The Quick Read: The standard conventional ceiling on a one-unit principal residence is 80% loan-to-value, and that cap applies to the whole new loan, not to your equity. No source ranks providers, and the lenders that write this loan depend on your credit, your property and the program the loan will be sold under. A broker that shops several wholesale lenders can match the file to the right one. Every figure here is subject to lender guidelines and full file review.
What a Cash-Out Refinance Is
A cash-out refinance replaces your current first mortgage with a larger one. The new loan pays off the old balance, any other liens and the financed costs. You receive what is left.
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.
That is different from a home equity loan or a HELOC. Those leave your first mortgage in place. A cash-out replaces it, so the terms of the old loan go away. The CFPB’s research office makes the same distinction and notes the added risk of giving up an existing mortgage.
This article does not rank providers. Nobody publishes a neutral ranking, and any list that claims to know the best lender for you before looking at your file is guessing. What follows is how the loan is built, so you know what decides the outcome.
Key Terms Defined
- Cash-out refinance: A new, larger first mortgage that pays off the old one and hands you the difference.
- LTV (loan-to-value): The new loan amount divided by the appraised value of the home.
- CLTV: Combined loan-to-value, which counts every lien against the home, not just the first mortgage.
- Principal residence: The home you live in as your main address.
- Limited cash-out (rate-and-term) refinance: A refinance that pays off the old loan and costs with only a small amount of incidental cash back.
- Seasoning: The minimum time you have owned the home, or held the loan being paid off, before cash-out is allowed.
What Is the Standard LTV Ceiling?
On a conventional loan, the ceiling for a one-unit principal residence is 80%. Fannie Mae’s Eligibility Matrix labels the cap “LTV, CLTV, HCLTV.” That wording matters. A second lien or HELOC counts toward the 80%.
Take a home appraised at a given value. The new first mortgage, plus any second lien that stays in place, cannot exceed 80% of that value. Your cash is what remains after the payoff, other liens and financed costs. If the appraisal comes in low, the cash shrinks with it.
Here is the common misreading. Borrowers hear “80%” and think they can take 80% of their equity. They can’t. The cap sits on the total loan against the full value.
Ceiling by occupancy and unit count
| Property | Conventional cash-out ceiling |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Occupancy sets the leverage. The 80% figure belongs to the one-unit home you live in. Everything else on that list drops to 75%.
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, regardless of the agency figure. The wholesale no-MI lane described below is not written there.
How the Loan Is Underwritten, Step by Step
Across the wholesale programs Lendmire places files with, the underwriting sequence is consistent. Here is how a cash-out file moves.
1. Value. An appraisal sets the number everything else is measured against. FHA measures its 80% against “Adjusted Value,” not always the raw appraisal.
2. Lien count. The underwriter totals the first mortgage payoff, any second lien or HELOC that stays, and financed costs. Together they must fit under the ceiling.
3. Occupancy. Freddie Mac’s Guide Section 4301.5 has its own occupancy requirement for primary residences. The program and the occupancy you declare set the ceiling.
4. Seasoning. Two clocks run. The first mortgage being paid off must be at least 12 months old, measured note date to note date. And a borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist.
5. Credit and ratios. This is full documentation: credit, income, employment and assets. 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 use 36% or 45%, with reserve and score factors from the Eligibility Matrix. Reserves can also apply on Fannie Mae files where the automated casefile DTI is above 45%.
6. Pricing. Higher leverage and lower credit scores cost more. Freddie Mac describes a credit fee in price that applies to cash-out loans. This article does not quote prices, and a Loan Estimate shows yours.
7. Closing. You receive a Loan Estimate and a Closing Disclosure. On a refinance of your home, you generally get a three-business-day window to cancel after signing, per CFPB guidance on the right of rescission.
What Decides Which Lender Fits
The lenders that write a given cash-out depend on the file. Seven things drive it:
- The appraised value
- Every lien counted against it
- Occupancy
- Both seasoning clocks
- Credit score and ratios
- Documentation type
- The program the loan will be sold or insured under
Some lenders add overlays stricter than the agency rule. One may want a higher score. Another may cap leverage below the agency ceiling. The agency rules apply only to loans sold to or guaranteed by that agency, which is why two lenders can give two different answers on the same file.
That is the job of a broker that shops several wholesale lenders. Lendmire is a mortgage broker licensed for consumer lending in 16 states. It does not lend. It matches the scenario to a program and a lender whose guidelines fit. Lendmire’s cash-out refinance programs page lays out the products it arranges.
Program fit at a glance
| Program | Best fit | Trade-off |
|---|---|---|
| Conventional cash-out | Equity above the 20% cushion, good credit | 80% cap on one unit |
| Wholesale no-MI lane | Strong score, conforming balance, 30-year fixed | Narrow eligibility; reaches 89.99% LTV, the one exception to the 80% cap |
| FHA cash-out | Borrowers with weaker credit profiles | 80% of Adjusted Value, plus FHA mortgage insurance |
| VA cash-out | Eligible veterans | Lender overlays vary |
| Jumbo | Balances above the conforming limit | Higher score, tighter file review |
The Wholesale No-MI Lane
Mortgage insurance is generally required above 80% LTV on the agency path, except for one wholesale lane. That lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio and a thirty-year fixed rate. The home must be a primary residence, the balance must be conforming, and the lane has its own six months of seasoning.
It is the one exception to the mortgage-insurance rule. It is not a general feature of cash-out lending, and it is not written in Texas. Whether your file fits depends on the lender.
Where the General Rule Breaks
The 80% figure is a starting point. These cases change it.
Two to four units. The ceiling drops to 75% on a multi-unit principal residence.
Cash buyers. Fannie Mae’s Selling Guide has a delayed financing exception for borrowers who bought with cash. Standard cash-out pricing still applies. The current version of the guide topic should be checked before relying on details.
Student-loan cash-out. Fannie Mae offers an option where the standard cash-out LTV applies but cash back to you is limited. The cap has changed over time, so ask the lender for today’s terms.
Special purpose cash-out. Freddie Mac exempts loans like a co-owner buyout from its credit fee and from some seasoning rules.
Limited cash-out. When cash back exceeds the small incidental allowance, the loan is reclassified as cash-out and the 80% cap applies. Fannie Mae allows the lesser of 2% of the new loan or $2,000. Freddie Mac allows the greater of 1% of the new loan or $2,000.
FHA. HUD Handbook 4000.1 sets the FHA cash-out maximum at 80% of Adjusted Value. The FHA Streamline is a different product. It refinances an existing FHA loan with limited credit review, and it does not pay out cash.
VA. VA’s cap is higher than conventional. VA lender-call material says the loan may not exceed 100% of the property’s reasonable value, and lists keeping LTV at or below 90% as one net tangible benefit test, not the cap. Many lenders set lower limits of their own. The VA IRRRL is a rate-reduction product for existing VA loans, not a cash-out.
Cash-Out vs. the Alternatives
A cash-out is the right tool when you want one new loan and the new terms are acceptable. It is the wrong tool when your current first mortgage has terms you want to keep.
| Option | First mortgage | Cash access |
|---|---|---|
| Cash-out refinance | Replaced | Lump sum at closing |
| HELOC or home equity loan | Stays in place | Second lien, counts toward CLTV |
| Limited cash-out | Replaced | Incidental amount only |
| FHA Streamline / VA IRRRL | Replaced | None |
A cash-out may lengthen the time it takes to pay off your mortgage, and the payment may rise because the loan is larger, according to CFPB’s guide on using home equity. CFPB also found that borrowers often use proceeds to pay down card and auto debt, with credit scores improving at first and then gradually worsening, per its cash-out outcomes report.
Questions to Ask Before You Apply
- What ceiling applies to my occupancy and unit count?
- Do you add an overlay on top of the agency rule?
- How do you count my second lien or HELOC?
- Does my first mortgage meet the 12-month age requirement?
- Does the no-MI lane fit my score and balance?
- If the appraisal comes in low, what happens to my cash?
- Do I need reserves on this file?
Common Mistakes
- Treating 80% as a share of equity instead of a cap on the whole loan.
- Forgetting that a second lien counts.
- Assuming cash-out is available right after a purchase.
- Expecting an FHA Streamline to pay out cash. It can’t.
- Assuming “no closing costs” means no costs. Those costs get built into the rate or the balance.
- Overlooking the rescission window. This three-business-day right to cancel applies to a refinance of your home, not to a purchase.
Frequently Asked Questions
What is the standard LTV ceiling for a cash-out refinance on a primary home?
Conventional cash-out on a one-unit principal residence is capped at 80%, per Fannie Mae’s matrix. Two- to four-unit principal residences cap at 75%. Lenders can set stricter overlays, and Texas homestead loans carry an 80% constitutional cap.
Can a second mortgage or HELOC block my cash-out?
It can reduce it. The ceiling is stated as LTV, CLTV and HCLTV, so a second lien that stays in place counts against the cap. Paying it off in the refinance changes the math.
Can I cash out right after buying my home?
Usually not. Two clocks apply: the loan being paid off must be 12 months old, and you must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist, subject to lender guidelines.
Can I cancel after I sign?
Generally, yes, for a refinance of your principal dwelling. You have three business days after the signing, the Truth-in-Lending disclosure and the notice of the right to cancel. Your original loan still has to be paid. A waiver is allowed only for a bona fide personal financial emergency.
Which cash-out provider is best for me?
It depends on the property, credit profile, leverage and documentation. Lenders differ on overlays and on which programs they write. A broker that shops multiple wholesale lenders can compare them against your file. Nothing here is a commitment to lend.
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 is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. 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
2. Fannie Mae Eligibility Matrix
3. Freddie Mac Guide Section 4301.5
6. CFPB’s guide on using home equity
7. CFPB cash-out outcomes press release
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 Qualify and Apply for a Cash-Out Refinance on Your Home · Top Cash-Out Refinance Providers for Seniors on a Fixed Retirement Income · How to Pay Out an Ex Without Selling Using 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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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.