The Quick Read: On a conventional cash-out refinance, the cap for a one-unit home you live in is 80% of its appraised value. That cap covers the whole new loan, not just the cash you take out. For a two- to four-unit primary home, the cap drops to 75%. Your actual number can land lower once the appraisal, credit, ratios and loan size are reviewed, subject to lender guidelines.
LTV stands for loan-to-value. It is the new loan balance divided by the home’s appraised value. The cap is a ceiling on that ratio. It is not a promise that you can borrow up to it.
Key Takeaways
- A one-unit primary home caps at 80%. Two- to four-unit primaries cap at 75%.
- The cap applies to the total new loan. It does not apply to your equity.
- Two clocks apply: six months on title and a first mortgage at least 12 months old.
- Payoffs and financed costs come out of the loan before any cash reaches you.
- The appraisal is the denominator. A low value shrinks the maximum loan.
What Is a Cash-Out Refinance LTV Limit?
A cash-out LTV limit is the largest share of your home’s value that the new mortgage can represent. The new loan pays off your current first mortgage and any liens being cleared. What’s left over goes to you, for any purpose.
The ceiling comes from the Fannie Mae and Freddie Mac rules. Fannie Mae’s Eligibility Matrix sets 80% for a one-unit principal residence and 75% for two to four units. Freddie Mac’s caps generally mirror those, so confirm the exact limit on your file.
Most borrowers have this backwards at first, so here is the plain version. Lenders do not let you borrow 80% of your equity. They let the total loan reach 80% of the home’s value. If you leave 20% of value untouched, that is the equity cushion.
Compare that with a purchase. A buyer of a primary home can go to 95%, and 97% for a first-time buyer on a fixed rate. A rate-and-term refinance on a one-unit primary reaches 95% too. Cash-out is the conservative one, because you are pulling equity out instead of just swapping the loan.
The same loan-to-value cap also applies to combined LTV, which counts second liens. A home equity line balance that stays in place counts toward the same ceiling. The first mortgage alone is not the test.
How Is the Loan Underwritten, Step by Step?
Think of the file as a sequence of gates. Fail one, and the cap never matters.
Step 1: Occupancy and unit count. These set the cap. One unit you live in gets 80%. Two to four units you live in get 75%. Second homes and investment properties also sit at 75% on a cash-out, but this article stays on the home you live in.
Step 2: The two clocks. Fannie Mae’s Selling Guide B2-1.3-03 requires at least one borrower on title for six months. If the new loan pays off your first mortgage, that mortgage must be at least 12 months old, measured note date to note date. The clocks are independent. Both must be met.
Step 3: Occupancy for every borrower. On a Freddie Mac primary-residence cash-out, every borrower must occupy the property. A co-borrower who lives elsewhere can break the file.
Step 4: The appraisal. A new appraisal sets the value. Freddie Mac’s cash-out product page says a new appraisal and inspection report is required. Value is the denominator, so a lower number shrinks your maximum loan dollar for dollar.
Step 5: The maximum loan. Multiply the cap by the appraised value. That gives the ceiling for the whole new loan. Subtract the first-mortgage payoff, any liens being cleared and any financed costs. What remains is your cash.
Step 6: Credit, ratios and reserves. The automated underwriting finding governs most files. Across the wholesale programs I place files with, conventional loans start at a 620 decision score, with a total ratio ceiling of 50% on automated files. Manually underwritten loans run tighter ratios of 36% or 45%. Fannie Mae’s matrix adds six months of reserves on automated cash-out files when the debt-to-income ratio exceeds 45%. Reserves are money left in the bank after closing.
Step 7: Pricing. Cash-out refinances are priced higher than rate-and-term refinances. Loan-level price adjustments depend on credit score and LTV. Your Loan Estimate shows the actual terms.
Step 8: Closing and the cancellation window. Because this is a refinance of your home, you get three business days to cancel after signing. Funds are disbursed after that period ends.
What Does the Math Look Like in Practice?
Percentages tell the story better than dollar figures. Picture a one-unit home with a mortgage balance at 55% of its appraised value. At an 80% cap, you have 25 points of value to work with. That is before any costs.
Now pull the costs out. Financed closing costs, a second lien you want cleared and any other payoffs all come off those 25 points. Cash in hand is usually well below “20% off the top.” That is the number that surprises people.
Run a second picture. Say your balance sits at 70% of value. Only 10 points of room remain. After costs, the cash may be small enough that the refinance stops making sense.
Appraisal risk matters here. If the home appraises lower than you expected, every point of the cap is worth less. A loan that worked at one value can shrink or fail at a lower one. Before you order anything, test your own number: take your best estimate of value, multiply by 0.80, and subtract your payoff. Then knock the estimate down a bit and run it again.
A wholesale lane also exists that reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio and a thirty-year fixed on a primary residence with a conforming balance. It carries its own six-month seasoning. It is not available in Texas on a homestead, and it is a narrower door than the standard cap, subject to lender guidelines and full file review.
Why Does Loan Size Matter as Much as LTV?
Two ceilings bind at once. One is the percentage cap. The other is the conforming loan limit, which the FHFA sets and resets each year. The new loan has to fit under whichever is lower.
On a modest home, the percentage cap bites first. On a high-value home, the dollar limit can bite first. In that case, 80% of value would exceed the limit, and the loan stops at the limit instead. FHFA’s 2026 baseline one-unit figure was reported as $832,750 with a higher ceiling in high-cost areas. Limits vary by county and unit count, so check your county rather than assuming the baseline applies.
Above the conforming limit, jumbo programs take over. They have their own score, leverage and ratio rules, covered separately.
How Do the Caps Compare Across Loan Types?
| Loan type (primary home) | Max LTV | Cash to borrower |
|---|---|---|
| Conventional cash-out, 1 unit | 80% | Yes, any purpose |
| Conventional cash-out, 2-4 units | 75% | Yes, any purpose |
| Rate-and-term, 1 unit | 95% | Incidental only |
| Purchase, 1 unit | 95% (97% first-time) | Not applicable |
Rate-and-term is the “limited cash-out” refinance. The new loan covers the payoff, closing costs and a purchase-money second lien. Only incidental cash comes back. Mortgage insurance applies above 80% LTV on the lower-equity options. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Mortgage insurance deserves a sentence. A one-unit cash-out stops at 80%, so the standard lane does not carry it. On higher-leverage loans, you can request cancellation at 80% of original value, and servicers must end it automatically at 78%, under the Homeowners Protection Act.
Where Does the General Rule Break?
The 80% headline has named exceptions. Here are the ones that actually change files.
Two- to four-unit homes. You live in one unit and rent the others. The cap is 75%.
Manufactured housing. The Fannie Mae matrix caps cash-out at 65% on a one-unit principal residence. Single-width manufactured homes are limited to purchase and limited cash-out only. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Delayed financing. Paid cash for the home recently? You can do a cash-out refinance inside the six-month window. The purchase must be arm’s-length, and the settlement statement must show no purchase financing. It is still priced and capped as cash-out.
Inheritance and legal awards. If you got the home by inheritance, or through a divorce or similar legal award, the six-month title wait does not apply.
Co-owner buyout. Buying out a co-owner under a legal agreement is exempt from the 12-month first-mortgage rule on Fannie Mae loans. Freddie Mac treats it as a special-purpose cash-out.
HELOC as the first lien. Freddie Mac makes an exception to its 12-month rule when the first lien is a home equity line.
Ineligible situations. Fannie Mae will not do a cash-out that is subject to a temporary interest rate buydown. Some PACE loan situations, where you have the equity to pay it off but choose not to, are also ineligible.
Texas. A cash-out on a Texas homestead is capped by the state constitution at the agency figure. The wholesale high-LTV lane is not written there. Texas also has its own product rules that sit outside this national overview.
FHA and VA. These are separate programs with their own rules. Do not carry conventional caps over to them.
Every one of these is subject to lender guidelines. Individual lenders can set stricter overlays than the agencies do.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
CLTV / HCLTV: Combined LTV counts all liens on the home. The “H” version also counts the full limit of any home equity line.
Seasoning: The waiting period before a loan or ownership qualifies for a transaction. Here, six months on title and a 12-month-old first mortgage.
Limited cash-out (rate-and-term): A refinance that pays off the current loan and costs, with only incidental cash back.
Delayed financing: A cash-out refinance allowed soon after an all-cash purchase.
Reserves: Money left in verified accounts after closing, counted in months of payments.
How Should You Decide?
Start with your leftover room. Subtract your payoff from 80% of a realistic appraised value. Then subtract costs. If what remains does not cover the reason you want the cash, stop there.
Next, compare what you give up. The new loan replaces your old one at current terms. It is larger, and it may carry a different rate and term than the loan you have now. If your current loan has terms you like, a second-lien or equity-line route may leave the first mortgage alone. Weigh that against a single new loan.
Then check the clocks. A recent refinance or purchase can reset them. Refinancing too early can restart the 12-month count.
Finally, plan on a wait. The three-day cancellation right means the cash does not show up the day you sign. Cancellation requires written notice, not a phone call.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Two more Lendmire resources cover related ground: how much a conventional cash-out lends on a primary home and the program overview for cash-out refinance programs. 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
Can I borrow 80% of my equity on a cash-out refinance?
No. The 80% applies to the home’s appraised value, and it covers the entire new loan. Your payoff, any liens being cleared and financed costs all count inside that cap. Cash to you is what remains afterward.
Do Fannie Mae and Freddie Mac set different ceilings?
Their conventional cash-out ceilings are generally the same for a primary home. Some details differ. Freddie Mac counts six months on title to the note date, while Fannie Mae counts to the disbursement date. Your lender’s overlays can also be stricter than either.
Can I do a cash-out refinance if I just bought the home?
Sometimes. If you paid cash, delayed financing may let you refinance inside the six-month window. Inheritance and legal awards also skip the title wait. Otherwise, you need six months on title and a first mortgage at least 12 months old.
Does a second lien or HELOC change the limit?
Yes. The cap applies to combined LTV, so any second lien or equity-line balance that stays in place counts toward the same ceiling. A larger second balance leaves less room for the new first mortgage, subject to lender guidelines.
Can I cancel after I sign?
Yes, on a refinance of your primary home you have three business days to cancel. The clock starts after you sign the note, get the Truth in Lending disclosure and receive two copies of the cancellation notice. Cancelling requires written notice.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. 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. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Freddie Mac Seller/Servicer Guide 4301.5
4. Freddie Mac Cash-Out Refinance product page
5. Fannie Mae Eligibility Matrix (media copy)
6. Orrick InfoBytes on FHFA conforming loan limits
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 on a Co-Owned Home? · Conventional Cash-Out Refinance Documents for a Primary Home · Conventional Cash-Out Refinance for Owners With a Primary and Second Home
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.