The Quick Read: Your cash in hand is the new loan amount minus everything that loan has to pay off or cover. That means the old mortgage payoff, any other required liens, and the closing costs and fees you roll into the balance. Equity is not your check. The leverage cap, the appraisal, and the payoffs decide it.
The Formula in One Line
The formula is: appraised value × the program’s LTV cap = maximum new loan. Then subtract the first mortgage payoff, any other liens that must be paid, and the costs paid from the loan. What is left is your 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: 7.18% 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.
Across the wholesale programs Lendmire places files with, a conventional cash-out refinance on a one-unit principal residence tops out at 80% LTV. Two- to four-unit principal residences, second homes, and investment property sit at 75%, so the 80% cap is specific to a one-unit principal residence and not a general limit. Occupancy sets the leverage. A cash-out is not limited to a primary residence, but a primary residence gets the highest cap. In Texas, a cash-out on a homestead (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Freddie Mac’s Guide §4301.5 defines a cash-out refinance as a mortgage with no specific restrictions on how the proceeds are used. That includes paying off a first lien and refinancing a home owned free and clear. A free-and-clear home with a new loan on it is still a cash-out.
Lendmire’s cash-out refinance programs page lays out the program options by occupancy and property type. All figures here are subject to lender guidelines and full file review. Nothing in this piece is a commitment to lend.
Key Terms Defined
- Gross cash: the maximum new loan minus the payoff of your existing first mortgage, before costs.
- Net cash: what actually lands in your hands after payoffs, costs, and prepaids come out.
- Payoff: the exact amount needed to retire your current mortgage, including interest through the payoff date.
- Prepaids: items paid up front at closing, such as initial escrow deposits and interest for the first partial month.
- Seasoning: the minimum time you must have owned the home or held the existing loan before cash-out is allowed.
- LTV: loan-to-value, the new loan divided by the appraised value.
How Is the Cash Calculated, Step by Step?
Work the estimate in order and keep a running subtotal. Each step shrinks the number.
1. Start with a realistic value. The appraisal sets the value the cap applies to. Use a conservative estimate, not the highest online figure. If the appraisal lands lower, every later number drops with it.
2. Apply the LTV cap. Multiply value by the cap that fits your occupancy and unit count. On a one-unit principal residence on the conventional path, that is 80%. The result is the ceiling on the new loan. You may borrow less.
3. Subtract the first mortgage payoff. Use a payoff figure, not your statement balance. The payoff includes interest that accrues up to the payoff date, so it runs higher than the balance on your last statement.
4. Subtract other required payoffs. A second mortgage, a HELOC you must close, or other liens that need clearing come out here. Fannie Mae counts subordinate financing in combined LTV, so a second lien that stays in place also eats into the ceiling.
5. Subtract costs paid from the loan. Costs you roll into the balance reduce your cash dollar for dollar. Costs you pay out of pocket leave the check larger but put money on the table at closing.
6. Account for prepaids and escrows. Expect to fund a new escrow account at closing. Your old servicer refunds the old escrow balance later, not at the table. So the check on closing day can look smaller than the full picture.
7. Check pricing effects. Fannie Mae applies loan-level price adjustments to certain cash-out refinances based on LTV and credit score. Freddie Mac refers to its credit fees in Exhibit 19. They show up in the pricing, so a cash-out costs more to carry than a no-cash-out refinance. Your loan officer can show how the adjustment lands on your file.
What remains is your estimate of net cash. A negative result means the loan cannot cover its own payoffs and costs. You would have to bring money to closing, which defeats the purpose.
Paid in Cash or Rolled In: Which Moves the Number?
Rolling costs into the loan raises the balance and cuts your check. Paying them out of pocket does the reverse. Neither is free. The costs are real either way, and financed costs are charged interest over the life of the loan.
Picture a homeowner with a one-unit primary residence and a first mortgage balance well under the cap. At 80% LTV, the gap between the cap and the payoff looks large on paper. Then a second lien gets added, the costs are financed, and the escrow deposit lands. The check ends up noticeably smaller than the first mental number. That is normal. It is the reason to estimate in steps rather than in one subtraction. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What Shrinks Your Check
Most estimates run high because they leave things out. Check this list before you trust any figure:
- A payoff that is higher than the statement balance because of accrued interest
- Second liens or HELOCs that must be closed
- Closing costs financed into the balance
- Initial escrow deposits and prepaid interest
- Loan-level price adjustments tied to LTV and credit score
- A lower appraisal than you assumed
- Mortgage insurance, where it applies
On mortgage insurance: the agency path requires it above 80% LTV, with one exception. A wholesale no-MI cash-out 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. A standard conventional cash-out at the 80% cap usually avoids mortgage insurance. Texas homestead loans are not written on that wholesale lane.
Reverse Math: Start From the Cash You Need
You can also work backward. Decide the net cash you want, then add the payoff, other liens, and costs. That total is the new loan you need. Divide it by the LTV cap, and you get the minimum appraised value the home must reach.
If that value is above what you think the home is worth, the plan does not fit. Either you need less cash, or a different program with a higher cap, or you wait. This check takes two minutes and saves a wasted application.
Does the Estimate Change by Program?
Yes. The cap and the rules differ by program, and the wrong program gives the wrong number.
| Program | Cash available? | Key point |
|---|---|---|
| Conventional cash-out | Yes | 80% LTV on a one-unit primary |
| Conventional rate-and-term | Only incidental | Cash back is limited |
| FHA Streamline | No | Existing FHA loan, no cash |
| VA IRRRL | No | Existing VA loan, no cash |
Rate-and-term is not cash-out. A limited cash-out refinance pays off the first mortgage, closing costs, and a purchase-money second, with only incidental cash back. Fannie Mae allows the lesser of 2% of the new loan amount or $2,000. This limited cash-out loan carries higher leverage than a true cash-out, up to 95% LTV on a one-unit principal residence. Do not mix up the two when you estimate cash. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Streamlines give no cash. The FHA Streamline and the VA IRRRL are for existing government loans. You cannot tack cash onto either one. If you want cash, you need a true cash-out. The IRRRL carries a 0.5% funding fee unless exempt, and both streamlines require a net tangible benefit.
VA cash-out works through a private lender, and VA’s cash-out page notes that a funding fee may apply at closing. A financed funding fee reduces the cash you receive the same way other financed costs do.
The Fannie Mae Eligibility Matrix shows that leverage varies by occupancy and unit count. Confirm your exact case against it before you budget.
Where the Rule Breaks
The general formula holds, but several situations change it.
Seasoning. The first mortgage being paid off must be at least 12 months old, measured from note date to note date, and at least one borrower must be on title for six months. Fannie Mae states both in announcement SEL-2023-01. Exceptions exist for delayed financing, inheritance, and legal awards. Files that assume the clock away are the ones that get kicked back.
Delayed financing. Bought with cash recently? An exception to the six-month title rule exists, with documentation conditions. Freddie Mac addresses it in §4301.5.
Free-and-clear homes. With no payoff to subtract, more of the cap becomes cash.
Student loan payoffs. Fannie Mae waives the cash-out price adjustment when proceeds pay off student loans, but standard cash-out leverage limits still apply.
PACE obligations. A PACE lien with first-lien priority has to be dealt with at payoff. Freddie Mac’s servicing guide treats it under its own rules, and in some cases the refinance falls under cash-out rules.
Credit and ratios. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Reserves can apply to cash-out files with higher ratios.
Turning the Estimate Into a Verified Number
Your first estimate is a rough number. The paperwork gives you the real one.
The Loan Estimate and Closing Disclosure both include a “Calculating Cash to Close” table. It lists total closing costs, closing costs financed, and the other items that move the figure. The CFPB’s guide to the forms walks through that table line by line. The Regulation Z disclosure rule requires the cash-to-close figure and a comparison to the Loan Estimate. On a cash-out, it shows cash to you rather than from you.
Treat the Loan Estimate as a working number. The Closing Disclosure shows the final cash and what changed. Compare the two line by line. If the payoff moved, that is usually per-diem interest. If the appraisal moved, the whole loan can move.
What the Extra Cash Really Costs
Cash out raises the loan balance, and a larger loan can raise the monthly payment and extend the payoff. The CFPB’s home equity guide notes that lenders typically want you to keep a cushion of equity, in the range of 10% to 20%.
The new rate applies to the whole balance, not just the new cash. If your existing loan is a good one, the cost of the extra cash includes giving that up. That is the real comparison, not the size of the check alone. A home equity loan or HELOC leaves the first mortgage untouched, so it can fit better when the cash need is small and the current first loan is worth keeping.
Why do people take cash out? The CFPB’s review of cash-out borrowers found that paying off bills or debts was the most common reason, cited by more than half of borrowers in earlier years. Debt payoff works only if the balances stay down afterward.
A cash-out on a primary residence generally carries a rescission period before funds are disbursed, so the money does not arrive at the signing table.
Common Mistakes When Estimating
- Using equity as the check. Equity is value minus the balance. The cap sets the limit.
- Using the statement balance instead of the payoff.
- Forgetting a second lien or HELOC.
- Ignoring financed costs and prepaids.
- Assuming the highest online value will appraise.
- Assuming every program caps at the same level.
- Expecting cash from a Streamline or IRRRL.
- Treating the Loan Estimate as final.
- Skipping the seasoning clocks.
Frequently Asked Questions
Why is my cash smaller than value times the cap minus my balance?
Because that shortcut skips the payoff interest, other liens, financed costs, prepaids, and pricing adjustments.
What happens if the appraisal comes in low?
The maximum loan drops with the value, and your cash drops by the cap percentage of the shortfall. On a tight file, it can erase the cash. Run the estimate at a lower value before you apply.
Can I get cash from an FHA Streamline or VA IRRRL?
No. Both are no-cash-out refinances for existing government loans. If you want cash, you need a true cash-out program.
Does a cash-out refinance require mortgage insurance?
On the agency path, mortgage insurance applies above 80% LTV, with one exception: the wholesale no-MI cash-out lane at up to 89.99% LTV described above. Where it applies, you can request cancellation at 80% of the original value, and the servicer must end it at 78%. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Can I do a cash-out right after buying?
Usually not. The existing loan must be at least 12 months old and a borrower must be on title for six months, with exceptions such as delayed financing. Subject to lender guidelines.
Next Step
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.
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
3. Fannie Mae Eligibility Matrix
8. CFPB cash-out research (archive newsroom)
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 a Cash-Out Refinance Works for a Big Expense · How a No-Cost Cash-Out Refinance Works · How the Cash-Back Line Works on a Cash-Out Refinance
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.