The Quick Read: A conventional cash-out refinance lends up to 80% of your home’s appraised value on a one-unit primary residence, and up to 75% on a two- to four-unit primary residence. That cap applies to the whole new first mortgage, not to the new money. The cash you receive is what remains after the loan pays off your current mortgage, any liens that must be cleared, and financed closing costs. Subject to lender guidelines and full file review.
What “Lending Against Value” Actually Means
The cap is a ceiling on the new loan. It is not a share of your equity.
Say a home appraises at a round number. At an 80% cap, the new first mortgage can reach 80% of that appraised value. You must keep at least 20% equity after closing. The payoff of your current loan comes out of that 80% first. What is left is your cash.
That is why “I can borrow 80% of my home’s value” is a common misreading. You borrow 80% in total, and most of it may simply replace the loan you already owe.
This is a point borrowers often misread at the start. They compare the cap to their equity, when the right comparison is the cap to their current balance. A homeowner with a balance near 70% of value can pull out roughly ten points of value in cash, before costs. A homeowner at 40% can pull out far more.
Lendmire is a mortgage broker licensed for consumer lending in 16 states, and it arranges these loans through wholesale lenders. It does not lend directly. For an overview of the product, see Lendmire’s cash-out refinance programs.
How the Loan Is Sized, Step by Step
The sizing runs in a fixed order. Each step can lower the answer, and the lowest limit wins.
1. Appraisal sets the value. On a refinance, the value is the appraised value. Your own estimate, an online estimate or a tax assessment does not set the number.
2. The cap sets the ceiling. Multiply the appraised value by the cap for your occupancy and unit count. Fannie Mae’s Eligibility Matrix shows 80% for a one-unit principal residence and 75% for two to four units.
3. Subtract what must be paid off. The new loan replaces your existing first mortgage. Other liens that stay in place count too, which the next section covers.
4. Subtract financed costs. If you roll closing costs into the loan, they use up part of the ceiling.
5. What remains is your cash. If that figure is zero or negative, there is no cash-out to be had.
6. Underwriting can still lower it. Credit, debt-to-income ratio, occupancy and property type are reviewed through the agencies’ automated systems. The wholesale conventional programs start at a 620 decision score, with a total ratio ceiling of 50% on most automated findings.
A simple percentage example helps. Take a one-unit home where your current first mortgage is 55% of appraised value. The cap is 80%. The maximum new loan is 80%. Subtract the 55% payoff, and the gap is 25 points of value. If you finance closing costs equal to 2% of value, your cash falls to about 23 points. Those are modeled percentages, not a quote.
Now say the appraisal comes in 5% lower than you expected. The cap now applies to a smaller number, while your payoff stays the same. The cash shrinks by about 4% of the original value, because the 80% cap removes 80% of the appraisal drop and the payoff does not change. Even a small appraisal miss comes straight out of your cash-out, since the payoff does not move.
The Second-Lien Trap
Combined loan-to-value, or CLTV, adds the new first mortgage and the balances of any second liens that remain. Per Fannie Mae’s Selling Guide on combined loan-to-value ratios, that includes the drawn part of a home equity line of credit and the unpaid balance of a closed-end second.
The cash-out cap applies to loan-to-value, combined loan-to-value and home equity combined loan-to-value together. A second lien that stays in place eats into the same cap. Most borrowers pay off the second at closing, which is simple but reduces the cash. Some lenders will resubordinate a second. Whether that works depends on the lender and on your CLTV after the refinance.
Caps by Occupancy and Unit Count
Occupancy changes the answer. These are the conventional cash-out caps for the programs Lendmire places.
| Property | Cash-out cap (LTV) |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| Second home | 75% |
| Investment property | 75% |
A second home or a rental sits lower than a primary residence. If you own a vacation home free and clear and want to tap it, the cap is the 75% line. Lendmire’s piece How Much a Cash-Out Refinance Lends on a Paid-Off Second Home works through that case.
One further wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance, with its own six months of seasoning. It is not written in Texas. A Texas homestead cash-out is capped by the state constitution at the agency figure. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Key Terms Defined
- Appraised value: the value a licensed appraiser assigns to your home, which the lender uses as the denominator for the ratio.
- Loan-to-value (LTV): the new first mortgage divided by appraised value, shown as a percentage.
- Combined loan-to-value (CLTV): the first mortgage plus any second liens, divided by appraised value.
- Seasoning: the minimum time a loan or a borrower’s ownership must have existed before a cash-out is allowed.
- Limited cash-out refinance: a refinance that pays off the first mortgage and costs and returns only small incidental cash, also called rate-and-term.
Cash-Out vs. Limited Cash-Out
A refinance with a little cash back is not automatically a cash-out. The two products have very different ceilings.
| Factor | Cash-out | Limited cash-out |
|---|---|---|
| Cap, one-unit primary | 80% | 95% (97% in some cases) |
| Cash back | Any amount, within the cap | Incidental only |
| Pays off | Existing liens, other uses | First mortgage, costs, purchase-money second |
| Mortgage insurance | Above 80% only | Above 80% |
If your goal is only a lower balance cost or a different term, the limited product may reach further. If you need real cash, the cash-out cap is the ceiling. Fannie Mae’s Selling Guide on limited cash-out refinances lays out what counts as incidental.
Mortgage insurance matters for the comparison. It is required above 80% LTV. The borrower may request cancellation at 80% of the original value under certain conditions, and the servicer must end it automatically at 78%. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Where the General Rule Breaks
The 80% figure is the headline, but several edge cases move it.
Seasoning. Per Fannie Mae’s cash-out refinance rules, two clocks run. The first mortgage being paid off must be at least 12 months old, measured from note date to note date. At least one borrower must also have been on title for six months. A home bought recently may have to wait. Exceptions exist for delayed financing, inheritance and legal awards, and time held in a revocable trust may count toward the title test if you are the primary beneficiary.
Reserves. When automated underwriting finds a debt-to-income ratio above 45%, six months of reserves are required on those files.
Listed homes. A home listed for sale must come off the market on or before disbursement.
Rounding. The ratio is truncated and then rounded up to the next whole percent, as Fannie Mae’s Selling Guide on loan-to-value ratios explains. A loan a hair over the cap can land in the next tier. Trimming financed costs can fix that.
Manufactured homes. These face much tighter limits, and some are not eligible. Ask before assuming the standard cap applies.
Loan size. The conforming loan limit can bind before the LTV cap does. Above it, jumbo programs take over with their own rules. Whichever limit is lowest wins.
Student loans. Fannie Mae waives the cash-out price adjustment when proceeds pay off eligible student loans, subject to conditions.
Pricing. Cash-out transactions and higher LTV tiers carry loan-level price adjustments. Those are built into the pricing, so a higher-leverage cash-out may cost more over the life of the loan than a limited refinance at the same balance.
What the Decision Looks Like in Practice
Start with your payoff, not the cap. Ask what your first mortgage balance is as a share of likely value. Then ask what the cash is for.
If the answer is paying off high-interest unsecured debt, be careful. The Consumer Financial Protection Bureau found that borrowers often use proceeds to pay down credit card and auto debt, and that their credit scores rose after the refinance before drifting down. Its research on paydown behavior adds a caution: moving unsecured debt onto your home puts the home at risk, and it only makes sense if the all-in cost of the new loan is lower than the cost of the debt it replaces.
There is a second trade-off. A cash-out replaces your current first mortgage, which may carry terms you like. Giving those up to reach the cash is a real cost. For some homeowners, keeping the existing loan and borrowing separately is the better call. For others, one new loan is cleaner. The flip point is the size of the gap between your existing terms and the new ones, which a loan estimate will show.
A short checklist before you apply:
- Your latest mortgage statement and any second-lien statements.
- Evidence of how long you have been on title.
- Asset statements if reserves may be required.
- A realistic view of value, knowing the appraisal decides it.
- A clear number for what you need, so you do not borrow to the cap by default.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Veterans comparing options can also read Lendmire’s piece How Much a VA Cash-Out Lends When Value Far Exceeds the Loan.
Frequently Asked Questions
Is the 80% cap a limit on my equity?
No. It limits the total new first mortgage against appraised value. You must keep at least 20% equity on a one-unit primary residence after closing. Your payoff, financed costs and remaining liens all count against that ceiling.
Does the lender use my purchase price or the appraisal?
The appraisal. On a refinance, appraised value is the denominator. Your purchase price, an online estimate or a tax assessment does not set the number, though they can help you judge whether an appraisal is reasonable.
What happens if my appraisal comes in low?
The maximum loan drops with it, and your payoff does not. The drop comes out of your cash. A low appraisal can shrink your cash-out noticeably, and in some cases there is no cash-out left. You may be able to adjust the loan amount or wait.
Do I have to pay off my second mortgage or home equity line?
Not always, but it stays in the combined ratio if it remains. The cash-out cap applies to combined loan-to-value too. Most borrowers pay it off at closing, which lowers cash. Some lenders will resubordinate it, subject to lender guidelines.
Can I roll closing costs into the new loan?
Often, yes, within the cap. Financed costs use up part of the ceiling, so they reduce your cash dollar for dollar. If a loan lands just over the cap, trimming financed costs can bring it back under. Everything is subject to full file review.
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.
For current guidelines, see conventional loan programs.
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References
1. Fannie Mae Eligibility Matrix
2. Selling Guide on combined loan-to-value ratios
3. Fannie Mae Selling Guide B2-1.3-02: Limited Cash-Out Refinance Transactions
4. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
5. Fannie Mae Selling Guide B2-1.2-01: Loan-to-Value Ratios
6. CFPB press release on cash-out refinance borrowers
7. CFPB: Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances
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: Can You Get a Conventional Cash-Out Refinance on a Vacation Home? · How to Buy Out a Divorcing Spouse With a Conventional Cash-Out Refinance · Conventional Cash-Out Refinance Requirements for a Clean File
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.