The Quick Read: There is no single best program. It depends on which loan you hold now, how much cash you take, and the loan-to-value ratio (LTV, the new loan divided by the home’s appraised value) that results. Paying off your old loan ends the old insurance. The new loan carries none only if it lands at or below 80% LTV, with one wholesale lane reaching higher. Subject to lender guidelines and full file review.
Key Terms Defined
Mortgage insurance: a monthly charge that protects the lender when your down payment or equity is under 20%. On conventional loans it is called PMI.
FHA mortgage insurance premium (MIP): FHA’s version of mortgage insurance. HUD sets it, and the rules for ending it differ from conventional PMI.
Seasoning: the waiting period a lender wants before you refinance. It applies to both the age of your loan and the time you have been on title.
Limited cash-out refinance: often called rate-and-term. It pays off your existing first mortgage and closing costs, with only incidental cash back.
Cash-out refinance: a new, larger loan that pays off the old one and hands you the difference.
VA funding fee: a one-time VA charge that takes the place of monthly mortgage insurance on a VA loan.
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.
Does a Cash-Out Refinance Remove Mortgage Insurance?
Yes, if the new loan fits under the cap. The old loan is paid off, so its insurance ends with it. Whether the new loan has insurance depends on one number: the LTV, counting the cash you take.
Here is the mechanism. A full cash-out on a one-unit primary residence tops out at 80% LTV in Fannie Mae’s eligibility matrix. A conventional cash-out that fits the cap generally carries no mortgage insurance.
The catch: the cash counts against you. Every dollar you pull raises the new balance. Add financed closing costs and you can slide past the line. Past it, the loan is either restructured or no longer eligible as a cash-out.
Owners focus on the insurance they are leaving and forget that the new loan has its own test.
If you want to compare programs by name, start with Lendmire’s cash-out refinance programs page.
What Is the “Best” Program? It Depends on What You Hold Now
The best program for your situation follows from your current loan. Think of it as three starting points.
| Current loan | Route that can end insurance | Main trade-off |
|---|---|---|
| Conventional with PMI | Conventional cash-out at 80% LTV or less | Cash taken shrinks your room under the cap |
| FHA with MIP | Leave FHA for a conventional loan | Needs enough equity to land at 80% LTV or less |
| VA | VA cash-out or other VA refinance | Funding fee replaces monthly insurance |
Conventional borrowers have the most options. Their lane is the one in the Quick Read: 80% LTV on a one-unit primary residence, 75% on two- to four-unit homes and second homes. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
FHA borrowers face a harder wall. FHA’s Streamline refinance keeps the loan FHA, so the premium stays. HUD’s Streamline page says the existing loan must be FHA-insured and current, and cash back above $500 is not allowed. A Streamline lowers your cost. It does not remove it. The way out is a conventional refinance.
VA borrowers have no monthly mortgage insurance at all. The VA’s Buyer’s Guide explains that the funding fee takes the place of it. The VA streamline refinance (the streamline) needs an existing VA loan and gives no cash back. It cannot turn an FHA or conventional loan into a VA loan.
How Is the Loan Underwritten, Step by Step?
Underwriting is the lender’s file review. Here is the sequence a broker walks through.
1. Identify the current loan. Conventional, FHA or VA. This decides which tools exist.
2. Check cancellation first (conventional only). You may be able to drop PMI without refinancing. The CFPB says you can request it in writing once the balance is scheduled to reach 80% of the original value. You certify there are no junior liens, and you may need to show the value has not fallen. Cancellation avoids new closing costs. A refinance does not.
3. Get a value. The appraisal sets LTV. The new loan amount includes the cash you take and any costs you finance.
4. Classify the transaction. Limited cash-out or full cash-out. Paying off a second lien or HELOC that was not used to buy the home generally pushes the file to full cash-out, which changes the cap and the pricing.
5. Test the seasoning clocks. Two run side by side. The first mortgage being paid off must be at least 12 months old, counted note date to note date. And a borrower must have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards, per Fannie Mae’s cash-out rules.
6. Underwrite credit and income. Wholesale conventional programs generally start at a 620 decision score, and the automated finding governs most files, with a total debt ratio ceiling of 50%. Credit score and LTV together drive pricing adjustments on cash-out loans.
7. Close, then confirm. The old insurance ends at payoff. Check the new Closing Disclosure to see whether the new loan carries any.
Occupancy matters too. A cash-out refinance on a conventional loan is available on a primary residence, and also on a second home or investment property, though the maximum loan-to-value is lower for those. A mortgage on a home you own free and clear also counts as cash-out, not rate-and-term.
A Wholesale Lane That Goes Above 80% With No Insurance
The general rule bends here. One wholesale lane reaches 89.99% LTV with no mortgage insurance on a cash-out. It asks for a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, a conforming loan balance and its own six months of seasoning. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Read that carefully. It is a narrow lane, not a universal feature. The lender builds the insurance cost into the loan instead of billing it monthly, so it is not free. It is also not written in Texas, where the state constitution caps a cash-out on the homestead at the agency figure.
This is why working with a broker matters. A broker shops multiple wholesale lenders and matches your scenario to the lane that fits. A bank with one menu cannot.
Three Scenarios, in Percentages
These are modeled assumptions, not market data.
Scenario one: strong equity, modest cash need. A homeowner with PMI and a home worth much more than the balance wants a small amount of cash. The new loan comes in well under 80% LTV. PMI ends, the cash arrives, and the main costs are closing costs and a pricing adjustment. Conventional cash-out fits. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Scenario two: the cash pushes the line. Same homeowner, bigger cash request. The new loan would land around 83% LTV. Standard cash-out is capped at 80%, so the file fails as written. The options: take less cash, look at the wholesale no-insurance lane if you qualify, or add a second lien instead. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Scenario three: FHA borrower, thin equity. The homeowner holds an FHA loan and the home’s value has grown only modestly. Leaving FHA at 80% LTV is out of reach. A Streamline lowers the cost but keeps MIP. Here the honest answer may be to wait, pay down principal, or keep the loan.
Where the General Rule Breaks
Named edge cases worth knowing:
- Limited cash-out at the higher LTV band. At 95% LTV on a one-unit primary residence (97% where the existing loan is agency-owned and the first-time-buyer program allows), mortgage insurance applies. Fannie Mae must own the existing loan for the top tier, per its limited cash-out rules. If your goal is removing insurance, this route does not do it.
- Lender-paid mortgage insurance. There is no monthly line item, because the cost sits inside the loan. It usually cannot be cancelled.
- Co-owner buyouts. These are exempt from the 12-month first-mortgage test.
- Pulling from a HELOC. Paying off a HELOC used for non-purchase reasons turns a rate-and-term into a cash-out.
- Occupancy change. If the home is no longer your primary residence, the leverage caps drop. Occupancy decides the number.
- Existing PMI on your current loan. It is no barrier to a cash-out. The old policy simply ends at payoff.
Is It Worth It? A Break-Even Framework
Cash-out is a trade, so weigh it. Ask four questions.
1. How much monthly insurance disappears?
2. What do closing costs and any pricing adjustment add?
3. How much larger is the new balance, and does a reset term extend your payoff?
4. How long will you keep the home?
The CFPB notes that ending PMI reduces monthly costs. But cash plus financed costs can offset those savings. If you need no cash, a plain rate-and-term refinance or PMI cancellation may beat a cash-out. Many people are surprised to learn that.
Also compare alternatives that leave your first mortgage alone: a second lien or HELOC. They win when the first mortgage is a good fit and the insurance is already near cancellation.
Frequently Asked Questions
Can I take cash out when refinancing to remove mortgage insurance?
Yes, as long as the new loan, including the cash, stays at or below 80% LTV on a conventional one-unit primary residence. Above that, insurance returns or the loan restructures. One wholesale lane goes higher without monthly insurance, subject to its score, ratio and seasoning conditions and lender guidelines. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Does a cash-out refinance require mortgage insurance?
Not if it fits under the 80% cap. Because the cash-out cap is 80%, a standard conventional cash-out generally carries none.
Will an FHA Streamline remove my mortgage insurance?
No. The loan stays FHA, so the premium stays. Removing it generally means refinancing into a conventional loan with enough equity to reach 80% LTV or less.
How long must I wait before a cash-out refinance?
Conventional cash-out generally needs a borrower on title for six months and a first mortgage that is at least 12 months old. Delayed financing, inheritance and legal-award exceptions exist. Your file review confirms which applies.
Can I just cancel PMI instead?
Often, on a conventional loan. You can request cancellation at 80% of the original value with good payment history and no junior liens. The servicer must end it automatically at 78%. FHA insurance follows different rules and is outside this cancellation law.
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.
Program figures 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 current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program 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
1. Fannie Mae Eligibility Matrix
4. CFPB
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance
6. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance
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 to Get a Cash-Out Refinance After Buying a Home With Cash · Does a Fourplex Cash-Out Refinance Need More Reserves Than a Duplex? · How to Use Cash-Out Refinance Proceeds on a Primary Home Wisely
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.