The Quick Read: No single program wins for everyone. The program that reaches the most equity depends on who you are, because VA, FHA and conventional loans serve different borrowers. VA generally allows the highest ceiling, but only for eligible borrowers. On a conventional loan for a one-unit home you live in, the standard cap is 80% of the home’s value, and one wholesale lane reaches 89.99% for borrowers who fit it. Every figure here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Key Takeaways
- A cash-out refinance replaces your whole first mortgage with a bigger loan and pays you the difference.
- The cap is a ceiling on the new loan. It is not the check you receive.
- Conventional cash-out tops out at 80% on a one-unit primary home. Two- to four-unit homes, second homes and investment property cap at 75%.
- VA offers the highest ceiling of the major programs. Lenders may set lower limits of their own.
- The Streamline and the VA streamline refinance are not cash-out programs, whatever the marketing says.
What Is a Cash-Out Refinance, Really?
A cash-out refinance swaps your current mortgage for a new, larger one. The new loan pays off the old balance and the closing costs. You get what is left as cash.
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 is different from a rate-and-term refinance. Rate-and-term only changes the interest rate, the loan length or both. It pays off the existing first mortgage and a few other items, with only incidental cash back. Take real cash out, and the loan is classified as cash-out. That classification matters because cash-out carries tighter leverage limits and higher pricing adjustments.
A home with no mortgage on it counts as cash-out too. Fannie Mae’s Selling Guide treats a new loan on a free-and-clear home that way.
Lendmire is a mortgage broker. It arranges these loans through wholesale lenders, and the lenders do the underwriting and approving. Lendmire’s cash-out refinance programs page lays out the options.
Which Program Lets You Borrow the Most?
Here is the honest ranking by ceiling, then the catch on each.
| Program | Who it fits | Ceiling in plain terms |
|---|---|---|
| VA cash-out | Eligible veterans and service members | Highest of the major programs |
| Conventional cash-out | Any qualifying owner-occupant | 80% on one unit |
| Conventional wholesale lane | Strong-credit, conforming-balance primary homes | Up to 89.99%, no mortgage insurance |
| FHA cash-out | Borrowers who want FHA-insured loans | Lower than VA, near conventional |
VA is first on paper. VA.gov says a cash-out loan can take equity as cash, or move a non-VA loan into a VA-backed one. You need a Certificate of Eligibility and you must live in the home. VA’s own news service says veterans can get up to 100% of their home equity in cash. In practice, many lenders apply a lower limit of their own. Think of VA as the highest ceiling, not a guaranteed one.
Conventional is the widest door. Anyone who qualifies can use it. On a one-unit primary home the cap is 80%. On two- to four-unit homes, second homes and investment property, it drops to 75%. Occupancy decides the leverage.
The 89.99% lane is the one most people miss. Across the wholesale programs placed through Lendmire, one lane reaches 89.99% with no mortgage insurance. It has conditions: a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming loan balance. It carries its own six months of seasoning. In Texas, the state constitution caps a homestead cash-out at 80% of the home’s value, so this lane is not written there. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
FHA sits in the middle. It suits borrowers who want FHA-insured financing, with a ceiling below VA’s. Mortgage insurance premiums apply and raise the cost of taking cash out.
The Cap Is Not Your Check
This is where most borrowers get tripped up. The cap applies to the whole new loan. Your cash is what survives after everything else comes out.
Work it in four steps:
1. Take the appraised value.
2. Multiply by the program’s cap. That is the largest new loan allowed.
3. Subtract your current payoff, any other liens you must clear, and the closing costs you roll in.
4. What remains is the most cash you can receive.
Say your home appraises at a number you can picture, and you owe 50% of it. At an 80% cap, you are borrowing up to 30 points of value beyond your balance. Roll in costs and some of those points disappear. Costs financed into the loan eat the same equity cap you are trying to use.
A wrinkle: Freddie Mac’s Guide Section 4203.1 rounds the calculated ratio up to the next whole number. A 94.01% ratio counts as 95%. On a file sitting right at a cap, that rounding can cost you.
Reverse Math: Start From the Cash You Need
Flip the formula when you have a target. Take the cap, subtract the cash you want and the costs, and what is left is the highest payoff your current balance can have. If your balance is above that number, the program cannot deliver your target. Better to learn it before the appraisal than after.
How the Loan Is Underwritten, Step by Step
Across the wholesale programs we place files with, the process runs in the same order every time.
1. Classify the loan. Cash-out, limited cash-out or rate-and-term? Everything downstream depends on it.
2. Order an appraisal. Value is the denominator in every leverage test.
3. Check seasoning and occupancy. Conventional cash-out requires the first mortgage you are paying off to be at least 12 months old, counted note date to note date. At least one borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist. VA requires you to live in the home.
4. Compute the maximum loan. Value times the cap for your occupancy and unit count.
5. Price the loan. Cash-out carries a higher pricing adjustment than a no-cash-out refinance. Freddie Mac’s cash-out product page confirms a credit fee based on score and leverage. FHA loans add mortgage insurance premiums, and VA adds a funding fee.
6. Underwrite the borrower. Lenders review credit, income, debt-to-income ratio (your monthly debts divided by your monthly income) and reserves. Wholesale conventional programs generally start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%.
7. Close and disburse. Existing liens are paid off and the net cash goes to you.
Mortgage insurance matters if you go above 80%. On the agency path it is required over that line, except in the wholesale no-mortgage-insurance lane above. You can ask to cancel it at 80% of the original value, and the servicer must end it at 78%.
Where the General Rule Breaks
The 80% figure is a rule of thumb. These edge cases bend it.
Streamlines are not cash-out loans. The FHA Streamline and the VA IRRRL are rate-and-term products. An FDIC-hosted copy of HUD’s Streamline summary says no cash may be taken out. The IRRRL carries a 0.5% funding fee unless you are exempt. Neither one can serve a borrower who wants equity.
VA has two cash-out types. VA Circular 26-19-05 separates Type I, a new loan not exceeding the payoff, from Type II, a new loan larger than the payoff. Only Type II removes equity.
Free-and-clear homes count as cash-out. No mortgage does not mean no classification. Certain renovation products are the exception when proceeds fund only eligible improvements.
Co-owner buyouts have their own lane. Buying out a spouse or partner under a legal agreement is treated differently from ordinary cash-out. Freddie Mac’s credit fee is not billed on its special purpose version.
Student-loan payoffs. Fannie Mae waives the cash-out pricing adjustment on qualifying student-loan cash-out refinances.
A property with a PACE loan. Check this early. Certain transactions on properties with PACE financing have been ineligible under agency rules.
State rules. Some states restrict cash-out against a homestead. Texas is the clear example in our footprint. Ask before you assume.
Second homes and rentals. One sentence settles it: occupancy decides the leverage, and the caps drop to 75% off the primary home.
Why You’ll See Different Numbers Elsewhere
Searching this topic turns up conflicting caps, especially for government loans. Two things explain it.
First, agency rules and lender overlays are different layers. An agency may allow a ceiling, and an individual lender may set a lower one. “Up to” is not “typical.”
Second, some pages are simply old. Rules change, and a figure from a few years ago may no longer apply. The figures in this piece come from the program parameters Lendmire works with. They remain subject to lender guidelines and full file review.
Can You Take 100% of Your Equity?
Rarely. VA is the one major program with a ceiling that approaches it, and even there lenders often set lower limits. On conventional loans you must leave at least 20% of the value in the home on a one-unit primary residence.
Even where the ceiling allows it, ask whether you should. A lower balance gives you a cushion if values dip. It also keeps your payment smaller and keeps mortgage insurance off the table.
What Shrinks Your Cash
- Rolled-in closing costs. They count against the cap.
- Pricing adjustments. Higher for cash-out, based on score and leverage.
- Mortgage insurance or funding fees. FHA premiums and the VA funding fee raise cost, and most can be financed.
- Property type and occupancy. Two- to four-unit homes cap at 75%.
- Credit and ratios. A lower score or a high debt-to-income ratio can lower your ceiling or add reserve requirements.
- Seasoning. A first mortgage under 12 months old can block conventional cash-out entirely.
What the Decision Looks Like in Practice
Start with who you are, then choose.
- Eligible veteran or service member: compare VA cash-out against conventional. VA often reaches further, so run both through a broker that shops several wholesale lenders.
- Strong credit, primary home, conforming balance: ask about the 89.99% lane before settling for 80%.
- Existing FHA or VA loan, no cash needed: a Streamline or IRRRL may beat a cash-out.
- Need a modest amount: a lower leverage target often keeps costs down and preserves your equity cushion.
Replacing your first mortgage also means giving up the loan you have. If your current terms are favorable, that trade deserves a hard look. Because a larger loan replaces the current one, the payment may rise and payoff may take longer.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Seasoning: The waiting period a lender requires, such as how long you have held title or how old your current mortgage is.
Rate-and-term refinance: A refinance that changes your rate or term and pays off the existing loan, with only incidental cash back.
Funding fee: A one-time VA charge, often financed into the loan.
Mortgage insurance: Coverage the lender requires on higher-leverage loans, which cancels at 80% and ends at 78%.
Reserves: Savings a lender wants you to hold after closing.
Frequently Asked Questions
Which program lets me borrow the most equity?
VA generally has the highest ceiling, but only for eligible borrowers, and individual lenders may set lower limits. For everyone else, conventional caps at 80% on a one-unit primary home, with a wholesale lane reaching 89.99% for borrowers who meet its conditions.
Can an FHA Streamline or VA IRRRL put cash in my pocket?
No. Both are rate-and-term products built for existing government-backed loans. If you want equity, you need a cash-out loan.
Does a VA cash-out require an existing VA loan?
No. VA says a cash-out loan can move a non-VA loan into a VA-backed one. You still need a Certificate of Eligibility and must live in the home.
Is the maximum LTV the same as the cash I will receive?
No. Your payoff, other liens and rolled-in costs come out first, and what remains is your cash.
Is there a waiting period before I can cash out?
On conventional loans, the first mortgage being paid off must generally be at least 12 months old, and a borrower must have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards.
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. 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.
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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 B2-1.3-03, Cash-Out Refinance Transactions
2. VA.gov, Cash-Out Refinance Loan
3. Freddie Mac Guide Section 4203.1
4. Freddie Mac Cash-out Refinance product page
5. VA Funding Fee and Closing Costs
6. FDIC-hosted copy of HUD’s FHA Streamline summary
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash-Out Refinance Rules After a Divorce With a Deadline to Refinance · Cash-Out Refinance Requirements to Tap Home Equity · Can You Get Approved for a Cash-Out Refinance on a Fourplex?
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
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.