The Quick Read: The amount a lender allows is a cap on the total new loan, set as a percentage of your home’s appraised value. Your cash is whatever room is left under that cap after the old mortgage, any other liens and financed closing costs are paid. For a one-unit primary residence on a conventional loan, the cap is typically 80%, and it drops for multi-unit homes and second homes.
What Is the Cap, and Is It the Same as Your Cash?
The cap limits the new loan, not your cash. Many homeowners hear “80%” and assume they can pull out 80% of their home’s value. They can’t. Eighty percent is the ceiling on the entire new mortgage, and it has to cover everything you owe first.
The formula is short:
- Maximum new loan = program cap × appraised value.
- Cash to you = maximum new loan − existing first mortgage payoff − other liens paid off − closing costs you choose to finance.
A cash-out refinance replaces your current mortgage with a bigger one. The new loan pays off the old one, and you keep the difference. That is why the old balance matters as much as the cap. Two neighbors with identical homes can walk away with very different amounts if one owes much less.
Lendmire arranges cash-out refinance programs as a mortgage broker through wholesale lenders. Across those programs, the cap, the property type and the lender’s file review decide the number. Everything here is subject to lender guidelines and is not a commitment to lend.
How Is the Maximum Loan Underwritten, Step by Step?
A lender works through six checks, and any one can shrink the number. Here is the order a file usually follows.
1. Classification. The lender first decides whether the loan is a limited cash-out (rate-and-term) refinance or a true cash-out. Taking cash beyond a small incidental amount, or paying off a second lien that was not used to buy the home, puts it in the cash-out category. That category has lower leverage caps and its own seasoning rules.
2. Eligibility screen. The lender checks occupancy, how long you have been on title, and how old the mortgage being paid off is.
3. Appraisal. A new valuation sets the ceiling. The cap multiplies by appraised value, not by what you paid or what a website estimates.
4. Combined liens. Every lien that stays in place counts toward the cap. Leave a second mortgage or home equity line outstanding, and it eats into the same limit.
5. Credit, income and ratios. The lender verifies your credit, income and debt load the usual way. The cap is a ceiling. Your finances decide whether you reach it.
6. Costs and disclosures. Closing costs can be paid out of pocket or financed. Financing them raises the loan and lowers your cash dollar for dollar.
What Are the Limits by Program and Property Type?
On a conventional loan, a one-unit primary residence reaches 80%, and nearly everything else sits at 75%. Owner-occupied single-family homes get the most room. Other property types get less, because lenders see more risk.
The Fannie Mae Eligibility Matrix sets 80% for a one-unit principal residence and 75% for a two- to four-unit principal residence. A second home is also capped at 75%. Freddie Mac’s Guide section 4203.1 sets the same 80% and 75% levels for those categories.
| Property and occupancy | Conventional cash-out cap |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Occupancy decides leverage. If the home is a second home or a rental, it gets the lower cap.
Compare that with the limited cash-out refinance. A rate-and-term loan on a one-unit primary residence can reach 95% LTV, and up to 97% under certain first-time-buyer programs. The tradeoff is that you take only incidental cash. Once you want real cash, the cap falls to the figures above. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
There is one wholesale lane worth knowing about. Among the programs Lendmire places files with, a 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, a conforming balance and its own six months of seasoning. It is the exception, not the standard. In Texas, a cash-out on the homestead is capped by the state constitution below the level this lane reaches, so that wholesale lane is not written there. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Government programs work differently. FHA lowered its cash-out cap years ago, per HUD Mortgagee Letter 2019-11, to reduce risk to the FHA insurance fund. Older articles that show a higher FHA number are out of date. The FHA Streamline and the VA IRRRL are not cash-out products. They exist to refinance an existing government loan with limited cash back. For a true VA cash-out, VA’s own page lists the test: a Certificate of Eligibility, meeting credit and income standards, and living in the home. VA does not set one universal percentage on that page, and individual lenders often set their own limits.
Worked Example: Where the Cash Goes
The arithmetic is simple once you express everything as a percentage of the home’s value. No dollar amounts are needed. Assume a one-unit primary residence with the standard 80% cap.
- Appraised value: 100%.
- Maximum new loan: 80% of value.
- Existing first mortgage payoff: 55% of value.
- Home equity loan paid off: 5% of value.
- Closing costs financed into the loan: 2% of value.
Cash to you: 80% − 55% − 5% − 2% = 18% of the appraised value.
Notice what happened. The cap says 80%, yet the borrower receives 18%. Skip the financed costs and pay them out of pocket, and the cash rises to 20% of value, though less cash stays in your pocket at closing.
Now the low-appraisal version. Suppose you estimated your home at 100% and owe 70% on the first mortgage with no other liens. At your estimate, the cap is 80%, so your cash before costs is 80% − 70% = 10% of that estimate. The appraiser comes in 5% below your number, so the value is 95% of the estimate. The cap becomes 80% of 95%, or 76% of the estimate. Cash before costs falls to 76% − 70% = 6% of the estimate. A 5% drop in value cut your cash by 40%. That is why the appraisal matters more than any other single input.
Why Your Number May Be Lower Than the Headline Cap
The program cap is a ceiling, and several things push your number below it. Based on how files come through the wholesale programs Lendmire places with, these are the usual culprits:
- A low appraisal. The cap multiplies by the lender’s value, not yours.
- Other liens that stay. Combined loan-to-value counts every lien against the cap.
- Financed costs. Appraisal, title and origination charges reduce net cash when rolled into the loan.
- Credit and ratios. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a 50% total ratio ceiling. Higher-ratio files may face added reserve requirements.
- Seasoning. Under Fannie Mae’s cash-out rules, the first mortgage being paid off must be at least 12 months old, measured note date to note date, and at least one borrower must have been on title for six months. Exceptions exist for inheritance, legal award and delayed financing.
- Loan size. Above the conforming limit, jumbo lanes take over with their own score and leverage rules. The county limit varies by location, so confirm yours with a loan officer.
- Pricing add-ons. Conventional cash-out loans carry loan-level price adjustments based on leverage and credit score. They raise the cost, not the cap.
Which Homeowners Get How Much? Scenario Comparison
Equity and payoff drive the spread more than credit does. The table uses percentages of appraised value and the 80% one-unit primary-residence cap.
| Homeowner profile | Owes (first + other) | Room under 80% cap |
|---|---|---|
| High equity, one lien | 40% | 40% |
| Moderate equity, one lien | 60% | 20% |
| Moderate equity, second lien | 55% + 10% | 15% |
| Thin equity | 78% | 2% |
| Underwater or near it | 80% or more | None |
Costs come out of the room before you see a dollar. The thin-equity borrower in row four may find that financed closing costs wipe out most of the remaining 2%. At that point the refinance may not make sense, and a different structure may be worth considering.
Say the same moderate-equity borrower owns a two-unit primary residence instead. The cap drops to 75%, so the room falls from 20% to 15% of value, same home and same balance. Property type alone changed the answer.
Where the General Rule Breaks
The 80% rule has named exceptions, and some of them trip people up.
- Non-occupant co-borrowers. Freddie Mac made non-occupying borrowers ineligible on primary-residence cash-out refinances. Every borrower on the loan must live in the home.
- Recently bought homes. The six-month title rule has exceptions, including inheritance, legal award and delayed financing. A recent purchase is not automatically blocked, but it needs the right documentation.
- Co-owner buyouts. Fannie Mae exempts a buyout from the 12-month loan-age rule. Freddie Mac handles it under a special-purpose cash-out, which counts as cash-out for leverage even though the borrower receives no cash.
- Free-and-clear homes. A home with no mortgage generally still counts as cash-out when you borrow against it.
- Renovation loans. Some renovation refinances are treated as no cash-out when the proceeds fund only eligible improvements.
- Energy-retrofit (PACE) liens. Freddie Mac requires a PACE obligation to be paid in full if cash-out proceeds are used for it, and it will buy a loan with a PACE lien only if that lien is truly subordinate.
- FHA and VA streamlines. These allow only a token amount of cash back. They are not a path to meaningful cash.
How Much Should You Actually Borrow?
Qualifying for the maximum does not mean borrowing it. A cash-out refinance resets the entire balance, not just the new cash. The old mortgage’s rate, term and mortgage-insurance status are replaced with the new loan’s. Borrowers who held a lower-rate loan can end up with a higher one on the whole balance. That tradeoff is the real cost of taking cash.
A few sizing questions help:
- What is the cash for? Debt consolidation, a renovation and an emergency reserve each justify different amounts.
- Does the payment still fit? The cap says what a lender will allow. Your budget says what you can carry.
- Are you moving unsecured debt onto your house? Credit card debt becomes mortgage debt. If payments become unsustainable, the home is at risk.
- Is a smaller amount enough? Borrowing less may keep you under 80% of value and away from heavier pricing adjustments.
- Would a different tool fit better? If you like your current loan, a second-lien product may leave it untouched. Weigh that against its own costs and terms.
Mortgage insurance is a related point. Conventional cash-out caps at 80%, so borrowers typically carry no mortgage insurance on the new loan. Rate-and-term refinances above 80% do carry it. It can be requested to cancel at 80% of original value and must end automatically at 78%, under the Homeowners Protection Act.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What to Gather Before You Ask for a Real Number
A reliable estimate needs five documents and a few numbers. Pulling these together first makes the conversation useful.
- Your latest mortgage statement, showing the payoff balance and the loan’s origination date.
- Statements for any second mortgage or home equity line.
- Your best estimate of value, understanding that the appraisal decides.
- Income and credit documents for every borrower on the loan.
- A decision on whether you would finance closing costs or pay them in cash.
The lender will issue a Loan Estimate listing costs and estimated cash to close. A short right-to-cancel window applies on a refinance of your primary residence, and funds are not released until it ends.
Key Terms Defined
Loan-to-value (LTV): The new loan balance divided by the appraised value of the home.
Combined loan-to-value (CLTV): The same ratio, but it adds every lien that remains on the property.
Seasoning: The minimum time you must have owned the home, or held the mortgage being paid off, before a cash-out is allowed.
Limited cash-out refinance: A refinance that pays off the existing mortgage and costs, with only incidental cash back.
Appraised value: The lender’s independent valuation, which sets the ceiling the cap applies to.
Financed closing costs: Fees added to the new loan balance instead of paid at closing, which reduces your net cash.
Frequently Asked Questions
Can I borrow 100% of my equity on a cash-out refinance?
No. On a conventional one-unit primary residence, the cap is typically 80% of value for the whole loan, so at least 20% of equity stays in the home. VA is the main exception, and its limits depend on the individual lender. Subject to lender guidelines and full file review.
Do closing costs come out of my cash?
Yes, they can. If you finance them, they raise the loan balance and reduce your cash by the same amount. If you pay them at closing, your cash from the loan stays larger, but you spend money up front. Your Loan Estimate shows which approach applies.
What happens if my appraisal comes in low?
Your cap shrinks and so does your cash, usually by more than the percentage the value fell. Because the old balance is fixed, the whole drop comes out of your room. Some borrowers take less cash, and some decide to wait.
Does the property type change how much I can borrow?
Yes. A one-unit primary residence gets the highest conventional cap, 80%. Two- to four-unit homes, second homes and investment property are typically capped at 75%.
Do I have to wait before doing a cash-out refinance?
Usually yes. The existing first mortgage generally must be at least 12 months old, and at least one borrower must have been on title for six months. Inheritance, legal award and delayed-financing exceptions exist. Rules vary by program and lender.
If You’re Weighing Your Options
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 to talk through your numbers with a licensed loan officer. Consumer lending is available in Alabama, California, Colorado, Florida, Georgia, Indiana, Michigan, Montana, New Mexico, North Carolina, Ohio, Pennsylvania, Tennessee, Texas, Virginia and Washington.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Eligibility Matrix
3. HUD Mortgagee Letter 2019-11
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much Recordation Adds to a Montgomery County Cash-Out Refinance · How Much Cash Justifies a Cash-Out Refinance on a Mortgage Worth Keeping · Can You Get a Cash-Out Refinance on a Paid-Off Condo?
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.