The Quick Read: Max LTV is the ceiling on the new loan, measured against the appraised value of the home. On a conventional cash-out refinance of a one-unit home you live in, that ceiling is 80%. It drops to 75% on two- to four-unit homes and second homes. The ceiling covers the whole new loan, so your payoff, other liens and financed costs come out before any cash reaches you. Figures are subject to lender guidelines and full file review.
What Does Max LTV Actually Measure?
Max LTV is the new loan divided by the appraised value. It is a cap on the total mortgage, not a share of your equity and not a cap on the cash.
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.
Take a home you live in, appraised at a given value. At an 80% ceiling, the largest new loan is 80% of that value. The remaining 20% stays in the house as equity. The cash you receive is whatever is left after the new loan pays everything it has to pay.
The Fannie Mae Eligibility Matrix lists the conventional cash-out ceiling at 80% for a one-unit principal residence and 75% for two- to four-unit principal residences. It also lists 75% for a one-unit second home. Those limits count every lien on the property, which matters once a second mortgage or HELOC is in the picture.
Key Terms Defined
Loan-to-value (LTV): The new loan balance divided by the appraised value of the home.
Combined LTV (CLTV): The same ratio, but counting every lien on the property, not just the first mortgage.
HCLTV: CLTV that counts the full credit limit on any HELOC, drawn or not.
Cash-out refinance: A new, larger mortgage that pays off the old one and puts the difference in your hands as cash.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the first mortgage, closing costs and a purchase-money second, with only incidental cash back.
Seasoning: The minimum age of your existing loan or your time on title before a cash-out is allowed.
How Is a Cash-Out Loan Sized, Step by Step?
The sizing is arithmetic, and the order matters. Across the wholesale programs Lendmire places files with, the same sequence shows up on every conventional cash-out.
1. Classify the loan. If the new loan only pays off the first mortgage, closing costs and a purchase-money second, it is limited cash-out. Anything beyond incidental cash back is a cash-out refinance, and the lower ceilings apply.
2. Start from an estimate of value. The lender works from an estimate first. The appraisal then replaces it, and the appraisal is the number that governs.
3. Apply the ceiling to appraised value. At 80% on a one-unit primary residence, the maximum new loan is 80% of that value.
4. Subtract what the loan must pay. The new loan retires your first mortgage and any second lien you are paying off. It can also finance closing costs, points and prepaids. Fannie Mae’s cash-out guide lists these as acceptable uses, along with taking equity out for any purpose.
5. Check liens that stay. A HELOC or second mortgage you keep uses up room under the cap. The ceiling counts all liens, so a kept second can shrink the cash to nothing.
6. Check seasoning and title. The first mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must have six months on title, with exceptions.
7. Check credit, ratios and reserves. The ceiling is one gate among several. Credit score, total debt ratio and reserves all apply, and reserve requirements can kick in when the debt ratio runs high on an automated finding. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
8. Price the loan. Conventional cash-out loans carry loan-level price adjustments. Those show up on the Loan Estimate, not here.
What is left after step four is your cash. Run it in that order and the number rarely surprises anyone at closing.
Why Is the Cash Smaller Than the Cap Suggests?
Because the cap is on the loan, not on the proceeds. Equity is not cash. A homeowner with a large share of equity still sees the payoff, any second lien and financed costs come out first.
Financing closing costs is the quiet one. Every cost rolled into the loan uses cap room. Pay those costs out of pocket and more of the ceiling becomes cash. Roll them in and the cash shrinks by the same amount.
The appraisal moves the number in a fixed way. If value comes in lower than expected, the maximum loan drops by the ceiling percentage of the shortfall. At 80%, each dollar of missing value removes 80 cents of loan capacity. The payoff does not change, so that reduction comes straight out of your cash.
Reconsideration of value is a normal request when comps are thin. A packet with recent nearby sales and documented improvements gives the appraiser something to review. It does not guarantee a change.
What Changes by Occupancy and Property Type?
Occupancy decides the ceiling. The same house gets a different number depending on how it is used.
| Property | Conventional cash-out max LTV |
|---|---|
| 1-unit principal residence | 80% |
| 2–4 unit principal residence | 75% |
| 1-unit second home | 75% |
A rental or investment property sits on its own program track. This is a primary-residence article, so the short version is that occupancy sets the leverage and the numbers above apply to a home you live in.
On a primary residence the qualifying question centers on the borrower’s own income and obligations rather than on income from the property.
Manufactured homes are the edge case to confirm early. Eligibility for cash-out has been narrower for certain manufactured housing, and a single-width home is the type most likely to be limited. Check it before the appraisal is ordered.
Is There a Wholesale Lane Above 80%?
Yes, for a narrow profile. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score and a 50% ratio ceiling on a thirty-year fixed, 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.
That is not the standard conventional ceiling, and not every file fits it. It is a lender program, subject to guidelines and full file review. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, so this lane is not written there.
How Do FHA and VA Compare?
FHA and VA work differently, and the streamlines are not cash-out products.
FHA cash-out sits at 80% under HUD Handbook 4000.1, and the figure is generally stated against adjusted value. Some borrowers remember an older, higher FHA limit. That limit is gone.
The FHA Streamline is a separate product for an existing FHA loan. HUD’s Streamline page says the lender may not add closing costs to the new mortgage amount. It does not put meaningful cash in your hands. Programs for existing FHA loans use a net tangible benefit test and limited credit review.
VA works the same way in spirit. The VA IRRRL is a rate-reduction product for an existing VA loan. The FDIC’s summary of the IRRRL describes it as a way to lower the interest rate on an existing VA loan or move an adjustable rate to a fixed one. A true VA cash-out is a different loan. VA Circular 26-19-05 says VA will not guaranty a refinance above 100% LTV, and it lists a 90% LTV test among the net tangible benefit tests. The statutory ceiling and what an individual lender offers are two different things. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Where Does the General Rule Break?
Seven situations change the answer.
- Delayed financing. If you bought the home recently with cash, a cash-out is still possible. The purchase must be arm’s-length, and the settlement statement must show no mortgage financing was used. Fannie Mae’s earlier published version of the cash-out guide describes this window, so confirm the current version before relying on it.
- Free-and-clear homes. A new mortgage on a home with no existing lien is still treated as cash-out.
- Co-owner buyouts. The 12-month seasoning on the old loan does not apply when you buy out a co-owner under a legal agreement.
- Renovation buyouts. Fannie Mae allows a limited cash-out version of its renovation loan to buy out a co-owner, such as after an inheritance or divorce. The borrower may not receive cash proceeds.
- Temporary buydowns. Loans with a temporary interest rate buydown are not eligible as cash-out refinances.
- A kept HELOC. The full credit limit counts toward the ceiling, drawn or not.
- Jumbo balances. Above the conforming limit, the jumbo lanes take over with their own score and ratio rules, and leverage that tops out below the conforming ceilings.
The Fannie Mae cash-out guide is the place to confirm any of these on a live file.
Which Limit Is Actually Stopping You?
When a file comes in light, the LTV ceiling is only one suspect. Work the list in this order.
- LTV. Is the maximum loan, after payoff and costs, below what you need?
- Seasoning. Is the first mortgage under 12 months old, or are you under six months on title?
- Ratios. Does the debt ratio push you past the program ceiling or into reserve requirements?
- Credit score. Does the score clear the program floor?
- Loan size. Does the amount cross into jumbo territory, where the rules change?
- Occupancy. Does the way you use the home match the program you chose? Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
If the loan clears LTV but fails another test, a bigger appraisal won’t fix it. That is why the binding constraint is worth finding before an appraisal fee is spent.
Should You Borrow the Maximum?
Usually not. The ceiling is the most the program allows. It is not a target.
On the standard conventional path, leverage above 80% brings mortgage insurance. It can be cancelled on request at 80% of the original value, with good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. Published typical annual premiums run from 0.58% to 1.86% of the balance, which is a range and not a quote. Staying at or under 80% avoids the cost altogether. The one wholesale lane described above is the exception to that pattern, and only for the narrow profile it sets.
The CFPB’s guide to using home equity says lenders typically want you to keep 10% to 20% of your home value as equity, and that none of the equity options converts 100% of your equity to cash. It also warns that your payment may rise and the loan may take longer to pay off, because you replace your mortgage with a larger one and the terms reset.
CFPB research on cash-out refinances and debt paydown finds that paying off other debts was a common reason for a cash-out, with home repairs second. It also notes that moving card or auto debt into the mortgage puts it behind your home and can raise foreclosure risk if payments become unsustainable.
Here is how the decision tends to look in practice. Picture a homeowner with a first mortgage and a small HELOC. Cashing out at the ceiling would pay off both, but the financed closing costs and the payoff leave less cash than the equity suggested. A smaller refinance, or leaving the first mortgage alone and using a different product, may fit the goal better. A plain rate-and-term refinance, which allows higher leverage (up to 95% on a one-unit home you live in) than a cash-out, is the right tool when the goal is a different term or loan structure and not cash.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Working Backwards From the Cash You Need
Most homeowners start with a number they need, not a ceiling. Reverse it.
Start with the cash target. Add your first mortgage payoff, any second lien you are retiring and the closing costs you plan to finance. That total is the new loan you need. Divide it by the ceiling that applies to your property, 80% for a one-unit home you live in. The result is the appraised value required to make it work.
If your estimated value falls short of that, the options are a smaller cash target, paying costs out of pocket, or a different product. Do this before the appraisal. It tells you whether the cap or the file is the problem.
Frequently Asked Questions
Is the max LTV a share of my equity?
No. It is a cap on the whole new loan relative to appraised value. At 80%, you keep at least 20% as equity, and the payoff, other liens and financed costs come out of the loan before any cash reaches you.
Do closing costs count toward the cap?
Yes, when you finance them. Fannie Mae allows closing costs, points and prepaids to be included in the new loan, and each one uses cap room. Paying them out of pocket leaves more of the ceiling available as cash.
Is the limit different for a second home or a two- to four-unit home?
Yes. On conventional loans the cash-out ceiling is 80% for a one-unit primary residence and 75% for two- to four-unit principal residences and one-unit second homes. Occupancy sets the leverage.
What happens if the appraisal comes in low?
The maximum loan falls by the ceiling percentage of the shortfall, while your payoff stays the same. That cuts your cash. An appraisal reconsideration request with recent nearby sales is a normal next step, though a change is not assured.
Can a lender set a lower cap than the program?
Yes. Agency figures are the ceiling, and individual lenders can add stricter overlays on score, ratios or property type. A broker comparing several wholesale lenders can show where the overlays differ, subject to lender guidelines and full file review.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the cash-out refinance programs and the equity each one reaches. Nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance 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 Eligibility Matrix
2. Fannie Mae Selling Guide B2-1.3-03
5. Fannie Mae B2-1.3-03 (earlier version)
6. CFPB guide to using home equity
7. CFPB cash-out refinances and debt paydown research
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: No Cash-Out Refinance for Homeowners Skipping the Cash: What It Is · Cash-Out Refinance for Homeowners: What a Wash-Out Means · Cash-Out Refinance for Homeowners in a Hurry: What Sets the Timeline
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.