The Quick Read: Two separate limits cap a conventional cash-out refinance, and you have to clear both. The first is a percentage of your home’s value, which is 80% on a one-unit primary residence. The second is a dollar ceiling on the loan size that varies by county. Above that ceiling, the loan is a jumbo loan, and Fannie Mae and Freddie Mac rules stop applying.
Key Takeaways
- The percentage cap controls how much equity you can pull out. The county ceiling controls how big the new loan can be.
- On a one-unit primary residence, the cap is 80% of appraised value. Two- to four-unit homes drop to 75%.
- The new loan must cover your payoff, financed costs and your cash. Large balances often hit the county ceiling before they hit 80%.
- Your first mortgage must be at least 12 months old, and a borrower must have been on title for 6 months. Exceptions exist.
- Above the county ceiling, your choices are to borrow less, keep your first mortgage and add a second loan, or move to a jumbo program.
What Does “Large Loan” Mean Here?
“Large” means three different things in cash-out lending, and the label changes which rulebook applies.
1. Conforming. The loan is at or below the baseline county limit. Fannie Mae and Freddie Mac can buy it.
2. High-balance. The loan is above the baseline but at or below the higher limit set for your county. It is still agency-eligible.
3. Jumbo. The loan is above your county’s limit. The agencies cannot buy it. Each investor sets its own cash-out rules.
So the first step is to find your county’s limit. That number tells you which lane you are in before any other test matters.
How Much Equity Can You Take Out?
The answer is 80% of your home’s appraised value on a one-unit primary residence, counting everything you owe against it. The Fannie Mae Eligibility Matrix sets this cap. You keep at least 20% equity after closing.
Occupancy and unit count change the cap:
| Property | Cash-out cap (LTV) |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
Occupancy decides the leverage. A home you do not live in sits at the lower tier. LTV, short for loan-to-value, is the loan amount divided by the appraised value.
Across the wholesale programs Lendmire places files with, there is one wrinkle. A lane on a 30-year fixed rate reaches 89.99% LTV with no mortgage insurance. It needs a 680 score and a 50% total ratio, and it applies only to a primary residence with a conforming balance. It carries its own six months of seasoning. It is not written in Texas, where a cash-out on the homestead is capped by the state constitution at the agency figure. Lendmire’s piece What Is The Maximum LTV For A Conventional Cash Out Refinance? goes deeper on the percentage side. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Program figures are subject to lender guidelines and full file review. None of this is a commitment to lend.
Why Does a Large Balance Hit a Ceiling?
A large loan hits the ceiling because the dollar limit does not scale with your home’s value. It is set by county. The federal regulator, the FHFA, announces a new baseline each fall. It takes effect on January 1.
Higher limits apply where 115 percent of the local median home value exceeds the baseline. By law, the highest limit cannot pass 150 percent of the baseline. Alaska, Hawaii, Guam and the U.S. Virgin Islands follow special statutory provisions with different limits. The FHFA keeps a county-by-county list. Check it for your county before you plan anything.
Here is the trap. Your cash-out loan is not just the cash you want. The new balance includes:
- the payoff of your existing first mortgage,
- any second lien you pay off,
- financed closing costs, and
- the cash you take.
That total is what gets compared to the county limit. The limit is not about equity. It is about the size of the new loan.
New limits are announced in the fall. Some lenders adopt expected figures early, at their own risk. A loan can be conforming at one lender and jumbo at another during that stretch. Until the regulator publishes the new numbers, treat them as unofficial.
Which Limit Binds First?
Run the percentages. These are examples built on assumptions, not market data. All amounts are shown as a share of your home’s appraised value.
Scenario 1: The percentage cap binds. You owe 40% of value on a one-unit primary home. Your county’s limit sits far above 80% of value. The loan can reach 80%. Before costs, that leaves about 40% of value as cash.
Scenario 2: The ceiling binds. Say you live in a high-value area and the county limit equals only 70% of your home’s value. The 80% cap would allow more, but the ceiling stops the loan at 70%. You owe 50% of value. At most, about 20% of value is left before costs. The percentage cap never comes into play.
Scenario 3: The ceiling binds with a second lien. Same home, same 70% ceiling. You owe 50% on the first mortgage and 10% on a second lien. Paying off both takes 60%. At most, about 10% of value is left for cash, and financed costs come out of it.
Large balances live in scenarios 2 and 3. Many borrowers find the ceiling, not the equity, is the real limit.
How Is Your Cash Calculated?
Cash is a waterfall. The steps run in this order:
1. Appraised value times the cap gives the maximum loan.
2. The maximum loan is compared to the county limit. The lower figure wins.
3. From that figure, subtract the first-mortgage payoff, any second-lien payoff and financed costs.
4. What remains is your cash.
The appraisal is the soft spot. Because the cap is a percentage of value, a low appraisal shrinks your cash. Each dollar of value lost removes four-fifths of a dollar of maximum loan. At a high balance that loss comes straight out of your cash, since the payoffs do not shrink.
Fannie Mae’s Selling Guide section B2-1.3-03 defines a cash-out refinance. It pays off existing mortgages with a new first mortgage on the same property, or places a new mortgage on a home owned free and clear. You can use the proceeds for any purpose.
Cash-out loans also carry loan-level price adjustments. These are pricing add-ons that depend on credit score and LTV. They are built into your pricing rather than shown as a line item. A cash-out loan usually prices higher than a plain rate-and-term loan with the same credit and LTV. The Loan Estimate shows the full terms. Compare them side by side.
What Are the Two Seasoning Clocks?
Seasoning is the waiting period a lender requires. Cash-out has two separate clocks, and people often mix them up.
- Clock one: the loan. The first mortgage you are paying off must be at least 12 months old, counted from note date to note date.
- Clock two: the title. At least one borrower must have been on title for 6 months. Freddie Mac’s Guide section 4301.5 states this for cash-out. It also treats a home owned free and clear as cash-out.
Exceptions exist:
- Delayed financing. If you bought with cash, you can refinance without waiting. The purchase must be an arm’s-length deal, and you must document where the purchase funds came from.
- Inheritance and legal awards. Ownership from a divorce award or inheritance generally counts from the transfer date. Confirm the details in the guide.
A recent purchase can block a cash-out. Check both clocks before you order an appraisal.
What About Credit, Ratios and Reserves?
The wholesale conventional programs start at a 620 decision score. An automated underwriting finding governs most files. The total debt-to-income ratio ceiling is 50% on the automated path. Manually underwritten loans run 36% or 45%, with the reserve and score factors in the Eligibility Matrix.
Reserves are cash left after closing. Fannie Mae’s reserve requirements can apply when the DU file shows a ratio above 45%. A large loan tends to push the ratio up, so reserves matter more as balances grow. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Mortgage insurance applies above 80% LTV. You can ask to cancel it at 80% of the original value. The servicer must end it automatically at 78%. Published annual premiums run 0.58% to 1.86% of the balance, a range and not a quote. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Cash-Out vs. Limited Cash-Out
A limited cash-out refinance, also called a rate-and-term refinance, pays off your first mortgage, closing costs and a purchase-money second lien. It allows only incidental cash back. Freddie Mac calls this “no cash-out.”
| Feature | Cash-out | Rate-and-term (limited) |
|---|---|---|
| Purpose | Take equity | Change loan terms |
| One-unit leverage | 80% | 95% |
| Cash back | Any purpose | Incidental only |
| Pricing | Usually higher | Usually lower |
Paying off a home equity line of credit (HELOC) in the same loan can make it a full cash-out instead of limited. Plan around that.
What If Your Loan Is Too Large for Conventional?
If the new balance would exceed your county’s limit, you have three paths.
| Option | How it works | Trade-off |
|---|---|---|
| Borrow less | Cut cash taken until the total fits the limit | Less cash |
| Keep the first mortgage | A HELOC or home equity loan sits behind it | Two payments, and the first stays untouched |
| Jumbo cash-out | A non-agency loan replaces the first | Its own rules and documentation |
The second path matters when your current first mortgage has favorable terms. A cash-out refinance replaces your first mortgage. The CFPB notes that home equity loans and HELOCs leave it in place.
The jumbo lanes Lendmire places files with start at a 660 decision score. They reach loans up to $5,000,000, with a 50% ratio ceiling on the fixed lanes. Cash-out leverage there is set lane by lane. Expect closer review of the appraisal, income and reserves than on a conforming loan.
Agencies do not set the rules above the county limit. Think of it as a different product, not a bigger version of the same one.
Where Do the Rules Bend?
A few edge cases change the math.
- Student loans. Fannie Mae waives the cash-out pricing adjustment if proceeds pay off eligible student loans.
- Delinquent taxes. Property taxes more than 60 days past due can be financed in the new loan.
- PACE liens. If you have enough equity and choose not to pay off a PACE lien, the loan is ineligible.
- Temporary buydowns. Loans with a temporary interest rate buydown are ineligible for cash-out.
- Manufactured homes. Lower leverage caps apply.
- Texas. Home-equity cash-out is governed separately by state rules.
A Pre-Application Checklist for Large Balances
1. Look up your county’s limit before you pick a loan amount.
2. Add up the full payoff: first mortgage, any second lien and financed costs.
3. Check both seasoning clocks.
4. Estimate your equity at 80% of value, then lower it if the appraisal is uncertain.
5. Pull your credit and calculate your debt-to-income ratio.
6. Gather income and asset documents, plus statements for every lien being paid off.
7. Ask whether keeping your current first mortgage beats replacing it.
Cash-out turns home equity into mortgage debt. The CFPB’s research on paydown behavior warns that moving unsecured debt into a mortgage can put the home at risk if payments become unsustainable. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by your home’s appraised value.
Conforming limit: The county dollar ceiling on loans that Fannie Mae and Freddie Mac can buy.
High-balance: A loan above the baseline limit but within your county’s higher limit.
Jumbo: A loan above your county’s limit, set by each investor and not by the agencies.
Seasoning: The waiting period tied to the age of your loan or your time on title.
Delayed financing: An exception that lets a cash buyer refinance and recover equity without the usual title wait.
Loan-level price adjustment: A pricing add-on based on credit score and LTV, built into the loan’s price.
Where to Go From Here
Start with two numbers: your county’s limit and your home’s value. They show which limit is likely to bind. 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. You can also read about Lendmire’s cash-out refinance programs first.
Frequently Asked Questions
Does a high home value let me exceed the county limit?
No. The county limit caps the new loan no matter how much your home is worth. A higher value raises your percentage-based cash, but the dollar ceiling stays put. Above it, you are in jumbo territory.
Can I borrow 100% of my equity?
No. On a one-unit primary residence, the cap is 80% of appraised value, so you keep at least 20% equity. Two- to four-unit homes drop to 75%. A wholesale lane reaches 89.99% on a 30-year fixed with no mortgage insurance, but only on a primary residence with a conforming balance, a 680 score and a 50% ratio.
Do I have to wait before I can do a cash-out?
Usually, yes. The first mortgage must be at least 12 months old, and one borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist. The documentation requirements are strict.
Is a cash-out refinance the same as a HELOC?
No. A cash-out refinance replaces your first mortgage with a new one. A HELOC sits behind your first mortgage and leaves it untouched. That difference matters if your current first loan has terms you want to keep.
Will a large cash-out loan cost more?
Often, yes. Cash-out loans carry price adjustments tied to credit score and LTV, and larger balances usually mean tighter ratios and more reserves. A Loan Estimate shows the full terms so you can compare them side by side.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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. Fannie Mae Eligibility Matrix
2. FHFA, 2026 Conforming Loan Limit Values
3. FHFA Conforming Loan Limits hub
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
5. Freddie Mac Guide, Section 4301.5
6. Fannie Mae Eligibility Matrix (reserves)
7. CFPB
8. CFPB: CFPB Cash Out Refinances and Paydown Behavior of Non Mortgage Debt Balances
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: Conventional Cash-Out Refinance Documentation for Every Income Type · Conventional Cash-Out LTV Limits by Occupancy and Unit Count · Can a Conventional Cash-Out Go Above the Cap Without Mortgage Insurance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.