The Quick Read: On a conventional cash-out refinance, the maximum loan-to-value sets a ceiling on the new loan, not on the cash you receive. Usually that ceiling is 80% of the home’s appraised value on a one-unit primary residence and 75% on two- to four-unit homes. Your cash is whatever is left after the old mortgage, other required payoffs and closing costs come out of that ceiling. Everything stays subject to lender guidelines and full file review.
Lendmire’s cash-out refinance programs page covers the loan lanes in detail. This article covers the mechanics: how the ceiling is built, how an appraisal moves it, and where the standard rule bends.
- Occupancy and unit count can lower the ceiling below the one-unit primary residence level.
- Cash to you equals ceiling, minus payoff, minus costs.
- The appraisal is the biggest swing factor on the file.
- The first mortgage being paid off generally must be at least 12 months old.
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 Does Max LTV Mean on a Cash-Out Refinance?
Max LTV is the largest share of the home’s appraised value the new loan can reach. LTV stands for loan-to-value. A home appraised at a given value with an 80% cap can carry a new loan up to 80% of that value. No more.
The CFPB describes a cash-out refinance as replacing your mortgage with a bigger one and taking the difference in cash. That “bigger one” is the piece the cap controls.
CLTV is combined loan-to-value. It counts the new first mortgage plus any other liens that stay on the property. If a second lien survives the refinance, it eats into the same ceiling.
Two numbers feed the math. One is value, from the appraisal. The other is the cap, which depends on the program, the occupancy and the number of units.
How Is the Maximum Loan Calculated, Step by Step?
The formula has three steps. Run them in order.
1. Start with the appraised value. The lender orders the appraisal. Whatever the appraiser concludes is the number the cap multiplies. Your own estimate, an online value or a tax assessment does not count.
2. Multiply by the cap. Value times the program’s maximum LTV gives the largest loan the program allows.
3. Subtract what has to be paid. The existing first mortgage comes out first. Then any liens that must be paid off. Then closing costs, if they are rolled into the loan. What remains is your cash.
Costs can be financed, but only while the total stays under the cap. Financed costs do not sit outside the ceiling. They use up room inside it.
Here is the part that trips people up. Say you owe 60% of the home’s value and the cap is 80%. The ceiling leaves 20 points of value to work with. Closing costs come out of those 20 points. You never get a clean 20.
Now a lower-balance case. Owe 30% of value, and the cap is 80%. That leaves 50 points before costs. The cap did not shrink. The payoff did.
And a high-balance case. Owe 78% of value after a recent purchase with a small down payment. There are only two points of room under an 80% cap, and closing costs may use all of it. That leaves little or nothing to take out as cash. Not a rule, just arithmetic.
What Is the Max LTV by Program and Property Type?
Occupancy and units set the leverage. Here is the conventional cash-out picture, per the lender program parameters and consistent with the Fannie Mae Eligibility Matrix.
| Property | Conventional cash-out max LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
The FHFA Office of Inspector General notes that Fannie Mae and Freddie Mac requirements generally limit cash-out acquisitions to a maximum 80% LTV, and that Fannie Mae’s limit had stood since 2015.
Texas is a separate case. A cash-out on a homestead there (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution. Other states can have their own cash-out rules too, so a national table never replaces a local check.
Where does the no-mortgage-insurance lane fit?
Across the wholesale programs Lendmire places files with, one lane reaches 89.99% LTV on a cash-out with no mortgage insurance. The requirements are tighter: a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, a conforming balance, and its own six months of seasoning. It is not written in Texas. Think of it as the exception, not the baseline. Eligibility depends on lender guidelines and full file review.
What about FHA and VA?
FHA and VA cash-out loans are for owner-occupied principal residences. For FHA, HUD sets the cash-out cap at 80% of adjusted value for case numbers assigned on or after September 1, 2019. Older case numbers carried a higher cap. A second lien does not get you around the cap.
VA works differently. VA’s cash-out page says you need a Certificate of Eligibility and plan to live in the home. The lender orders the appraisal, and you go through a private lender, not VA directly. VA rules permit up to 100% of the VA-determined value, but individual lenders often set lower limits, and you still have to qualify on income and credit.
Does Max LTV Differ for a Cash-Out Versus a Limited Cash-Out?
Yes. The cap depends on how much cash you take. A refinance, also called a limited cash-out, reaches much higher leverage because it pays off the existing first mortgage and closing costs with only incidental cash back.
| Factor | Cash-out | Rate-and-term (limited cash-out) |
|---|---|---|
| One-unit primary max LTV | 80% | 95% (97% in some cases) |
| Cash back | Any amount within cap | Incidental only |
| Mortgage insurance | Above 80% (no-MI lane excepted) | Above 80% |
| Seasoning | 12-month first mortgage | Different test |
The agencies set the incidental cash differently. Fannie Mae’s Selling Guide now sets it at the greater of 1% of the new loan or $2,000, while the lender program parameters list the older Fannie wording as the lesser of 2% or $2,000. Freddie Mac uses the greater of 1% of the new loan or $2,000. Name the agency when you see the figure, and expect the lender to apply its current guide.
Paying off a home equity line used for other purposes reclassifies the loan as cash-out. Fannie Mae’s guide allows limited cash-out treatment only when the existing subordinate lien funded the purchase or certain energy-related expenses. So a borrower who wants to consolidate a HELOC into a new first mortgage should expect cash-out pricing and the cash-out cap.
Buying out a co-owner under a written agreement is a limited cash-out transaction at both agencies. That matters when a divorce or an inheritance changes who is on title.
How Does an Appraisal Change the Number?
The appraised value is the base of the ceiling, so a lower value shrinks the ceiling even if nothing else on the file changes. Because the cap multiplies the value, every dollar of value lost removes only the cap’s share of a dollar from the ceiling, while the existing balance stays the same.
Walk through it in percentages. Suppose the cap is 80% and you owe 60% of what you believed the home was worth. At your expected value, the ceiling leaves 20 points of that value before costs. Now the appraisal comes in 5% lower. The ceiling drops to 80% of the lower value, and the existing balance now equals a bigger share of the lower value. The room between payoff and ceiling shrinks by more than the 5% itself suggests, and the thinner that room was to begin with, the larger the share it loses.
That is why the cushion matters more than the headline cap. Files with a large gap between payoff and ceiling absorb a light appraisal. Files with a thin gap do not.
Appraisal reconsideration is a routine step when a value looks light. A well-documented packet with recent nearby sales and condition notes is the usual route. It does not always change the value. Plan the loan so a small miss does not break it.
For FHA, the denominator is “adjusted value,” not a raw appraisal figure. Same logic applies.
What Seasoning Rules Apply?
Seasoning is the ownership clock, and it is where files get kicked back. On a conventional cash-out, the first mortgage being paid off generally must be at least 12 months old, measured from the old note date to the new note date. The Fannie Mae Selling Guide states this directly. The lender program parameters also call for the borrower to have been on title for six months.
Named exceptions exist: delayed financing, inherited property and property awarded through a legal process. Each has its own paperwork, so ask early if one applies.
A borrower who bought a few months ago with a small down payment usually fails on two counts. The clock is short and the equity cushion is thin. Check both before starting a file.
One more edge case. A home with no mortgage is generally treated as cash-out on a new loan, so the 80% cap applies even though nothing is being paid off.
Where Does the General Rule Break?
The 80% rule is a starting point. These are the named exceptions.
- Unit count. Two- to four-unit homes drop to 75%.
- Occupancy. Second homes and investment property carry their own lower caps. Occupancy sets the leverage, and a cash-out can be written on a primary residence, a second home or an investment property.
- Texas homesteads. The state constitution caps these at 80% of value.
- FHA combined debt. The 80% applies to the first mortgage plus subordinate liens, not the FHA loan alone.
- PACE loans. Certain PACE-loan situations can make a cash-out ineligible when the borrower has the equity but does not pay off the PACE obligation. Check the current Selling Guide, since guidance changes.
- Disaster and co-owner situations. Fannie Mae has limited cash-out treatments for disaster-related repairs and co-owner buyouts.
- Loan-size ceilings. Above the conforming limit, jumbo lanes take over with their own leverage and score requirements.
How Do Credit and Ratios Interact With the Cap?
Credit does not usually change the cap. It changes the price and sometimes the eligibility. Fannie Mae applies loan-level price adjustments by credit score and LTV, and cash-out loans have their own section of the matrix. Those adjustments are built into pricing, not shown as a separate line on your closing disclosure.
The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run tighter, 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.
Mortgage insurance is the other lever. It is required above 80% LTV on the agency path, except in the wholesale no-MI cash-out lane described above. You may request cancellation at 80% of original value with good payment history, no subordinate liens and no decline in value, and the servicer must terminate it automatically at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is the program sheet’s range, not a quote. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Is the Maximum the Amount You Should Borrow?
No. The ceiling is the most a program allows. It is not a recommendation.
Taking cash adds to your loan balance. Fannie Mae’s consumer refinance page notes that cash taken out is added to the balance, which can reduce equity and extend the payoff time. The CFPB warns that the loan may take longer to pay off and the payment may rise because a larger loan replaces the old one.
So each step toward the ceiling does three things. The balance goes up. The equity cushion goes down. The monthly obligation tends to go up. Borrowing near the cap also leaves less protection if values dip.
A practical test: price the cash you need, not the cash you can get. A borrower who needs a modest amount for a repair often does better stopping well below the cap. A borrower consolidating higher-cost debt might reasonably go further. The decision turns on what the money does.
The CFPB also looked at how borrowers use proceeds. Its report on cash-out borrowers found many used cash to pay down credit card and auto debt, with credit scores improving at first and then gradually worsening. Paying off cards helps only if the balances stay down.
Compare alternatives too. The CFPB says a cash-out refinance may be more or less expensive than a HELOC, depending on terms. A borrower with a first mortgage worth keeping often looks at a second lien instead. A borrower with a loan they want to replace anyway looks at cash-out.
For more on that trade-off, Lendmire’s piece Should You Borrow the Full Max LTV on a Cash-Out Refinance? works through the cushion question.
What Does the File Look Like in Practice?
Expect the lender to ask for pay and income documentation, asset statements, a payoff statement for the existing loan, and the appraisal. VA files add the Certificate of Eligibility. The documents themselves are routine. The friction is in the details.
- Payoff statements. A stale payoff figure throws off settlement reconciliation. Request a fresh one.
- Liens. A forgotten second lien or HELOC changes the CLTV and the loan type.
- Value assumptions. Using your own estimate instead of the appraisal produces numbers that fall apart.
- Seasoning. Note dates on the old loan decide eligibility, not the date you moved in.
- Reserves. Some automated findings require reserves, and a higher ratio can add a reserve requirement. Document the accounts early. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
CLTV (combined loan-to-value): All liens on the property added together, divided by the appraised value.
Seasoning: The minimum age of the loan being paid off, or the time you have held title.
Limited cash-out refinance: A refinance that pays off the existing first mortgage and costs with only incidental cash back.
Loan-level price adjustment (LLPA): A pricing add-on tied to credit score and LTV, built into the loan’s price.
Adjusted value: The FHA figure used in place of a raw appraisal value for its LTV cap.
Frequently Asked Questions
Can I borrow 80% of my home’s value in cash?
No. The 80% cap applies to the entire new loan. Your cash is that amount minus your existing mortgage payoff, any required lien payoffs and closing costs rolled into the loan. A homeowner who owes most of that 80% will see little cash.
Does a lower appraisal change my cash-out amount?
Yes. The appraised value is the base for the cap, so a lower value shrinks the ceiling and can erase cash on a thin-equity file. A documented appraisal reconsideration is a normal step when comparable sales support a higher figure, though it does not always change the result.
Does the cap change if I pay off a HELOC?
Often, yes. Paying off a home equity line that funded things other than the purchase or certain energy expenses makes the loan a cash-out. That brings the cash-out cap and cash-out pricing. For FHA, the cap also applies to the combined debt, so a second lien does not add room.
Is 80% always the limit?
No. It is the standard for a conventional cash-out on a one-unit primary residence. Two- to four-unit homes are lower, second homes and investment property are lower, and a wholesale lane reaches 89.99% with no mortgage insurance under tighter conditions. VA rules permit up to 100% of the VA-determined value, though lenders often set lower limits. Everything is subject to lender guidelines.
How long do I have to own the home before a cash-out?
The mortgage being paid off generally must be at least 12 months old, measured note date to note date, and the lender program parameters also look for six months on title. Delayed financing, inheritance and legal-award exceptions exist. Verify which one fits before applying.
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. Reach the team at 828-256-2183 or request a quote.
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. CFPB Ask CFPB: HELOC alternatives
2. Fannie Mae Eligibility Matrix
3. fhfaoig.gov
5. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance Transactions
6. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
7. Fannie Mae SEL-2025-08 disaster-related limited cash-out
8. Fannie Mae, Refinance Options
9. CFPB Older Americans housing guide
10. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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 to Retitle an Inherited 2-4 Unit for a Cash-Out Refinance · How Much Cash Comes Out of a Cash-Out Refinance When the 30-Year Clock Restarts? · How Much a Pledged-Asset Mortgage Lends vs. a Cash-Out Refinance
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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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.