The Quick Read: On a conventional cash-out refinance, the maximum loan-to-value is a ceiling on the new loan, not a share of your equity you are entitled to take. For a one-unit home you live in, that ceiling is 80% of the appraised value. Credit, debt ratios, seasoning and the appraisal can all pull the real number below it, subject to lender guidelines and full file review.
Key Takeaways
- The cap is 80% LTV on a one-unit principal residence. It is 75% on two- to four-unit principal residences, second homes and investment property.
- LTV is the new loan divided by the appraised value. A lower appraisal shrinks the maximum loan and shrinks your cash even faster.
- A cash-out refinance replaces your first mortgage. It does not add a second loan on top.
- Seasoning applies: the loan being paid off must be 12 months old, and a borrower must have been on title for 6 months, with named exceptions.
- One wholesale lane reaches 89.99% LTV with no mortgage insurance, but only at a 680 score and a 50% ratio on a narrow set of files. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
What Does “Max LTV” Mean on a Cash-Out Refinance?
Max LTV is the highest percentage of your home’s value that the new first mortgage can reach. The loan amount is divided by the appraised value. Whatever is left after the payoff, costs and any other required items is the cash you can take.
Think of it as a fence around the loan. You can borrow up to the fence. Whether you can borrow all the way up depends on other tests.
Three terms get mixed up here:
- LTV counts only the first mortgage against the value.
- CLTV adds other loans secured by the home.
- HCLTV adds the unused part of a home equity line.
On a straight cash-out that pays off everything, the three often land on the same number. When a second lien stays in place, they split apart, and the cap applies to the combined figure.
Who Sets the Cap?
The agencies set the baseline, and the lender can go tighter. Across the wholesale programs Lendmire places consumer files with, the conventional cash-out cap is 80% on a one-unit primary home. Individual lenders can add their own limits on credit score, property type or loan size.
Fannie Mae’s cash-out guide sends readers to its Eligibility Matrix for the actual leverage limits. That matrix is revised from time to time, so check the current version before you plan around any number. Freddie Mac’s Guide Section 4203.1 holds its own tables. They split cash-out limits by property type and by whether the file is underwritten by automated system or by hand.
Lendmire is a mortgage broker. It arranges these loans through wholesale lenders in the 16 states where it is licensed for consumer lending. It does not lend. Every figure here is subject to lender guidelines, and nothing is a commitment to lend.
Your Cap by Occupancy and Property Type
For the home you live in, the cap is 80% on one unit and 75% on two to four units. Second homes and investment property also sit at 75% on a cash-out. The table puts the numbers side by side, with the limited cash-out refinance included for contrast.
| Transaction | Max LTV | What it means |
|---|---|---|
| Cash-out, 1-unit primary home | 80% | The standard cap |
| Cash-out, 2–4 unit primary home | 75% | Extra units lower the cap |
| Cash-out, second home or investment | 75% | Not the focus of this page |
| Cash-out, wholesale no-MI lane | 89.99% | Needs 680 score, 50% ratio, primary home |
| Rate-and-term (limited cash-out), 1-unit | 95% | Only incidental cash back |
The gap between 80% and 95% is the whole point of the “limited cash-out” label. A rate-and-term refinance pays off the first mortgage, closing costs and any purchase-money second lien. You get only incidental cash back. Once you take real cash, the loan is a cash-out and the lower cap applies. Fannie Mae’s limited cash-out guidance also notes that adding new non-purchase-money subordinate financing can change how a refinance is classified.
Manufactured homes sit lower still. Check the current matrix for your property type before assuming the 80% figure.
The Cash-Out Math, Step by Step
The formula is short: appraised value times the cap, minus your payoff, minus costs, equals cash to you. Here are the steps in order.
1. Estimate the appraised value. Use a realistic number, not a hope. The lender orders the appraisal, and that value is what counts. Fannie Mae’s LTV guidance uses the current appraised value on a refinance.
2. Multiply by the cap. On a one-unit primary home, that is 80%. The result is the largest new loan the leverage rule allows.
3. Subtract the payoff. The new loan retires your existing first mortgage. Any other liens being paid off come out here too.
4. Subtract closing costs and any items paid from proceeds. Appraisal, title and lender or third-party charges all count. Costs vary by file, so ask for the Loan Estimate to see yours.
5. What remains is the cash you can take. It is a maximum, not a promise. Credit, ratios and reserves still have to work.
One rounding detail catches people. The ratio is truncated to two decimals and then rounded up to the next whole percent. The Fannie Mae Guide’s own example turns 94.01% into 95%. Financed mortgage insurance is added to the loan amount before the ratio is figured. So a ratio that looks like it sits just under the cap can land just over it.
Same House, Different Appraisal
A lower appraisal cuts your cash faster than it cuts your loan. The reason is simple: the payoff does not move. Here is a modeled example, using index points instead of dollars.
Say your home is worth 100 points in your head. Your payoff is 60 points. At an 80% cap, the maximum loan is 80 points. That leaves 20 points of room before costs.
Now the appraisal comes in 5% lower, at 95 points. The cap is now 76 points. Room is down to 16 points. Value fell by 5%, but your gross room fell by 20%. Closing costs have not shrunk, so the cash you actually receive drops by even more.
That is why a thin equity position is the most fragile. The more of the cap your payoff already uses, the less a value miss can absorb. Some owners find the numbers no longer justify the refinance at all. That is a legitimate result of running the math before you apply.
Why You May Get Less Than the Cap
The cap is one gate among several, and each one can bind on its own. Run through them in this order.
Credit score. The wholesale conventional programs start at a 620 decision score. On an adjustable rate under manual underwriting, the floor is 640. The Eligibility Matrix ties minimum scores to LTV and ratio bands, so a higher-leverage cash-out can ask for more than the floor.
Debt ratio. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45%, with reserve and score factors from the matrix. Under Fannie Mae’s automated system, a ratio above 45% on a cash-out triggers a six-month reserves requirement, per the cash-out guide.
Loan size. The new loan has to fit within the conforming limit for your county, which the FHFA sets and changes. Look yours up on FHFA’s county lookup. A cash-out above the limit moves into jumbo territory, which has its own rules.
Seasoning. Covered below. It can block the file before leverage even matters.
Property and title. A home listed for sale must be off the market by disbursement. Title issues and certain property types can cut the cap or end eligibility.
Pricing. Cash-out generally carries higher pricing adjustments than a no-cash-out refinance, and they scale with score and LTV. A file sitting right at the cap with a modest score is the costliest version of this loan. Sometimes taking a bit less cash makes the whole refinance work better.
So the cap is a ceiling. Another test usually sets the actual number. When a lender approves less than you hoped, ask which gate was binding. The answer tells you what to fix.
Seasoning: Which Value and When
Seasoning is the waiting rule, and it trips up more files than the LTV cap does. On the programs Lendmire works with, the first mortgage being paid off must be at least 12 months old, measured note date to note date. A borrower must also have been on title for 6 months. Delayed financing, inheritance and legal-award situations are the named exceptions.
Delayed financing is the one to know if you bought with cash. It lets a cash buyer recover purchase funds with a refinance, if the original purchase was arm’s-length and the funds are documented. Fannie Mae’s current cash-out guidelines set the specific requirements, and they can change, so confirm them against the current guide.
A related point: the lender uses the current appraised value on a refinance, not what you paid. If you bought low and the home has gained value, that gain counts. If the market has softened, it counts against you.
The wholesale lane that reaches 89.99% has its own six months of seasoning, on top of its other conditions.
Existing Second Liens and Combined LTV
If a second lien stays in place, the cap applies to the combined balance. That can shrink the new first mortgage by a lot. Take a modeled case. A first mortgage uses 50 points of value and a second uses 15. At a combined cap of 80 points, only 15 points remain for new money, before costs.
The usual fix is to pay the second off in the same transaction. Then the new loan replaces both, and the cap is measured against one balance. Whether a paid-off second counts as purchase-money matters for how the refinance is classified, so raise it early with your loan officer.
Where the General Rule Breaks
The 80% figure is the standard, and these cases bend it.
- Two- to four-unit homes. The cap falls to 75% even when you live in one of the units.
- Second homes and investment property. The cap is 75%. This page is about the home you live in, so occupancy is just a contrast here. Say you live in the property, and the one-unit figure applies. Say you do not, and it does not.
- Manufactured homes. Cash-out limits are lower, and some types are not eligible. Check the matrix.
- Co-owner buyouts. Freddie Mac has a special purpose cash-out refinance for buying out a co-owner. The existing first mortgage can be paid off regardless of age, but the cash-out leverage limits still apply.
- Excluded structures. Some structures are ineligible for a cash-out, such as loans with a temporary buydown. Confirm the current list on the Guide page.
- Texas. A cash-out on a homestead is capped by the state constitution at the agency figure. The wholesale no-MI lane is not written there.
- Condos. A condo project review applies to a cash-out, so project issues can stop a file regardless of your equity.
The 89.99% Lane
A wholesale lane reaches 89.99% LTV with no mortgage insurance. It is narrow. It needs a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance, plus its own six months of seasoning. If your file fits, it can reach equity the standard 80% cap cannot. If one condition misses, you are back at the standard cap. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Mortgage insurance is the usual cost of high leverage. It is required above 80% LTV on conventional loans. You can request cancellation 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%. Premiums vary by score and leverage. A lane that skips the insurance deserves a careful look at what it trades for that benefit. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Over the Cap? Your Options
If your target is above the cap, you have five realistic moves.
- Take less cash. Lower the request until the loan sits under the cap and the other tests.
- Pay down the balance first. Each point of principal you retire adds room under the cap.
- Wait. Value can rise, and seasoning clocks keep running.
- Pay off the second lien in the transaction. That removes the combined-LTV squeeze.
- Compare a different structure. A rate-and-term refinance reaches 95% on a one-unit primary but gives only incidental cash back. It solves a different problem.
Pick based on what the cash is for. If the purpose is paying down other debt, think about it hard. Cash-out replaces the entire first mortgage, so the old balance, term and payment structure go away. Using home equity to pay unsecured debt also puts the home behind that debt. The CFPB’s cash-out research found that paying off bills or debts is the reason borrowers most often give, and it cautions that this can raise foreclosure risk. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Right to Cancel After You Sign
A refinance on your primary home carries a right of rescission, which gives you a limited window to cancel after closing. The CFPB’s explanation covers how that window is counted. Funds are normally released after that window passes, and exact timing varies by file and lender. Rescinding does not cancel your obligation on your other loans, including the original mortgage.
Pre-Application Checklist
Gather these before you ask for a number.
- Your best honest estimate of value, and a sense of recent sales nearby.
- Your current payoff balance, plus any second lien or home equity line.
- The note date on your current first mortgage, and your date of title.
- Your credit scores and a list of monthly debts, so you can see where your ratio lands.
- Your reserves, in case the ratio test triggers a reserve requirement.
- The purpose of the cash and the amount you actually need. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Common Mistakes
- Treating the cap as the share of equity you can take. It is a ceiling on the loan.
- Using a list price or online estimate in place of an appraisal.
- Forgetting that the payoff comes out before you see any cash.
- Ignoring the rounding rule when you sit near the cap.
- Assuming the 80% cap applies to every property and occupancy.
- Planning a cash-out right after a purchase or a recent refinance without checking seasoning.
- Treating the cap as the only gate. Credit, ratios and reserves decide the outcome too.
Key Terms Defined
LTV (loan-to-value): The new loan divided by the appraised value, shown as a percentage.
CLTV (combined loan-to-value): All loans secured by the home, added together and divided by the value.
Seasoning: The minimum time you must hold the title or the existing loan before a cash-out is allowed.
Delayed financing: An exception that lets a cash buyer take out a cash-out refinance soon after purchase, with documented funds.
Limited cash-out refinance: A rate-and-term refinance that pays off the first mortgage and costs and allows only incidental cash back.
Rescission: Your right to cancel certain refinances on a primary home within a limited window after closing, with the exact timing depending on the file and the lender.
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. Lendmire’s cash-out refinance programs page lays out the options. For a deeper look at how the cap is set, see Lendmire’s piece What Is The Maximum LTV For A Conventional Cash Out Refinance?.
Frequently Asked Questions
Can I take out all of my equity with a conventional cash-out refinance?
No. On a one-unit primary home, the new loan tops out at 80% of the appraised value, so at least 20% stays as equity. Costs and your payoff come out of that room too, so your cash is smaller than the gap between value and balance. A narrow wholesale lane reaches 89.99% for files that meet its conditions, subject to lender guidelines.
Is 80% LTV guaranteed if I qualify?
No. It is the most the program allows for a one-unit primary home. Your credit score, debt ratio, reserves, loan size and appraisal can each hold the approved amount below it. Individual lenders may also set tighter limits than the agency baseline. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Does a lower appraisal change my cash more than my loan?
Yes. Your payoff stays the same, so a drop in value reduces the room above the payoff by a larger share than the value fell. A 5% lower value can cut your gross room by far more than 5%. Run your own numbers at a lower value before you apply.
Will I pay mortgage insurance on a cash-out at the cap?
Usually not at 80%, because mortgage insurance is required only above 80% LTV on conventional loans. The no-MI wholesale lane reaches higher leverage without it, but with stricter score and ratio conditions. If a loan does carry mortgage insurance, cancellation can be requested at 80% of the original value and ends automatically at 78%.
How soon after buying or refinancing can I do a cash-out?
The loan being paid off must be at least 12 months old, and a borrower must have been on title for 6 months, unless an exception applies. Delayed financing covers cash purchases, and inheritance and legal-award situations have their own treatment. The lender confirms this from your documents.
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. Fannie Mae Eligibility Matrix
2. Freddie Mac Guide Section 4203.1
3. Fannie Mae Selling Guide B2-1.3-02 Limited Cash-Out
4. Fannie Mae Selling Guide B2-1.2-01, Loan-to-Value Ratios
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. Freddie Mac Guide Section 4301.6
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Buy Out a Divorcing Spouse With a Conventional Cash-Out Refinance · Conventional Cash-Out Refinance Requirements for a Clean File · Can You Get a Conventional Cash-Out Refinance on a Vacation Home?
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.