The Quick Read: A cash-out refinance replaces your whole mortgage with a bigger one. A closed-end second mortgage leaves your current loan alone and adds a new loan behind it. The cash-out refinance fits you if you want one payment and a reset of the whole loan. The home equity loan fits you if you want to keep a first mortgage you like. One catch on the “high-LTV” part: on a primary home, a standard conventional cash-out refinance tops out at 80% loan-to-value (LTV), which is your loan balance divided by your home’s value. One narrow wholesale lane reaches 89.99%, covered below. The 95% and 97% figures you may have seen belong to other loan types.
That last point trips up a lot of homeowners. Those higher numbers belong to purchase loans and refinance loans that pay off your existing loan and give you almost no cash. Cash-out is a different product with a tighter 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.
Side-by-Side
| Factor | Cash-Out Refinance | Home Equity Loan |
|---|---|---|
| Your current mortgage | Paid off and replaced | Stays in place |
| Number of payments | One | Two |
| Leverage, one-unit primary | 80% LTV standard; 89.99% on one narrow lane | Set by each lender |
| Leverage, two- to four-unit | Up to 75% LTV | Set by each lender |
| Credit floor | 620 wholesale conventional; 680 on the 89.99% lane | Set by each lender |
| Mortgage insurance | None at 80% or below; none on the 89.99% lane | Lender-specific |
| Occupancy | Primary home gets the top leverage | Lender-specific |
| Documentation | Full file and new appraisal | Lender-specific |
A few notes on that table. Across the wholesale programs Lendmire places files with, a standard conventional cash-out on a one-unit primary home caps at 80%. Two- to four-unit homes, second homes and investment property cap at 75%. Every figure is subject to lender guidelines and a full file review.
The 89.99% lane is the exception to that 80% standard, and it is narrow. It applies only to a primary residence with a conforming loan balance, a thirty-year fixed rate, a 680 score and a 50% total debt ratio. It carries its own six months of seasoning, meaning a waiting period after you buy. It skips mortgage insurance. It is not written on Texas homesteads, because the Texas constitution caps homestead cash-out at the agency figure. Details on cash-out refinance programs depend on the lender and your file.
What “High-LTV” Really Means Here
Search the phrase and you will find two different ideas mixed together. The first is how much of your home’s value you want to borrow in total. The second is a refinance product the agencies call “high-LTV.”
The agency product is not a cash-out loan. Fannie Mae’s eligibility matrix treats the very highest-leverage refinances as a special limited cash-out category, available only when Fannie Mae already owns your existing loan. Freddie Mac’s guide sets the standard cash-out cap at 80% for a one-unit primary home and 75% for two to four units. It counts any second lien toward that total.
Fannie Mae also trimmed the cash you can take on a limited cash-out refinance. Its announcement SEL-2025-08 set a small cap on cash back. Think of those loans as a way to change your loan terms, not to pull money out.
So if you want real cash, a standard cash-out gives you 80% on a one-unit primary home. Beyond that, you need the narrow wholesale lane above. Or you need a second lien from a lender with its own combined-leverage rules.
When a Cash-Out Refinance Is the Better Fit
Choose the refinance when you want to restructure the whole loan, not just add to it. These situations tend to point that way:
- You want one payment. The new loan pays off your old first mortgage. You write one check each month instead of two.
- Your current loan is not worth keeping. Some owners have a loan they would happily replace. A cash-out lets you change the term and the loan type at the same time.
- You need to reach higher combined leverage. Some second-lien lenders stop well short of the first-mortgage cap. A cash-out refinance can reach the full 80% on a one-unit primary home.
- You are consolidating a large amount. One bigger first mortgage can be simpler than stacking a second loan on top.
- You plan to stay put. A refinance has its own closing costs, and those take time to earn back. Staying in the home gives the move room to pay off.
Picture a homeowner whose first mortgage sits at 50% of the home’s value. She wants cash worth another 20% of value for a renovation. A cash-out refinance to 70% leaves a 10-point cushion under the 80% cap and keeps one payment. That works if she has no attachment to the old loan.
Mortgage insurance is the other piece. At 80% or below, a conventional cash-out does not need it. Above 80% on a purchase or rate-and-term loan, it is required. It can be cancelled when your balance reaches 80% of the original value. The servicer must end it automatically at 78%, under the Homeowners Protection Act. The 89.99% wholesale lane skips mortgage insurance altogether, but it asks for a stronger score.
Now the costs. A cash-out is a brand-new first-mortgage closing. You get an appraisal, title work and closing costs on the whole loan, not just the new money. Your rate and term reset on the entire balance. The CFPB’s guide to using home equity warns that the payoff period may lengthen and the payment may rise. That matters most when you are replacing a loan you were already paying down.
When a Home Equity Loan Is the Better Fit
A home equity loan is a closed-end second mortgage. You get a lump sum and repay it on a fixed schedule. Your first mortgage does not change. It suits a different set of borrowers:
- You like your current first mortgage. If its terms are good, a second loan lets you borrow without touching it.
- You need a smaller amount. Borrowing a modest slice of equity on a second lien can be simpler than replacing a big balance.
- You are moving in a few years. Less money spent on a full refinance closing can matter when you will not stay long.
- You want a clear payoff date on the new money. A lump sum on a set schedule keeps the new debt separate from the old.
- Your first mortgage is close to paid off. A short second loan can add cash without restarting the clock.
Here is the other side of that scenario. Say a homeowner’s first mortgage is at 50% of value, and she needs 20 points of value in cash. A second lien that reaches 70% combined would leave the first loan untouched. That works if a lender will go that far. Some second-lien lenders cap combined leverage lower than the first-mortgage cap, and that is the gap to test before you count on it. Lendmire’s piece Home Equity Loan vs Cash-Out Refinance Limits for a Primary Home walks through that gap.
The tradeoffs are real. You carry two payments. The second lien sits behind your first mortgage, which is why lenders tend to be cautious with it. If you miss payments on either loan, the home is at risk. The CFPB also warns that an old second lien can resurface and, in some cases, be used to start foreclosure even when the first mortgage is current.
Same Home, Same Risk
Both loans use your home as collateral. That part does not change with the product. If you use equity to pay off credit cards, you are moving unsecured debt onto your house. The Federal Reserve reminds borrowers that taking out equity leaves you owning less of your home. It also leaves you with less to net at sale.
Both options need a plan for a dip in value too. The higher the combined LTV, the thinner your cushion. If values soften, a thin cushion can limit your next refinance or your sale proceeds. Many borrowers do better leaving some room under the cap than borrowing to the limit.
Key Terms Defined
- LTV (loan-to-value): Your loan balance divided by your home’s appraised value.
- Combined LTV: The same ratio with every loan on the home added together, including a second lien.
- Second lien: A loan secured by your home that is paid after the first mortgage if the home is sold to cover debts.
- Rate-and-term refinance: A refinance that pays off your existing loan and gives you only incidental cash back.
- Seasoning: A waiting period before you can refinance. For a conventional cash-out, the loan being paid off must be at least 12 months old, and you must have been on title for 6 months.
The Verdict
Neither product wins every time. The refinance wins on simplicity and on reaching the highest allowed leverage. The home equity loan wins when your first mortgage is worth keeping and your cash need is modest.
A short checklist helps. Ask how much cash you need as a share of your home’s value. Ask whether your first mortgage is worth keeping. Ask how long you will stay. Then check the combined LTV each route allows on your home. If you need cash that pushes past 80%, a standard cash-out will not get you there. The narrow 89.99% lane or a second lien might, depending on the lender and your file.
For a two- to four-unit home, or a second home, the 75% cap changes the math. A person living in one unit of a duplex gets different limits than a one-unit owner. Occupancy decides the leverage, so say plainly how you use the property.
Where to Go From Here
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 a cash-out refinance on my primary home go above 80% LTV?
On a standard conventional cash-out, no. The cap is 80% on a one-unit primary home and 75% on a two- to four-unit home. One narrow wholesale lane reaches 89.99% with no mortgage insurance for primary residences with a 680 score. It is not written in Texas, and it is subject to lender guidelines and full file review.
Do I keep my current mortgage with a home equity loan?
Yes. The home equity loan is a second lien behind your first mortgage, so your first loan keeps its existing terms. You then carry two monthly payments instead of one.
Does a cash-out refinance need mortgage insurance?
Not at 80% LTV or below on a conventional loan. Mortgage insurance is required above 80% on purchases and rate-and-term refinances. It can be cancelled at 80% of the original value and must end at 78%. The 89.99% wholesale lane has none.
How long must I own the home before a cash-out refinance?
For a conventional cash-out, the mortgage being paid off must be at least 12 months old. You must also have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards.
Is a home equity loan safer because my first mortgage stays the same?
Not necessarily. Both loans use your home as collateral. A missed second-lien payment can lead to foreclosure even if the first mortgage is current.
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.
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References
1. Fannie Mae Eligibility Matrix
2. Freddie Mac Single-Family Guide, Section 4203.1
3. Fannie Mae Announcement SEL-2025-08
4. CFPB, Using Home Equity guide
5. Federal Reserve, Refinancings
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Should You Cash Out Home Equity With a Home Equity Loan or HELOC? · How a Lender Sizes a High-LTV Cash-Out Refinance on a Primary Home · Cash Out Refinance vs Home Equity Loan for a Kitchen Remodel
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.