The Quick Read: The cap is the largest new loan a program allows, stated as a share of your home’s value, and it changes with the loan type. FHA caps a cash-out refinance at 80% of the home’s adjusted value. Conventional loans set a tiered cap by occupancy and unit count. VA allows the most leverage of the three, with the funding fee counted inside the limit. Whatever the cap, your cash is always less than your equity, because payoffs and costs come out first.
Key Takeaways
- LTV (loan-to-value) is the new loan divided by the home’s value. The cap decides how much equity must stay in the house.
- FHA cash-out tops out at 80% LTV, and a second lien that stays in place counts against it.
- Conventional caps drop for two-to-four-unit homes, second homes and rentals.
- VA’s cap is the highest, but the funding fee sits inside it and lenders often set lower limits.
- Seasoning, payment history, credit, income and the appraisal can limit your cash even when the equity math works.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s value, shown as a percentage.
CLTV (combined loan-to-value): The same math, but with every other mortgage on the home added to the new loan first.
Cash-out refinance: A new mortgage that pays off your old one and hands you the extra as cash.
Limited cash-out refinance: A refinance that pays off the old loan and costs and gives you little or no cash back. It carries a higher cap than a full cash-out.
Seasoning: The waiting period a program wants before you can refinance, such as how long you have owned the home or held the current loan.
Adjusted value: FHA’s value measure. For a home you have owned a year or more, it is the appraised value.
Reasonable value: The value VA sets through its own appraisal process.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
How Cash-Out Refinance LTV Limits Work
An LTV cap sets a ceiling on the new loan. It does not promise you any cash. The program takes the home’s value, multiplies by its cap, and that is the most the new loan can be.
Everything the new loan must do comes out of that room. It pays off your current mortgage. It pays off any second mortgage you want gone. It covers closing costs and any financed mortgage insurance or funding fee. What is left is your cash.
The flip side matters just as much. A cap of 80% means at least 20% of the home’s value stays as your equity after closing. A cap near the full value leaves almost no cushion. That is a real risk if prices dip.
Two programs can use the same cap and still treat “value” differently. FHA, conventional and VA each define it in their own way, as the sections below show.
The FHA Cap: 80% of Adjusted Value
FHA cash-out refinances reach 80% LTV on a home you have owned and lived in as your primary residence for 12 months before the case number is assigned. Across the wholesale programs Lendmire places FHA files with, that is the number that frames the whole conversation. You can read how Lendmire structures it on the FHA cash-out refinance program page. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
This cap is lower than many older web pages claim. FHA allowed a higher cap for years, then cut it. HUD’s Mortgagee Letter 2019-11 lowered the maximum LTV and CLTV on cash-out refinances to 80% of adjusted value. It says the cut limits risk to the FHA insurance fund from growing insured balances. If you see a higher number on a blog, it is outdated.
Three details trip people up.
First, the cap applies to combined loans. A second mortgage or HELOC that stays in place uses up room under the same 80%. You cannot get past the cap by keeping a second lien.
Second, FHA is for owner-occupants only. It is a primary-residence program. If the home is a second home or a rental, FHA cash-out is not the tool.
Third, county loan limits apply separately. The LTV cap and the county loan limit are two different ceilings. The smaller of the two controls your loan. Limits are set by county and change every year, so check yours rather than assuming.
Mortgage insurance also takes room. FHA charges an upfront premium of 1.75% of the base loan, usually financed. It also charges an annual premium between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a 30-year loan above 90% LTV, the annual premium lasts the full term. At or below 90%, it ends after eleven years. The financed upfront premium is part of the loan, so it eats into your cash.
For contrast, FHA’s rate-and-term refinance on a primary residence you have occupied for the previous twelve months reaches 97.75%. Rate-and-term means no cash comes out. The jump from 97.75% to 80% shows how much more cautious the program is when you take equity out.
The Conventional Cap: Tiered by Occupancy
Conventional cash-out limits come from Fannie Mae, and they step down as the loan gets riskier. The Fannie Mae Eligibility Matrix lists separate maximums for LTV, CLTV and HCLTV. HCLTV adds the full HELOC credit line, not just the drawn balance. Here is the pattern in plain terms:
- A one-unit primary residence gets the highest conventional cap.
- A two-to-four-unit primary residence gets a lower cap.
- Second homes and one-unit rentals get lower caps than a one-unit primary home.
- Limited cash-out refinances get a much higher cap than full cash-out.
One sentence on rentals, since the pattern implies it: occupancy decides the leverage, so a home you do not live in gets less of it.
The matrix also says condo and project type can lower the allowed LTV, and some construction-to-permanent loans on co-op or attached condo units are not eligible. Check unit type before you plan on a number.
Conventional adds its own gates. Fannie Mae’s Selling Guide topic on cash-out refinances says the existing first mortgage you pay off must have a minimum age, measured note date to note date. At least one borrower must have been on title for a set period before disbursement. A higher debt-to-income ratio on an automated-underwriting file triggers reserve requirements. A home listed for sale must be off the market by the disbursement date. Conventional cash-out also carries loan-level price adjustments, which affect cost but not the cap. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Some lenders set limits tighter than Fannie Mae’s published caps. That is a lender choice, not agency policy. If you want the primary-home details, see Lendmire’s piece Conventional Cash-Out Refinance LTV Limits for a Primary Home.
The VA Cap: The Highest, With Fine Print
VA allows the highest leverage of the three. The VA Lenders Handbook, VA Pamphlet 26-7, Chapter 6, sets the maximum cash-out loan at VA’s reasonable value. It also says the funding fee, in part or whole, cannot push the loan above that value. So the financed fee counts inside the cap, not on top of it. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Here is the catch. That cap is VA’s rule, not a promise from every lender. Some lenders set a lower limit of their own, which is called an overlay. Compare the program rule to what your lender actually offers.
VA adds tests beyond LTV:
- Every cash-out must show a net tangible benefit to the veteran.
- VA-to-VA refinances and refinances of a non-VA loan follow different tests.
- Some cases with a fixed-rate loan moving into an adjustable-rate cash-out loan face a lower limit.
- Entitlement and occupancy rules apply, and they are specific to the veteran.
If you are refinancing a conventional or FHA loan into VA, Lendmire’s piece on how to apply for a VA cash-out refinance from a conventional or FHA loan walks through the steps.
Side by Side
| Factor | Conventional | FHA | VA |
|---|---|---|---|
| Cap on a 1-unit home | Tiered by occupancy | 80% | Up to reasonable value |
| Value basis | Appraisal or waiver | Adjusted value | VA reasonable value |
| Occupancy | Primary, second, rental | Primary only | Veteran’s occupancy |
| Fee inside the cap | None (pricing adjustments affect cost, not the cap) | Financed premium | Financed funding fee |
| Second lien counts | Yes (CLTV, HCLTV) | Yes (CLTV) | Yes, as lender applies |
How the Loan Is Underwritten, Step by Step
Think of it as six checks. Any one can limit your cash.
1. Program and occupancy. Where you live and how many units the home has sets the cap. FHA needs a primary residence. VA needs the veteran’s occupancy. Conventional covers more situations at tiered caps.
2. Value. The lender orders an appraisal, or conventional may accept a value offer on some files. FHA uses adjusted value. VA uses reasonable value. A different value means a different ceiling.
3. Every lien. The lender counts your first mortgage and any second lien that stays. Under FHA and conventional, they all count against the combined cap.
4. The cash math. Value times cap, minus the loans being paid off, minus costs and financed fees, equals your possible cash.
5. Seasoning and history. FHA looks at 12 months of ownership and occupancy before the case number, plus a clean recent payment history. Conventional looks at the age of your current first mortgage and time on title.
6. Credit, income and reserves. The automated finding or a manual review decides this. FHA’s base ratios are 31/43 (housing to total debt). Documented compensating factors can stretch them up to 40/50 at the top tier. Across the wholesale programs Lendmire places FHA files with, the starting point is a 580 decision score. Each of these is subject to lender guidelines and full file review.
A Modeled Example, No Dollar Figures
Say a homeowner’s first mortgage equals 55% of the home’s value, and a HELOC they want to keep equals another 10%. That is a combined 65%.
Under FHA’s 80% cap, the room is 15% of the home’s value. Closing costs and the financed upfront premium come out of that 15%. What remains is the borrower’s cash. Pay off the HELOC in the same refinance, and the combined balance falls, so the room grows by as much as the HELOC was.
Now suppose the appraisal comes in 5% below what the owner expected. The cap now applies to a smaller value, so the maximum loan shrinks by about 4 points of the original value. On a thin margin, that can wipe out most of the cash.
These percentages are modeled assumptions, not program figures. Your own numbers will differ.
Where the General Rule Breaks
The caps above are the rule. Here are the places where the rule bends or stops.
Inherited homes. FHA’s occupancy period has exceptions for inherited property, with conditions. If the home was rented after you inherited it, expect the full period to apply. Ask a loan officer how the file would be read.
Recent purchases. FHA uses a lower value measure on homes acquired within the past year, such as purchase price plus documented improvements. Conventional has a named exception called delayed financing for recent cash purchases, with documentation conditions.
Free-and-clear homes. Fannie Mae allows a cash-out on a property with no mortgage lien. The cap still applies, and the whole loan is your cash minus costs.
Manufactured homes. FHA wants the home permanently installed on a site for a set time before the case number. Some lenders cap conventional manufactured-home cash-out tighter than the agency.
Limited versus full cash-out. The label depends on how much cash you receive and what you pay off, not on your intentions. A refinance that hands you more than a small amount of cash can fall into the lower-cap category.
Ask about the lower-cap category directly if that is your loan type.
Other cases. Jumbo loans and state-specific rules, such as homestead protections, can limit cash-out further. Ask before you build a plan.
Common Misreadings
“FHA allows the old, higher cap.” It did before 2019. It does not now. Pages that still show it are stale.
“A HELOC gets me past the cap.” It does the opposite. The cap counts combined balances.
“VA means all my equity is mine.” The funding fee sits inside the cap, the net tangible benefit test applies, and many lenders set lower limits.
“Hitting the cap guarantees a loan or a fixed amount of cash.” It does not. Credit, income, appraisal, payment history and costs all matter.
“Conventional is the same cap for every home.” It steps down for multi-unit homes and homes you do not live in.
“There is one federal waiting period.” There is not. The waiting periods are program rules from FHA, Fannie Mae and others, and they differ.
What the Decision Looks Like in Practice
Start with your situation, not the program.
A veteran with thin equity often finds VA the only route that reaches. A homeowner with weaker credit and a clean housing history may find FHA workable, accepting the insurance cost for a lower credit bar. A homeowner with strong credit and plenty of equity often does best conventional, since there is no FHA-style mortgage insurance to carry. Each of these is a lender-by-lender call.
If the numbers fall short, you have options:
- Pay down a second lien so the combined balance fits under the cap.
- Wait for appreciation or paydown, especially if a low appraisal is the problem.
- Ask for a smaller cash amount, which can keep the file inside the cap.
- Look at a limited cash-out, if you mostly want to pay off a loan and costs.
- Consider a different product, such as a home equity loan that leaves your first mortgage untouched.
Before you consolidate debt, think about what you are moving. CFPB research, on cash-out refinances and non-mortgage debt, warns that turning unsecured debt into mortgage debt can put your home at risk if the payment becomes unmanageable. Credit card debt rarely costs you the house. A mortgage can.
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. Every program figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
What is the cash-out refinance LTV limit for FHA?
It is 80% of adjusted value, on a primary residence you have owned and lived in for 12 months before the case number. The cap applies to combined loans, so a second lien you keep counts against it. FHA used to allow more, but HUD cut the cap in 2019.
Is the conventional limit the same for every property?
No. Fannie Mae’s matrix gives a one-unit primary residence the highest cap and steps it down for multi-unit homes, second homes and rentals. Condo and project type can lower it further. Some lenders also set limits tighter than the published caps.
Does the VA funding fee count toward the limit?
Yes. VA says the financed funding fee cannot push the loan above reasonable value. The fee is inside the cap, not on top of it. Many lenders also use a lower cap than VA’s own rule.
Why is my cash less than my equity?
Because the new loan has other jobs first. It pays off your current mortgage and any lien you want gone. It also covers closing costs and any financed insurance premium or funding fee. Only what is left comes to you.
What if my appraisal comes in low?
The cap applies to the lower value, so the maximum loan shrinks. A modest drop in value can remove a large share of your cash. Your options are a smaller cash amount, a paydown of a second lien, or waiting.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see FHA loan programs.
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References
1. HUD Mortgagee Letter 2019-11
2. Fannie Mae Eligibility Matrix
3. Fannie Mae Selling Guide, B2-1.3-03: Cash-Out Refinance Transactions
4. VA Pamphlet 26-7, Chapter 6: Refinancing Loans
5. CFPB: Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Refinance an FHA Loan to Conventional as a First-Time Buyer · How Much Cash a Conventional Loan Takes vs. an FHA Loan on Strong Credit · Refinance Requirements for Switching Into VA or Out of FHA
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.