The Quick Read: To get a Freddie Mac cash-out refinance on a primary home, you typically must live there, have been on title for six months, and be paying off a first mortgage at least 12 months old, with the new loan capped at 80% LTV on a one-unit home, subject to lender guidelines.
- Five underwriting gates run in order: occupancy, time on title, age of the loan being paid off, equity and LTV, and credit and ratios.
- The 80% cap applies to the whole new loan, so your payoff, other liens and financed costs come out before you receive any cash.
- Named exceptions exist, including delayed financing after a cash purchase, co-owner buyouts, inherited homes and LLC-held title.
- A three-day right to cancel in writing typically applies to a refinance of your principal home, but not to purchase loans or second homes.
- Compare a cash-out against alternatives like a HELOC, since a cash-out resets your entire first mortgage; terms are subject to full file review.
On a one-unit primary home, the new loan generally tops out at 80% of the home’s value. You must live in the home, have been on title for six months, and be paying off a first mortgage that is at least 12 months old. Terms are subject to lender guidelines and full file review.
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.
A cash-out refinance is a new first mortgage that pays off your old one and puts the leftover equity in your hands. Debt payoff, repairs, a tuition bill.
This article covers the primary-home lane only.
Lendmire is a mortgage broker. Through wholesale lenders in the 16 states where it is licensed for consumer lending, it arranges these loans every week. Details of the broker’s cash-out refinance programs sit on the program page. The mechanics below are what that file work looks like.
Key Terms Defined
- Cash-out refinance: A new first mortgage larger than the payoff, with the difference paid to you.
- LTV (loan-to-value): The new loan balance divided by the appraised value of the home.
- Seasoning: The minimum age of the loan being paid off, or the minimum time you have held title.
- Note date: The date you sign the mortgage note. Seasoning is measured from this date.
- Delayed financing: A cash-out exception for a home bought with cash, where the ownership clock is waived.
- Cancellation: Your right to cancel certain refinances in writing after signing.
How Is the Loan Underwritten, Step by Step?
Underwriting runs five gates in order. Miss one and the file stalls, no matter how much equity you have.
1. Occupancy. Every borrower on the loan must occupy the property as a primary residence, per Freddie Mac Guide section 4301.5. A non-occupant co-borrower on a cash-out is where files get kicked back.
2. Time on title. At least one borrower must have been on title for six months before the note date. The settlement statement or recorded deed documents it.
3. Age of the loan being paid off. The first mortgage must be at least 12 months old, measured from its note date to the new note date. Fannie Mae’s Selling Guide carries the same 12-month test. A recent purchase can clear the six-month title test and still fail this one. Two clocks, not one.
4. Equity and LTV. The appraised value sets the ceiling. On a one-unit primary home the conventional cash-out cap is 80% LTV. On two- to four-unit primary homes it is 75%. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
5. Credit and ratios. Across the wholesale conventional programs, the floor starts at a 620 decision score. The automated finding governs most files, with a total debt-to-income ceiling of 50%. Manually underwritten loans use 36% or 45% ceilings, paired with reserve and score factors. Waiting periods after credit events are agency rules: four years from a chapter 7 discharge, seven from a foreclosure, four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.
Freddie’s LTV limits apply whether the loan runs through automated underwriting or is manually underwritten.
How Much Cash Will You Actually Get?
Less than “80% of value minus your balance.” The 80% cap applies to the whole new loan. Everything else comes out of that ceiling first.
The formula:
- Appraised value × 80% = maximum new loan.
- Subtract the payoff of your first mortgage.
- Subtract any other liens being cleared.
- Subtract closing costs, prepaid items and any taxes you roll into the loan.
- What remains is your cash.
Take a home appraised at a round value with a first mortgage around half of that value. The 80% ceiling leaves roughly 30% of value before costs. Financed closing costs and payoffs then shrink that number. The appraisal drives everything. A low appraisal cuts the ceiling, and the cash drops with it.
Which Structures and Variations Exist?
Four structures matter on primary-home files. The table shows how they differ.
| Structure | Leverage on 1-unit primary | Who it fits |
|---|---|---|
| Standard cash-out | 80% LTV | Most homeowners taking equity out |
| Wholesale no-MI lane | Up to 89.99% LTV | 680 score, 50% ratio, 30-year fixed |
| Rate-and-term (limited cash-out) | 95% LTV | Payoff only, incidental cash back |
| Special-purpose (co-owner buyout) | Per Guide 4301.6 | Buying out a co-owner |
The wholesale lane reaching 89.99% LTV requires no mortgage insurance, a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. It is not written in Texas, where the state constitution caps cash-out on a homestead at the agency figure. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Rate-and-term is the easy-to-confuse sibling. It pays off the first mortgage, closing costs and a purchase-money second lien, with only incidental cash back. Mortgage insurance applies above 80% LTV. If your goal is cash in hand, it is the wrong product. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Cash-out loans also carry credit fees under Guide Exhibit 19, so they price differently from a no-cash-out refinance. Pricing is built into the loan terms. Compare it line by line on your Loan Estimate.
Where Does the General Rule Break?
Most of the named exceptions are in the Guide itself. Know them before you assume you are blocked.
Delayed financing. If you bought with cash recently, the six-month title clock can be waived. The file documents the cash purchase with the settlement statement. Where borrowed funds were used for the purchase, the paydown treatment is different. Expect extra scrutiny of how the purchase was funded.
Buying out a co-owner. Guide section 4301.6 covers special-purpose cash-out. The borrower and co-owner must have jointly owned the home for at least 12 months before the initial application, and inherited interests are exempt. Both must show they occupied it as a primary residence. This lane is for divorce and partner buyouts, not for pulling extra cash.
Title held in an LLC or LP. Time in the entity can count. At least one borrower must have been majority owner or in control since the entity acquired the property. Title must move into the borrower’s name on or before closing.
Leasehold and co-op. The six-month clock runs from the ground lease start or the date the co-op shares were acquired.
HELOC as the first lien. A first lien that is a HELOC is exempt from the 12-month age test, a point that surprises people.
Limited cash-out confusion. A refinance that pays off a second lien counts as limited cash-out only if the second lien funded the purchase. A HELOC used for a kitchen, for example, makes the new loan a cash-out.
Inheritance. Inherited homes get an exception to the title clock.
Second homes. Occupancy decides leverage. A second home cash-out is a different file with different caps. Lendmire’s piece Vacation Home Cash-Out Refinance vs Primary Home for a Second-Home Owner covers the contrast.
What Documents Does the File Need?
Clean documents give the lender fewer preventable gaps to review. A typical primary-home cash-out file carries:
- Current mortgage statement and payoff information, showing the original note date.
- Settlement statement or recorded deed, to document time on title.
- Proof of occupancy, usually matching ID, bills and the credit file address.
- Income documents, which differ for salaried and self-employed borrowers.
- Homeowners insurance declarations and, for condos, the HOA information the lender requests.
- For delayed financing, the original cash purchase settlement statement and proof of the source of funds.
The failure modes are predictable. A deed that still shows an LLC. A co-borrower who lives elsewhere. Catch them before the application, not after.
What Happens After You Sign?
Once closing documents are signed on a refinance of your principal home, a three-day cancellation window applies. The CFPB says the clock starts only after three things have happened: you sign the note, you receive the accurate loan disclosure, and you receive two copies of the notice of right to cancel. You must cancel in writing. A phone call is not enough. Money paid must be returned within 20 calendar days after the lender receives your notice.
The right applies to a principal dwelling. A purchase mortgage has none, and a second home is excluded.
Should You Do It? (The Decision in Practice)
A cash-out replaces your whole balance on new terms. That is the trade. You are not borrowing against equity on top of the old loan. You are resetting the old loan too.
Run the decision in this order:
1. Does the cash have a defined job, such as repairs that add value or debt that costs more to carry?
2. Can you clear all five gates, including the 12-month loan age and the 80% cap?
3. After costs, is the cash worth resetting the full balance?
4. Is your leverage low enough to avoid mortgage insurance? Above 80% LTV it is required, cancels on request at 80% of original value with good payment history, and terminates automatically at 78%. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
On the debt-payoff question, the CFPB’s research on cash-out refinances flags a tradeoff. Moving non-mortgage debt into mortgage debt can raise foreclosure risk, since defaulting on unsecured debt is unlikely to cost you the home. Paying off a card with house collateral can carry added risk.
Alternatives exist. A HELOC or home equity loan leaves your first mortgage in place. That can make sense when your current loan is one you want to keep.
Two related situations come up often. A VA borrower faces different verification rules, covered in Lendmire’s piece VA Cash-Out Refinance Electronic Verification Rules for a Primary Home. Owners of small multi-unit homes face a lower cap, and their question is whether credit standards rise as well.
Frequently Asked Questions
Can I take 80% of my home’s value as cash?
No. The 80% cap limits the whole new loan on a one-unit primary home. Your payoff, other liens and financed costs come out first, so the cash you receive is lower than 80% minus your balance.
Does everyone on the loan have to live in the home?
Yes. For a primary-residence cash-out, all borrowers must occupy the property. A co-borrower who lives elsewhere is a common reason a file gets reworked.
Are there exceptions to the six-month and 12-month rules?
Some. Delayed financing after a cash purchase and inherited homes carry exceptions to the title clock. A first lien that is a HELOC is exempt from the 12-month age test. Otherwise, the first mortgage being paid off must be at least 12 months old, subject to lender guidelines.
What is the difference between cash-out and rate-and-term?
Rate-and-term pays off the first mortgage, closing costs and a purchase-money second lien, with only incidental cash back. It allows higher leverage, up to 95% on a one-unit primary. Cash-out gives you real proceeds at a lower cap.
Can I cancel after I close?
Often, yes. A refinance of your principal home carries a three-business-day right to cancel in writing, starting only after the note, disclosure and notices are all in your hands. It does not apply to purchase loans or second homes.
What to Do Next
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. All figures above are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
For the program’s current guidelines, see conventional loan programs.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Freddie Mac Seller/Servicer Guide 4301.5
2. Fannie Mae Selling Guide B2-1.3-03
4. CFPB’s research on cash-out refinances
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How Freddie Mac Limits the Loan on a Primary Home Cash-Out Refinance · How to Close a Homeready Cash-Out Refinance on a Primary Home · Freddie Mac Cash-Out Refinance Seasoning Period Requirements
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.