The Quick Read: The most cash you can pull from a home on a conventional loan is capped by how much of its value the new loan may cover. On a one-unit primary residence under the standard agency programs, that cap is 80% of the appraised value. One narrower wholesale lane reaches higher, as explained below. The cash you receive is whatever is left after the new loan pays off your old mortgage, any second liens, and the closing costs you choose to finance. Program figures are subject to lender guidelines and full file review.
What a Conventional Cash-Out Refinance Is
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference as cash. Per the Fannie Mae Selling Guide, it pays off the existing first mortgage with a new first mortgage on the same property. The guide also allows you to take equity out for any purpose.
“Conventional” means the loan is not backed by FHA or VA. Conforming simply means the loan fits the size limits and guidelines set by Fannie Mae and Freddie Mac.
The common alternative is a limited cash-out refinance, often called rate-and-term. It replaces your loan, covers closing costs, and gives back only small, incidental cash. It allows higher leverage, up to 95% on a one-unit primary home. The trade is simple: more cash means a lower ceiling.
How the Maximum Is Calculated
Start with the appraised value. Multiply by the LTV cap. LTV is loan-to-value, the new loan balance divided by the home’s value. Then subtract what the new loan has to pay off.
Across the wholesale programs Lendmire places files with, the conventional cash-out caps are:
| Property and occupancy | Cash-out LTV cap |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Fannie Mae’s Eligibility Matrix is the document behind these limits, and lenders can add stricter rules of their own. If you own a second home or a rental, occupancy decides your leverage. Two cases sit outside this table: manufactured homes, which carry a lower cap, and the 89.99% wholesale lane. Both are covered below.
One detail trips people up. The cap covers CLTV, combined loan-to-value. If a second lien stays in place, it counts against the same ceiling.
The Waterfall From Ceiling to Cash
Think of the maximum as a waterfall. Each step takes a bite out of what you walk away with.
1. The ceiling. Appraised value times the LTV cap.
2. Payoff of your first mortgage. The full balance comes out first.
3. Payoff of other liens. A home equity loan or HELOC, if you choose to retire it or must.
4. Financed costs. Closing costs, points, and prepaid items rolled into the loan.
5. Net cash. What is left.
Here is a worked picture in percentages. Say your home is worth 100 units and you owe 50% of its value on a first mortgage. At the 80% cap, the new loan can reach 80. After the payoff, you have a gross of 30% of the value. Roll in closing costs, and the net shrinks again. The same logic works with any home, which is the point.
Now the constrained case. Say the same home carries a first mortgage at 50% of value plus a second lien at 15%. Retire both and the gross is 15%, because 65% of value is paid off against the 80% cap. Leave the second lien in place and the combined balance must still fit under 80%, so the new first mortgage has less room. Either way, every lien you carry cuts into the cash.
Two Limits, and Which One Binds First
Two caps work at once. The LTV cap limits the loan as a share of value. The county conforming loan limit caps it in dollars. The maximum is the lower of the two.
The Federal Housing Finance Agency sets those limits each year, with a higher ceiling in high-cost counties. You can read the current values in the FHFA conforming loan limit announcement. Check your own county, because the figure varies.
In practice, the LTV cap binds first on most homes. The dollar limit binds on high-value homes with lots of equity. If your 80% number lands above your county’s limit, you are in jumbo territory. Jumbo loans run on a different set of rules and credit floors, and the conventional cap no longer decides the answer.
How the Loan Is Underwritten
Underwriting is the lender’s review of your income, assets, credit, and the property. A cash-out refinance is reviewed much like a purchase. Here is the sequence.
Application and disclosures. You apply and receive a Loan Estimate, a standard form that lays out the loan terms and costs. Compare it line by line across lenders.
Appraisal. A new appraisal sets the value. It is the denominator in LTV, so it largely decides your maximum. A value that comes in 5% lower shrinks the ceiling by the same share.
Credit and ratios. The wholesale conventional programs start at a 620 decision score. Many files are decided by the automated underwriting finding, with a total debt-to-income ceiling of 50%. Debt-to-income, or DTI, is your monthly debts divided by your monthly gross income. Manually underwritten loans run tighter, at 36% or 45%, with the reserve and score factors of the Eligibility Matrix. The matrix also applies minimum reserves to cash-out casefiles with DTI above 45%. Reserves are cash you hold after closing.
Pricing. Fannie Mae applies loan-level price adjustments to cash-out loans, based on LTV and credit score. Those adjustments are not a line item you pay at the table. They are built into the pricing you are offered. In plain terms, borrowing the maximum at a lower score usually costs more than borrowing less.
Closing and payoff. The new loan pays off your old one and any liens you are retiring. You receive what remains as cash.
Seasoning: The Two Clocks
Seasoning is the waiting period a lender requires before you can refinance. Two clocks run on a cash-out refinance.
- The loan clock. The first mortgage being paid off must be at least 12 months old, measured from the old note date to the new note date. The Fannie Mae Selling Guide states this rule directly.
- The title clock. At least one borrower must have been on title for six months. Agency guidance, including the archived Selling Guide section, describes this test. That version is older, so confirm current wording with your lender.
Exceptions exist for delayed financing, inheritance, and legal awards. Delayed financing is covered below.
Where the General Rule Breaks
The 80% rule is a starting point. These situations change it.
Recent all-cash buyers. Delayed financing lets someone who bought with cash take a refinance soon after, without waiting out the usual seasoning. The purchase must be an arm’s-length deal documented by a settlement statement showing no mortgage. Any borrowed purchase funds must be repaid first.
Free-and-clear homes. No mortgage means nothing to pay off, but a new loan on a debt-free home is still treated as cash-out. Many owners assume it is simpler. It is not.
Homes held in an LLC or LP. If you bought the home through an LLC or LP and want to refinance it personally, Freddie Mac lets that time count toward the six-month title clock when you were the majority owner or in control. Title must move into your own name on or before the note date. Lenders may handle this differently, so ask early.
Delinquent property taxes. The Fannie Mae guide allows financing real estate taxes more than 60 days delinquent, with an escrow account set up unless law prohibits it.
Student loan payoff. Fannie Mae waives the cash-out price adjustment for loans that meet its student loan cash-out requirements. That makes it a narrow but real exception.
Manufactured homes. The matrix sets a much lower cap, 65%, for a manufactured home as a primary residence.
Texas homesteads. Texas has its own constitutional limits on homestead cash-out. A Texas homeowner should read Lendmire’s piece Can a Texas Homestead Move From FHA to Conventional Cash-Out Refinance?.
The 89.99% Exception
One wholesale lane reaches 89.99% LTV. On the standard agency programs, mortgage insurance is the usual requirement above 80%. This lane is a separate program structure, written without mortgage insurance, so the standard rule does not apply to it. That is why it can sit above 80% where the general rule would otherwise call for coverage. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
The 89.99% lane comes with a narrower box. 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 not written in Texas. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
This is the real answer for an owner seeking the true maximum. A file either fits the box or it does not.
For the standard programs, a related breakdown lives in Lendmire’s article What Is The Maximum LTV For A Conventional Cash Out Refinance?.
Mortgage Insurance and the Cash-Out Decision
On standard agency-backed loans, mortgage insurance is required above 80% LTV. It protects the lender, not you. You may request cancellation at 80% of the original value with a good payment history, no subordinate liens, and no decline in value. The servicer must end it automatically at 78%, under the Homeowners Protection Act. Published typical annual premiums run from 0.58% to 1.86% of the balance. That is a range, not a quote. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
At the standard 80% cash-out cap, mortgage insurance does not apply. That is one reason the cap sits where it does. The 89.99% lane above is the one program built to go past 80% without it. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Moving Off an FHA or VA Loan
Many owners with a government-backed loan consider switching to conventional to pull cash. Two things matter. First, FHA and VA streamline refinances skip the appraisal and have limited credit review. A cash-out on conventional gives those up. Second, mortgage insurance on an FHA loan can last a long time, while a conventional loan at or below 80% LTV carries none. Weigh the lost streamline against the end of insurance and the cash you want. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Should You Take the Maximum?
Being able to borrow the maximum does not mean you should. A larger balance usually raises your monthly payment for as long as you own the home. Replacing your first mortgage also resets your loan terms.
Consider the risk too. The Consumer Financial Protection Bureau notes that turning other debts into mortgage debt can put the home at risk of foreclosure if payments become unsustainable. That is the honest cost of cheaper-looking debt.
A short decision checklist:
- Do you have a specific use for the cash, such as repairs or paying off higher-cost debt?
- Can your budget carry the new, larger payment with room to spare?
- Will you keep the home long enough for the costs to pay off?
- Would a smaller cash-out give you what you need with less risk?
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
When the Appraisal Comes in Low
A low appraisal shrinks the ceiling. You have three practical options. Ask the lender about a reconsideration of value, which means giving the appraiser better comparable sales. Take a smaller cash amount. Or wait and refinance later when value or your balance improves. A smaller loan often still works, because the cap is a ceiling, not a target.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
CLTV (combined loan-to-value): All loans against the home, including second liens, divided by its value.
Seasoning: The minimum time you must hold a loan or title before refinancing.
Loan-level price adjustment: A pricing change tied to features like credit score and LTV, built into your offer rather than billed as a fee.
Reserves: Cash or liquid assets you still hold after closing.
Frequently Asked Questions
Can I borrow 80% of my home’s value in cash?
No. The 80% cap covers the whole new loan, including the payoff of your current mortgage. Cash is what remains after that payoff, any other liens, and financed closing costs.
Does a second home or rental get the same cap?
No. Second homes and investment properties carry a 75% cap, as do two- to four-unit primary residences. Occupancy and unit count set the leverage.
How long must I own the home first?
At least one borrower must be on title for six months, and the mortgage being paid off must be at least 12 months old. Delayed financing, inheritance, and legal-award exceptions exist, subject to lender guidelines.
Can I finance my closing costs?
Yes, in many cases. The Fannie Mae guide allows proceeds to cover closing costs, points, and prepaid items. Doing so reduces your net cash, and the Loan Estimate is the comparison tool.
What do most people use the cash for?
The CFPB found more than half of cash-out borrowers from 2014 to 2019 said they were paying off other debts. Home repairs or new construction was the second most common stated use.
Next Steps
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. You can start with Lendmire’s cash-out refinance programs. Every figure above is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
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.
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 Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. FHFA conforming loan limit announcement
4. Fannie Mae Selling Guide B2-1.3-03, archived version on ownership and delayed financing
5. Consumer Financial Protection Bureau
6. 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: Can You Do a Conventional Cash-Out Refinance Without a Mortgage? · Conventional Cash-Out Refinance for Owners Sizing Their Equity Share · Conventional Cash-Out Refinance for Owners Who Bought Recently
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
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.