The Quick Read: The cash you can take out is not your equity. It is whatever is left under the lender’s loan-size ceiling after the old mortgage, other liens and any financed costs are paid. The basic formula is appraised value times the program’s maximum LTV, minus everything the new loan must pay off. Then the lender tests your credit, income and reserves, and the smallest result wins.
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.
LTV means loan-to-value: the loan balance divided by the home’s appraised value.
Key Takeaways
- The appraiser’s number sets the value. Your own estimate and online estimates do not.
- The loan-to-value cap limits the total new loan, not the cash you receive.
- The payoff of your current mortgage comes out first. Cash is what is left.
- Financed closing costs shrink the cash. Paying them out of pocket does not.
- Credit, income, reserves and ownership timing can pull the number below the cap.
The Formula, Step by Step
The formula has three moves. Multiply the appraised value by the program’s cap. That gives the largest new loan the program allows. Subtract the balance of your current mortgage and any other debt the new loan must clear. What remains is your maximum cash, before costs.
Picture a home that appraises at 100 units of value. Say the program caps a one-unit primary residence at 80% LTV. The largest new loan is 80 units. If your current mortgage is 55 units, you have 25 units of room. Financed closing costs of 3 units take it to 22 units of cash. Pay those costs from your own funds instead, and the full 25 units is available. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Those numbers are modeled to show the order of operations. They are not a market average and not a quote.
Here is the full sequence a lender follows on most files:
1. Establish value. A new appraisal is ordered. The cap applies to that figure.
2. Apply the cap. Occupancy and unit count pick the percentage.
3. Count every lien that stays. A second mortgage or HELOC you keep eats into the same ceiling.
4. Subtract the payoff stack. That means the first mortgage, liens being paid off, and financed costs.
5. Check seasoning and ownership. How long you have held the loan and the title matters.
6. Qualify the borrower. Credit score, total debt ratio and reserves can shrink the number.
7. Disclose it. The Loan Estimate shows the cash back, and the Closing Disclosure confirms it.
Most online estimates stop at step four. Real files are often decided at steps five and six.
Which Limit Decides Your Number?
The lowest applicable limit decides. Several checks run on the same file, and each one can set a different ceiling. The lender does not average them. It takes the smallest result.
| Check | What the lender tests | What shrinks the number |
|---|---|---|
| Value cap | Appraised value times program LTV | Low appraisal, tighter occupancy cap |
| Payoff stack | Mortgage, liens, financed costs | Large balance, second liens that stay |
| Timing | Age of loan, time on title | A recent loan or recent purchase |
| Qualification | Credit score, debt ratio, reserves | High existing debt, thin savings |
| Program overlay | Lender’s own tighter limits | Stricter cap than the program’s |
Many homeowners assume the value cap is the only test. It is the first one, not the only one. A file can clear the cap by a wide margin and still be sized down because income cannot carry the larger loan.
Across the wholesale programs Lendmire places files with, the cap and the payoff stack are usually the two limits you can predict at the kitchen table. Seasoning and qualification are the two that surprise people.
What a Cash-Out Refinance Is, in Plain Terms
A cash-out refinance replaces your existing first mortgage with a new, larger one. The difference between the new loan and what you owed comes to you as cash. A home owned free and clear can also be financed this way, and the agencies treat that as cash-out too. Freddie Mac’s Guide section 4301.5 covers that case.
The new terms apply to the whole balance, not just the new cash. That is the part many borrowers miss. If you keep a loan you like and need only a modest amount, compare the options before you replace the entire mortgage. Lendmire arranges cash-out refinance programs through wholesale lenders, and the same sizing logic applies to each.
Key Terms Defined
- Appraised value: The home’s value as set by a licensed appraiser, which the lender uses for every ratio.
- LTV (loan-to-value): The loan balance divided by appraised value.
- CLTV (combined LTV): The total of all loans against the home, divided by appraised value.
- Payoff stack: Everything the new loan must clear, including the old mortgage, liens and financed costs.
- Seasoning: The minimum time you must have held a loan or the title before refinancing.
- Reserves: Savings left after closing that cover housing payments.
- Limited cash-out refinance: A refinance that pays off the existing mortgage and costs, with only incidental cash back. Lenders also call it rate-and-term.
How Much Do the Loan Caps Differ by Program?
The caps differ by occupancy and property type, and a cash-out cap is lower than a purchase or rate-and-term cap. The table below pulls from the programs Lendmire arranges. Every figure is subject to lender guidelines and a full file review, and none is a commitment to lend.
| Scenario | Maximum LTV |
|---|---|
| Conventional cash-out, one-unit primary home | 80% |
| Conventional cash-out, two- to four-unit primary home | 75% |
| Conventional cash-out, second home | 75% |
| Conventional cash-out, investment property | 75% |
| Wholesale no-MI lane, primary home, conforming loan | 89.99% |
| Rate-and-term (limited cash-out), one-unit primary home | 95% |
The conventional figures match Fannie Mae’s eligibility matrix for cash-out on the home you live in. Occupancy decides the leverage, so a second home or rental sits lower than the home you live in.
The 89.99% lane has conditions. It needs a 680 score, a 50% total debt ratio or lower, a thirty-year fixed rate, a primary residence and a conforming loan balance. It carries its own six months of seasoning. It has no mortgage insurance. It is not written in Texas, where the state constitution caps a cash-out on the homestead at the agency figure.
Here is the catch with the higher-leverage lane. A higher cap does not guarantee more cash. The payoff stack and qualification still apply, and the file can come in under the cap.
FHA and VA work differently. Both have their own cash-out rules and their own treatment of fees that are financed into the loan. The VA funding fee, for example, counts toward the loan amount being tested. Some lenders also set limits tighter than the program does. Ask which ceiling applies to your file: the program’s or the lender’s.
Worked Example: When the Value Cap Binds
This is the simplest case. The home appraises at 100 units. The cap is 80% LTV, so the maximum loan is 80 units. The current mortgage is 50 units. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Room under the cap is 30 units. Costs financed at 3 units leave 27 units of cash. The cap is the limit here, so the lender stops looking for other constraints once the file qualifies.
Worked Example: When Income Binds
Same home, 100 units of value, same 80% cap. Say the mortgage balance is only 40 units. The cap leaves room for 40 units of cash.
But this borrower already carries heavy car and card payments. A larger loan pushes the total debt ratio past the 50% ceiling the wholesale programs generally apply under automated review. The loan that fits the ratio is smaller, perhaps 70 units of value. Cash drops to 30 units, not 40.
The cap never moved. Qualification pulled the number down. This is the step most online calculators skip, and it is why a lender’s estimate can come in under a web tool’s.
A higher debt ratio can also trigger a reserve requirement, even when the loan fits under the cap. Reserves are checked on the borrower’s savings, not the equity. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Worked Example: Financed Costs vs. Costs Paid in Cash
Take the first example again: 100 units of value, an 80-unit cap and a 55-unit payoff. Closing costs, points and prepaids can be financed on a conventional cash-out, as Fannie Mae’s Selling Guide describes. Assume the costs are 3 units and you borrow right up to the ceiling.
| Approach | Loan size | Cash to you |
|---|---|---|
| Costs financed (3 units) | 80 | 22 |
| Costs paid out of pocket | 80 | 25, with 3 paid from savings |
At the ceiling, the loan is the same size either way. Financing the costs makes your check smaller. Paying them yourself makes the check larger, but the 3 units come from your savings. Below the ceiling, financing the costs also raises your balance. Neither choice is wrong. Know which one you are making.
What Moves the Number Most?
Appraisal changes move cash far more than they move value, because the payoff does not change. Take the home at 100 units with a 70-unit payoff and an 80% cap. Room under the cap is 10 units.
| Appraised value | Loan ceiling | Cash before costs |
|---|---|---|
| 100 | 80 | 10 |
| 95 | 76 | 6 |
| 90 | 72 | 2 |
A 5% drop in value cut cash by 40%. A 10% drop cut it by 80%. That is the leverage effect. The thinner your margin, the more a low appraisal hurts.
The lender orders a new appraisal on a cash-out. Freddie Mac’s product page says the same about its own loans. Purchase price, tax assessments and online estimates do not replace it.
Other items shift the number too:
- Second liens and HELOCs. Under the agencies’ combined-ratio tests, a lien you keep counts against the cap. Paying it off clears room, but it also uses cash from the same pool.
- Accrued interest and prepaids. These add to the payoff stack and reduce proceeds slightly.
- Past-due property taxes. Taxes that are well past due can be rolled into the new loan, and an escrow account is generally required.
- A listing. A home listed for sale has to come off the market by the time the new loan funds.
Timing Rules That Can Block a Cash-Out
Seasoning is where the “I have plenty of equity” plan often breaks. For a conventional cash-out in the programs Lendmire arranges, the mortgage being paid off must be at least 12 months old, counted from note date to note date. A borrower must also have been on title for at least 6 months.
There are named exceptions. Delayed financing covers a recent cash purchase. Inheritance and legal award can waive the title test. Those exceptions have their own conditions in the agency guides, so confirm them with a loan officer before assuming they apply.
Occupancy matters too. On a cash-out of a primary home, all borrowers must live in the home under Freddie Mac’s requirement. A co-borrower who does not live there can complicate the file.
Reserves are the other quiet limit. Cash-out proceeds do not automatically count as reserves. Some files get sized down because the borrower has too little left in savings after closing. Ask early how your lender treats this.
What If You Only Want to Lower the Loan, Not Take Cash?
Then you may not need a cash-out at all. A rate-and-term refinance, also called limited cash-out, goes to 95% LTV on a one-unit primary home, or 97% where the existing loan is agency-owned and the first-time-buyer program allows. The new loan pays off the existing first mortgage, closing costs and a purchase-money second lien. Only incidental cash comes back. Mortgage insurance applies above 80% LTV. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
For government loans, there are streamline options. The FHA Streamline needs an existing FHA loan, requires a net tangible benefit and carries limited credit review. The VA IRRRL needs an existing VA loan, has a 0.5% funding fee unless you are exempt, and has seasoning of the later of 210 days and 6 payments. Neither is a cash-out. Do not use the names interchangeably.
Above the conforming limit, the jumbo programs take over. They use a 660 decision score, leverage to 90%, loans up to $5,000,000 and a 50% ratio ceiling on the fixed lanes.
Mortgage insurance matters if you cross 80% LTV. You may ask to cancel it 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%. The published typical annual premium runs from 0.58% to 1.86% of the balance. That is a range, not a quote. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
If the Number Comes Back Too Low
Work through the options in order of effort:
1. Ask which limit bound. Value, payoff, qualification or timing. The fix depends on which one it is.
2. Request a smaller amount. Sometimes the file clears at a lower loan.
3. Pay down a lien or card. This can fix a debt ratio problem.
4. Skip financing the costs. That adds back cash, though you pay the costs yourself.
5. Wait on seasoning. If time is the limit, the file may work later.
6. Try a different program. Another lane may reach different leverage.
7. Stop. If the cash costs more than it is worth, leave the current loan alone.
The last option is real. A cash-out resets the whole loan. If the amount you need is small, other tools may fit better.
What Does the Borrower Risk?
Cash taken from the home is debt secured by the home. The CFPB has noted that moving unsecured debt into a mortgage puts the home at risk if payments become unsustainable. Defaulting on a credit card is unlikely to cost you the house. Defaulting on a mortgage can.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Questions worth asking a loan officer before you apply:
- Which cap applies to my occupancy and unit count?
- Does the lender add a tighter limit than the program’s?
- Which liens must be paid off, and which can stay?
- How are closing costs treated in my sizing?
- Do I meet the seasoning and title tests today?
- What reserves will I need after closing?
Pairing the Math with the Right Program
Cap, payoff and qualification interact differently across programs. Lendmire’s piece What Is The Maximum LTV For A Conventional Cash Out Refinance? goes deeper on the conventional side. The estimate you get before an appraisal is only an estimate. The final number depends on the appraisal, the payoff and a full file review, and nothing here is a commitment to lend.
Next Step
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.
Frequently Asked Questions
Is the maximum cash the same as 80% of my home’s value?
No. The 80% is a cap on the total new loan for a one-unit primary home. Your current mortgage, other liens and financed costs come out first. Only what is left under the cap can reach you as cash.
Can a lender give me less than the program maximum?
Yes. The cap is a ceiling, not a promise. Credit, total debt ratio, reserves and seasoning can pull the number lower. Some lenders also apply limits tighter than the program does.
Does a low appraisal change how much cash I get?
Yes, and by more than you might expect. The payoff stays fixed while the cap shrinks with value. A modest drop in appraised value can cut cash by a much larger share.
Do closing costs reduce my cash-out?
When you finance them, yes. The costs join the payoff stack and reduce what is left under the cap. Paying them from your own funds keeps the cash larger but takes money out of pocket.
Is a home I own free and clear still a cash-out?
Yes. A new mortgage on a home with no existing loan is treated as a cash-out. The same loan-size caps and qualification tests apply.
For your own numbers, request a scenario review with Lendmire.
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.
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. Freddie Mac Guide Section 4301.5
2. Fannie Mae Eligibility Matrix
3. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
4. Freddie Mac Cash-Out Refinance Product Page
5. CFPB: Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances
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 Take Cash Back Without a Cash-Out Refinance? · How a Lender Processes a Cash-Out Refinance Application · Can a Lender Allow Higher Loan-to-Value on a Cash-Out Refinance?
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
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.