The Quick Read: The standard conventional cash-out rules apply in every state, and community-property law adds a layer on top. Leverage is 80% on a one-unit primary home, and the loan being paid off must be at least 12 months old. A spouse who is not on the loan may still need to sign the mortgage document, and may still receive the right-to-cancel notice. Every figure here is subject to lender guidelines and full file review.
Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.40% as of October 15, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the agency cap on a one-unit principal residence, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages.
What a Cash-Out Refinance Is
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference. The new loan pays off your existing first mortgage and any other liens you choose to clear. It also covers closing costs. What is left comes to you. Under the Fannie Mae Selling Guide, equity taken out “for any purpose” counts. So does paying off a second lien of any age.
A rate-and-term (limited cash-out) refinance is different. It pays off the first mortgage and costs, with only incidental cash back. Across the wholesale programs we place files with, that product reaches 95% LTV on a one-unit primary home. LTV, or loan-to-value, is the loan balance divided by the home’s appraised value. Cash-out sits lower because you are pulling equity out. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The community-property layer comes from state law, not from the loan program. It decides who must sign and who gets notice. It does not change the leverage math. Lendmire’s cash-out refinance programs page covers the program side in more detail.
Which States Are Community-Property States?
Nine states: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin. USDA’s credit guidance lists the same nine. Alaska is an opt-in community-property state, meaning spouses must elect it by written agreement or trust.
In these states, income earned and property acquired during a marriage is generally owned by both spouses. That matters at the closing table. A lien on the home can affect a spouse’s ownership interest even when that spouse never touches the loan. Texas adds its own constitutional home-equity rules, covered below.
How the Loan Gets Underwritten, Step by Step
Here is the path a conventional cash-out file takes, and where a marriage changes it.
1. Classify the loan. The lender decides whether the file is cash-out or limited cash-out. Fannie Mae’s cash-out topic covers equity taken for any purpose. A limited cash-out has its own, narrower definition.
2. Check the clocks. The first mortgage being paid off must be at least 12 months old, measured from the note date of the old loan to the note date of the new one. At least one borrower must have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards.
3. Map the household. The loan officer asks your marital status and who holds title. Tell them early. It shapes the document list.
4. Underwrite the borrowers. Income, credit, assets, ratios and LTV. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45%, with reserve and score factors from the Eligibility Matrix.
5. Appraise. The appraised value sets LTV, so it largely decides how much cash is available.
6. Close. The package includes the mortgage or deed of trust, the notice of right to cancel, and any state forms.
What decides the outcome is simple: appraised value, your credit and ratios, whether a spouse’s signature is needed, and the lender’s own rules.
The Leverage Limits
| Property and occupancy | Max cash-out LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
These match the Fannie Mae Eligibility Matrix. Occupancy drives the number. One sentence is enough for non-primary homes: the lower figure applies, and the rest of this article is about the home you live in.
One wholesale lane goes further. It reaches 89.99% LTV with no mortgage insurance. It needs a 680 score and a 50% ratio on a thirty-year fixed loan, primary residence, conforming balance. It carries its own six months of seasoning. It is not written on a Texas homestead. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Does Your Spouse Have to Sign?
Often yes, even if your spouse is not a borrower. Fannie Mae’s signature rules for security instruments require two groups to sign the mortgage or deed of trust. The first is each person with an ownership interest in the property, even if their income is not used to qualify. The second is the spouse of any person with an interest, if state law requires that signature to waive rights arising from the marriage.
Signing the security instrument is not signing the note. The note is the promise to repay. Freddie Mac’s spouse-signature legend says the spouse signs only to comply with the law, without personal liability for the sums secured. Put plainly, a non-borrowing spouse gives up property rights in the lien and takes on no personal debt.
| Person | Signs the note? | Signs the security instrument? |
|---|---|---|
| Borrower on title | Yes | Yes |
| Spouse on title, not a borrower | No | Yes |
| Spouse off title | No | When state law requires it |
Freddie Mac’s exhibit says the spouse must be identified as a “Borrower” on the security instrument when three things are true. The borrower is married, the spouse is not signing the note, and the property is homestead. The exhibit also frames this around a non-purchase-money mortgage, and a cash-out refinance is one.
Government-backed loans handle spouses their own way.
Whose Debts Count?
This is where borrowers get confused, so be careful. Which debts count against you depends on the program and on the lender’s own rules. Government programs differ from conventional. USDA, for example, says a non-purchasing spouse’s obligations must be counted in the total debt ratio unless state law excludes them.
For a conventional file, the treatment is set by the agency guide plus the lender’s overlays. An overlay is a stricter rule a lender adds on top of the agency’s. Your loan officer confirms it for your file before you apply. Do not assume a blanket answer from a forum post.
The ratio ceiling still applies to the people on the loan. Freddie Mac’s guide says a manually underwritten loan with a monthly DTI over 45% is ineligible for sale to Freddie Mac. DTI is your monthly debts divided by your monthly income.
The Right to Cancel Covers Every Owner
A cash-out refinance on your primary home carries a three-business-day right of rescission. That is the window in which you can cancel the loan. Funds are normally not disbursed until it ends. Purchases are exempt. Refinances on the principal dwelling are not.
Here is the community-property wrinkle. Regulation Z gives the right to each consumer whose ownership interest will be subject to the lien. Notice goes to every such owner. One owner’s decision to cancel is effective for all of them. So a spouse on title who is not a borrower can still receive the notice and can still cancel the deal.
The clock runs until midnight of the third business day after the latest of closing, delivery of the notice, or delivery of the material disclosures. Plan your cash needs around that.
Texas: The Big Exception
Texas homestead cash-out loans fall under Section 50(a)(6) of the state constitution. Freddie Mac’s Guide 4301.7 caps these loans at 80% LTV. It also requires special Texas Home Equity uniform instruments. A special-purpose cash-out refinance cannot be a Texas equity loan. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The key idea is the two layers. Texas law, not the agency’s definition of cash-out, decides when Section 50(a)(6) applies. The Freddie Mac requirements apply regardless of how Chapter 4301 categorizes a refinance as cash-out or no cash-out. So a loan can be “cash-out” to Texas and limited cash-out to the agency, or the reverse. Lenders have to make that call file by file.
For underwriting and closing detail, Fannie Mae’s Texas 50(a)(6) topic is the primary text. The state also has waiting periods and notice rules that vary by loan type. Confirm them with your loan officer and a title company.
Where the General Rules Bend
Recent cash buyers. The six-month title rule has a delayed-financing exception. If you bought with cash, you may be able to pull equity back out sooner.
Inheritance and legal awards. These are named exceptions to the title-tenure clock. Divorce decrees and court awards can fall here too.
Divorce. Court-ordered assignment of debt can change what counts in your ratios. It needs a decree and proof of the title transfer. Your lender will want the paperwork in hand.
Manufactured homes. Cash-out leverage runs lower on these. Ask your loan officer for the current figure.
Government loans. FHA, VA and USDA each have their own spouse and debt treatment. This article covers conventional only.
What Your Decision Looks Like in Practice
Take a married couple in a community-property state. Both are on title, and one wants the cash-out loan. Both sign the security instrument. Both get the cancel notice. Only the borrower’s income, credit and debts are underwritten, subject to the lender’s rules on spousal debt.
Now say only one spouse is on title. The non-titled spouse may still need to sign. State law, not the loan program, decides.
Before you apply, work through these points:
- How much equity you need, against 80% on a one-unit home or 75% on two to four units.
- Whether your current loan is at least 12 months old.
- Whether you have six months on title, or an exception.
- Whether keeping your current loan makes more sense. A cash-out pays off the old loan, so every term changes.
- What a larger balance does to monthly cost, and whether it pushes you into mortgage insurance. Mortgage insurance is required above 80% LTV. It can be cancelled at 80% of original value, and the servicer must end it at 78%.
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
Community-property state: A state where property acquired during marriage is generally owned jointly by both spouses.
Security instrument: The mortgage or deed of trust that pledges the home as collateral.
Note: The signed promise to repay the loan.
Rescission: The three-business-day right to cancel a refinance on your primary home.
Seasoning: The waiting period required before you can refinance or cash out.
Overlay: A rule a lender adds on top of the agency’s minimum.
Frequently Asked Questions
Can I do a conventional cash-out refinance without my spouse?
Sometimes, but not without your spouse’s involvement on paper. Your spouse does not have to be a borrower. State law may still require a signature on the security instrument, and a spouse on title gets the right-to-cancel notice. Your loan officer confirms what applies in your state.
Does a non-borrowing spouse take on the debt?
No. A spouse who signs only the security instrument gives up property rights in the lien. They take no personal liability for the loan, per Freddie Mac’s signature legend.
How soon after buying can I cash out?
The loan being paid off must be at least 12 months old, and one borrower must be on title for six months. Delayed financing, inheritance and legal-award exceptions exist. Your lender confirms which, if any, fits your file.
Is Texas different from the other eight states?
Yes. Texas homestead cash-outs follow the state constitution and use special uniform instruments, with an 80% LTV cap. The other community-property states follow the standard agency rules, with spouse-signature rules set by state law. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Do a spouse’s debts count against me?
It depends on the program and the lender. Government programs such as USDA may count a non-purchasing spouse’s debts. For conventional loans, the agency guide and lender overlays control, so ask before you apply.
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 paperwork starts with the right questions.
For current guidelines and terms, see Lendmire’s conventional loan programs page.
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.
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References
1. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Fannie Mae Eligibility Matrix
4. Fannie Mae Selling Guide B8-2-03, Signature Requirements for Security Instruments
5. Freddie Mac Guide Exhibit 5A
7. CFPB Regulation Z, 12 CFR 1026.23, Right of Rescission
9. Fannie Mae Selling Guide B5-4.1-03, Texas Section 50(a)(6)
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 Rules After Listing Your Home for Sale · Texas Conventional Cash-Out Refinance Rules for a Lock-in Homeowner · Conventional Cash-Out Refinance Electronic Verification Rules
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.