The Quick Read: To compare cash-out refinance costs fairly, line up both loans on the same Loan Estimate: same term, same lock timing, same payoff. Then compare four things: closing costs, cash to close or cash back, the monthly payment, and total cost over the years you will keep the loan. A cash-out usually costs more because the loan is larger, the leverage limit is lower, and cash-out pricing applies.
The comparison trips people up because the same house, the same balance and the same borrower can land in either category. The category sets the leverage ceiling, the pricing, the waiting periods and the paperwork. Get the category wrong and the comparison is meaningless.
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.
This walkthrough starts with what each loan is, then shows how to read the two quotes, where the usual rules bend, and how to decide. Lendmire’s cash-out refinance programs page covers the program side. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
What Is the Difference Between a Plain Refinance and a Cash-Out?
A plain refinance, which the agencies call “limited cash-out,” replaces your current first mortgage and pays closing costs, with only a small amount of cash back. A cash-out refinance replaces it with a bigger loan and hands you the difference. The purpose of the loan, not your intent, decides which one you have.
Fannie Mae’s Selling Guide treats these as two separate topics. One covers limited cash-out transactions. The other covers cash-out refinances. Freddie Mac uses different labels, including “no cash-out” and “cash-out,” but the split is the same idea.
Here are the main differences across the wholesale programs we arrange loans through:
| Factor | Plain (Limited Cash-Out) | Cash-Out |
|---|---|---|
| Leverage, one-unit primary | Up to 95% LTV (97% in the case described below) | 80% LTV (89.99% in the no-MI wholesale lane described below) |
| Leverage, 2-4 units or second home | Varies by occupancy | 75% LTV |
| Cash back | Small, incidental only | Whatever equity allows |
| Mortgage insurance | Above 80% LTV | Above 80% LTV, except one wholesale no-MI lane |
| Existing loan age | Not a cash-out clock | At least 12 months |
Limited cash-out can reach 97% where the existing loan is agency-owned and a first-time-buyer program allows it. The one wholesale no-MI cash-out lane reaches 89.99% LTV on a primary residence, and it is the only exception to the 80% cash-out cap and to the mortgage-insurance rule.
Why Does a Cash-Out Cost More?
A cash-out costs more for three reasons: a larger balance, lower leverage limits that can change the pricing, and a cash-out pricing add-on that lenders apply. You will not see that add-on as its own line. It shows up through the rate or points on your Loan Estimate.
The balance matters most. Any cost that scales with the loan amount, such as title insurance or percentage-based fees, grows when you borrow more. Then pricing: Fannie Mae states that cash-out pricing applies to cash-out refinances, including delayed financing. A cash-out is treated as riskier, so it is priced that way.
Third, you may need an appraisal. Leverage is measured against appraised value, and a cash-out always needs a value to set the ceiling. Some government streamlines skip the appraisal, which is part of why they are cheaper. More on those below.
How Do You Line Up Two Loan Estimates?
Ask for both quotes at the same term and the same lock timing, then compare them line by line. The Loan Estimate is a standard form, so the sections match. Do not compare one loan with costs rolled in against one paid at the table. That gap hides the real difference.
Work through these steps:
1. Confirm the category of each quote. Ask the loan officer to label it as limited cash-out or cash-out. If you plan to pay off a home equity line, ask whether it was used to buy the home. If it was not, the loan is generally a cash-out.
2. Match the loan term. A 30-year cash-out against a 20-year plain refinance tells you nothing about cost.
3. List the closing costs. Compare the totals, then compare the items that scale with the loan amount.
4. Note cash to close or cash back. On a plain refinance you may bring money or take a little. On a cash-out you receive the net proceeds.
5. Compare the payment. A bigger balance raises the payment unless a lower rate or longer term offsets it.
6. Compare total cost over your holding period. Not the full 30 years, unless that is how long you will keep the loan.
Net the proceeds
Cash to you is the new loan, minus the payoff, minus any costs you financed. Financed costs draw on the same leverage cap as your cash. Say you borrow at the 80% ceiling on a one-unit primary home and roll in the closing costs. Every dollar of cost is a dollar less in your pocket. Rolling costs in does not make them free. You pay interest on them for as long as you hold the loan.
What Is the “Cost of the Cash” Itself?
The cost of the cash is the extra you pay because you took cash, separate from the cost of refinancing at all. To isolate it, get a plain refinance quote and a cash-out quote on the same house, then compare the difference in closing costs, the difference in payment, and the difference in total interest over your holding period. That difference is what the extra borrowed money costs you.
This is the question most comparison pages skip. It matters because a cash-out can replace a low-cost mortgage with a higher-cost one. You are not just borrowing new money. You are re-pricing the old balance too. If your current loan is well priced, the cash-out may cost far more than the cash is worth. The CFPB’s research on cash-out refinances found that one of the most frequent uses of the money was paying the closing costs of the new loan. It also notes that cash-out refinancing draws down current wealth. You are converting equity into debt.
Consider a scenario with no dollars attached. Picture a homeowner who needs a modest sum for a repair and holds a well-priced first mortgage. A plain refinance would not add the cash. A cash-out would re-price the entire balance. Sometimes a separate second loan or home equity line is cheaper than a full cash-out, because it leaves the first mortgage alone.
How Do You Run a Break-Even?
Divide your total upfront costs by the monthly savings, and count only the months you expect to keep the loan. If you will sell or refinance before that point, the refinance did not pay off. For a cash-out, savings may be zero or negative, because the payment often rises. In that case the break-even question becomes: is the cash worth the added monthly cost?
A few practical points:
- Count the term reset. Starting a fresh 30-year term lowers the payment but can raise total interest.
- Include points and credits. Paying points lowers the payment and raises upfront cost. Lender credits do the reverse. Compare the net effect.
- Use your real holding period. Be honest about how long you will stay.
Mortgage insurance changes the math too. On the agency path it is required above 80% LTV, with one exception: a wholesale no-MI cash-out lane that reaches 89.99% LTV at a 680 score, a 50% ratio, a 30-year fixed on a primary residence with a conforming balance, and its own six-month seasoning. Where insurance applies, you may request cancellation at 80% of the original value with good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. Typical annual premiums run from 0.58% to 1.86% of the balance on Lendmire’s conventional program sheet. That is a program-sheet range, not a quote. Insurance is a real cost difference between a high-leverage plain refinance and a lower-leverage cash-out. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
When Does the Usual Rule Break?
A few situations blur the line between plain and cash-out. Knowing them keeps you from comparing the wrong loans.
- A second lien that was not purchase money. Fannie Mae treats a refinance with new subordinate financing as limited cash-out only if the first mortgage meets the limited criteria. Paying off a home equity line that funded something other than the purchase generally pushes the loan into cash-out.
- Delayed financing. A cash buyer can take cash out inside the usual six-month title window. It remains a cash-out for pricing and leverage, and the paperwork is heavy.
- Free-and-clear homes. No existing lien means the new loan is a cash-out. The HUD archive says the same about FHA: properties owned free and clear may be refinanced as cash-out.
- Inherited homes. There are exceptions to the seasoning clocks for inheritance, and for legal awards, so ask about them.
- Buying out a co-owner. Under a written agreement, this is a limited cash-out transaction at both Fannie Mae and Freddie Mac, even though cash moves.
- Adding someone to title. Depending on the program, this can create a cash-out classification even if you want no cash. Ask before you sign anything.
- Texas homesteads. A cash-out on a Texas homestead, known as a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The wholesale no-MI lane, which otherwise reaches 89.99% LTV, is not written there.
- Occupancy. A cash-out can be written on a primary residence, a second home or an investment property, and occupancy sets the leverage. On a one-unit primary residence the conventional cap is 80%, while two- to four-unit homes, second homes and investment property are capped at 75%.
Do Government Streamlines Change the Comparison?
Yes, if you already hold an FHA or VA loan. Those streamlines are much cheaper to run than a cash-out, and they are not open to anyone else.
The FHA Streamline refinances only an existing FHA loan. It involves no appraisal, a limited credit review and a net tangible benefit, meaning the new loan must actually help you. The HUD archive describes it as designed to lower principal and interest, with no meaningful cash back. FHA rate-and-term refinances with an appraisal reach 97.75%.
The VA IRRRL is a “VA to VA” loan, available only with an existing VA-guaranteed loan. It carries a 0.5% funding fee unless you are exempt, no VA appraisal, a net tangible benefit, and seasoning of the later of 210 days and six payments. The lender’s own interest and closing fees come on top of the funding fee. A VA cash-out refinance carries a meaningfully higher funding fee than the IRRRL and can pay off a non-VA loan.
Compare those against a cash-out and the gap is obvious. A streamline cuts out the appraisal, the heavy paperwork and the cash-out pricing add-on.
Above the conforming limit, the jumbo lanes take over. Across our wholesale programs those start at a 660 decision score, reach 90% leverage, and go up to $5,000,000 with a 50% ratio ceiling on the fixed lanes. Cash-out rules and caps differ there, so the comparison should be run on the actual quote. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Who Qualifies, and What Does the Lender Look At?
For the wholesale conventional programs, the decision score starts at 620, or 640 on an adjustable rate under manual underwriting. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans sit at 36% or 45%, with reserve and score factors from the Eligibility Matrix. Waiting periods after credit events follow agency rules: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.
On a cash-out, the first mortgage being paid off must be at least 12 months old, counted from note date to note date. You must have been on title for at least six months, with exceptions for delayed financing, inheritance and legal awards. A plain refinance has lighter clocks. Freddie Mac’s Bulletin 2021-16 set a 30-day seasoning requirement on the loan being paid off by a no-cash-out refinance. It also limited the pre-closing discussion with the borrower to cash-out refinances, so cash-out files carry a heavier documentation load.
One practitioner note. When two quotes look close, the difference is usually hiding in how the costs were handled, rolled into the balance on one and paid in cash on the other. Normalize that first. Then the real gap in pricing shows up.
How Do You Decide?
Choose by what you need the money for and what your current loan looks like.
| Your situation | Likely better fit |
|---|---|
| Existing loan is well priced, need modest cash | Compare a separate second loan |
| Want a lower payment, no cash needed | Plain refinance |
| Hold an FHA or VA loan, want to lower the payment | Streamline or IRRRL |
| Need substantial cash, current loan is costly anyway | Cash-out refinance |
| Buying out a co-owner | Limited cash-out under a written agreement |
Before you commit, run this checklist:
- Both quotes carry the same label and term.
- You know the total closing costs on each.
- You know how much of each is financed.
- You have a break-even tied to your real holding period.
- You know whether mortgage insurance applies and when it would end.
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.
Key Terms Defined
Limited cash-out refinance: A refinance that pays off your first mortgage and closing costs, with only a small, capped amount of cash back.
Cash-out refinance: A refinance with a larger loan than your payoff, where you receive the difference as cash.
LTV (loan-to-value): Your loan balance divided by the home’s appraised value, shown as a percentage.
Seasoning: The minimum time you must have held the home or the loan before certain refinances are allowed.
Net tangible benefit: A requirement on streamlines that the new loan must give you a real, documented advantage.
Loan Estimate: The standard form that lists a loan’s terms and costs so you can compare offers.
Frequently Asked Questions
Can I roll closing costs into either loan?
Yes, on both, within the leverage limit. Rolled-in costs are added to your balance, so you pay interest on them. On a cash-out they also reduce your cash proceeds, because costs and cash share one leverage cap.
Does paying off a home equity line make my refinance a cash-out?
Usually, unless that line funded the purchase of the home. A purchase-money second lien can be paid off inside a limited cash-out. A line used for anything else generally flips the loan into a cash-out. Confirm the category before you compare quotes.
Is a free-and-clear home a plain refinance?
No. With no existing lien to pay off, the new loan is a cash-out under conventional rules. HUD’s archive says the same for FHA. Leverage and pricing follow the cash-out limits.
Does delayed financing turn a cash-out into a plain refinance?
No. Delayed financing lets a cash buyer borrow inside the six-month window, but the loan stays a cash-out for pricing and leverage. It also requires meeting all other cash-out eligibility rules.
Is the VA funding fee the whole cost of a VA refinance?
No. The funding fee is one piece. The lender also sets the rate and points, and other closing costs apply. Compare the full Loan Estimate, not just the fee.
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 broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. 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
4. CFPB’s research on cash-out refinances
5. HUD HOC Reference Guide, Refinances (archive)
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Approved for a Cash-Out Refinance That Rolls Closing Costs Into the Loan? · How Lenders Underwrite a Cash-Out Refinance With Typical Closing Costs on a Family Home · How a Lender Sizes a Cash-Out Refinance on a Cash Purchase
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.