The Quick Read: For most homeowners who live in the house, the best program is a conforming conventional cash-out refinance, but only if your equity, loan size, ownership time and credit line up. The new loan pays off your old mortgage and hands you the difference. Leverage tops out at 80% of the home’s value on a one-unit primary residence. The right fit for your situation depends on four tests: equity, loan size, seasoning and credit.
Key Takeaways
- A conventional cash-out refinance caps at 80% loan-to-value (LTV) on a one-unit primary home and 75% on a two- to four-unit primary home.
- You generally need 12 months on the loan you are paying off and 6 months on title.
- Equity left in the home usually limits you before the loan limit does.
- Some files qualify for a wholesale lane that reaches 89.99% LTV with no mortgage insurance, at a 680 score.
- A “limited” refinance is a different product. It allows only small cash back.
What Does “Conforming Conventional Cash-Out” Actually Mean?
A conforming conventional cash-out refinance is a new mortgage, backed by Fannie Mae or Freddie Mac rules, that replaces your current loan and gives you cash from your equity. Each word matters, so here they are one at a time.
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: 7.24% as of October 29, 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.
“Conventional” means no government insurance, so it is not FHA or VA. “Conforming” means the loan follows Fannie Mae and Freddie Mac guidelines and stays under the county loan limit. “Cash-out” means the new balance is larger than what you owe, and you keep the difference after costs.
The size cap comes from the FHFA, which sets limits each year and varies them by county. The agency publishes its conforming loan limit values for the baseline and for high-cost counties. Loans above your county’s limit are jumbo and follow different rules. Look up your own county before you plan around any number.
Here is the honest answer on “best.” No single program wins for everyone. Lendmire is a mortgage broker, not a lender. Across the wholesale programs Lendmire places files with, the winner depends on your credit, your equity, your property and how long you have owned it. A broker’s job is to match the file to the program. Lendmire’s cash-out refinance programs page lays out the options side by side.
How Is a Conventional Cash-Out Loan Underwritten, Step by Step?
Underwriting is a short sequence of tests, and each one can shrink your cash or end the file. Knowing the order helps you prepare. Here is how a typical file moves.
1. Eligibility screen. The lender confirms the home is your primary residence. It checks how long you have owned it and how old your current mortgage is.
2. Value. An appraisal sets the home’s value. Value drives everything else, because leverage is a percentage of it. A low appraisal shrinks your cash. Sometimes it erases it.
3. Leverage cap. The lender applies the maximum LTV for your property type. On a one-unit primary home, that is 80%.
4. Loan size check. The new balance must stay at or under your county’s conforming limit.
5. Credit and ratios. Automated underwriting reviews your score, debts and reserves. The wholesale programs we place start at a 620 decision score. The automated finding governs most files, with a total debt ratio ceiling of 50%.
6. Pricing review. Fannie Mae applies a loan-level price adjustment to many cash-out loans. Selling Guide B2-1.3-03 says it depends on LTV and credit score. More leverage and a lower score both push pricing up.
7. Disclosures and closing. You receive a Loan Estimate after you apply and a Closing Disclosure before you sign.
8. Funding. On a refinance of your home, you generally get a short cancellation window before funds are released. The new loan pays your old mortgage and closing costs first. You receive what remains.
Notice what is missing: a promise. Every step is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
How Much Cash Can You Actually Take Out?
You can take out the lesser of what the leverage cap allows and what the loan limit allows, minus your payoff and costs. The equity cap usually binds first.
Run it as a sequence:
1. Start with the appraised value.
2. Multiply by the cap for your property: 80% for a one-unit primary home, 75% for two to four units.
3. Check that result against your county’s conforming limit.
4. Subtract your current mortgage payoff, any other liens and closing costs.
5. What is left is your cash.
Picture a homeowner whose house is worth a round figure and who owes about half of it. At an 80% cap, the new loan can reach well beyond the old balance. The gap between the cap and the payoff is the cash pool, before costs. Now picture a different owner who owes 70% of the value. The cap leaves only a thin sliver. Same program, very different outcome.
Closing costs come out of this pool, or you pay them in cash. They cover things like the appraisal, title work and origination. They are a meaningful share of the loan amount, so read your Loan Estimate line by line, and compare estimates from more than one lender. The CFPB’s Your Home Loan Toolkit walks through that comparison.
Here is the catch most people miss. Equity, not income, is often the wall. Many owners with strong credit still hit the 80% cap first. Keeping roughly 20% equity after closing is built into the program.
What Are the Two Seasoning Clocks?
Seasoning is the waiting period before you can refinance for cash. Conventional cash-out uses two separate clocks, and people constantly confuse them.
| Clock | What it measures | Requirement |
|---|---|---|
| Title time | How long you have owned the home | 6 months on title |
| Loan age | How old the mortgage being paid off is | 12 months, note date to note date |
Freddie Mac’s Guide section 4301.5 states both rules. At least one borrower must be on title for six months. When proceeds pay off a first mortgage, that loan must be at least 12 months old. The 12 months run from the note date of the old loan to the note date of the new one.
The clocks can differ. Say you bought a home eight months ago with a mortgage. Your title clock is satisfied, but your loan clock is not. You would wait, or look at a different structure.
Some exceptions exist. Delayed financing covers a cash purchase refinanced shortly after. Inheritance and legal-award situations are also exceptions. A co-owner buyout is treated as a special-purpose cash-out and skips the 12-month loan-age rule. Paying off a home equity line of credit is reported by secondary sources as exempt from the 12-month rule, so confirm that with the lender on your specific file.
One more trap: a new mortgage on a home you own free and clear is still a cash-out refinance. You cannot call it something gentler.
Are There Variations Worth Knowing About?
Yes. Three structures matter, and they change how much you can reach.
The standard conventional cash-out. This is the 80% product above. It is the default for a one-unit primary home.
The higher-leverage wholesale lane. One lane we place reaches 89.99% LTV with no mortgage insurance. It requires a 680 score and a 50% ratio ceiling. The loan must be a thirty-year fixed on a primary residence with a conforming balance, and it carries its own six months of seasoning. It suits borrowers who need more than 80% and have strong credit. It is not written on Texas homesteads, where the state constitution caps cash-out at the agency figure. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The limited cash-out (rate-and-term) refinance. This is not a cash-out loan. It pays off your first mortgage, your closing costs and a purchase-money second lien, with only incidental cash back. Leverage reaches 95% on a one-unit primary home, and up to 97% where the existing loan is agency-owned and the first-time-buyer program allows. Mortgage insurance applies above 80%.
That last point corrects a common myth. People hear “97%” and assume it applies to cash-out. It does not. The 97% figure belongs to purchase loans and certain rate-and-term refinances.
| Structure | Leverage on a one-unit primary home | Cash to you |
|---|---|---|
| Standard cash-out | 80% | Yes, from equity |
| Higher-leverage wholesale lane | Up to 89.99% | Yes, with strict credit |
| Limited cash-out | 95% (97% in a narrow case) | Only incidental |
Where Does the General Rule Break?
Several edge cases change the answer. Know them before you apply.
- Occupancy and units. Leverage drops to 75% on two- to four-unit primary homes. Second homes also sit at 75%.
- Loan size above the limit. If the new balance exceeds your county’s conforming limit, you move into jumbo territory. The jumbo lanes we place start at a 660 decision score, reach 90% leverage and allow loans up to $5,000,000, with a 50% ratio ceiling on fixed lanes.
- Energy-assessment liens. An unpaid PACE loan can make a loan ineligible for cash-out under Fannie Mae’s rules. Plan to resolve it first.
- Recent credit events. The agencies set waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, four from a short sale or deed in lieu. Documented extenuating circumstances can shorten them.
- State rules. Some states have special cash-out rules, and Texas is the clearest example. Your state can change both the cap and the structure.
- Student loan cash-out. Fannie Mae has a version for paying off student debt. It waives the cash-out price adjustment but limits what you can keep. Ask a broker whether it fits your goal. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Rules in this area also change. The CFPB has asked for public input on whether to rethink the cancellation window for cash-out refinances, as one law-firm summary of the request explains. No rule has been proposed, so check the current rule when you apply.
What About Mortgage Insurance and Credit Score?
Mortgage insurance is a non-issue at 80% or below, and the standard cash-out stops there. That is one reason the 80% product is popular. You avoid the monthly premium.
If you go above 80%, mortgage insurance applies. You can request cancellation at 80% of the original value with good payment history, no subordinate liens and no drop in value. The servicer must end it automatically at 78%. Published typical annual premiums run from 0.58% to 1.86% of the balance. That is a range, not a quote.
On credit, the wholesale conventional programs start at a 620 decision score. An adjustable rate under manual underwriting starts at 640. Manually underwritten loans use ratio limits of 36% or 45%, depending on the reserve and score factors in the Eligibility Matrix. Higher scores generally improve both approval odds and pricing.
How Do You Decide Which Program Is Best for You?
Match your situation to the structure. This table does that without pretending one answer fits all.
| Your situation | Program that usually fits |
|---|---|
| Plenty of equity, strong credit, one-unit home | Standard conventional cash-out at 80% |
| Need more than 80%, score of 680 or higher, fixed rate | Higher-leverage wholesale lane |
| Need to lower your payment, little cash needed | Limited cash-out (rate-and-term) |
| Balance would exceed county limit | Jumbo lane |
| Owned the home under six months | Wait, or ask about delayed financing |
| Mortgage under 12 months old | Wait, or look at limited cash-out |
Honestly, this one is a genuine toss-up for many owners between standard cash-out and a home equity line. A cash-out replaces your first mortgage, so everything resets, including your term and your balance. A line leaves your first loan alone. If your existing loan is one you value, that matters. A cash-out also tends to raise the monthly payment, even when the new rate is lower, because the balance is larger.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What Should You Prepare Before You Apply?
Preparation shortens the argument you would otherwise have with underwriting. Bring the following:
- Your most recent mortgage statement, showing the payoff and the original note date.
- Proof of how long you have been on title.
- Pay stubs, W-2s and tax returns for the income side.
- A list of every lien on the property, including any energy-assessment lien.
- A clear reason for the cash. Lenders do not require a purpose on most files, but you should have one.
Check your credit report for errors first. Fix those before the lender pulls your score.
A broker earns its place at this stage. Experienced brokers see the same pattern often: the borrower assumes income is the barrier, and equity turns out to be the real wall. Running the leverage math before applying saves a hard credit pull and a disappointing appraisal.
Frequently Asked Questions
How soon after buying can I do a cash-out refinance?
Usually not right away. At least one borrower generally needs six months on title, and a mortgage being paid off must be 12 months old. A cash buyer may have another path through delayed financing. A limited cash-out has no 12-month rule but allows only incidental cash back.
Does a paid-off home count as a cash-out?
Yes. A new mortgage on a home you own free and clear is classified as a cash-out refinance. The six-month title rule applies, but the 12-month loan-age rule does not, since there is no loan to season. Leverage caps are the same as any other cash-out.
Can I cash out up to 97% of my home’s value?
No. The 97% figure applies to certain purchase loans and one narrow rate-and-term case. Standard cash-out on a one-unit primary home is capped at 80%. A separate wholesale lane reaches 89.99% with no mortgage insurance, but it requires a 680 score and a 50% ratio ceiling. Eligibility is subject to lender guidelines.
Can I back out after I sign?
Often, yes, for a short time. On a refinance of your home, you generally have until midnight of the third business day to cancel, and the CFPB explains how that window starts. Funds are released afterward. If required disclosures were missing, the window can stretch much longer.
Do closing costs come out of my cash?
Closing costs can come out of your cash. You may pay them in cash at closing or have them taken from proceeds. Either way, the net cash you receive is the proceeds minus costs. No fixed percentage applies to everyone, so compare Loan Estimates line by line.
What Is the 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.
Key Terms Defined
Conforming loan: A mortgage that follows Fannie Mae and Freddie Mac guidelines and stays at or under the county loan limit.
Loan-to-value (LTV): The new loan balance divided by the home’s appraised value, shown as a percentage.
Seasoning: The waiting period a lender requires on your ownership or your existing loan before you can refinance for cash.
Limited cash-out refinance: A refinance that pays off your mortgage and costs but allows only small cash back.
Loan-level price adjustment: An added pricing charge, based on LTV and credit score, that applies to many cash-out loans.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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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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. FHFA Conforming Loan Limit Values
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. CFPB: Your Home Loan Toolkit
4. Freddie Mac Seller/Servicer Guide §4301.5
5. Consumer Finance Monitor: CFPB RFI on TRID and rescission
6. CFPB: How long do I have to rescind
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 Much a Conventional Loan Refinance Lowers a Payment · Can a Trust Take Out a Conventional Loan on a Primary Home? · Conventional Loans for Vacation Home Buyers Who Will Use It Themselves
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
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.