The Quick Read: Your cash is the new loan minus everything paid out of it. That means your old mortgage payoff, any other liens, closing costs, prepaid items and any fee added to the loan. The gap between your old balance and the maximum loan is only the starting point. What lands in your bank account is smaller.
The Short Version: The Net-Cash Formula
Here is the whole formula in one line. Net cash equals the home value times the allowed LTV, minus the payoff of existing liens, minus closing costs, minus any financed program fees.
LTV means loan-to-value: your total debt divided by what the home is worth. On a conventional cash-out refinance of a one-unit primary residence, the standard ceiling is 80% LTV. That figure is subject to lender guidelines and a full file review. It is a ceiling, not a promise. Credit, income, the appraisal and costs can all pull your number lower.
Each step below uses percentages of home value rather than dollars. That keeps the model honest. Your real figures come from your own appraisal, payoff statement and Loan Estimate.
Key Takeaways
- The maximum loan is a ceiling set by value and LTV. It is not your cash.
- Closing costs, payoffs and financed fees all come out of that ceiling.
- A low appraisal lowers the ceiling, and that reduction flows through to your cash.
- Taking the maximum raises your balance and cuts your remaining equity.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the appraised value of the home.
CLTV (combined LTV): All loans secured by the home added together, divided by its value.
Payoff amount: The exact sum needed to close out your existing loan on the closing date, including accrued interest.
Seasoning: The waiting period a loan or title must meet before a refinance is allowed.
Prepaids and escrow deposits: Items paid up front, such as homeowner’s insurance premiums and starting tax reserves. They are not lender fees.
What Do You Need Before You Start?
You need four numbers: your estimated home value, your payoff, the LTV cap for your program and an estimate of closing costs. Gather the paperwork that backs each one.
| Input | Where to find it | Why it matters |
|---|---|---|
| Home value | Appraisal | Sets the maximum debt |
| Payoff | Payoff statement from servicer | Differs from your statement balance |
| Other liens | Second mortgage or HELOC statement | Eat into the same LTV room |
| Closing costs | Loan Estimate | Reduce cash dollar for dollar |
The payoff is the one people get wrong. Your statement balance leaves out interest that builds up between the last payment and closing. The payoff statement includes it, so the real number runs a little higher.
Step 1: Estimate the Maximum New Loan
Multiply your value by the LTV cap. At 80%, a home worth 100 units supports a loan of up to 80 units. At 75%, which is the conventional cap on two- to four-unit primary residences and on second homes, that same home supports 75.
Occupancy decides leverage. A second home or rental in the same house type gets a lower ceiling than a primary residence. Condos and manufactured homes can add their own limits. The Fannie Mae Eligibility Matrix publishes the caps by occupancy and property type, and it flags reserve requirements when the debt-to-income ratio on a cash-out file climbs above 45%. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Across the wholesale programs Lendmire places consumer files with, one lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. Most cash-out files sit at the 80% standard, though. Details on these cash-out refinance programs depend on the lender and your file.
One state note: in Texas, a cash-out on a homestead is capped by the state constitution, and the wholesale lane above is not written there.
Step 2: Subtract Your Payoff and Any Other Liens
A lien is a legal claim against the home. Your first mortgage is one. A HELOC or second mortgage is another. Whatever you pay off comes out of the maximum loan. Whatever stays in place still counts against the cap.
Say your payoff is 55% of value and you want a conventional 80% cash-out. That leaves 25% of value before costs. Now say you also have a second mortgage you plan to keep. On a combined basis, that second lien uses up room under the cap, so the new first loan must be smaller. Your cash shrinks accordingly. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Two eligibility gates sit in front of the math. Conventional cash-out generally needs a borrower on title for at least six months. If a first mortgage is being paid off, it must be at least 12 months old, counted note date to note date. Owning free and clear does not make it a simple rate-and-term deal.
Step 3: Subtract Closing Costs
Closing costs reduce cash dollar for dollar. They break into three buckets:
- Lender and origination charges. The fees for making the loan.
- Third-party charges. Appraisal, title work, recording and similar services.
- Prepaids and escrow deposits. Insurance premiums and starting tax reserves. These are your own money moving into an account, not a fee, but they still draw down your check.
To estimate, start with the Loan Estimate your broker or lender provides. It lists each bucket. Add them up, then factor in any pricing choices you make that change the cash due at closing. Those choices change your net-cash line directly, so review them against the Loan Estimate before you decide.
Then add program fees. A VA cash-out carries a funding fee. The VA lists it at 2.15% for first use and 3.3% after first use. It does not shrink with a larger down payment. FHA charges an upfront mortgage insurance premium. When either is financed into the loan, it reduces your cash and counts toward the LTV ceiling. Lendmire’s piece How Much a VA Cash-Out Nets After the Funding Fee and Closing Costs walks through that case.
FHA also has its own cash-out cap. It cut the maximum LTV and CLTV from 85% to 80% of adjusted value, per HUD Mortgagee Letter 2019-11. If you have seen 85% quoted somewhere, that number is out of date.
Three Ways to Handle Closing Costs
You can pay closing costs out of pocket, take them out of your proceeds, or roll them into the loan. The last two look almost identical on a cash-out, because the proceeds come from the same new loan.
| Method | Loan amount | Cash you receive | LTV headroom |
|---|---|---|---|
| Pay out of pocket | Smaller | Larger | More left |
| Deducted from proceeds | Set by cap | Reduced by costs | Cap fully used |
| Rolled into the loan | Set by cap | Reduced by costs | Cap fully used |
The practical difference is where your money comes from. Paying from savings keeps the loan smaller and your cash intact. Rolling costs in means you borrow them and pay interest on them for the life of the loan.
Plain language note: if you ever hear a “no-cost” refinance offered, the costs have not vanished. They are built into the interest rate or the balance instead.
The Full Worked Example
Here is the waterfall with modeled inputs. These are placeholders for the math, not a quote and not an offer.
- Home value: 100 units.
- Allowed LTV: 80%, so the maximum loan is 80 units.
- Existing first-mortgage payoff: 55 units.
- Closing costs, prepaids and financed fees: C units (your Loan Estimate supplies this).
- Net cash = 80 − 55 − C = 25 − C.
If C comes to 3 units, you net 22. That is the check, not 25.
Now run the low-appraisal case. The home appraises at 95 units instead of 100. At 80% LTV the maximum loan drops to 76 units. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
- Net cash = 76 − 55 − C = 21 − C.
The appraisal shortfall of 5 units of value cost you 4 units of cash. Every point of lost value cuts your ceiling at the LTV rate. Your costs did not drop with it. On a thin-equity file, a low appraisal can wipe out most of the cash.
Working Backward: How Much Should You Request?
Sometimes you know the cash you need. The reverse formula is: loan needed equals payoff plus target cash plus closing costs and fees.
Say you need 20 units of cash and your payoff is 55. If costs run 3 units, the loan must be about 78. Compare that to your ceiling. At 80% of a 100-unit value, you have room. At 75%, you do not, and the target is out of reach as structured.
One wrinkle: some costs, like points and certain fees, are a percentage of the loan itself. That makes the answer slightly circular. Your broker’s Loan Estimate settles it, so treat your hand math as a first pass.
Why Does Your Final Number Differ?
Expect the estimate to move. These are the usual reasons:
- Appraisal. Value above or below your guess changes the ceiling.
- Payoff statement. Accrued interest raises the payoff.
- Fee changes. Some charges can shift between the Loan Estimate and closing.
- Program caps. Occupancy, property type and loan size all change the LTV.
- Credit and ratios. A score or ratio that misses the program’s thresholds can lower the leverage or stop the file. Conventional wholesale programs generally start at a 620 decision score. Subject to lender guidelines.
- Reserves. Higher debt-to-income files may need cash in the bank.
If you refinance a primary residence, a federal right-of-rescission waiting period applies. Funds are released after that window ends, so the cash does not arrive at the closing table.
What Does the Cash Cost You?
A bigger balance means a bigger payment obligation. Every dollar of financed cost also accrues interest, so rolled-in costs add to what you pay over time.
Three more points belong in your decision:
1. The new rate applies to the whole balance. That includes your old balance, not only the cash you pull out. If your existing loan has favorable terms, you give those up.
2. Your remaining equity falls. At 80% LTV, you keep 20% of value as equity. A low-appraisal surprise is harder to absorb. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
3. Mortgage insurance. It is required above 80% LTV on conventional loans. It can be requested off at 80% of the original value and ends automatically at 78%. The standard cash-out cap sits at 80%, so most conventional cash-outs avoid it.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Where the General Rule Breaks
A few cases move the math:
- Limited cash-out. A rate-and-term refinance pays off the first mortgage and costs and returns only incidental cash. Leverage can reach 95% LTV on a one-unit primary residence under the verified parameters. It is not a cash-out.
- FHA Streamline. This is not a cash-out product. The existing loan must be FHA-insured and current, and the refinance must show a net tangible benefit. HUD does not allow closing costs to be rolled into the new loan. A “no-cost” streamline usually carries a higher interest rate instead.
- Second homes and rentals. Occupancy decides the cap. On conventional cash-out, second homes and investment property sit at 75% LTV, below the 80% for a primary residence.
- Short seasoning. If your first mortgage is under 12 months old or you are newer than six months on title, you generally wait. Exceptions exist for delayed financing, inheritance and legal awards.
How Do You Verify the Number on Your Paperwork?
Your Loan Estimate lists the loan amount, total closing costs and payoffs. Estimated Cash to Close is the sum of those three amounts. A check box shows whether the money is due from you or paid to you. On a cash-out, it should show cash to you.
The CFPB‘s Closing Disclosure guide adds one trap. Cash to Close is not the same number as total closing costs. Compare the final Closing Disclosure to your latest Loan Estimate line by line. Ask about anything that moved.
Common Mistakes
- Treating the maximum loan as your cash.
- Using the statement balance instead of the payoff.
- Forgetting a second lien that stays in place.
- Ignoring prepaids and escrow deposits.
- Assuming a low appraisal costs only a little.
- Forgetting that financed fees reduce cash and count against the cap.
- Comparing offers without looking at both loan costs and lender credits on each Loan Estimate.
Frequently Asked Questions
Do closing costs come out of my cash-out proceeds?
Yes, unless you pay them from your own money. When they are taken from proceeds or rolled into the loan, your cash drops by the full amount of the costs. They also count against the LTV ceiling.
Does a second mortgage or HELOC reduce my cash?
It does. If you pay it off at closing, the payoff comes out of your proceeds. If you keep it, it counts toward combined LTV and shrinks the first loan you can take.
Is 80% LTV what I will actually receive?
No. Eighty percent is the cap on most conventional cash-outs of a one-unit primary residence. Credit, income, the appraisal and costs can all land you under it. All figures are subject to lender guidelines and file review.
Can I get cash if I own my home outright?
Yes, but it counts as a cash-out refinance. You still face the cash-out cap and the six-month title requirement.
Why does my Cash to Close differ from my closing costs?
Cash to Close nets the loan against payoffs and costs. Closing costs are only one input. On a cash-out, the loan usually exceeds the payoffs by enough to leave cash for you.
Next Steps
Pull your payoff statement, get a realistic value estimate and request a Loan Estimate. Run the waterfall once with your own figures. 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.
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 with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Eligibility Matrix
2. VA Funding Fee and Closing Costs
3. HUD Mortgagee Letter 2019-11
5. CFPB
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How a Cash-Out Refinance Works From Application to Closing · How a Cash-Out Refinance Turns Equity Into Cash at Closing · Cash-Out Refinance for Homeowners Waiting on Funds After Closing
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.