The Quick Read: There is no special program with that name. A cash-out refinance removes PMI (private mortgage insurance, the policy a lender requires when you borrow more than 80% of the home’s value) when the new loan lands at 80% of value or below. Conventional cash-out loans cap at 80% on a one-unit primary residence, so that cap does most of the work. One wholesale lane reaches higher with no mortgage insurance for borrowers who fit, subject to lender guidelines and full file review.
Key Takeaways
- PMI goes away because of the new loan-to-value ratio, not because of a named program.
- Across the wholesale programs Lendmire places files with, conventional cash-out tops out at 80% on a one-unit primary residence.
- You may not need to refinance at all. Cancellation and automatic termination cost nothing.
- Refinancing replaces your whole loan. Weigh the full cost against what PMI costs you.
- The best program for your situation depends on your equity, credit score, property type and how long you hold the loan.
Is There a Named Cash-Out Program That Removes PMI?
No. The question assumes a product that does not exist as a product. What exists is a rule: mortgage insurance is required above 80% loan-to-value (LTV, your loan balance divided by the home’s value). Get the new loan to 80% or below, and the requirement falls away.
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.
A cash-out refinance does that almost by design. It replaces your current mortgage with a bigger one and hands you the difference in cash. Because the agency cash-out limit on a one-unit primary residence is 80% LTV, a conventional agency cash-out loan can’t carry the kind of high leverage that triggers PMI. Think of it as a side effect of that limit. That is an inference from how the rules fit together, not a feature anyone sells. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
So when someone asks for the “best” program, the honest answer is that it depends on your situation: equity, credit score, property type and what you want the cash for. Lendmire is a mortgage broker, not a lender. It shops several wholesale lenders and matches your scenario to the program that fits. You can see how the options are laid out on Lendmire’s cash-out refinance programs page.
How Does a Cash-Out Refinance Remove PMI?
It works in three moves. First, the new loan pays off your old mortgage and the old PMI policy with it. Second, you take cash on top of the payoff. Third, the lender tests the new loan against the home’s appraised value. If that ratio is 80% or less, no mortgage insurance is charged on the new loan.
Here is the catch. Cash-out spends your equity. Every dollar you pull out raises the new balance and pushes the ratio up toward the cap. You can use cash-out to remove PMI only if you have equity to spare above the 80% line.
Picture a homeowner who bought with 5% down. Years later, the balance sits at about 70% of the home’s current value. A cash-out refinance can take that to 80% and still carry no PMI. Compare that with a homeowner whose balance sits at 85% of value. A standard conventional cash-out is off the table, because the starting point is already above the cap. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Two other facts matter:
- A cash-out loan carries pricing adjustments that a plain refinance does not, based on your credit score and leverage. That is the cost of taking cash.
- The 80% cap applies to one-unit primary residences. Two- to four-unit primary residences, second homes and investment property cap at 75% in these programs. If your home is not a one-unit primary, expect less room.
What About the Wholesale Lane Above 80%?
One lane breaks the usual pattern. Among the wholesale programs placed through Lendmire, a cash-out lane reaches 89.99% LTV with no mortgage insurance. It has tight conditions. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
- A 680 credit score.
- A total debt ratio of 50% or lower.
- A thirty-year fixed loan.
- A primary residence.
- A conforming loan balance.
- Six months of seasoning. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
It is not written in Texas, because the state constitution caps a homestead cash-out and this lane is not offered there.
If you fit, this lane lets you take cash and skip PMI with less equity than the 80% route needs. If you don’t fit, the standard 80% route is still there. Which one makes sense depends on your score, your equity and how long you plan to keep the loan. This is also where a broker earns its keep. One wholesale lender may write your scenario and another may not.
Mortgage insurance above 80% is a general rule of conventional lending. As Fannie Mae’s Selling Guide puts it, a conventional first mortgage above 80% LTV needs mortgage insurance unless the lender uses another approved form of credit enhancement. That is why a lane with no insurance above 80% has its own guidelines and its own conditions. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Which Refinance Path Removes Your Insurance?
Cash-out is one route among several. Here is how they compare.
| Path | Removes PMI? | Gives you cash? |
|---|---|---|
| Conventional cash-out (80% cap) | Yes, if new LTV is 80% or less | Yes |
| Wholesale lane to 89.99% | Yes, no mortgage insurance | Yes |
| Rate-and-term refinance | Only if new LTV is 80% or less | Only incidental cash back |
| Request cancellation | Yes, at 80% of original value | No |
| Automatic termination | Yes, at 78% of original value | No |
The rate-and-term refinance (also called a limited cash-out refinance) can run to 95% LTV on a one-unit primary residence. At that leverage, PMI usually stays. It pays off the old first mortgage and closing costs, and only a small amount comes back to you. It trims your rate or term. It does not fix PMI unless the ratio ends at 80% or below.
How Is the Loan Underwritten, Step by Step?
Here is the order a cash-out file moves through.
1. Baseline. Find out your current PMI cancellation date and your current LTV. If you are close to the 80% or 78% mark, waiting may beat refinancing.
2. Seasoning. Seasoning is the waiting period before you can refinance. In the programs behind these files, the first mortgage being paid off must be at least 12 months old, counted from note date to note date. At least one borrower must also have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards.
3. Value. An appraisal sets the home’s value. The new LTV is the new loan amount divided by that value. This one number decides whether PMI applies.
4. Underwriting. The lender runs the file through automated underwriting. The wholesale programs start at a 620 decision score, and the automated finding governs most files with a total ratio ceiling of 50%. The Fannie Mae Eligibility Matrix sets the score and LTV combinations. It also calls for minimum reserves on automated cash-out files with a debt-to-income ratio above 45%.
5. Pricing. The cash-out pricing adjustment is applied. You will see it on your Loan Estimate.
6. Closing. The new loan pays off the old one. Confirm in writing that the old PMI policy was cancelled and that any unearned premium is handled.
Seasoning and appraisal are the two steps that surprise people. A recent purchase can block a cash-out. A low appraisal can sink the ratio even with a strong score.
Do You Need to Refinance at All?
Often you don’t. This is the comparison most borrowers should run first.
Federal law gives you two free exits. Under the Homeowners Protection Act, you can ask to cancel PMI once your balance reaches 80% of the home’s original value. The Consumer Financial Protection Bureau says that request must be in writing. You may need to show good payment history, no junior liens, and that the value has not dropped. The servicer must end PMI automatically when you reach 78% of original value on the original schedule, if you are current.
There is also a route that uses current value. If your home has gained value, a servicer may allow removal based on today’s appraisal. The rules in Fannie Mae’s Servicing Guide are strict. A loan seasoned more than five years needs an LTV of 80% or less. If the value comes in below the original value, the servicer can deny the request unless you pay down the balance. It may cost you only an appraisal, far less than a new loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
So ask the real question. Do you want the cash, or do you only want PMI gone? If it is only PMI, check cancellation first. If you want cash anyway, cash-out may do both jobs at once.
What Does the Trade-Off Look Like?
Refinancing replaces everything. Removing PMI alone changes nothing else. A refinance brings:
- New closing costs.
- A new rate.
- A reset loan term.
- Cash-out pricing adjustments.
- A larger balance, because you took cash.
Typical annual PMI premiums run from 0.58% to 1.86% of the balance. That is a range, not a quote, and your own premium depends on your credit and leverage. The question is whether the PMI you stop paying outweighs the full cost of the new loan. If you will keep the home a long time and your PMI is high, the math can work. If you might move in a few years, it often doesn’t.
Skip the refinance if you are months from automatic termination. Skip it if the new loan resets you to a long term and you were nearly paid down. Skip it if you can’t say what the cash is for.
Where Does the General Rule Break?
Several situations change the answer.
FHA and VA loans. The Homeowners Protection Act does not cover government-insured loans. Fannie Mae’s consumer site notes that FHA mortgage insurance is more involved and may call for a refinance. Moving into a conventional loan at 80% or below is a common way out.
Lender-paid mortgage insurance. Some loans carry insurance built into the loan terms by the lender. It does not cancel the way borrower-paid PMI does. For those loans, refinancing may be the only exit.
Home equity loans and second liens. In a limited cash-out refinance, only a second lien used to buy the home can be paid off. Pay off an equity loan taken for other reasons, and the transaction becomes a cash-out.
Homes with no mortgage. A new loan on a home with no lien on it is still treated as cash-out.
Lower-ratio property types. Two- to four-unit homes, second homes and investment property cap at 75%. For a second home or rental, occupancy decides the leverage, and that is all this article covers on it.
Declined value. If your home is worth less than when you bought, a removal request can be denied. A refinance faces the same test through the new appraisal.
Special debt. Property-assessed energy financing and student loan payoffs have special treatment in agency rules. If either applies, ask your broker early.
Worked Scenario: Two Homeowners, Same Question
Hypothetical, in percentages only.
Homeowner A put 5% down and is now about four years in. The balance has fallen to roughly 75% of current value because the neighborhood appreciated. The first mortgage is well past 12 months. A cash-out to 80% takes a small slice of equity as cash and carries no PMI. Compare that with simply asking the servicer to cancel. If cancellation is available, the free route may be the smarter first step. If A also wants cash, the refinance does both.
Homeowner B bought recently with 3% down and sits near 92% of value after a year. A standard cash-out is blocked by the 80% cap, and a lane that stops at 89.99% would not fit a balance that sits above it. B’s realistic paths are to wait for the balance to fall, request cancellation later, or look at a rate-and-term refinance that may still carry PMI. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Same question, different answers. That is why scenario matching matters more than any single program label.
Key Terms Defined
PMI (private mortgage insurance): A policy on a conventional loan that protects the lender when you borrow more than 80% of the home’s value.
LTV (loan-to-value): Your loan balance divided by the home’s value, shown as a percentage.
Cash-out refinance: A new, larger mortgage that pays off the old one and gives you the difference in cash.
Seasoning: The minimum time you must have owned the home or held the existing loan before you can refinance.
Rate-and-term refinance: A refinance that changes your rate or term without meaningful cash back. Also called a limited cash-out refinance.
Automatic termination: The point where a servicer must end your PMI without being asked, at 78% of original value on the original schedule.
What Should You Prepare Before You Ask?
Gather these before you talk to a broker:
- Your current PMI cancellation date and loan balance, from your servicer.
- The date you closed on the home and the date of your current loan.
- Your best estimate of today’s value. The appraisal will set the real number.
- Your credit score range and monthly debts.
- What you plan to do with the cash.
Then compare three scenarios side by side: keep the loan and request cancellation, refinance without cash, and refinance with cash. Look at the Loan Estimate for each. A more affordable path depends on how long you keep the home and how much PMI you pay each month.
Frequently Asked Questions
Does PMI on my current loan block a cash-out refinance?
No. The new loan pays off the old loan and its PMI policy at closing. What matters is the new LTV, your credit score, your seasoning history and the appraisal. PMI on the old loan is a cost you are trying to leave behind, not a barrier.
Do I have to refinance to get rid of PMI?
Usually not. If you reach 80% of original value, you can request cancellation in writing. At 78%, the servicer must end it if you are current. FHA mortgage insurance is the main exception, and a refinance into a conventional loan is a common way out.
Is a cash-out refinance cheaper than keeping PMI?
It depends. A cash-out refinance brings new closing costs, a reset term and cash-out pricing adjustments. Keeping the loan costs you the monthly PMI until cancellation. Compare the full cost of the new loan against the PMI you would still pay. If you are close to automatic termination, waiting often wins.
How much equity do I need to drop PMI with a cash-out?
You need enough that the new loan, including the cash you take, lands at 80% or less of the appraised value on a one-unit primary residence. In the wholesale lane to 89.99%, a 680 score, a 50% ratio and other conditions apply. Each program is subject to lender guidelines and full file review.
Can I take cash out right after buying?
Usually not. The first mortgage being paid off must be at least 12 months old, and a borrower must have been on title for six months. A recent purchase is the most common seasoning problem.
Your 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. Nothing here is a commitment to lend. Program details are subject to lender guidelines and full file review.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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. Fannie Mae Selling Guide B7-1-01, Provision of Mortgage Insurance
2. Fannie Mae Eligibility Matrix
3. Consumer Financial Protection Bureau
4. Fannie Mae Servicing Guide B-8.1-04, Termination of Conventional Mortgage Insurance
5. Fannie Mae, Private Mortgage Insurance
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Conventional Loan Requirements for an Heir Assuming a Mortgage · Can You Use a Conventional Cash-Out Refinance Right After a Rehab? · How to Remove Escrow From a Conventional Loan After Closing
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
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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.