The Quick Read: A lender sets a ceiling on the whole new loan as a percentage of your home’s appraised value, and your cash is what remains after the payoff, any required liens, and financed costs. On a conventional loan for a one-unit primary home, that ceiling is 80% of value. Occupancy, property type, and loan program move the number, and the check you receive is always smaller than the new loan.
What Is a Lump-Sum Cash-Out Refinance?
A lump-sum cash-out refinance replaces your current mortgage with a larger one. The new loan pays off the old balance, and you take the difference as one payment at closing.
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.
The whole balance reprices, not just the new cash. That separates it from a home equity loan, which sits behind your existing mortgage and leaves it untouched. Lendmire’s cash-out refinance programs page covers the options that Lendmire, a mortgage broker, arranges through wholesale lenders.
Rolling closing costs into the balance does not make a refinance a cash-out. It becomes one when the new loan is meaningfully larger than the payoff plus costs and you keep the difference.
How Does the Lender Calculate the Maximum Cash?
The lender never picks a cash figure first. It works down from a cap on the total loan.
1. Start with the appraised value. A cash-out generally needs a new full appraisal, and that value drives everything else.
2. Multiply by the cap. For a conventional one-unit primary home, the cap is 80% of value.
3. Subtract your payoff. The existing first mortgage comes off the top.
4. Subtract other liens that must be paid. A second mortgage that cannot stay in place also comes out of proceeds.
5. Subtract financed costs. Anything you roll into the loan uses up room under the cap.
6. What remains is your maximum cash.
Here is the same sequence in percentages, with no dollar amounts. Say your home appraises at 100% of value. The 80% cap leaves 80% for the whole new loan. If your payoff is 50% of value, that leaves 30%. If financed costs and a required lien payoff take another 3%, your cash after costs and liens tops out near 27% of value.
Here is the catch. People hear “80%” and assume it is the cash they get. It is the ceiling on the entire loan.
What Is the Cap for Each Program?
Occupancy and property type set the leverage. Across the wholesale conventional programs Lendmire places files with, the picture looks like this:
| Property type | Conventional cash-out cap |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
The Fannie Mae Eligibility Matrix carries the agency’s 80% one-unit principal-residence figure and restricts single-width manufactured homes to limited cash-out only. A cash-out can be written on a primary home, a second home, or a rental. Occupancy sets the leverage, and a one-unit primary home gets the highest cap.
FHA is stricter than most borrowers expect. HUD Mortgagee Letter 2019-11 cut the FHA cash-out cap from 85 to 80 percent, measured against adjusted value rather than the raw appraisal. Older pages that still show 85% are out of date.
VA cash-out loans can reach higher on paper, but many investors who buy VA loans apply lower limits. Program ceilings and what a lender will write are not always the same number.
There is one exception worth knowing. A wholesale lane reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio on a thirty-year fixed, for a primary residence with a conforming balance. It carries its own six months of seasoning. It is the exception to the mortgage-insurance rule below, and it is not written in Texas. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Texas has its own rule. 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. Some other states add cash-out rules of their own.
What Else Limits the Amount?
Leverage is only the first filter. Four more checks can shrink the number or block the loan.
- Loan age. The first mortgage being paid off must be at least 12 months old, measured from note date to note date, per Fannie Mae Selling Guide B2-1.3-03. A recent cash-out resets that clock.
- Time on title. A borrower should be on title for 6 months. Exceptions cover delayed financing, inheritance, and legal awards.
- Credit and ratios. 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 agency matrix.
- Loan size. Above the conforming limit, jumbo lanes take over. They start at a 660 decision score, reach 90% leverage, and go to $5,000,000, with a 50% ratio ceiling on the fixed lanes.
Mortgage insurance enters when leverage passes 80% on the agency path, with the no-insurance wholesale lane above as the exception. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. You can ask to cancel 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%.
Past credit events carry waiting periods set by the agencies: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
What Shrinks Your Check?
Gross loan and net cash are different numbers. Four things sit between them.
Payoff of the old loan. This is the largest deduction for most homeowners.
Other liens. A retained second lien consumes room under the cap, because the cap applies to combined leverage. Under HUD’s letter, the combined cap also sits at the same limit.
Financed costs. Closing costs paid out of the loan lower your cash dollar for dollar. Pay them in cash and the check is larger, but you bring money to the table.
The appraisal. A lower value cuts the ceiling. Take a home you hoped was worth 100% and that appraises at 95%. The 80% cap now sits at 76% of your original expectation. With the same 50% payoff and 3% in costs and liens, gross cash falls from 27% to 23% of the original value. The appraisal can swing your cash more than anything else on the list.
What Happens After You Get the Loan?
Your monthly payment may rise, because you replace your mortgage with a larger loan. The CFPB’s guide on using home equity also notes that a cash-out may stretch out the time to pay off the mortgage, and that lenders typically want you to keep at least 10% to 20% of your home’s value as equity.
You will get a Loan Estimate and, later, a Closing Disclosure. For a refinance of your principal home, you generally have three business days to cancel after signing, and funds go out after that window.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Where Does the General Rule Break?
Several situations bend the standard formula.
- Cash buyers. A buyer who paid cash can use delayed financing, which skips the usual title wait. The new loan is generally limited to the documented initial investment plus financed costs, and cash-out pricing still applies. The older Fannie Mae wording is archived, so confirm the current terms before relying on it.
- Homes owned free and clear. A new loan on a paid-off home is still a cash-out. Freddie Mac Guide §4301.5 defines a cash-out as a mortgage with no restrictions on how the proceeds are used, and it covers free-and-clear homes.
- Renovation and energy loans. Certain renovation products are treated as “no cash-out” when the money goes only to eligible improvements, and the credit fee does not apply to those special-purpose loans.
- Streamlines. The FHA Streamline and the VA IRRRL lower the cost of a loan you already have. They are not cash tools. FHA allows only minor closing adjustments. The IRRRL is positioned as a rate-reduction product for existing VA loans.
- VA cash-out. It can fund debt payoff, school, or home improvements, and it requires a Certificate of Eligibility. Lenders may allow higher leverage when the new loan does not exceed the payoff, and overlays bite when equity comes out.
- Rate-and-term refinances. These allow only incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan or $2,000. Freddie Mac’s is the greater of 1% of the new loan or $2,000. A rate-and-term refinance of a one-unit principal residence goes up to 95% LTV.
Key Terms Defined
Appraised value: The opinion of your home’s worth that the lender uses to set the cap.
Loan-to-value (LTV): The new loan balance divided by appraised value.
Payoff: The balance needed to close out your current mortgage.
Net proceeds: The cash you receive after payoff, liens, and costs.
Seasoning: The minimum age of your loan or time on title before a cash-out is allowed.
Cash-Out vs. the Alternatives
| Option | What happens to your first mortgage | Best fit |
|---|---|---|
| Cash-out refinance | Replaced entirely | You want one loan and one lump sum |
| Home equity loan | Stays in place | You like your current terms |
| HELOC | Stays in place | You need money over time |
| Rate-and-term refinance | Replaced, little cash back | You want new terms only |
The deciding variable is your existing loan. If its terms are good, a second lien leaves them alone. If not, a cash-out lets you reset everything in a single transaction.
How Should You Size the Amount?
Take only what the purpose needs. A larger cash-out leaves less equity, raises the payment, and resets your payoff clock. Because a new cash-out restarts the 12-month clock, you cannot go back for more right away.
A smaller draw also leaves room if prices dip. The cap protects the lender’s cushion, not yours. Staying below the ceiling keeps some of your own.
The best program for your situation depends on property type, credit profile, how much leverage you need, and your documents. A broker that shops several wholesale lenders can match your scenario to the program that fits, and program figures stay subject to lender guidelines and full file review.
Frequently Asked Questions
Can I take out 100% of my equity?
No. The cap applies to the whole new loan, so a conventional one-unit primary home tops out at 80% of value. You always keep some equity, and your payoff, other liens, and costs reduce cash further.
Why is my check smaller than the new loan amount?
The new loan first pays off your existing mortgage, any required liens, and financed costs. Only the remainder reaches you. Paying costs out of pocket makes the check larger, though you bring cash to closing.
Does an FHA cash-out go to 85%?
No. HUD cut the cap to 80% of adjusted value in 2019. Older materials that show 85% are outdated.
Can I cash out soon after buying or refinancing?
Usually not. The loan being paid off must be at least 12 months old, and a recent purchase triggers a seasoning test unless delayed financing applies.
What if the appraisal comes in low?
The ceiling drops with the value. Your payoff stays the same, so the cash shrinks. You can take a smaller amount, wait, or compare programs.
Next Steps
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. Nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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 Eligibility Matrix
2. HUD Mortgagee Letter 2019-11
3. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
4. CFPB’s guide on using home equity
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 Much a Cash-Out Refinance Gives an S-Corp Owner · How Much Cash Comes Out of a Cash-Out Refinance With High Equity and Low Income? · How to Qualify and Apply for a Cash-Out Refinance on Your Home
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.