The Quick Read: The amount comes from one bank’s own collateral policy, not from an agency cap. A conventional cash-out refinance stops at 80% of the home’s value on a one-unit primary residence. The two products also do different jobs. Pledging assets mostly cuts the cash you bring to a purchase. A cash-out refinance hands you cash from equity you already own.
Here is the honest version of who each is for. A cash-out refinance fits a homeowner with real equity who wants cash and is fine with a larger loan. A pledged-asset mortgage fits a buyer or owner with a big investment portfolio who wants to keep it invested instead of selling it. That buyer accepts that the portfolio now backs the loan too.
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.
One term first. Loan-to-value (LTV) is the loan balance divided by the home’s value. A higher LTV means you borrow more of the home’s worth and keep less equity as a cushion.
Side-by-Side
This table covers what can be said with confidence. No neutral, agency-level figure exists for how much a pledged-asset mortgage lends. The cash-out figures below come from the wholesale conventional programs Lendmire places files with, subject to lender guidelines.
| Factor | Pledged-Asset Mortgage | Cash-Out Refinance |
|---|---|---|
| Who sets the limit | The bank’s own policy | Agency and program rules |
| Leverage | Varies by bank and asset mix | 80% one-unit primary; 75% 2-4 units, second homes, investment |
| Collateral | Home plus pledged portfolio | The home only |
| Credit floor | Set by each bank | 620 decision score on wholesale conventional |
| Mortgage insurance | Varies by bank | Not needed at 80% or less; a wholesale lane to 89.99% carries none |
| Occupancy | Set by each bank | Primary, second home or investment; occupancy sets leverage |
| Documentation | Home file plus account statements and pledge papers | Full credit, income, asset and appraisal file |
| Cash to you | Usually none; it reduces cash needed | Yes, the equity left after payoffs |
| If you default | Home and pledged securities at risk | Home at risk |
Read the “Cash to you” row twice. It explains most of the confusion between these two products.
Lendmire’s cash-out refinance programs page covers the conventional side of this table in more detail.
Key Terms Defined
Pledged-asset mortgage: A home loan where you pledge securities or cash as extra collateral, usually in place of some or all of a cash down payment.
Cash-out refinance: A new, larger first mortgage that pays off your old loan and gives you the leftover equity as cash.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the old loan and closing costs and returns only a small amount of incidental cash.
Advance rate: The share of a pledged asset’s value a bank will count as collateral. Banks set lower shares for riskier assets.
Seasoning: The waiting period a lender wants, such as how long you have owned the home or held the loan you are paying off.
Mortgage insurance: Coverage that protects the lender on high-LTV conventional loans. You pay for it, and it can end as your balance falls.
What Sets the Limit on Each One?
A cash-out refinance is limited by the home. The appraisal sets the value, the program sets the LTV cap, and the cap sets the maximum loan. Occupancy and unit count move that cap. A one-unit primary residence reaches 80%. Two- to four-unit primary residences, second homes and investment properties sit at 75%.
Fannie Mae’s cash-out refinance rules also add a pricing adjustment that depends on LTV and credit score. More leverage and a lower score cost more. This page does not quote that adjustment.
A pledged-asset mortgage is limited by two things. The home still has to appraise. The bank also decides how much of your portfolio it will count and at what value. That second decision is the bank’s own policy. No Fannie Mae, Freddie Mac, FHA or VA program carries the label “pledged-asset mortgage.” Any number you see advertised belongs to that one bank.
Here is the one agency rule that touches the idea. Fannie Mae allows borrowed funds secured by an asset, such as savings, CDs, stocks, bonds or retirement accounts, as a source of money for the down payment, closing costs and reserves. It reasons that these funds represent a return of your own equity. That is a rule about where your funds to close come from. It does not raise the LTV cap on a refinance.
Same House, Same Portfolio: How the Two Routes Compare
Picture a homeowner with a paid-down house and a large brokerage account. Call the home’s value 100%. The existing mortgage is some slice of that.
Run the cash-out route first. The lender caps the new loan at 80% of value, assuming a one-unit primary residence. The old mortgage and closing costs come out of that 80%. Whatever remains is your cash. A homeowner whose old loan already sits near 70% of value gets very little back. The cap, not your portfolio, is the limit.
Now run the pledged-asset route. The portfolio is the second leg of collateral, so the bank may be willing to lend a larger share of the home’s value than the cash-out cap. How much more depends on the bank. It depends on the mix of stocks, bonds and cash, and on how much of each the bank counts. No neutral source publishes a head-to-head figure, so anyone quoting you one is quoting a single lender’s menu.
Two more points complicate the comparison. First, a pledged-asset structure usually reduces the cash you need to bring in. It does not put cash in your hand the way a cash-out refinance does. Second, the lender decides how a refinance with pledged assets is classified. A lender may treat it as a cash-out or as a lower-leverage refinance, depending on what the proceeds do. Ask for that classification in writing before you plan around it.
When a Pledged-Asset Mortgage Is the Better Fit
Pledging works best for someone with a large portfolio and a clear reason not to sell it. Selling appreciated holdings can mean a tax bill. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
It also suits a buyer who wants to lower the cash going into the purchase. Your securities stay invested and you keep ownership of them. The bank sets the terms on trading, withdrawals and release of the collateral, so read those terms before you sign. Another piece, how a pledged-asset mortgage works on a cash-out refinance, walks through the refinance mechanics.
Plan for the downside, because the structure puts two assets at risk. If you default, you could lose the house and the pledged securities. If the portfolio falls in value, the bank can ask you to add collateral or can sell pledged holdings. A borrower with a portfolio concentrated in one stock should weigh that carefully. That trade-off is the price of keeping the portfolio invested.
Pledged-asset loans are also easy to confuse with pledged-asset credit lines and margin loans. They are different products with different risks.
One caution on how Lendmire fits in. Lendmire is a mortgage broker licensed for consumer lending in 16 states. It arranges FHA, VA, conventional and jumbo loans through wholesale lenders. A pledged-asset mortgage is a bank-style structure, so its terms come from the individual bank. Treat any figure here as general, not as a program Lendmire quotes.
When a Cash-Out Refinance Is the Better Fit
Cash-out is the cleaner choice when you want cash and the equity is already there. You keep one collateral asset, your home, and your portfolio stays out of the loan. The rules are public and the lender is not setting its own collateral policy. Most of the guidance in this section applies to a standard conventional file.
Equity is the first test. A cash-out refinance replaces your loan with a larger one, so the payment can rise and the payoff date can move out. The CFPB’s guide to using home equity says lenders typically want you to keep 10% to 20% of the home’s value as equity. The 80% cap on a one-unit primary residence lines up with the top of that range.
Timing is the second test. Across the wholesale conventional programs Lendmire places files with, the first mortgage being paid off must be at least 12 months old, counted note date to note date. You also need to have been on title for 6 months. Freddie Mac’s cash-out refinance section states the six-month title requirement and names exceptions such as an inheritance or a legal award in a divorce. Delayed financing is another exception.
Mortgage insurance is the third. On the agency path it applies above 80% LTV, with the wholesale no-mortgage-insurance cash-out lane as the exception. That lane reaches 89.99% LTV. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, a conforming balance and its own six months of seasoning. Standard cash-out caps at 80%, so mortgage insurance does not come into play there. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
In Texas, a cash-out on a homestead is capped at 80% of the home’s value by the state constitution. The wholesale no-mortgage-insurance lane is not written there.
What if you already have an FHA or VA loan?
Check whether a streamline does the job before you move to cash-out. The FHA Streamline refinances an existing FHA loan that is current. It must show a net tangible benefit, and it caps cash back at $500. Closing costs cannot be rolled into the new streamline loan.
The VA IRRRL, the VA’s streamline for existing VA loans, allows no cash back except for energy-efficiency improvements. If you want equity cash out of a VA or non-VA loan with VA benefits, the path is VA’s own cash-out refinance. It requires a Certificate of Eligibility and living in the home.
What if you only want the lower balance, not cash?
A limited cash-out (rate-and-term) refinance is a different tool. On a one-unit principal residence it reaches 95% LTV, and 97% where the existing loan is agency-owned and the first-time-buyer program allows. It returns only incidental cash and carries mortgage insurance above 80%. The new loan pays off the existing first mortgage, closing costs and a purchase-money second lien. It does not pay you for equity. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A Practitioner’s Note on Where These Files Go Wrong
Some borrowers start with a pledged-asset idea but really want cash, and pledging does not produce cash, so cash-out fits them better. Others hold a large portfolio, run into the 80% cash-out cap, and look for a structure that sidesteps it.
The files that go smoothly start with one question: what do you need the money for? If the answer is “cash for a project or to pay off debt,” look at cash-out. If the answer is “keep my portfolio invested and put less cash into the deal,” look at pledging. If the answer is “a lower balance or a different term,” look at a limited cash-out refinance or a streamline.
The Verdict
Neither option wins on size alone. A pledged-asset mortgage can reach further than the conventional cash-out cap in some bank programs. Reaching further means the portfolio, not just the house, answers for the loan.
Choose a cash-out refinance if you want a published rule set, one asset at risk, and cash in hand. Choose pledging if you have a large portfolio, a tax or investment reason to leave it alone, and the stomach for added collateral risk. Choose a streamline or limited cash-out if cash is not the goal.
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 a pledged-asset mortgage be used on a refinance?
Sometimes, but it depends on the bank. Pledged-asset loans are a bank structure with no agency program behind them, so each lender decides which transactions it will take. The bank also decides how to classify the refinance and how much of your portfolio to count. Ask for both in writing before you rely on the loan.
Does a cash-out refinance need mortgage insurance?
At 80% LTV or less, no, and 80% is the standard cash-out cap on a one-unit primary residence. Mortgage insurance applies above 80% on the agency path, and the wholesale no-mortgage-insurance cash-out lane is the exception. That separate lane reaches 89.99% LTV with a 680 score and a 50% ratio on a thirty-year fixed primary residence. Everything is subject to lender guidelines and full file review.
How long do I have to own the home before a cash-out refinance?
Across the wholesale conventional programs, the first mortgage you are paying off must be at least 12 months old, and you must have been on title for 6 months. Freddie Mac names exceptions to the title rule, such as an inheritance or a legal award. Delayed financing is another path for homes bought with cash.
What happens to my pledged securities if the market drops?
The bank can ask for more collateral, and it can sell pledged holdings under its loan terms. In a default, you could lose both the home and the securities. Trading in the pledged account may also be limited. Read the collateral-maintenance language before you sign, because it varies by bank.
Can an FHA Streamline or VA IRRRL pull cash out?
Barely, or not at all. The FHA Streamline allows no more than $500 in cash back, and the VA IRRRL allows none except for energy-efficiency improvements. Both require an existing loan of the same type. For real equity cash, you look at a cash-out refinance.
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: Cash-Out Refinance Transactions
2. Fannie Mae Selling Guide: Borrowed Funds Secured by an Asset
3. CFPB: Using Your Home Equity (guide for older Americans)
4. Freddie Mac Guide, Section 4301.5: Cash-Out Refinance Mortgages
5. HUD: FHA Streamline Refinance
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 With Income and Asset Requirements · How a No-Cost Cash-Out Refinance Works · How Much Documentation a Cash-Out Refinance Mortgage Requires
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.