The Quick Read: Your limit is a percentage of your home’s appraised value, and it changes with the loan program, the number of units and how you use the property. On a conventional cash-out refinance of a one-unit primary residence, the cap is 80%. Multiply the appraised value by that cap, subtract everything you owe and the costs rolled into the loan, and what remains is the most cash you could receive. The cap is a ceiling, not a promise of that much cash.
What You Need to Know First
- The cap sets the minimum equity you keep. At an 80% cap, you keep at least 20%.
- Appraised value, not your estimate, is the number that counts.
- Second mortgages and HELOCs count against you through combined LTV.
- Clocks matter. Time owned and time on the current loan can block a file even with plenty of equity.
- Passing the LTV test is one gate. Credit, income ratios and reserves are separate gates.
What Is an LTV Limit, Exactly?
LTV means loan-to-value: the new loan amount divided by the home’s value. The limit is the highest LTV a program allows on that kind of loan. On a refinance, the value is the appraised value. On a purchase, lenders use the lower of price or appraisal. Fannie Mae’s Selling Guide lays out that formula. It also says the result is rounded up to the next whole percent, so a number just past a whole percent counts as the next one. That matters when you sit right at a cap.
Cash-out refinance estimate
The starting figures are an example value with a balance and a cash request in proportion. Replace them with yours.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the agency cap on a one-unit principal residence, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a cash-out refinance quote; a cash-out loan is priced by the lender at lock. The cash available is the loan the program cap allows less the balances paid off, before closing costs, which are not included. The HELOC line is the program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. Licensed in sixteen states for consumer mortgages.
Across the wholesale programs Lendmire works with, borrowers most often confuse two ideas. One is the share of value you can borrow against. The other is the share of your equity you can pull out. An 80% cap does not let you take 80% of your equity. It lets the total loan reach 80% of the home’s value. The rest of the math comes out of that.
Lendmire arranges cash-out refinance programs through wholesale lenders as a mortgage broker, so the limits below are the ones a file is measured against before it goes to a lender.
The Five-Step Check Before You Apply
Run these steps in order. It takes an evening with your mortgage statement and a pencil.
1. Pin down the product. Is this a cash-out refinance, or a rate-and-term (limited cash-out) refinance? The two have very different ceilings, covered below.
2. Classify the property. Decide whether it is a one-unit or two- to four-unit home, and whether it is your primary residence or a second home. These set the cap.
3. List every lien. Add the first mortgage payoff and any second mortgage or HELOC. Those all count toward the total.
4. Estimate value. Use recent sales and your own judgment, but treat the number as a guess until an appraiser weighs in.
5. Run the math. Maximum new loan equals value times the cap. Estimated cash equals that maximum minus your payoffs and any costs financed into the loan.
Here is a worked example using percentages only. Say your first mortgage balance equals 55% of the home’s value, you have no other liens, and you are refinancing a one-unit primary residence at the 80% cap. You have room for 25% of value before costs. Financed costs and prepaid items, a few percent of value, come out of that room. What is left is your cash.
Now add appraisal risk. If the appraisal lands 5% below your estimate, the maximum loan shrinks by 80% of that gap, or 4% of your original estimate. That reduction comes straight out of your cash, because your payoff did not change. Many borrowers are surprised by this step. Build a cushion into your plan.
Reverse Math: Start From the Cash You Need
Sometimes the better question is whether your target amount fits. Add your payoffs, your target cash and a few percent of value for costs. Then divide that total by your estimated value. If the result sits above the cap, the plan does not fit as written. If it sits at or just under the cap, one weak appraisal can break it. Aim for a result a few points under the cap.
Which Cap Applies to You?
Caps move with occupancy, unit count and purpose. For conventional loans placed through the wholesale programs Lendmire uses, the cash-out and rate-and-term ceilings look like this, subject to lender guidelines and full file review:
| Property and purpose | Typical maximum LTV |
|---|---|
| Cash-out, one-unit primary residence | 80% |
| Cash-out, two- to four-unit primary residence | 75% |
| Cash-out, second home | 75% |
| Rate-and-term, one-unit primary residence | 95% |
| Rate-and-term, first-time-buyer program where existing loan is reviewed | 97% |
The gap between 80% and 95% is the whole reason step one matters. A refinance pays off your existing first mortgage, closing costs and a purchase-money second lien, with only incidental cash back. If you take more than that, the loan becomes cash-out and the lower cap applies. Second homes and rental properties get lower leverage than primary residences. If your home is not your main residence, expect a lower cap and ask your loan officer which one applies.
Conventional lanes beyond 80%
Some wholesale lanes reach 89.99% LTV with no mortgage insurance. They require a 680 credit score and a 50% ratio ceiling on a thirty-year fixed loan, a primary residence and a conforming balance. They carry their own six months of seasoning. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, so that wholesale lane is not written there. Availability can also vary by state for other programs. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
FHA and VA: Different Rules
Government-backed loans run on their own ceilings. FHA lowered its cash-out cap through HUD Mortgagee Letter 2019-11, so it now sits at the same level as the conventional primary-residence cap. Old advice that FHA allows more is out of date.
VA works differently. VA Circular 26-19-05 says VA will not guarantee a refinance above the full reasonable value of the home. A financed funding fee counts toward that limit. VA also splits cash-out refinances into two types, based on whether the new loan exceeds the payoff of the loan being refinanced. Individual lenders may set tighter limits than VA’s ceiling, so the program maximum is not the same as what a given lender offers.
The streamlines are a different animal. The FHA Streamline and the VA IRRRL are for borrowers who already hold an FHA or VA loan. They are not cash-out products. HUD limits cash back to a small amount, and VA says no cash comes from IRRRL proceeds. Both skip the usual appraisal hurdle, which is the trade-off: no appraisal risk, but no real cash. The VA IRRRL carries a 0.5% funding fee unless exempt and a seasoning rule of the later of 210 days and six payments. The FHA Streamline needs a net tangible benefit. FHA rate-and-term with an appraisal goes to 97.75%.
CLTV: Where a Second Mortgage or HELOC Enters
Your first mortgage is not the only debt in the math. Combined LTV, or CLTV, adds the first mortgage, any drawn HELOC balance and closed-end second liens. Fannie Mae’s CLTV rules spell that out. A related measure, HCLTV, counts the full HELOC credit limit whether you have drawn on it or not. An open line you never use can still reduce your room.
So if you have a HELOC, list its limit, not just its balance. Ask your loan officer how it will be treated. In many cash-out files, the HELOC is paid off and closed as part of the refinance, which clears it from the math. Confirm that before you assume it.
Beyond the Cap: What Can Lower Your Real Limit
Meeting the cap does not mean approval. Several other items shape the outcome.
- Seasoning. The first mortgage being paid off must be at least 12 months old, counted from note date to note date. At least one borrower must have been on title for six months. There are exceptions, including delayed financing after a cash purchase, inheritance and legal awards. The Fannie Mae cash-out rules list them, along with the point that a home listed for sale must come off the market first.
- Credit score. The agency eligibility matrix ties the allowed LTV to your score. The wholesale conventional programs start at a 620 decision score, and many files need more for higher leverage.
- Income ratios and reserves. Most files run through automated underwriting with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45%, depending on score and reserves.
- Property type. Condos in certain projects may need lower ratios. The Fannie Mae Eligibility Matrix flags this. Fannie Mae’s manufactured-housing guidance has also treated single-width homes as ineligible for cash-out. Check the current version with a loan officer.
Higher LTV bands can cost more, so sitting just under a band edge can matter.
- Lender overlays. A lender may set a tighter limit than the agency. Two lenders can read the same file differently.
Is Your Number Over the Limit? Your Options
If the math does not fit, you have choices. None are free of trade-offs.
- Take less cash. A smaller request may fit under the cap with room to spare.
- Pay down the balance first. Lower payoff means more room, but it uses your own cash.
- Wait. If seasoning is the issue, time fixes it. If value is the issue, time may help or hurt.
- Switch products. A home equity loan or HELOC leaves your first mortgage alone. These are different products with their own limits, and the trade-off is a second payment.
- Reconsider the plan. The cap exists partly because home values can fall. A CFPB paper warns that rolling unsecured debt into a mortgage puts the home behind that debt. If you would be stretching to make the new payment, say so before applying.
Questions to Ask a Loan Officer
Bring these to the first conversation. They separate published rules from lender-specific ones.
1. Which loan program and cap apply to my property type and occupancy?
2. Does your lender use a tighter limit than the agency?
3. How will my HELOC or second lien count?
4. What are my seasoning dates, and do any exceptions apply?
5. At what LTV does pricing change, and where do I sit?
6. If the appraisal comes in low, what happens to my cash?
For help vetting who you are talking to, Lendmire’s piece How to Check Lenders Before a Conventional Cash-Out Refinance walks through that step.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s appraised value, shown as a percentage.
CLTV (combined loan-to-value): The first mortgage plus any drawn HELOC and other second liens, divided by value.
HCLTV: The same as CLTV, but it counts the full HELOC credit limit, drawn or not.
Seasoning: The minimum time you must have owned the home or held the loan being paid off.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the old loan, costs and certain liens, with only incidental cash back.
Appraised value: The value an appraiser assigns, which is the number lenders use on a refinance.
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. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
Does my LTV limit change if I own a duplex?
Yes. On a conventional cash-out refinance, a two- to four-unit primary residence is capped at 75%, against 80% for a one-unit home. Pick your property type first, because it sets the cap before any other factor does.
Can I use my own estimate of value to check my limit?
Use it for planning only. On a refinance, the lender relies on the appraised value, and a lower number cuts your maximum loan by the cap percentage of the shortfall. A cushion of a few points under the cap protects you from a weak appraisal.
Does a HELOC I never used still count?
Yes, it can. Combined measures count the drawn balance, and HCLTV counts the full credit limit. Ask how your lender treats the line, and whether paying it off and closing it at the refinance is an option.
Can I get cash from an FHA Streamline or VA IRRRL?
Not in any meaningful way. HUD limits cash back to a small amount, and VA says no cash may come from IRRRL proceeds. If you need real cash, you would look at a cash-out refinance, which requires an appraisal.
I have plenty of equity. Why might I still be ineligible?
Clocks and other tests can block you. The loan being paid off must be at least 12 months old, a borrower must have been on title for six months, and credit, income ratios and reserves still apply. Exceptions like delayed financing exist for specific situations.
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.
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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 Selling Guide B2-1.2-01, LTV Ratios
2. HUD Mortgagee Letter 2019-11
4. Fannie Mae Selling Guide B2-1.2-02, CLTV Ratios
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. Fannie Mae Eligibility Matrix
7. CFPB
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: 20-Year vs. 15-Year Refinance for Shortening a 30-Year Loan · How to Refinance Soon After a Purchase and Clear Seasoning · How to Refinance Out of an ARM Payment Higher Than It Should Be
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
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.