The Quick Read: Loan-to-value (LTV) sets the ceiling on a cash-out refinance, and the appraisal sets the value that ceiling is built on. On a conventional loan for a one-unit primary home, the ceiling is 80% of appraised value, and everything you owe against the home counts toward it. Cash is what remains after the payoff, any liens that stay, and costs rolled into the new loan. Credit, debt-to-income, and ownership history decide whether you reach the ceiling at all, subject to lender guidelines and full file review.
What Is a Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a larger one and pays you the difference. You get one new loan and one new payment schedule. A home equity loan or HELOC works differently: it sits beside your first mortgage and leaves it in place.
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.
Lendmire’s cash-out refinance programs page covers the program lanes. Lendmire is a mortgage broker. It arranges these loans through wholesale lenders, and the lender reviews and decides each file.
A limited cash-out refinance is a different transaction. It pays off the existing loan and closing costs, and only incidental cash comes back. Fannie Mae caps that cash at the lesser of 2% of the new loan or $2,000. Anything beyond that is cash-out and follows cash-out rules.
How Does LTV Decide How Much Cash You Get?
LTV is the new loan balance divided by the appraised value. The program’s maximum LTV, times the appraised value, gives the largest total loan allowed. Subtract what you owe, and what is left is the cash.
The working sequence:
1. Get the appraised value. This is the number every other step depends on.
2. Multiply by the program maximum. At 80%, a home appraising at $100 on the dollar can carry $80 of total debt.
3. Subtract the current first mortgage payoff. Add any second lien that will stay in place.
4. Subtract costs financed into the loan. Closing costs rolled into the balance use up LTV room before any cash reaches you.
5. What remains is your gross cash. It is a ceiling, not a promise.
Picture a homeowner whose home appraises at the value they expected, with a first mortgage that is 40% of that value. At an 80% cap, there is room for 40 points of cash before costs. Roll in closing costs and a small HELOC that stays behind, and the room shrinks. Same house, same equity, less cash.
This is why “I can borrow 80% of my equity” is wrong. The cap is a percentage of value, not of equity. At 80% LTV you keep at least 20% of the home’s value as equity. The Fannie Mae Eligibility Matrix states its limits as LTV, CLTV, and HCLTV, which means other liens on the home count against you, not just the new first mortgage. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What Are the LTV Limits by Property Type?
Occupancy and unit count set the ceiling. On a conventional cash-out, the limit is 80% LTV on a one-unit principal residence. It is 75% on two- to four-unit principal residences, second homes, and investment property. A cash-out can be written on any of those occupancy types. Occupancy sets the leverage, not whether the loan exists.
| Property | Conventional cash-out LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Texas has its own rule. 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 lane described below is not written in Texas.
Can You Go Above 80% Without Mortgage Insurance?
Mostly no, with one exception. Mortgage insurance is generally required above 80% LTV on the agency path. Across the wholesale programs Lendmire places files with, one lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, and a conforming balance. It carries its own six months of seasoning.
Where mortgage insurance does apply, annual premiums are typically a percentage of the loan balance, and the exact cost depends on the borrower’s profile and the program. Any figure here is an estimate, not a quote. By law, you can request cancellation at 80% of original value with good payment history, no subordinate liens, and no decline in value. The servicer must end it automatically at 78%.
What Are the Cash-Out Refinance Requirements?
LTV is only the first test. Underwriters check six items:
- Credit. The wholesale conventional programs start at a 620 decision score. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Scores generally need to rise as LTV rises.
- Debt-to-income. This is monthly debt payments divided by gross monthly income. The automated finding governs most files, with a total ratio ceiling of 50%. Manual underwriting uses 36% or 45%, depending on reserves and score factors in the Eligibility Matrix.
- Income and employment. Documented and stable.
- Reserves. Required on some files, especially manual ones.
- Seasoning. The mortgage being paid off must be at least 12 months old, counted note date to note date. A borrower must have been on title for six months, per Freddie Mac’s Guide Section 4301.5, which also addresses delayed financing.
- Credit events. The agencies set waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Pricing also moves with LTV. Fannie Mae applies loan-level price adjustments to certain cash-out loans based on LTV and credit score, and Freddie Mac has its own credit fees. In general, more leverage means higher cost. Sometimes the cheaper path is taking less cash.
Where Does LTV Collide With Debt-to-Income?
The lower of the two limits sets your real cash ceiling. A bigger loan means a bigger payment, and that pushes the debt-to-income ratio up. A borrower with plenty of equity can still be capped by income.
Consider a scenario with the opposite problem. A borrower has strong income and low debt, but the appraisal comes in light. Here LTV binds first. The ratio is fine, but the room under the cap is gone.
Check both before you decide how much to request. Ask your loan officer which one is the limiting factor on your file.
What Happens If the Appraisal Comes In Low?
Your estimate was provisional until now. A lower value shrinks the maximum loan dollar for dollar at the same LTV cap. On a file that was close to the ceiling, even a small miss can remove most of the cash.
Your options are practical:
- Take less cash and proceed.
- Ask for an appraisal reconsideration, with recent nearby sales and condition details the appraiser may not have used.
- Pay down the balance to restore room.
- Wait and reapply later.
Which one fits depends on how much cash you needed in the first place. If the project needs a fixed amount, a low appraisal can make the whole refinance not worth doing.
How Do You Work Backward From a Target Amount?
Start with the cash you need. Add the payoff, any liens that stay, and an allowance for costs. That sum is the loan you need. Divide by the program’s LTV cap. The result is the appraised value you need to reach it.
If your home is not likely to appraise at that level, the target is out of reach on that program. Lower the target, or look at a different product. This reverse check takes a few minutes and can save an application.
Where Does the General Rule Break?
The 80% rule has named edge cases.
- Free-and-clear homes. A new loan on a home with no mortgage is cash-out at Freddie Mac. It is cash-out at Fannie Mae too, since with no first lien it falls outside the limited cash-out definition.
- Existing second liens. If the new first mortgage will not pay off a subordinate lien, that lien must be clearly subordinate to the new loan. It also counts toward combined LTV.
- Renovation products. Freddie Mac treats CHOICERenovation loans as no cash-out when proceeds go only to eligible renovations.
- Buying out a co-owner. Under a written agreement, this is a limited cash-out transaction at both agencies.
- Student loan payoff. Fannie Mae’s student-loan cash-out option still uses the standard cash-out LTV limits. The price adjustment is waived on loans that meet its requirements.
- PACE obligations. If cash-out proceeds pay off a PACE obligation, Freddie Mac requires cash-out rules.
- Title exceptions. Delayed financing, inheritance, and legal awards can change the ownership clock.
What About FHA and VA?
Government loans follow their own caps. FHA’s cash-out maximum is 80% of adjusted value for case numbers assigned on or after September 1, 2019. The old 85% figure still shows up in outdated documents. The first mortgage plus subordinate liens also cannot exceed the nationwide mortgage limits.
VA lets you replace your current loan to take equity out, or to move a non-VA loan into a VA-backed one. You need a Certificate of Eligibility and must meet credit and income standards. VA’s ceiling is higher than conventional. Lendmire’s piece VA Cash-Out Refinance Limits for How Much Cash You Can Take covers the details.
Streamlines are not cash-out. The FHA Streamline allows only minor closing adjustments, per HUD’s reference guide. The VA IRRRL allows no cash to the borrower. Both are built to lower a payment or change a loan type, not to tap equity.
What Does a Cash-Out Cost Beyond the Closing Table?
You are replacing your existing mortgage, which may have terms worth keeping. A cash-out may extend your payoff time and may raise your payment because the new loan is larger. Lenders also typically want you to keep a meaningful share of your home’s value as equity.
Closing costs financed into the loan raise the balance and use LTV room. Borrowers often use proceeds to pay down card and auto debt. Credit scores may improve at first, then gradually worsen. Taking only what you need is the safer habit.
Because the loan is on your principal dwelling, you generally get a three-business-day right to cancel after closing. A second home does not have that right.
Key Terms Defined
LTV (loan-to-value): The loan amount divided by the appraised value of the home.
CLTV / HCLTV: Combined LTV counts all liens on the home. The “H” version also counts the full HELOC limit.
Seasoning: How long you have owned the home, or held the loan being paid off, before a cash-out is allowed.
Limited cash-out: A refinance that pays off the loan and costs, with only a small amount of cash back.
Subordinate lien: A second loan or HELOC that ranks behind the first mortgage.
Debt-to-income (DTI): Monthly debt payments divided by gross monthly income.
Frequently Asked Questions
How much cash can I take out of my home?
It depends on appraised value, the program’s maximum LTV, and what you owe. On a conventional one-unit primary home, the cap is 80% of value, minus your payoff, any liens that stay, and financed costs. Debt-to-income can lower the figure further.
Can I take out all my equity?
No. At an 80% cap, you keep at least 20% of the home’s value as equity. Most programs require a cushion, and other liens count against the same ceiling.
How long must I own the home before a cash-out?
Conventional programs generally want at least one borrower on title for six months, and the loan being paid off at least 12 months old. Delayed financing, inheritance, and legal-award exceptions can change this. Rules vary by program and lender.
Does a cash-out refinance work on a second home?
Yes, but the conventional ceiling drops to 75% LTV. Occupancy sets the leverage. Primary residences get the highest limit. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Is a cash-out refinance the same as a HELOC?
No. A cash-out replaces your first mortgage with one new loan. A HELOC adds a second loan and leaves your first mortgage untouched.
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. All 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.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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. Fannie Mae Eligibility Matrix
2. Freddie Mac Guide Section 4301.5
4. HUD archived reference guide, Appraising Refinances
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 Requirements for a Second Cash-Out Refinance in a Row · Cash-Out Refinance Requirements After a Job Change · Cash-Out Refinance Requirements to Fund Large Renovations
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.