The Quick Read: There is no single best program once the clock has run. The right one depends on which loan you are paying off, who insures it, and who is on title. On a conventional loan, the old first mortgage must be at least 12 months old. FHA and VA measure their waiting periods differently, so the first job is to match your loan to the right clock.
Key Takeaways
- “12 months” means a different thing under conventional, FHA and VA rules.
- Conventional cash-out reaches 80% of value on a one-unit primary home and 75% on two to four units.
- The 12 months run from the old loan’s note date to the new loan’s note date, not from your purchase date.
- FHA Streamline and VA streamline refinance are rate-and-term tools. They are not cash-out programs.
- A recent refinance restarts the conventional clock, even if you have owned the home for years.
Why “12 Months” Is Not One Rule
Seasoning is the waiting period a lender requires before it will pay off a loan with a new one. Borrowers hear “12 months” and assume one rule. It is really three.
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.
Here is how the clocks compare.
| Loan being paid off | What the clock measures | Length |
|---|---|---|
| Conventional | Age of the old first mortgage, note date to note date | 12 months |
| Conventional | Time a borrower has been on title | 6 months |
| FHA cash-out | Owner-occupancy and on-time payments before the case number | 12 months |
| VA to VA cash-out | First due date, plus payments made | 210 days and 6 payments |
Note date is the day you signed the loan. It is the date on the promissory note, not the date of your first payment. If you signed your current mortgage on a Tuesday last spring, the new loan’s note date must be at least 12 months after that Tuesday.
The six-month title test sits next to the 12-month test. At least one borrower must have been on title for six months. Many people mix these two up. Six months used to be the loan-age rule, and some older articles still say so.
How the Waiting Period Fits the Bigger Picture
Meeting the clock only opens the door. It does not decide the loan. You still need the equity, the credit and the income to pass a full review.
Across the wholesale programs Lendmire places files with, the order of questions is the same. What is being paid off? Does the clock apply to it? Then how much equity does the program let you reach? The answers narrow the field quickly, and the rest is fit. Lendmire’s cash-out refinance programs page lays out the loan options a broker can shop for you.
A broker earns its keep at this stage. Different wholesale lenders write different lanes. Some stop at the standard leverage limit. Others reach further, with their own seasoning and score floors. Which lenders fit you depends on your property type, credit profile, leverage need and documents. A broker that shops several of them can match your file to a lane that fits.
How a Cash-Out Refinance Is Underwritten, Step by Step
Underwriting is the lender’s review of whether you can repay. Here is the order a typical file follows.
1. Identify the payoff. Is it a first mortgage, a home equity line, a second lien, or nothing at all because the home is paid off? The answer sets the clock.
2. Run the clock. Check the old loan’s note date against today. Check title history. Check occupancy.
3. Document the seasoning. Lenders prove it with the credit report or title commitment. For FHA, they also look for proof you lived there, such as utility bills.
4. Order the appraisal. Cash-out loans are sized on appraised value. A low appraisal can shrink your cash more than any rule.
5. Review income, credit and debts. Conventional wholesale programs start at a 620 decision score. The automated finding governs most files, with a total debt ratio ceiling of 50%. Manually reviewed loans use a tighter 36% or 45% ceiling, depending on the file.
6. Price the loan. Conventional cash-out carries pricing adjustments that rise with higher leverage and lower credit scores. FHA and VA add their own insurance or funding fee.
7. Pay off the old lien, then pay you. The old loan is paid first. What remains is your cash.
Every step is subject to lender guidelines and full file review. Nothing here is a commitment to lend.
The Programs, Side by Side
Four loan families come up most often once the clock is met. This table separates the ones that pay cash from the ones that do not.
| Program | Pays cash out? | Key condition |
|---|---|---|
| Conventional cash-out | Yes | Old first lien 12 months old |
| Wholesale higher-leverage lane | Yes | Own 6-month seasoning, 680 score |
| FHA cash-out | Yes | 12 months of occupancy and payments |
| VA cash-out | Yes | Seasoning only if paying off a VA loan |
| FHA Streamline | No | Existing FHA loan, net tangible benefit |
| VA IRRRL | No | Existing VA loan, 210 days and 6 payments |
Conventional cash-out
Conventional cash-out reaches 80% of value on a one-unit primary residence. On two- to four-unit primary residences, second homes and investment property, the ceiling is 75%. Occupancy decides the leverage, so a rental or second home sits at the lower figure.
The occupancy and title tests come from the agencies. Freddie Mac’s Guide section 4301.5 requires every borrower to occupy a primary residence. It also requires at least one borrower to have been on title for six months. The same guide points to its credit fee exhibit for cash-out pricing. Fannie Mae‘s Selling Guide sets parallel rules.
The higher-leverage wholesale lane
One wholesale lane reaches 89.99% loan-to-value (LTV) with no mortgage insurance. LTV is the loan amount divided by the home’s value. The lane requires a 680 score, a 50% debt ratio, a 30-year fixed rate, a primary residence and a loan within conforming limits. It carries its own six months of seasoning. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
Mortgage insurance protects the lender when you borrow above 80% of value. On loans that carry it, you can request cancellation at 80% of the original value. The servicer must end it automatically at 78%. Some borrowers want this lane because it reaches more equity. Others find the standard 80% is enough.
In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure. The wholesale lane is not written there.
FHA cash-out
FHA has its own 12-month test. At least one borrower must have owned and lived in the home for the 12 months before the FHA case number is assigned. Payments on all mortgages must also be made within the month due for those 12 months, or since the loan began if that is shorter. This comes from HUD Handbook 4000.1. FHA cash-out applies to principal residences only.
VA cash-out
VA cash-out can pay off debt, fund school or pay for improvements. Its seasoning rule applies only when the loan being refinanced is VA-guaranteed. VA Pamphlet 26-7, Chapter 6 sets the test as a first due date at least 210 days before the note date, plus six consecutive payments. Paying off a non-VA loan has no VA seasoning. Some lenders add the 210-day test anyway as their own rule.
The streamlines (no cash)
These two are the most misread. A streamline is a reduced-paperwork refinance of a loan you already have.
HUD’s Streamline page says an FHA Streamline is only for an existing FHA loan that is current, and it must show a net tangible benefit. That means the refinance must leave you measurably better off. HUD allows only a token amount of cash back and does not let you roll closing costs into the loan. HUD is also clear that “streamline” describes the paperwork, not the costs.
The VA IRRRL works the same way. The VA’s IRRRL page says it cannot put cash in your hands, and no loan other than the existing VA loan may be paid off from its proceeds. It carries a 0.5% funding fee unless you are exempt, and no VA appraisal.
If you want cash from an FHA or VA loan, you need the cash-out version, not the streamline.
Where the 12-Month Rule Bends or Breaks
The general rule has named exceptions. These are the ones that matter most.
A recent refinance resets the clock. A refinance creates a new note. That new note must be 12 months old before a conventional cash-out can pay it off. A homeowner of ten years can still be blocked if they refinanced last summer. This is the most common surprise.
Home equity lines and second liens. The 12-month test on the old first lien does not apply to a subordinate lien being paid off. A subordinate lien is a loan that sits behind your first mortgage. Freddie Mac also exempts a refinanced home equity line from the 12-month test.
Co-owner buyouts. Divorce, inheritance and partner buyouts fall under exceptions. Both agencies exempt buying out a co-owner under a legal agreement from the 12-month test.
Delayed financing. If you bought with cash, conventional rules let you take cash out within six months of purchase. You must document where the purchase funds came from. In effect, you recover the cash you put in.
Renovation loans. Freddie Mac treats certain renovation and energy loans as “no cash-out” when the proceeds fund only eligible improvements. Those can sit outside the 12-month test.
Title in an LLC. If a home is titled in an LLC, conventional rules generally require ownership to move into your personal name to close. That is a title fix to plan for before you apply.
Inheritance on FHA. An heir does not need a minimum occupancy period first, provided the home was never treated as an investment property. If it was rented after inheritance, the borrower must occupy it for 12 months.
Free-and-clear homes. A home with no mortgage can be refinanced for cash on FHA. Conventional rules treat a paid-off home as a cash-out as well, so the loan-age clock does not apply when there is no loan to age.
PACE loans. A borrower with enough equity to pay off a PACE assessment loan, but who chooses not to, is ineligible for conventional cash-out.
What the Decision Looks Like in Practice
Start with what you owe now. Then follow the branch.
- Existing conventional loan. Conventional cash-out after 12 months is the usual path. FHA is rarely the better fit here unless credit is the issue.
- Existing FHA loan. FHA cash-out needs its 12 months of occupancy and on-time payments. A conventional refinance is the other route if your score and equity support it.
- Existing VA loan. VA cash-out follows the VA-to-VA seasoning.
- Existing FHA or VA loan, better term only. If you have an FHA or VA loan and you only want a better term, a streamline or IRRRL may fit. You get no cash.
Picture a homeowner who refinanced a conventional loan about eight months ago and now wants cash for a roof. The conventional clock has four months to go. In the meantime, a home equity line sits behind the new first loan. It does not trigger the 12-month test on the first lien, though lender rules still apply. Another homeowner bought a house with cash and wants the money back. Delayed financing is built for that.
Now picture a homeowner with a paid-off VA loan. The VA seasoning rule has nothing to measure, so the question shifts to equity and credit.
The preparation checklist for months nine to twelve
- Find your note date on the Closing Disclosure from your last loan.
- Pull your credit report and check for errors.
- Confirm every borrower’s name on title.
- Keep a record of on-time payments, since FHA looks at twelve months of history.
- Gather income documents and a list of the debts you plan to pay off.
- Decide what the cash is for before you apply.
The Cost of the Cash
A cash-out refinance replaces your whole first mortgage, not just the part you borrow against. Your old loan and its terms disappear. A larger loan can raise the monthly payment and stretch out the payoff. The cash is added to your new loan amount, which raises the balance and the lifetime interest.
Many borrowers use the cash to pay down card and auto debt. Credit scores often improve at first and then gradually worsen. Card balances can drift back up, though they may stay below pre-refinance levels. Swapping card debt for mortgage debt only helps if the cards stay quiet afterward.
A cash-out loan also leaves less equity cushion than a refinance, which stops at 95% of value on a one-unit primary home. Lower leverage on a cash-out is the program’s way of keeping some of that cushion in place.
If a quoted refinance looks cheaper than your current loan, compare the full terms on the Loan Estimate line by line. Costs can be built into the balance or the rate instead of showing up as a separate fee.
Key Terms Defined
Seasoning: The waiting period a lender requires before an existing loan or ownership counts as established enough to refinance.
Note date: The day you signed the loan. It starts the seasoning clock.
Limited cash-out refinance: A refinance that pays off your first mortgage and costs, with only incidental cash back. Lenders also call it rate-and-term.
Subordinate lien: A loan that sits behind your first mortgage, such as a second mortgage or home equity line.
Net tangible benefit: The measurable improvement a streamline refinance must show, such as a better term, to be allowed.
Delayed financing: An exception that lets a cash buyer take out cash soon after purchase, with documented proof of where the money came from.
Loan-to-value (LTV): The loan amount divided by the home’s appraised value.
Matching Your File to a Program
The best program for your situation is the one that fits your old loan, your title, your equity and your goal. A homeowner chasing the most equity needs a different lane than one who wants the simplest file. Comparing programs side by side is what a broker is for.
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. Qualification is subject to lender guidelines and full file review. This is not a commitment to lend.
Frequently Asked Questions
Does the 12 months start when I bought the house?
No. On conventional loans it starts at the note date of the mortgage being paid off and ends at the note date of the new one. A refinance last year can matter more than a purchase ten years ago. The six-month title rule is separate and looks at time on title.
Can I get cash from an FHA Streamline or a VA IRRRL?
No. HUD allows only a token amount of cash back on an FHA Streamline. The VA does not allow any cash on an IRRRL. If you want real cash, you need a cash-out program. Both streamlines also need an existing FHA or VA loan to refinance.
What if I refinanced recently but want cash now?
A conventional cash-out generally has to wait until the new loan is 12 months old. A home equity line or second lien does not trigger the same test on your first lien, though lenders set their own terms. Which route fits depends on your equity and goals.
Does VA cash-out always require 210 days?
No. That test applies when you are paying off a VA loan. If you are paying off a non-VA loan, VA applies no seasoning. Some lenders still add the 210-day test as their own rule, so ask which one applies.
How much equity can I reach?
Conventional cash-out reaches 80% of value on a one-unit primary home and 75% on two to four units. One wholesale lane reaches 89.99% with no mortgage insurance at a 680 score and a 50% debt ratio on a 30-year fixed primary residence. These limits are subject to lender guidelines and your full file.
For your own numbers, request a scenario review with Lendmire.
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.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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. Freddie Mac Seller/Servicer Guide, Section 4301.5, Cash-out refinance Mortgages
2. Fannie Mae
3. VA Pamphlet 26-7, Chapter 6, Refinancing Loans
4. HUD, FHA Streamline Refinance
5. VA, Interest Rate Reduction Refinance Loan
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.