Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The Quick Read: Lenders set the most cash you can pull out by applying a loan-to-value cap to the appraised value, and that cap depends on the property type and how you use the home. On conventional loans the cap is 80% for a one-unit primary residence and 75% for two- to four-unit homes, second homes and investment property. Your payoff, other liens and financed costs come out of that cap first, and what is left is your cash. Everything here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
Key Takeaways
- The cap is a ceiling on the total new loan, not on the cash you receive.
- Occupancy and unit count set the cap. Credit, ratios, seasoning and the appraisal decide whether you reach it.
- The first mortgage being paid off must be at least 12 months old, measured note date to note date.
- Costs you roll into the loan reduce your cash. They do not sit outside the cap.
- A rate-and-term refinance is a different product with higher leverage and almost no cash back.
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: 7.18% as of November 5, 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.
What a Cash-Out Refinance Actually Is
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference. The lender classifies the transaction first. If the new loan is bigger than the payoff plus allowed costs, it is cash-out. A home owned free and clear that gets a new mortgage placed on it also counts as cash-out, even though there is no old loan to pay off.
That classification matters because it sets the leverage, the seasoning test and the pricing category. A limited cash-out (rate-and-term) refinance only pays off the existing first mortgage, the closing costs and a purchase-money second lien. It allows incidental cash back and nothing more. 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. Cross either line and the file is underwritten as cash-out.
Misclassification is an easy way to be surprised. A borrower expects to take $15,000 for a project on what looks like a rate-and-term deal. The lender reads it as cash-out and applies a lower leverage cap. That happens before the file ever reaches an underwriter.
Lendmire’s cash-out refinance programs page lays out the program families. The mechanics below apply across the conventional lane.
How Does Property Type Change the Maximum?
Property type and occupancy set the ceiling. On conventional cash-out loans the cap is 80% LTV on a one-unit principal residence. It is 75% on two- to four-unit principal residences, second homes and investment property. Fannie Mae’s Eligibility Matrix shows the one-unit and two- to four-unit primary residence figures. Occupancy decides the leverage, and a cash-out is written on a primary residence, a second home or an investment property. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
| Property and use | Conventional cash-out cap |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Lenders cap the multi-unit and non-primary categories lower because the risk profile differs. Multi-unit properties carry more moving parts, and second homes and rentals are the first to be given up in a hardship. A lower cap keeps a larger equity cushion in place.
Two other property types deserve a mention. Manufactured housing carries lower cash-out ceilings than a site-built one-unit home. Some lenders also set tighter limits on mixed-use buildings, properties with an accessory dwelling unit, or homes used partly for short-term rental. Those rules vary by lender, so the property type needs to be named on day one. If the answer to “what is this property, exactly?” is fuzzy, the cap is fuzzy too.
Texas works differently for homestead cash-outs. A Section 50(a)(6) loan on a Texas homestead is capped at 80% of the home’s value by the state constitution. That is a state rule, not an agency one, and it applies on top of any program cap.
The Underwriting Walkthrough, Step by Step
An underwriter works through the file in a set order. Each step can lower the number or stop the file.
1. Classify the loan. Cash-out, limited cash-out or a government streamline. Cash back above the incidental limit makes it cash-out.
2. Confirm the property type and occupancy. Unit count, primary, second home or investment, and any special features. This picks the row in the cap table.
3. Order the appraisal. The current appraised value is the denominator for every calculation. The maximum loan is the appraised value times the cap for that property type.
4. Test seasoning. The first mortgage being paid off must be at least 12 months old, measured note date to note date. On top of that, a borrower generally has to have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards. The Fannie Mae Selling Guide on cash-out refinance transactions sets out the 12-month rule.
5. Underwrite the borrower. Credit, income, total debt ratio and reserves. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files. The total ratio ceiling is 50%. Manually underwritten loans run at 36% or 45%, depending on the reserve and score factors in the Eligibility Matrix. On Fannie Mae automated files with a ratio above 45%, six months of reserves is required.
6. Pay off everything that must be paid. The existing first lien, any other liens being paid, and the closing costs and prepaids you choose to finance.
7. Compute net cash. The new loan minus those payoffs and financed costs. That is what the borrower receives.
8. Issue the disclosures. The Loan Estimate shows estimated cash to close and closing costs. The Closing Disclosure shows the final figures. Total closing costs and cash to close are two different numbers.
The step that surprises people most is step 6. The cap is a ceiling on the entire new balance, so everything that comes out of the loan reduces the cash.
A Worked Example Without Dollars
Take one home and run it three ways. Assume the appraisal comes in at 100 units of value and an existing first mortgage balance of 55 units. These are modeled numbers, not market data.
- One-unit primary residence at 80%. The maximum loan is 80 units. Subtract the 55-unit payoff, and 25 units remain before costs. Financed closing costs come out of the 25.
- Two-unit primary residence at 75%. The maximum loan is 75 units. After the same payoff, 20 units remain before costs.
- Second home at 75%. The same 20 units remain, before costs. Credit and reserve overlays may differ.
Now suppose the appraisal comes in 5% light, at 95 units. The one-unit maximum drops to 76 units, and cash before costs drops to 21. A five-unit miss in value costs four units of cash, because the 80% cap applies to the lower value. This is why appraisal reconsideration, with recent nearby sales, is a normal step on cash-out files.
The same logic applies to equity left behind. On a one-unit conventional cash-out, the cap means you keep at least 20% equity. On the other categories, at least 25%.
What Lowers Your Cash
Four things come out of the cap before you see a dollar:
- The payoff of the existing first mortgage.
- Other liens you pay off with the loan, such as a second mortgage or a HELOC you choose to close.
- Closing costs and prepaids you finance rather than pay out of pocket.
- Any gap between the appraisal you hoped for and the one you got.
The CFPB’s Loan Estimate explainer shows how the form lays out closing costs and estimated cash to close. Costs paid from the loan amount reduce your proceeds. Costs paid out of pocket leave proceeds untouched but raise cash needed at the table.
A larger balance usually means a larger monthly obligation, and a cash-out can reset your loan term. A borrower holding a loan well into its term should weigh that against the cash received. Cash-out loans are also priced differently from rate-and-term loans. Those mechanics sit with the lender and the Loan Estimate, not here.
Documents by Property Type
Documentation follows the property and the borrower. A one-unit primary residence usually needs the standard package: income documents, asset statements, a payoff statement and homeowners insurance. Add to it by property type:
- Two- to four-unit primary residence: lease or rent information for the other units where the lender counts that income, plus the appraisal’s unit-level detail.
- Second home: proof the home is a second home and not a rental, plus any additional reserves the lender sets.
- Investment property: lease evidence and any extra reserve documentation the lender requires.
- Manufactured home: the title and foundation documentation the appraiser and lender need to treat it as real property.
- Texas homestead: the paperwork tied to the state’s Section 50(a)(6) rules.
The mechanical problem is rarely the document itself. It is a mismatch between what the borrower says the property is and what the appraisal and title say.
Where the General Rule Breaks
Delayed financing. Recent cash buyers can take cash out before the 12-month seasoning is met. The borrower still has to meet general eligibility and the other cash-out requirements, and cash-out pricing applies. The same Fannie Mae guide section covers it.
Student loan cash-out. Fannie Mae allows proceeds to pay off student loans, with special feature codes. The standard cash-out LTV ratios still apply.
Ineligible features. Some property features can take a home out of a program or lower its cap, such as the mixed-use, accessory dwelling unit and short-term rental situations described above. Check current lender guidelines before building a plan around any of these features.
The no-mortgage-insurance lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio. It requires a thirty-year fixed rate, a primary residence and a conforming balance, with its own six months of seasoning. It is the one exception to the mortgage-insurance rule, and it sits above the 80% and 75% conventional caps described above. It is not written in Texas. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Government programs differ. FHA cash-out is limited to owner-occupied principal residences. The FHA Streamline needs an existing FHA loan and returns no cash. VA cash-out can replace a VA or non-VA loan, and the VA IRRRL is a no-cash-out streamline for existing VA loans. The VA IRRRL carries a 0.5% funding fee unless the borrower is exempt, and requires seasoning of the later of 210 days and 6 payments. Many lenders set their own VA cash-out caps, so check the program with the lender.
Mortgage insurance. On the agency path, mortgage insurance is required above 80% LTV, except in the wholesale no-MI cash-out lane described above. The borrower may request cancellation at 80% of the original value, and the servicer must end it automatically at 78%. Since conventional cash-out tops out at 80% in most cases, this mostly matters on rate-and-term loans. The mortgage insurance premium range on Lendmire’s conventional program sheet runs from 0.58% to 1.86% of the balance annually.
Waiting periods. After credit events, the agencies require four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
What If the Cap Is Too Low?
If your property type caps you below the cash you need, there are a few options a broker would review. They are not promises.
- Compare loan types. Leverage differs between conventional, FHA and VA, and between programs within each. Lendmire’s piece Does the Maximum LTV on a Cash-Out Refinance Change by Loan Type? walks through the differences.
- Reduce what comes out of the cap. Paying closing costs out of pocket, rather than financing them, leaves more of the cap as cash.
- Check the appraisal. A well-documented reconsideration request with recent nearby sales can recover value.
- Look at the second-lien path. Keeping a low existing first mortgage and borrowing separately may reach the cash without refinancing the first.
- Wait for seasoning. If the current mortgage is under 12 months old, the clock is the problem, not the cap.
The right program depends on your property type, credit profile, leverage need and documentation. A broker that shops multiple wholesale lenders can match the scenario to the program, and the best fit for your situation is the one whose guidelines match your file.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the appraised value of the home.
Seasoning: The minimum time you must have held the loan being paid off, or title to the home, before a cash-out is allowed.
Reserves: Verified funds left in your accounts after closing, counted in months of housing payments.
Debt-to-income ratio (DTI): Your monthly debts divided by your monthly gross income.
Limited cash-out refinance: A refinance that pays off the first mortgage and costs and returns only a small amount of cash.
Net cash: The new loan minus all payoffs and financed costs, which is what you actually receive.
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.
Frequently Asked Questions
Can I borrow 80% of my home’s value as cash?
No. The 80% is the cap on the total new loan for a one-unit primary residence. Your existing mortgage payoff, any other liens and financed closing costs come out first. What remains is your cash.
Does a two- to four-unit home get the same limit as a single-family home?
No. On conventional loans a one-unit primary residence is capped at 80%, while two- to four-unit primary residences are capped at 75%. Second homes and investment property are also capped at 75%. Lender guidelines and full file review apply.
Can I take cash out soon after buying?
Generally not. The mortgage being paid off must be at least 12 months old, and borrowers are generally on title for 6 months. Delayed financing is a narrow exception for recent cash buyers, with documentation and cash-out terms.
Does a streamline refinance give me cash?
No. The FHA Streamline and the VA IRRRL are no-cash-out products for existing FHA and VA loans. For cash, you would look at a cash-out refinance on a conventional, FHA or VA program.
What happens if the appraisal comes in low?
The maximum loan shrinks by the cap times the shortfall, and your cash shrinks with it. A reconsideration request with recent nearby sales is the usual response. If value does not move, the options are a smaller cash amount, paying costs out of pocket, or waiting.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
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.
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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 Eligibility Matrix
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. CFPB Loan Estimate explainer
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 Lenders Underwrite a Cash-Out Refinance to Fund a Renovation · How Lenders Underwrite a Cash-Out Refinance Keeping the Second Mortgage in Place · How a Property Release Works in a Cash-Out Refinance
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.