The Quick Read: Usually, yes. On a conventional cash-out refinance, appraisal charges, title charges, points and prepaid items can be added to the new loan balance. The catch is that the total loan still has to fit under the maximum loan-to-value cap, so every dollar you finance is a dollar of cash-out you don’t receive. FHA Streamline is the main exception, because it does not let closing costs be added to the new loan.
Why Financing Fees Shrink Your Cash-Out
Think of the loan as three pieces stacked under one ceiling. The first piece is the payoff of your current mortgage. The second is any closing costs you choose to finance. The third is the cash that lands in your hands. The ceiling is the loan-to-value cap multiplied by the appraised value.
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.
On a conventional cash-out refinance, that cap is 80% LTV on a one-unit principal residence and 75% on two- to four-unit principal residences, second homes and investment property, subject to lender guidelines. Occupancy sets the leverage. Whatever you finance for the appraisal and title work comes out of the same room under that ceiling.
Here’s the catch most borrowers miss: financing is not free money. It is a trade. You keep more cash in your pocket on closing day, and you carry a bigger balance for as long as the loan lasts.
Across the wholesale programs Lendmire places files with, the borrowers who feel this most are the ones near the cap. If your equity is thin, financed fees can erase a meaningful share of the cash-out you were counting on. If you have plenty of equity, the fees barely dent the proceeds.
What Do Appraisal and Title Fees Actually Cover?
Appraisal and title fees are third-party charges for confirming what the home is worth and who owns it. They are separate from the lender’s own charges, and both show up on your Loan Estimate.
The appraisal fee pays an independent appraiser to set the home’s value. On a cash-out, that value drives everything, because the LTV cap is applied to the appraised figure. The appraisal is often due before closing, which matters for the timing question below.
Title charges are a bundle. They typically include a title search, the lender’s title insurance policy, settlement or escrow services and recording. Existing liens being paid off are settled through the title or settlement agent at closing. Whether you also buy an owner’s policy is a separate decision, and requirements for the lender’s policy are set by the lender.
One more point: the way title work is structured varies by state. Some states use title companies, others lean on attorneys, and the fee layout changes accordingly. Your Loan Estimate shows your actual line items.
Can You Finance Each Fee? Conventional Rules
Yes, on both agency products. Fannie Mae’s Selling Guide lists financing closing costs, points and prepaid items as an acceptable use of a limited cash-out refinance. Its full cash-out section lists the same item among the acceptable uses of proceeds, per the Fannie Mae cash-out refinance guidelines. Freddie Mac’s cash-out refinance page states that closing costs, financing costs and prepaids can be rolled into the new loan amount.
So the appraisal fee and the title charges can both ride inside the loan. Neither is treated differently from the other. The limit is the LTV cap, not the type of fee.
A small terminology note. Fannie Mae calls a refinance a “limited cash-out refinance,” and Freddie Mac calls it a “no cash-out refinance.” On those, you can finance the same costs, but you are only allowed incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan amount or $2,000. Freddie Mac’s is the greater of 1% of the new loan amount or $2,000.
Three Ways to Cover the Fees
You have three options, and they behave differently.
| Method | Cash to you | Loan balance | Interest over time |
|---|---|---|---|
| Pay out of pocket | Unchanged | Unchanged | No added interest |
| Deduct from proceeds | Reduced at closing | Unchanged | No added interest |
| Add to the loan balance | Unchanged | Larger | Interest on the added amount |
Paying out of pocket keeps the balance clean. It makes sense when you have spare cash and expect to hold the loan a long time.
Deducting from proceeds is the quiet middle option. The fees come out of your cash-out check, so the balance stays put, but you receive less.
Adding fees to the balance preserves your cash but costs more over the life of the loan. The Consumer Financial Protection Bureau notes that rolling closing costs into the loan lowers upfront costs but adds to the overall cost because of the added interest.
A Worked Example
Take a one-unit primary residence with an appraised value that supports the 80% cap. Say the current mortgage payoff is about 55% of that value. That leaves roughly 25 percentage points of room under the cap for fees and cash combined.
Now suppose appraisal and title charges together equal about 1% of the home’s value. Paid in cash, you still have all 25 points available as proceeds. Financed, you have about 24 points left as cash. The fees took one point of room, and the balance rose by the same amount.
Now run the low-appraisal version. If the appraisal comes in 5% below what you expected, the cap shrinks with it. The same payoff and the same fees now consume a bigger share of a smaller ceiling. In a tight file, a low value can turn a small cash-out into no cash-out at all, or into cash due at closing. That is a result of the LTV math, not a special penalty.
The takeaway: the closer the payoff sits to the cap, the more every financed fee matters.
When the Appraisal Fee Is Due Before Closing
Financing the appraisal fee does not always mean you skip paying it up front. The appraiser is usually paid before closing. If the lender collects the fee when the appraisal is ordered, you pay it then.
What financing can do is reimburse you. At closing, the fee is counted in the new loan, and the cash you brought earlier is returned or credited through the settlement. You may see this on the Closing Disclosure as a paid-before-closing item. It is easy to misread, so check that line.
What Changes on FHA and VA?
The answer flips depending on the program, and the flip points are specific.
FHA Streamline is the clearest exception. HUD says that streamline describes only the documentation and underwriting the lender performs and “does not mean that there are no costs,” and that FHA does not allow lenders to include closing costs in the new streamline mortgage amount. The existing FHA loan, a net tangible benefit and no appraisal are the hallmarks of this product. So you pay the costs in cash or take a lender credit that is built into the rate.
VA IRRRL works differently. It requires an existing VA loan, carries a 0.5% funding fee unless the borrower is exempt, and uses no VA appraisal. VA’s funding fee and closing costs page is the place to confirm which costs may be added on a given loan type, and the rules differ between a purchase and a refinance. Allowable costs on an IRRRL can be added, but the details turn on the file.
Cash-out versions of FHA and VA both need a full appraisal, and costs sit inside the program’s LTV cap. The VA funding fee on a cash-out is higher than on an IRRRL.
Here’s the simple split. A streamline skips the appraisal but cannot finance costs on FHA. A cash-out requires the appraisal but allows financing. You pick which constraint fits.
Edge Cases Worth Knowing
A few situations bend the general answer.
- Delayed financing. If you bought the home with cash, Fannie Mae lets the new loan reach the documented initial investment plus financed closing costs, prepaids and points, still under the LTV caps. Exceptions to seasoning also exist for inheritance and legal awards.
- Student loan payoff. On Fannie Mae’s cash-out, the cash-out pricing adjustment is waived when the transaction pays off student loans. The loan can still finance closing costs, points and prepaids.
- Seasoning. The first mortgage being paid off must be at least 12 months old, measured note date to note date, and the borrower must have been on title for six months. Freddie Mac’s Guide section 4301.5 governs its version.
- No-MI wholesale lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance, with its own six months of seasoning. It is the one exception to the mortgage insurance rule above 80%.
- Texas homesteads. A cash-out on a Texas homestead, a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The wholesale no-MI lane is not written there. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
“No-Cost” Refinances and Other Look-Alikes
A “no-cost” cash-out is a marketing term. The costs are still paid. They are built into the interest rate or the balance, so you pay them over time instead of at closing. HUD describes it the same way: the lender takes a higher rate and uses the premium to cover the charges.
Two other look-alikes cause confusion. First, “closing costs” and “cash to close” are different numbers. If cash to close is smaller than total closing costs, one possible reason is that costs were rolled into the loan. Second, cash-out and limited cash-out are separate products with different leverage and pricing. Both agencies build a pricing adjustment into cash-out based on LTV and credit, so higher leverage costs more in the pricing structure.
Pay or Finance? A Decision Guide by Situation
Neither choice is right for everyone. Here is how the flip points tend to fall.
- Thin equity. If the payoff sits close to the cap, paying the fees in cash protects your proceeds. Financing eats the room you need.
- Plenty of equity. Financing barely dents the cash-out, so it becomes a convenience choice. The main cost is the added interest.
- Planning to sell or refinance again soon. Financing tends to cost less in total, because you won’t carry the larger balance for long.
- Holding the loan for decades. Paying cash usually wins on total cost, since added interest compounds across the term. A bigger balance also extends payoff time and can raise the monthly payment, as the CFPB’s home equity guide points out.
- Tight monthly budget. Financing lowers cash needed now but raises the payment later. Weigh both.
If you’re comparing programs more broadly, Lendmire’s cash-out refinance programs page lays out the products that reach different levels of equity.
How to Read Your Loan Estimate and Closing Disclosure
Three checks catch most surprises.
1. On the Loan Estimate, find the appraisal charge and the title and settlement lines. These are the third-party items in question.
2. Compare closing costs to cash to close. A gap can mean costs were financed.
3. On the Closing Disclosure, confirm the final loan amount matches payoff plus financed costs plus your cash-out.
If a number doesn’t reconcile, ask before closing. A lender can walk you through each line.
Key Terms Defined
Loan-to-value (LTV): The new loan amount divided by the home’s appraised value.
Cash to close: The money you must bring, or the amount you receive, once all credits and financed costs are counted.
Financed costs: Fees added to the new loan balance instead of paid out of pocket.
Lender’s title policy: Insurance that protects the lender’s claim on the home against title defects.
Prepaids: Items paid ahead of time at closing, such as the first stretch of interest and escrow deposits.
Frequently Asked Questions
Can I roll the appraisal fee into the loan?
Usually, on a conventional cash-out. Fannie Mae and Freddie Mac both allow closing costs, including third-party charges, to be added to the new balance. The total must stay under the LTV cap. You may still pay the appraiser up front and be reimbursed at closing.
Can title fees be financed too?
Yes, on conventional loans. Title search, the lender’s policy, settlement and recording are all closing costs, and they can be financed within the cap. On an FHA Streamline, they cannot be added to the loan.
What if the appraisal comes in low?
The maximum loan shrinks because the cap applies to the appraised value. Your cash-out may drop, vanish, or turn into cash due at closing. The same fees take up a larger share of a smaller ceiling.
Is a “no-cost” refinance really free?
No. The costs are paid through a higher rate or a larger balance rather than at the table. The term is a way of shifting when you pay, not whether you pay.
Are these fees tax-deductible?
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend. Lendmire is a mortgage broker arranging these loans through wholesale lenders.
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.
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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 B2-1.3-02, Limited Cash-Out Refinance Transactions
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Freddie Mac, Cash-Out Refinance
4. CFPB Closing Disclosure explainer
5. HUD, Single Family Streamline
7. CFPB Using Home Equity guide (PDF)
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 Lenders on a Historic Home · Cash-Out Refinance Lenders With More Than 40% Equity and No Appraisal · Best Cash-Out Refinance Program With Six Months of Title Seasoning Before Cashing Out
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.