I pay mortgage insurance to borrow more than 80% on a cash-out?
No, not on a standard conventional cash-out. Mortgage insurance makes a high-leverage loan insurable, but it does not lift the cash-out cap. The 80% limit on a one-unit primary residence is an eligibility ceiling. Higher leverage is available on a limited cash-out, which gives back only incidental cash, or through a specific wholesale lane.
Why do the cash-out cap and the mortgage insurance trigger both sit at 80%?
They are separate rules that land on the same number for a one-unit primary residence. Insurance is required above 80% on a conventional first mortgage. The cash-out cap stops lending at 80% for that same home. For two to four units and second homes, the cap drops to 75%, so the cap and the insurance trigger no longer line up.
Does “no mortgage insurance” mean the loan costs less?
Not necessarily. Without a separate insurance charge, the cost of the added risk is usually built into how the loan is priced. Compare the full terms on your Loan Estimate rather than looking for the absence of one line. Mortgage insurance can end through cancellation at 80% and automatic termination at 78%, while priced-in cost does not follow that path.
Can I use the no-mortgage-insurance lane in any state?
No. The lane is written for a primary residence, a thirty-year fixed rate and a conforming balance, and it is not written in Texas. A Texas homestead cash-out is capped at the standard agency figure by the state constitution. Lendmire is licensed for consumer lending in 16 states, and availability depends on the lender and your file.
Is a limited cash-out the same as a cash-out refinance?
No. A limited cash-out can reach 95% on a one-unit primary residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows it. In exchange, it pays off the existing loan and costs and returns only incidental cash. Paying off non-purchase liens converts it to a cash-out, and the lower cap then applies. Mortgage insurance is required above 80% on a limited cash-out.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Selling Guide B7-1-01: Provision of Mortgage Insurance
2. Fannie Mae Eligibility Matrix
3. CFPB: When Can I Remove Private Mortgage Insurance (PMI) From My Loan?
4. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
5. FHFA Announces Conforming Loan Limit Values
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
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.