The Quick Read: The conventional cash-out limit on a one-unit second home is 75% of the appraised value. That is five points below the 80% limit on a one-unit primary residence. The cap covers all the financing on the property, not just the first mortgage, so any HELOC or other lien that stays in place uses up part of the room. Every figure here is subject to lender guidelines and full file review.
If you are used to the leverage on a home you live in, the second-home number can feel stingy. It is not a lender quirk. It comes from the agency rules that sit under almost every conventional loan, and the sections below walk through how it works, where it bends, and what to do if you land above the line.
Key Terms Defined
LTV (loan-to-value): The new loan divided by the appraised value of the home, shown as a percentage.
CLTV (combined loan-to-value): All loans secured by the property, added together, divided by the appraised value. A first mortgage plus a HELOC counts here.
HCLTV: The same idea as CLTV, but it counts the full credit limit of a HELOC, even if you have not drawn on it.
Cash-out refinance: A new mortgage that pays off the old one and gives you extra money from your equity.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the old mortgage and closing costs, with only small incidental cash back. It does not release equity.
Seasoning: The waiting period before a loan or ownership can be used for a refinance.
Second home: A one-unit property you occupy for part of the year, kept for your own use rather than rented out.
What Is the Cash-Out Limit on a Second Home?
The limit is 75%. The Fannie Mae Eligibility Matrix caps a one-unit second home cash-out refinance at 75% LTV, CLTV and HCLTV. Freddie Mac Guide 4203.1 says the same for loans run through its automated system. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Across the wholesale programs I place files with, that is the ceiling you plan around. Both agencies land on the same number, so shopping lenders does not move it. Lenders can set tighter rules of their own. The agency figure is a ceiling, not a promise.
Here is how the cash-out limits line up by occupancy, per Lendmire’s program parameters:
| Occupancy | Max cash-out LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
The second home sits with the multi-unit and investment properties, not with the home you live in full time. Lenders see a second home as a bit riskier than a primary residence. When money gets tight, people tend to protect the roof over their head first. That is the logic behind the lower cap.
How Much Equity Must You Keep?
At least 25%. With a 75% cap, the new loan cannot exceed three-quarters of the appraised value, so a quarter of the value stays untouched.
Picture a second home the appraiser values at 100 units. The most the new loan can be is 75 units. Whatever you still owe on the first mortgage comes out of that 75 first. So does any HELOC or other lien that stays in place. What is left is the cash you can take, before closing costs.
Closing costs matter here too. If you finance them into the new loan, they use the same room under the cap. A smaller cost package means more cash in hand.
How the Loan Is Underwritten, Step by Step
Here is the path a cash-out file takes on a second home.
1. Classify the transaction. The lender first decides whether this is cash-out or limited cash-out. A limited cash-out pays off the first mortgage and costs, with only minimal cash back. Fannie Mae defines it in Selling Guide B2-1.3-02. Anything that releases real equity is cash-out and gets the 75% cap.
2. Check seasoning and ownership. Fannie Mae Selling Guide B2-1.3-03 asks for three things:
- The existing first mortgage must be at least 12 months old, counted note date to note date.
- At least one borrower must have been on title for six months.
- A home that was listed for sale must be off the market by the disbursement date.
Freddie Mac has a parallel six-month ownership rule in Guide 4301.5.
3. Appraise and compute. An appraisal sets the value. The maximum new loan is that value times 75%. Then subtract the payoff on your first mortgage and any other liens that remain. The cap applies to combined financing, so an old HELOC cuts your cash dollar for dollar.
4. Underwrite the file. The lender runs the file through the agency’s automated system. Credit, debt ratios and reserves all weigh in. Across our wholesale programs, a 620 decision score is the typical floor, and the automated finding governs most files, with a total ratio ceiling of 50%. Some files also need reserves, meaning savings left after closing. Fannie’s matrix ties a reserve requirement to cash-out refinances on automated files with a ratio above 45%.
5. Price the loan. Second homes carry an added pricing adjustment that grows as leverage rises. The Loan Estimate shows the full cost picture. Compare it with your other options before you sign.
The cap is not a guarantee. Credit, ratios, reserves, the appraisal and a lender’s own overlays can all shrink what you can borrow.
Why Rounding Matters at the Line
Freddie Mac rounds the calculated ratio up to the next whole number. So 75.01% fails the 75% cap. The Guide’s own example is 94.01% rounding up to 95%.
If your numbers sit within a hair of the cap, assume the lender will not round in your favor. A modest drop in the appraisal can push you over. Build in a cushion before you count on a specific amount of cash.
What If the Appraisal Comes In Low?
Every point the appraisal misses cuts your maximum loan by 75% of that shortfall. A home valued at 100 units that appraises at 95 now supports a loan of 71.25 units, not 75. That is 3.75 units less cash, from a five-unit miss.
Low appraisals hurt more than people expect because the payoff and any other liens do not shrink. The whole drop comes out of your cash. This is why a lender’s appraisal, not a listing price or a neighbor’s sale, drives the final number.
Cash-Out vs. Limited Cash-Out vs. Purchase
The 75% figure only applies to cash-out. The same second home can carry very different leverage depending on what the new loan does:
| Transaction | Second-home LTV |
|---|---|
| Purchase | Up to 90% |
| Limited cash-out refinance | Up to 90% |
| Cash-out refinance | Up to 75% |
A common mistake is reading the 90% figure as the refinance limit. That number is for buying the home, or for a refinance that releases no real equity. It does not apply when you want cash.
Where the Rule Breaks: Edge Cases
The general rule has several named exceptions and traps.
Delayed financing. If you bought the home with cash, you may not have to wait six months to borrow against it. The delayed financing exception in B2-1.3-03 waives the title wait. It requires an arm’s-length purchase and standard eligibility. The loan is still cash-out, so the 75% cap still applies. Expect to document what you paid.
Buying out a co-owner. The 12-month seasoning rule does not apply when you buy out a co-owner under a legal agreement. The new loan still has to meet cash-out leverage, not limited cash-out leverage.
Inheritance or legal award. Freddie Mac’s Guide 4301.5 allows an exception to the six-month title wait. It is aimed at an heir or a legally awarded owner.
Co-ops. Fannie Mae’s matrix says cash-out refinances on second homes are not permitted for co-op share loans.
Community Seconds. These down-payment assistance programs are not permitted with second homes or cash-out refinances.
Manufactured homes and some condo projects. Limits can be lower, and lenders add their own rules. Ask early, because the answer depends on the project and the lender.
One unit only. The agency matrix lists second-home eligibility only for one unit. A two- to four-unit property is a primary residence or an investment property, each with its own cap.
Occupancy decides leverage. If the home is really used as a rental, the investment-property rules apply instead. How you use the property, not what you call it, sets the limit.
Rules also change over time, and agency documents get updated. Expect your lender to check the current versions of the matrix and guide at the time of your file.
What a Lender Looks At on a Second-Home Cash-Out
On a typical file, expect the lender to review these items:
- Deed or title evidence showing ownership and how long you have held it
- Existing mortgage statements, including any HELOC
- The appraisal
- Asset and reserve statements
- Credit and total debt ratios
- Proof the property is a true second home, not a rental
For a delayed financing file, add the settlement statement and proof of where the purchase funds came from.
What Does the Decision Look Like in Practice?
Start with three questions. What is the home worth, what do you owe, and how much cash do you need? If the math fits under 75%, a conventional cash-out may work. If it does not, you have options.
- Take less cash. A smaller cash-out keeps the new loan under the cap.
- Wait and let equity build. Paydown and appreciation raise your room over time.
- Pay down a lien first. Clearing a HELOC opens up space under the combined cap.
- Look at your primary home. The primary-residence cash-out cap is 80%, so equity there may reach further.
- Use a different kind of loan. A HELOC or second lien on the vacation home can fit when a full refinance does not.
It also helps to weigh what you give up. The CFPB’s home equity guide notes that a cash-out refinance can extend the time it takes to pay off your debt and may raise your monthly payment. A new loan also resets your interest rate and terms. If your current loan has terms you like, replacing it just to pull cash may cost more than it gains.
That last point is a genuine toss-up for many owners. A cash-out gives you one clean loan. A second lien keeps the first mortgage as it is. Which fits better depends on what you hold now and what you need the money for.
Lendmire’s cash-out refinance programs page lays out the program options. For a related look at how the caps shift with property use and size, see Lendmire’s piece Conventional Cash-Out LTV Limits by Occupancy and Unit Count.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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.
Frequently Asked Questions
Can I take 80% cash-out on a second home like I can on my main home?
No. The agency cap on a one-unit second home is 75%, against 80% for a one-unit primary residence. The difference reflects how lenders weigh risk by occupancy. If you need more leverage, a cash-out on your primary home may reach further. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Does the 75% limit count my HELOC?
Yes. The cap applies to combined financing, so a HELOC that stays in place reduces the room for the new loan. Freddie Mac also tracks HELOC credit limits through its HTLTV measure. Paying off or closing the HELOC as part of the transaction changes the math.
Can a second-home refinance go to 90%?
Only for a purchase or a limited cash-out refinance, where you take no meaningful cash. Once you pull real equity out, the 75% cap applies. Many borrowers mix the two up because both appear on the same agency tables.
I just bought the home with cash. Do I have to wait?
Not always. The delayed financing exception can waive the six-month title wait after an all-cash, arm’s-length purchase. The loan is still treated as cash-out, so the 75% cap applies. Lenders typically want settlement statements and proof of the source of funds.
Is the limit different between Fannie Mae and Freddie Mac?
No. Both cap conforming second-home cash-out refinances at 75% for one-unit homes. Freddie’s cap applies to loans run through its automated system. Lender overlays can set tighter limits, but the agency ceiling is the same.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Eligibility Matrix
2. Freddie Mac Guide Section 4203.1
3. Fannie Mae Selling Guide B2-1.3-02: Limited Cash-Out Refinance Transactions
4. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
5. Freddie Mac Guide Section 4301.5
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 Limits for a Large Loan · The Case for a Conventional Cash-Out Refinance in the Second-Lien Era · Conventional Cash-Out LTV Caps for a Free-and-Clear Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.