The Quick Read: A conventional cash-out refinance is available in most states on the same agency rules, but what you can take and what it costs depend on equity, occupancy, loan size and local law. On a one-unit primary residence, the cap is 80% of appraised value. Local layers like New York’s mortgage recording tax and Texas’ constitutional home-equity limits change the cost or the ceiling, not the basic product.
Key Takeaways
- The agency rules are national. The cost overlay is local.
- Cash-out is capped at 80% LTV on a one-unit primary residence and 75% on two- to four-unit homes.
- Cash-out pricing is built into the loan, not shown as a separate fee line.
- “High-cost” means two different things: expensive closings and high conforming loan limits.
- Compare the cash you actually receive, not the maximum loan. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What Counts as a Conventional Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a larger one and pays you the difference. If you take more than a small incidental amount of cash, or pay off anything beyond the first lien and closing costs, lenders treat it as cash-out. It is then capped and priced as cash-out.
Fannie Mae’s Selling Guide draws that line. The distinction matters because a rate-and-term (limited cash-out) refinance gets far higher leverage: 95% LTV on a one-unit primary residence across the wholesale programs we place files with. Same house, same borrower, very different ceiling. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Lendmire’s cash-out refinance programs sit inside this same agency framework. Lendmire is a mortgage broker licensed for consumer lending in 16 states, arranging these loans through wholesale lenders. Every figure below is subject to lender guidelines and full file review. None of it is a commitment to lend.
How Is a Cash-Out Loan Underwritten, Step by Step?
Underwriting runs in a fixed order. Each step can cut the cash you receive or end the request.
1. Eligibility clocks. The first mortgage being paid off must be at least 12 months old, counted note date to note date. At least one borrower must have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards.
2. Maximum LTV. Per the Fannie Mae Eligibility Matrix, a one-unit primary residence tops out at 80%. Two- to four-unit homes cap at 75%. In our wholesale programs, second homes and investment property also sit at 75%.
3. Appraisal. Value drives everything. Your maximum loan is the LTV limit times appraised value.
4. Income, assets, credit and ratios. Underwriting runs through the automated system or manually. Our wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a 50% total ratio ceiling.
5. Reserves. Per the same matrix, a higher debt-to-income ratio on automated files, above 45%, triggers minimum reserves on cash-out.
6. Pricing. Agency pricing adjustments rise with lower credit scores, higher LTV and cash-out purpose. They stack. We describe the effect rather than the percentages, because they change.
7. Disclosure and closing. You receive a Loan Estimate, then a Closing Disclosure showing estimated cash to close.
The arithmetic is simple: maximum loan, minus your payoff, minus costs, equals cash available. That last number is the one that matters.
What Does the Cost Stack Look Like?
Cash-out costs more than other refinances, and most of the reason is invisible. Pricing adjustments are set when the loan is delivered to the agency. They show up in your rate or credit, not as a line labeled “cash-out fee.” The 2023 pricing redesign, directed by the FHFA, raised upfront costs on many cash-out loans, per Fannie Mae’s Lender Letter.
Here is how the visible costs break down.
| Cost item | What it pays for | Shoppable? | State-driven? |
|---|---|---|---|
| Origination and points | Lender and broker work | Yes | No |
| Appraisal | Value opinion | Limited | No |
| Title and settlement | Title search, insurance, closing agent | Some | Often |
| Recording and transfer taxes | Government filing | No | Yes |
| Escrow deposits | Taxes and insurance | No | Partly |
The CFPB’s closing cost research found origination charges are the largest disclosed category, followed by title fees. Some required services can be shopped for, and some cannot. Your Loan Estimate separates them. Read it with that split in mind.
You can pay costs in cash or finance them into the loan. Financing them shrinks your net proceeds, because the added balance counts against the same LTV cap.
Why Do Some States Cost More?
Some states add layers that the agencies do not. The agency rules stay identical everywhere. Local law decides the rest. Two examples show the range.
New York. A refinance triggers the mortgage recording tax on the new loan. New York City adds its own city-level tax, and the state components stack on top. The NYC Department of Finance reports the city tax is a percentage of the mortgage, with a higher tier for larger loans and an exemption for individual co-op apartments. That report is dated, so confirm current rates with a closing attorney. Combined, the tax can run to a low single-digit percent of the new loan. A consolidation agreement (CEMA) can limit the tax to the new money, but it needs the old lender’s cooperation and extra legal fees.
Texas. A cash-out on a homestead is a constitutional “home equity” loan under Section 50(a)(6). It has its own overlays, including Texas-specific documents and a new appraisal. Texas is also where the wholesale 89.99% no-mortgage-insurance lane described below is not written.
The lesson: a state can raise your costs, lower your ceiling, or both. Run the Loan Estimate before you assume the national numbers apply.
Does “High-Cost” Mean Expensive Closings or High Loan Limits?
Both, and they are unrelated. Mixing them up leads to bad assumptions.
High-cost closing states are expensive because of taxes, title practices and attorney involvement. That is a cost question.
High-cost loan-limit counties are a size question. The FHFA sets a baseline conforming limit and raises it locally where 115% of the median home value exceeds the baseline. Local limits cannot exceed 150% of the baseline. Multi-unit homes get higher limits. The FHFA’s annual addendum lays out the method. Whether your cash-out loan is conforming or jumbo depends on where your county sits.
A loan above the conforming limit moves to the jumbo lane. Our wholesale jumbo programs start at a 660 decision score, with a 50% ratio ceiling on the fixed lanes. Lendmire’s piece Jumbo Cash-Out Refinance Requirements in High-Cost Closing States covers that lane in depth.
Where Does the General Rule Break?
The 80% rule is a baseline. These cases bend it.
- Delayed financing. A borrower who bought with cash can refinance before the usual clocks run out. The purchase must be arm’s-length and documented, per Fannie Mae’s guide. Cash-out pricing still applies.
- Student loan payoffs. Fannie Mae waives the cash-out pricing adjustment when proceeds pay off eligible student loans.
- Two- to four-unit homes. The cap drops to 75%.
- Manufactured housing. Some programs set lower caps. Check the current matrix.
- Texas homestead. Local law governs the loan, even when it might otherwise look like a no-cash-out refinance.
- The no-mortgage-insurance lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio. It requires a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
One more point. Above 80% LTV, ordinary conventional mortgage insurance applies. It can be cancelled at 80% of original value on request and ends automatically at 78%. That cancellation rule is why the 80% line shapes the whole product.
How Do You Decide Whether It Is Worth It?
Start with the purpose. The CFPB’s home equity guide is blunt: no option converts all of your equity to cash. Your payment may rise, your term may lengthen, and the rate and terms reset on the whole balance, not just the new cash.
Picture a borrower with a low-rate first mortgage who wants cash for a renovation. A cash-out refinance resets the entire balance to new terms. A separate home equity product may leave the first loan alone. That is a real tradeoff, and the cheaper path depends on the size of the cash need relative to the existing balance.
Now picture a borrower with high-interest card debt. Cash-out can consolidate it. But CFPB research on paydown behavior found card balances tend to creep back toward pre-refinance levels. Paying unsecured debt with mortgage debt also raises foreclosure risk if the balances rebuild. Skip it if the spending habit is unchanged.
A short checklist before you apply:
- Compare the “cash to borrower” line on the Loan Estimate, not the maximum loan.
- Ask which charges are state-driven and which you can shop.
- Confirm the title and seasoning clocks before ordering an appraisal.
- Check whether your loan size crosses the local conforming limit.
- 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. Call 828-256-2183 or request a quote.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off the old one and gives you the leftover equity as cash.
Limited cash-out refinance: A refinance that pays off the existing loan and costs, with only incidental cash back.
Loan-level price adjustment: A pricing add-on tied to credit score, LTV and loan purpose, built into your loan’s pricing.
Seasoning: The time a loan or title ownership must exist before it qualifies for cash-out.
Mortgage recording tax: A local or state tax charged on the new mortgage amount in some jurisdictions.
Conforming loan limit: The maximum loan size the agencies will buy, set by the FHFA and higher in high-cost counties. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Frequently Asked Questions
Can I borrow against all of my home equity?
No. On a one-unit primary residence, conventional cash-out stops at 80% of appraised value, and at 75% for two- to four-unit homes. The CFPB also notes that no home-equity option converts all equity to cash. Whatever remains above your payoff, costs and the equity you must keep is the cash you can take.
Why does cash-out cost more than a rate-and-term refinance?
Pricing adjustments rise with cash-out purpose, lower credit scores and higher LTV, and they stack. They are built into your pricing instead of listed as a fee. A rate-and-term refinance gets higher leverage and lighter pricing because the lender takes on less risk.
Does a high-cost state change what I can take out?
Sometimes. New York mainly adds cost through its mortgage recording tax. Texas changes the ceiling and paperwork under Section 50(a)(6). Most other states follow the agency rules, with costs varying by title practice and local fees.
How long must I own the home before cashing out?
At least one borrower must be on title for 6 months, and the first mortgage being paid off must be at least 12 months old. Delayed financing, inheritance and legal-award exceptions exist. Seasoning can block a request regardless of how much equity you have.
Can I roll closing costs into the loan?
Yes, in most cases. Financing costs raises the balance and counts against the same LTV cap, so your net cash falls by the same amount. Compare cash to borrower on the Loan Estimate before choosing.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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 Selling Guide: Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. FHFA
5. CFPB Request for Information on Closing Costs (May 2024)
7. CFPB Using Home Equity Guide
8. CFPB Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances (Jan 2025)
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: Can You Finance Every Closing Cost in a Conventional Cash-Out Refinance? · How to Get a Conventional Cash-Out After a Quitclaim From a Parent · How to Apply for a Conventional Cash-Out Refinance Step by Step
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
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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.