The Quick Read: A conventional cash-out refinance on a one-unit primary home generally lends up to 80% of the appraised value, and that cap covers the whole new loan, not just the cash you take out. Your existing mortgage gets paid off first, then closing costs come out, and what remains is your cash. Two-unit to four-unit primary homes cap at 75%. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
What Is a Conventional Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a larger one and hands you the difference. The home stays the collateral. You end up with one loan, a new balance, and cash at closing.
The key word in the headline question is “lends.” The cap limits the total new loan as a share of the home’s value. It does not limit how much equity you can pull. Those are different numbers, and it is easy to mix them up.
Say a home is worth 100 units of value. At an 80% cap, the new loan can reach 80 units. If your current mortgage is 50 units, the gap is 30 units before costs. If your current mortgage is 70 units, the gap is 10. Same home, same cap, very different cash.
Lendmire’s cash-out refinance programs are arranged through wholesale lenders on conventional guidelines. Lendmire is a mortgage broker, so the lender reviews the file and makes the decision.
Key Terms Defined
LTV (loan-to-value): The new loan divided by the appraised value of the home.
CLTV / HCLTV: Combined versions of LTV that count other liens on the home too. A HELOC counts at its full credit limit, not just what you’ve drawn.
Seasoning: How long you’ve owned the home or held the current loan before a cash-out is allowed.
LLPA (loan-level price adjustment): A risk-based pricing charge Fannie Mae applies to some cash-out loans, based on credit score and LTV. It is built into pricing, not billed as a separate line you see.
Limited cash-out refinance: A refinance that pays off the existing loan and costs, with only small cash back. It carries much higher leverage than a true cash-out.
Conforming loan limit: The maximum loan size Fannie Mae and Freddie Mac will buy. It varies by county and unit count. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
How Is the Maximum Loan Calculated, Step by Step?
The maximum is the appraised value times the LTV cap, then the payoff and costs come off the top. In practice, five steps decide your cash.
1. Value. The appraisal sets the denominator. A lower appraisal shrinks the maximum loan one-for-one. Everything else flows from this number.
2. Apply the cap. For a one-unit principal residence, the Fannie Mae Eligibility Matrix sets the cash-out maximum at 80%. For a two- to four-unit primary home it is 75%. Across the wholesale programs placed through Lendmire, those are the working numbers for standard conventional cash-out.
3. Pay off what’s there. The new loan first retires your existing first mortgage. Any subordinate lien you want gone, such as a second mortgage, is paid from the same proceeds. Remember that a HELOC left in place counts toward the cap at its full limit, which cuts the cash available.
4. Subtract costs. Closing costs, title, appraisal, prepaid items and any loan-level price adjustment reduce the net. Costs vary by file, so plan for them as a real deduction rather than a rounding error.
5. Check the second ceiling. Loan size has its own limit. FHFA sets the conforming loan limits that decide whether a loan can be sold to Fannie Mae or Freddie Mac. They differ by county. Your maximum is the lower of the LTV result and the county limit. Above the limit, the loan becomes a jumbo loan outside these agency rules.
That last step catches people in high-value homes. The percentage can say yes while the loan-size ceiling says no.
Why Is My Cash Smaller Than My Equity?
Because the cap leaves a cushion, and costs and payoffs come off before you see a dollar. Equity is value minus what you owe. Cash is the capped loan minus the payoff, minus costs.
At the 80% cap on a one-unit home, at least 20% of the appraised value stays as equity. That cushion is built in. Then closing costs reduce the proceeds further.
A common misconception is “I can borrow up to 80% of my equity.” In fact, the new loan can be up to 80% of the home’s value. A homeowner with a large balance and modest equity may have little or no cash room even when the home has appreciated.
The CFPB also notes that a cash-out refinance can lengthen the time to pay off the home and can raise the monthly payment because the loan is larger. The terms of the loan change too, not just the balance.
Where Does the General Rule Break?
The 80% figure holds for the standard case. These named situations move it, or take cash-out off the table.
| Situation | What changes |
|---|---|
| Two- to four-unit primary home | Cap drops to 75% |
| Second home or investment property | Different occupancy, 75% cap on the wholesale programs |
| Limited cash-out (small cash back) | Much higher leverage, but cash back is incidental |
| Single-width manufactured home | Not eligible for cash-out |
| Co-op share loan on a second home | Cash-out not permitted |
| Community Seconds | Cash-out not permitted |
| Texas homestead | Capped by the state constitution at the agency figure |
Occupancy is the dividing line. If the home is not your primary residence, leverage drops, and this article stays focused on the home you live in.
Limited versus true cash-out. The 97% and 95% caps seen on the matrix belong to limited cash-out refinances. That is not a bigger version of cash-out. It is a different transaction, where the new loan pays off the existing mortgage and costs with only incidental cash back. Some of those features also require the agency to already own your loan. Don’t use those numbers to estimate a cash-out.
The paid-off home. Taking a new first mortgage on a home with no lien is still cash-out. The 12-month loan-age test has no loan to measure, but the title test still matters. Confirm the exact treatment with the lender on your file.
Higher-leverage wholesale lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio and a thirty-year fixed on a primary residence with a conforming balance. It has its own six-month seasoning, and it is not written in Texas. It is a narrow lane, not the default, and approval depends on the full file. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What Are the Eligibility Clocks?
Seasoning rules decide when you can do a cash-out at all.
Per Fannie Mae’s Selling Guide B2-1.3-03, the clocks work like this:
- The first mortgage being paid off must be at least 12 months old, measured note date to note date. This test does not apply to subordinate liens being paid off, or to a co-owner buyout under a legal agreement.
- At least one borrower must have been on title for six months before the new loan is disbursed.
- A property that was listed for sale must be off the market on or before disbursement.
Delayed financing is the named exception for recent buyers. If you bought for cash within the last six months, the original purchase was arm’s-length, and the settlement statement shows no mortgage financing, a cash-out may still be available. The transaction is still treated as cash-out for LTV and pricing. Inheritance and legal-award exceptions also exist on the wholesale programs.
The settlement statement from the original purchase is the document that proves it. Files without a clean one get kicked back.
What Credit, Ratio and Reserve Rules Apply?
Across the wholesale conventional programs, the floor is a 620 decision score, and the automated underwriting finding governs most files. The total ratio ceiling is 50% on an automated approval. Manually underwritten loans run tighter ratios, 36% or 45%, with reserve and score factors from the Eligibility Matrix.
On automated cash-out files, if the debt-to-income ratio exceeds 45%, six months of reserves are required under the Selling Guide. Reserves documentation, meaning recent asset statements, needs to be complete before the file goes in.
Waiting periods after credit events are agency rules: four years from a chapter 7 discharge, seven from a foreclosure, four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Mortgage insurance is the other piece. On a standard cash-out at the 80% cap, mortgage insurance does not apply, since it is required only above 80% LTV. Where it does apply, you can request cancellation at 80% of original value with good payment history, and the servicer must end it automatically at 78%. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
How Does Pricing Work Without Quoting a Rate?
Cash-out loans carry risk-based pricing. Fannie Mae applies loan-level price adjustments to certain cash-out refinances, based on credit score and LTV. They stack on top of other adjustments. The practical effect: the higher the LTV and the lower the score, the more the pricing leans against you.
Fannie Mae’s own announcement explains that FHFA directed targeted increases to upfront fees on some cash-out refinances. That is why a cash-out and a rate-and-term refinance at the same score can price differently.
One exception worth knowing: the adjustment is waived when proceeds pay off eligible student loans, subject to the Selling Guide requirements.
So the pricing is not just the interest rate. It includes these adjustments, and your Loan Estimate shows how they land on your file.
What Does a Worked Example Look Like?
Run the numbers on percentages instead of dollars. Picture a one-unit primary home appraised at 100% of its value.
- Cap: 80% of value.
- Existing first mortgage: 55% of value.
- Room under the cap: 25% of value.
- Costs and prepaids: a few percent of value, subtracted from that 25%.
- Net cash: what’s left, somewhat under 25% of value.
Now change one variable. If the appraisal comes in 5% lower, the cap drops with it, and the existing mortgage becomes a larger share of the smaller value. The room under the cap shrinks by slightly less than the 5% itself.
Now add a HELOC that stays in place at a 10% limit. The combined cap still sits at 80%, so the new first mortgage has to fit under the 80% minus that 10% cushion. Cash falls sharply.
Last case: a two-unit primary home. Same math, but at 75%. The cap is five points lower, which can erase the cash entirely if the balance is already high.
Is It Worth It, and What Are the Alternatives?
It depends on what the money does. CFPB research found that paying off other bills or debts was a common reason borrowers gave for cash-out refinancing, followed by home repairs. The CFPB cautions that paying non-mortgage debt with mortgage debt can raise foreclosure risk. Your home is the collateral.
The CFPB’s guidance describes a cash-out refinance as replacing your mortgage with a bigger one and taking the difference in cash, with closing costs often due. It may be more or less expensive than a HELOC depending on terms.
The structural difference matters. A cash-out replaces the first lien. A home equity loan or HELOC leaves the first lien intact. If your existing first mortgage has favorable terms, replacing it just to reach equity means giving those terms up. If you only need a small amount, that tradeoff may not pay.
Cash-out borrowers are a mixed pool. Research shows they tend to have lower scores, lower incomes and smaller loans than non-cash-out borrowers, so it isn’t a product only for the financially stressed.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Mistakes on Cash-Out Files
- Assuming 80% of equity. The cap is 80% of value.
- Forgetting the HELOC. A line left in place counts at its full limit.
- Ignoring seasoning. The 12-month loan age and six-month title clocks apply unless an exception fits.
- Using limited cash-out numbers. The 95% and 97% caps do not apply to a true cash-out.
- Skipping the loan-size ceiling. High-value homes can hit it before the LTV cap.
- Stale documents. Some lenders set age limits on credit, income, asset and appraisal documents. Those are lender overlays, not agency policy, so ask what the lender on your file requires.
Frequently Asked Questions
How much can I borrow in a conventional cash-out refinance on my primary home?
Up to 80% of the appraised value on a one-unit primary residence, and 75% on a two- to four-unit primary home. That figure is the total new loan, so your payoff and costs come out of it. The county conforming loan limit is a second ceiling, and the lower of the two governs.
Does a HELOC change how much cash I can get?
Yes. A HELOC that stays in place counts toward the combined cap at its full credit limit, not just the drawn balance. That reduces the room for the new first mortgage and the cash you can take. Paying the HELOC off with the new loan removes it from the cap.
Can I do a cash-out right after buying my home?
Not usually. One borrower needs six months on title, and an existing first mortgage must be 12 months old. If you bought with cash, delayed financing may allow a cash-out inside six months, provided the settlement statement shows no mortgage financing.
Is a cash-out refinance the same as a limited cash-out?
No. Limited cash-out pays off the current loan and costs with only small cash back, and it carries far higher leverage. A true cash-out is capped lower because you’re taking real equity out. The two are priced and underwritten differently.
Can a manufactured home or co-op qualify?
Single-width manufactured homes are not eligible for cash-out. Cash-out on second-home co-op share loans isn’t permitted either. Eligibility on any property depends on lender guidelines and full file review.
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.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see conventional loan programs.
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References
1. Fannie Mae Eligibility Matrix
2. FHFA 2026 Conforming Loan Limits Release
3. CFPB, Using Your Home Equity Guide
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
5. Fannie Mae’s own announcement
6. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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: Conventional Cash-Out Refinance DTI on a 2-4 Unit Primary Home · Conventional Cash-Out Refinance Requirements for a Vacation Home · Can a Paid-Off Inherited Home Get a Conventional Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.