The Quick Read: The best program depends on the loan you hold now, whether you live in the home, and how much equity you want to reach. A cash-out refinance replaces your first mortgage with a larger one, and you keep the difference as cash. Conventional, FHA, and VA each fit a different borrower. A broker that shops several wholesale lenders can match your file to the right one, subject to lender guidelines and full file review.
Key Takeaways
- A cash-out refinance swaps your current first mortgage for a bigger new one. You keep the title and the house.
- On a conventional loan, the standard ceiling is 80% LTV on a one-unit home you live in.
- Clocks matter: the loan being paid off must be at least 12 months old, and you generally need 6 months on title.
- There is no single winner. Your existing loan type, your occupancy, and your goal pick the program.
- A cash-out refinance is not always the right tool. If your current first mortgage is one you want to keep, a second lien may fit better.
What Is a Cash-Out Refinance, and Why Does It Count as Borrowing Without Selling?
A cash-out refinance is a new first mortgage that pays off your old one and hands you the leftover equity as cash. You borrow against the house instead of selling it. You still own it, and you still live in it.
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.
Equity is the gap between what the home is worth and what you owe. LTV, or loan-to-value, is your loan balance as a percentage of the appraised value. If your home appraises at 100% of its value and the program caps you at 80% LTV, the new loan can be no more than 80% of that value. Your old payoff, other liens, and any financed costs come out of that amount first. What remains is your cash.
That is the whole mechanic. The rest of this article is about which version of it fits you.
Lendmire’s cash-out refinance programs page lays out the program families. The short version for a homeowner: Lendmire is a mortgage broker, so it compares wholesale lenders for you rather than lending its own money.
What Does “Best Program” Actually Mean?
“Best” is not a brand or a lender. It is the program whose rules your file meets and whose trade-offs you can live with. Across the wholesale programs placed through a broker, five questions sort most files:
1. What kind of loan do you have now? A conventional, FHA, or VA first mortgage points toward different options.
2. Do you live in the home? Cash-out programs for a principal residence carry the highest leverage.
3. How much cash do you need? The more equity you want, the fewer programs reach it.
4. How is your credit and income? Scores and ratios decide which lanes are open.
5. What are you using the money for? Debt payoff, a renovation, and a one-time expense do not carry the same risk.
Notice what is missing: a pricing quote. Pricing moves daily and depends on your file. Program fit comes first.
Which Program Fits Which Borrower?
Three families cover most homeowners. A fourth, jumbo, takes over when the loan is above the conforming limit.
| Program | Best for | Main requirement | Main trade-off |
|---|---|---|---|
| Conventional cash-out | Most owner-occupants with equity | 80% LTV cap, one-unit home you live in | Mortgage insurance rules and seasoning clocks |
| FHA cash-out | Borrowers who fit FHA credit rules | Principal residence only | FHA mortgage insurance applies |
| VA cash-out | Eligible veterans and service members | Certificate of Eligibility, you live there | Funding fee unless exempt |
| Jumbo | Loans above the conforming limit | Higher score floor, strong file | Tighter credit and reserve review |
Figures for FHA and VA cash-out leverage vary by lender overlay, so confirm them against the current agency pages and your lender’s guidelines before relying on a number.
Conventional cash-out
This is the workhorse. Across the wholesale programs placed through the brokerage, conventional cash-out on a one-unit principal residence tops out at 80% LTV. Two- to four-unit homes, second homes, and investment property are capped at 75%. That one sentence is the whole occupancy rule: how you use the property sets the leverage. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Credit starts at a 620 decision score on the wholesale conventional programs. The automated underwriting finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run tighter, at 36% or 45% depending on reserves and score factors. All of it is subject to lender guidelines.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score and a 50% ratio on a thirty-year fixed, a primary residence, and a conforming balance. It carries its own six months of seasoning. Not every lender writes it, and it is not available in Texas. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
FHA cash-out
HUD’s FHA Handbook 4000.1 separates cash-out from no-cash-out refinances. A standard FHA cash-out is for an owner-occupied principal residence. It works for borrowers whose credit profile fits FHA better than conventional. The trade-off is FHA mortgage insurance, which behaves differently from conventional mortgage insurance.
VA cash-out
The VA’s cash-out loan page says you need a Certificate of Eligibility and must live in the home. It can take equity out, or it can refinance a non-VA loan into a VA-backed one. The VA does not lend the money. A private lender does, and your lender orders the appraisal.
Jumbo
Above the conforming limit, jumbo lanes take over. On the wholesale side, these start at a 660 decision score, reach leverage up to 90%, and lend up to $5,000,000, with a 50% ratio ceiling on the fixed lanes. Cash-out leverage inside the jumbo range depends on the specific lane. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting follows the same sequence on most files. Each step can stop a deal, so knowing the order helps.
1. Pick the product. Rate-and-term is a limited cash-out refinance with only small incidental cash back. Full cash-out is for borrowers who want equity proceeds. The FHA Streamline and VA IRRRL are not cash-out products.
2. Check occupancy. For a primary residence, all borrowers must occupy the property. VA and FHA cash-out also require you to live there.
3. Check the clocks. More on these below.
4. Order the appraisal. The appraised value sets the ceiling. The Fannie Mae Eligibility Matrix sets maximum LTV by loan purpose, number of units, and occupancy.
5. Underwrite credit, income, assets. On conventional files, an automated engine evaluates the file. Lenders then document your income, employment, and reserves.
6. Close and receive funds. The old lien is paid first. You receive the remainder.
What decides the outcome: appraised value, total debt against the home, occupancy, seasoning, credit and income, and which program’s cap applies.
The two clocks
Conventional cash-out has a loan-age test and a time-on-title test. The first mortgage being paid off must be at least 12 months old, measured note date to note date. You also need to have been on title for 6 months. Exceptions exist for delayed financing, inheritance, and legal awards. Fannie Mae’s cash-out refinance section covers delayed financing for cash buyers, with cash-out pricing applied.
If you bought recently, count the months before you apply.
Cash-Out Refinance, HELOC, or Home Equity Loan?
A cash-out refinance replaces your first mortgage. A HELOC (a revolving line of credit secured by the home) or a home equity loan (a fixed lump-sum second loan) sits beside it.
Here is how a broker usually frames the choice:
| Your situation | Often fits |
|---|---|
| You like your current first mortgage and need a modest amount | A second lien |
| Your current loan is expensive or you want to change its term | Cash-out refinance |
| You want one lump sum and one payment | Cash-out refinance |
| You want staged draws over time | HELOC |
The deciding question is what you give up. A cash-out refinance resets your whole balance and term. A second lien leaves your first mortgage alone. If your existing loan is one you would not want to replace, say so early in the conversation.
This is a genuine toss-up for many borrowers. A cash-out refinance is cleaner on paper. A second lien protects a good existing loan. Neither is “best” without your numbers.
What Does a Realistic Scenario Look Like?
Say you own a one-unit home you live in, with a first mortgage that is 18 months old. You have been on title well past six months. The home appraises well, and your balance sits far below the cap.
At 80% LTV, the new loan can reach 80% of the appraised value. Subtract your old payoff and your financed closing costs. What is left is your cash. If you roll costs into the loan, the cash you receive shrinks by that amount. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Now flip one detail. Your first mortgage is only eight months old. You do not clear the 12-month loan-age test for conventional cash-out. A limited cash-out might still work, but it gives you only incidental cash. Same house, same equity, different answer. The clocks decide.
Two more things change the monthly picture. Your balance goes up, so your payment can go up. You also reset the term. The VA notes that adding cash raises the balance and the interest paid over the life of the loan.
Where Does the General Rule Break?
Most cash-out files follow the pattern above. These are the named exceptions.
- Delayed financing. A cash buyer can take cash out without the usual wait. Cash-out pricing applies, and documentation is strict, including the original settlement statement.
- Co-owner buyout. Freddie Mac treats buying out a co-owner as a special-purpose cash-out. Fannie Mae has also clarified that its HomeStyle Renovation limited cash-out can buy out a co-owner’s interest.
- Paying off a second lien. Under Fannie Mae’s limited cash-out rules, a purchase-money second can be paid off and still count as limited. Other second liens push the loan into full cash-out.
- A home owned free and clear. Freddie Mac treats a loan on a home with no first lien as cash-out. Fannie Mae calls a property with no outstanding first lien an ineligible limited cash-out transaction, with a narrow construction-to-permanent exception.
- A Fannie Mae-owned loan. Limited cash-out and high-LTV treatment can tie to Fannie Mae owning your existing loan. The automated underwriting message can confirm this.
- Texas. A cash-out on a Texas homestead is capped by the state constitution, which sets its own limit on the loan amount. The 89.99% wholesale lane is not written there.
- Inheritance. Both FHA and Freddie Mac list title-time exceptions. Confirm the exact wording with the handbook or guide before counting on one.
- Second homes and rentals. Occupancy decides leverage. Second homes, two- to four-unit homes, and investment property carry the 75% conventional cash-out cap.
Streamlines are not cash-out
An FHA Streamline refinances an existing FHA loan with limited credit review, and it requires no appraisal. The VA IRRRL does the same for an existing VA loan, with a 0.5% funding fee unless exempt, no VA appraisal, and seasoning of the later of 210 days and six payments. Both require a net tangible benefit. Neither puts equity cash in your hands.
What Does a Cash-Out Refinance Cost You?
You pay in several ways. Know each one before you sign.
- Closing costs. You can pay them in cash or roll them into the loan. Rolling them in reduces the cash you receive and raises your balance.
Fannie Mae applies cash-out pricing, and that pricing does not state a dollar amount for your loan.
- Mortgage insurance. Above 80% LTV, mortgage insurance applies. You may request cancellation at 80% of the original value, with good payment history, no subordinate liens, and no decline in value. The servicer must end it automatically at 78%. Published typical annual premiums run 0.58% to 1.86% of the balance, which is a range and not a quote. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Some lenders and sites advertise “no-closing-cost” refinances. The costs do not vanish. They get built into the rate or the balance. Compare the Loan Estimate line by line.
When Should You Not Do This?
Skip a cash-out refinance, or at least slow down, in these cases:
- You would trade a first mortgage you like for a more expensive one just to reach a small amount of cash.
- You plan to spend the money on things that do not build value or retire debt.
- Your budget has no cushion for a higher payment.
- Your equity is thin, and a dip in home values would leave you with little room.
The home is the collateral. If you cannot make the payment, you risk the house. A cash-out refinance also converts equity into debt, so you own less of the home on paper the day it closes.
What Should You Prepare?
A short list saves time and surprises:
- Your current mortgage statement and payoff details.
- Proof of how long you have been on title and when your loan originated.
- Two clear income and employment records, plus asset statements.
- A realistic number for how much cash you need and why.
- Any second liens, a co-owner, or a trust on title, so the broker can plan around them.
Then ask the broker to compare programs against your goal, not just against a payment.
What Happens After You Sign?
On most refinances of a primary residence, you get three business days after signing to cancel. Cancellation must be in writing, and a phone call is not enough. If the lender failed to give required disclosures or the notice, the right can extend up to three years. If you rescind, you still owe the original loan.
Funds on a primary-residence refinance are not disbursed until that window ends, so plan for the wait.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off your old one and gives you the leftover equity as cash.
LTV (loan-to-value): Your loan balance as a percentage of the home’s appraised value.
Seasoning: The waiting period a lender requires, such as how long you have been on title or how old the loan being paid off is.
Limited cash-out (rate-and-term) refinance: A refinance that pays off your first mortgage and costs, with only small incidental cash back.
Lien: A legal claim on your home that secures a loan.
Mortgage insurance: Coverage for the lender, required above 80% LTV, that cancels as your balance falls. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Combined LTV: All loans against the home, added together, as a percentage of its value.
Frequently Asked Questions
Is there one best cash-out refinance program?
No. The best program depends on your current loan type, whether you live in the home, how much equity you want, and your credit. A conventional file, an FHA file, and a VA file each start from different rules. A broker that shops multiple wholesale lenders can compare them against your scenario.
How much can I borrow against my home?
On a conventional loan, 80% LTV for a one-unit home you live in, and 75% for two- to four-unit homes, second homes, and investment property. One wholesale lane reaches 89.99% LTV with no mortgage insurance for qualifying primary-residence borrowers. Everything is subject to lender guidelines and full file review.
Can I take cash out right after buying?
Usually not on a standard cash-out. The loan being paid off must be at least 12 months old, and you generally need 6 months on title. Delayed financing is the exception for cash buyers, with cash-out pricing applied.
Can I borrow against a paid-off home?
Yes, with limits. A home with no first lien is treated as cash-out by Freddie Mac, and Fannie Mae does not allow it as a limited cash-out.
Does a cash-out refinance increase what I owe?
Yes. Your new balance is larger than your old one, and the term resets. That can raise your payment and the total interest you pay over time, so compare it against a second lien before choosing.
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.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
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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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
3. Fannie Mae Eligibility Matrix
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
5. Freddie Mac
6. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance Transactions
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Delayed Financing vs. a Traditional Cash-Out Refinance for a Cash Buyer · Should Co-Owners Use a Cash-Out Refinance Buyout or Sell the Home? · Cash-Out Refinance vs Home Equity Loan When You Need Full Value
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.