The Quick Read: It is whatever is left of the new loan after your old mortgage, any required liens and the closing costs are paid. The formula is new loan amount, minus payoff, minus costs and prepaid items. The program’s loan-to-value cap limits the whole new loan, not the cash. So every closing cost you roll into the loan uses up room under that cap and comes straight out of your check.
- Formula: new loan − payoff of the first mortgage and required liens − closing costs and prepaids = cash to you.
- The cap is on the loan. At 80% LTV, you do not receive 80% of your home’s value.
- Financed costs shrink the ceiling. Paying costs out of pocket keeps the loan smaller but uses your savings.
- Your Loan Estimate shows which approach applies. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
What Is the Formula for Net Cash?
Net cash equals the new loan amount minus the payoff of your existing first mortgage, minus any other liens that must be paid, minus closing costs, prepaid items and government fees that come out of proceeds or get rolled into the loan. That is the whole calculation.
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.
Start with the ceiling. Lenders set it by multiplying your appraised value by the program’s maximum LTV. For a conventional cash-out refinance on a one-unit primary home, the cap is 80%. On two- to four-unit primary residences, second homes and investment property, it is 75%. (Occupancy sets the leverage; a cash-out can be written on any of those property types, subject to lender guidelines.) Fannie Mae’s eligibility matrix lays out these maximums by occupancy, and the current version is the one to check.
Now subtract. The first thing out of the ceiling is the payoff on your current mortgage, including interest owed up to the payoff date. Then come any liens the lender requires you to clear. Closing costs follow, whether they are paid out of your proceeds or financed into the loan. What remains is your cash.
Here is the catch. People hear “80% LTV” and picture a check for 80% of the home’s value. That figure is the cap on the total debt against the house, and your existing mortgage fills much of it before you see a dollar. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Gross Cash vs. Net Cash: What’s the Difference?
Gross cash is the room between your payoff and the LTV ceiling. Net cash is what actually reaches you after costs. The gap between them is your closing costs, prepaids and any debts the lender requires you to pay at closing.
Treat gross cash as a ceiling, never a promise. A calculator that shows the gap between your payoff and 80% of value is showing the maximum before fees. Fees then take their share, and a low appraisal can shrink the ceiling itself.
The CFPB’s Loan Estimate explainer makes a related point: Estimated Cash to Close is a different figure from total closing costs. On a cash-out refinance, a negative cash-to-close figure generally means money is coming to you. A positive one means you owe money at the table.
A Worked Example in Percentages
Take a home you own with a conventional first mortgage on a one-unit primary residence. Say the home appraises at a value we will call 100%, and your current payoff is 45% of that value. These are modeled assumptions, not market data.
| Step | Share of home value |
|---|---|
| Maximum new loan (80% cap) | 80% |
| Less: payoff of current mortgage | −45% |
| Gross cash available | 35% |
| Less: closing costs and prepaids, if financed | varies by file |
| Net cash to you | 35% minus costs |
No official percentage exists for what a cash-out refinance costs. Federal sources publish none, and costs vary by file, program and state. Your Loan Estimate gives the real number for your loan. Whatever it shows, subtract it from the 35%.
That also tells you the practical rule: net cash is always lower than gross cash by the full amount of costs you finance, plus any debts paid at closing.
Financed Costs vs. Costs Paid Out of Pocket
Rolling costs into the loan leaves you less cash but keeps your savings intact. Paying them yourself gives you the larger check but requires money at closing. The two approaches differ in where the money comes from, and financing adds interest over time, as described below.
| Approach | New loan size | Your check | Cash needed at closing |
|---|---|---|---|
| Costs financed | Larger | Smaller | Little or none |
| Costs paid from your funds | Smaller | Larger | Yes |
When the loan is already at the LTV cap, financing costs gives you no choice but to take less cash. Every dollar financed is a dollar you cannot take out. When you are well under the cap, the choice is mostly about cash flow and payment size.
There is a second effect. A larger balance means a larger payment and more interest paid over time. The CFPB’s guide to using home equity notes that a cash-out refinance may extend the time to pay off your mortgage and may raise the monthly payment. Rolled-in costs add to both effects.
The Loan Estimate has a “Calculating Cash to Close” table. It shows Total Closing Costs on one line and “Closing Costs Financed (Paid from your Loan Amount)” on another. Those two lines tell you which approach your lender has built into the file. The CFPB describes that table under Regulation Z §1026.37.
What Closing Costs Come Out of a Cash-Out Refinance?
Four groups of charges reduce your proceeds: lender and broker charges, third-party services, government fees, and prepaid items with escrow deposits. Each shows up on your Loan Estimate, and none is a flat percentage you can predict in advance.
- Lender and broker charges. Origination and processing items for arranging the loan.
- Third-party services. Appraisal, title work and settlement services.
- Government fees. Recording charges and any transfer-related items your state applies.
- Prepaids and escrows. Interest from closing to the end of the month, insurance and tax deposits.
Cash-out loans also carry pricing adjustments that Fannie Mae and Freddie Mac apply to cash-out transactions. That cost does not appear as a separate fee line. It shows up in the rate or in points, so compare complete Loan Estimates rather than single lines.
Prepaids are the item most estimates miss. They are real money out of your proceeds, yet they are not “fees” in the usual sense. A fresh escrow deposit can also be partly offset when your old servicer refunds the old escrow account. That refund arrives separately, after closing.
What Else Reduces Your Check?
Anything the lender requires paid at closing comes off the top before you see cash. That includes the first mortgage payoff, a home equity line or second mortgage that must be cleared, and in some cases past-due items.
One distinction matters here. Across the wholesale programs Lendmire places, a refinance can pay off your first mortgage, closing costs and a purchase-money second lien while returning only incidental cash. The agencies cap that cash differently: Fannie Mae allows the lesser of 2% of the new loan amount or $2,000, and Freddie Mac allows the greater of 1% of the new loan amount or $2,000. If you pay off a second lien that was not used to buy the home, such as a HELOC you spent on other things, the loan becomes a full cash-out and the 80% cap applies.
The payoff itself also moves. It includes interest accrued up to the payoff date, so it is slightly higher than the balance on your last statement.
Why Your Check May Differ From the Estimate
- Appraisal. A lower value lowers the LTV ceiling, which lowers gross cash. The ceiling is a percentage of the appraised value, not your estimate of it.
- Payoff amount. Per-diem interest changes it day by day.
- Prepaids and escrows. Deposits depend on your closing date and your tax and insurance bills.
- Required liens. A second mortgage or other lien can claim part of the proceeds.
- Changed costs. Third-party charges can change between the Loan Estimate and the Closing Disclosure.
The Closing Disclosure is where you check all of it. The CFPB’s Closing Disclosure explainer says to compare it with your Loan Estimate and ask the lender to explain any change. The cash-to-close section shows whether money is owed by you or paid to you. After closing, the right of rescission on a refinance of a primary home gives you a short window before the funds are released.
Working Backward From the Cash You Need
Start with your target, then add everything that has to come off the top. The sum is the loan you need, and that loan has to fit under the LTV cap.
Target cash + payoff + required liens + financed closing costs and prepaids = required loan.
Divide that required loan by the appraised value. If the result is at or below 80% on a one-unit primary home (75% on a two- to four-unit primary residence, second home or investment property), the target is within reach on LTV alone. If it is above, one of three things has to give: you take less cash, you pay some costs from savings, or you reconsider the plan altogether.
Credit and ratios gate the loan as well. Wholesale conventional programs start at a 620 decision score, with a total ratio ceiling of 50% on most files. Paying off other debts with the proceeds changes your ratios, usually in your favor. And on cash-out loans run through Desktop Underwriter with a ratio above 45%, minimum reserves can apply. Check the current matrix with your loan officer, since these are subject to lender guidelines and full file review.
Seasoning matters too. The first mortgage you are paying off must be at least 12 months old, measured note date to note date. You generally must have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards. A recent all-cash buyer can use delayed financing to take cash out sooner, though cash-out pricing still applies, per Fannie Mae’s cash-out refinance guide.
Does the Answer Change by Loan Type?
Yes, sharply. Conventional and VA cash-outs return real money. FHA and VA streamlines return almost none.
| Loan path | Cash back | Closing costs |
|---|---|---|
| Conventional cash-out | Up to the LTV cap, net of costs | May be financed within the cap |
| VA cash-out | Up to the program’s cap, net of costs | Funding fee may be financed |
| FHA Streamline | $500 at most | Cannot be rolled into the new loan |
| VA IRRRL | None | Funding fee applies unless exempt |
The HUD Streamline page says the loan being refinanced must already be FHA-insured and current, and the refinance must produce a net tangible benefit. Cash in excess of $500 may not be taken out, and closing costs cannot be included in the new mortgage amount. “Streamline” refers to lighter documentation and underwriting, not to a lack of costs.
The VA IRRRL is the same idea on the VA side. A VA-hosted fact sheet hosted by the FDIC states that the borrower may not receive cash from an IRRRL. Across the programs Lendmire places, the IRRRL carries a 0.5% funding fee unless the borrower is exempt, with no VA appraisal and a seasoning requirement of the later of 210 days and 6 payments.
A VA cash-out is different. You go through a private lender, and a one-time funding fee may apply, which can be paid in cash or financed. The fee is a percentage of the loan, and some borrowers are exempt. A financed funding fee works like any other financed cost: it reduces your cash.
In Texas, a cash-out on a homestead is a Section 50(a)(6) loan, capped at 80% of the home’s value by the state constitution.
One Wholesale Exception Worth Knowing
Mortgage insurance is normally required above 80% LTV on the conventional path, and it cancels at 80% and ends at 78% of the original value under the Homeowners Protection Act. The one exception is a wholesale cash-out lane that reaches 89.99% LTV with no mortgage insurance. 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. It is not written in Texas. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
More leverage means more cash potential, but it also means a larger loan and a bigger monthly commitment. Whether the extra cash is worth that depends on what you will do with it.
Is It Worth the Cost?
It depends on what the cash does for you. Paying off higher-cost debt or funding a project that adds value can justify the costs. Cash taken without a plan rarely does.
The CFPB has found that paying off other bills or debts was the most common reason borrowers gave for cash-out refinancing, with more than half of surveyed borrowers citing it each year from 2014 to 2019 and more than 40% in 2020 and 2021, per its research release.
Three checks help:
1. Cost recovery. Net cash has to be worth more to you than the costs and the added interest it generates.
2. Payment change. A larger balance and a reset term can raise your obligation even if the first mortgage was already low.
3. What you give up. Replacing a loan you like with a new one resets its terms.
If you want to keep the loan you have, a separate home equity product can reach equity without replacing it. That can make sense when your current mortgage is a good one. The tradeoff is a second payment and its own costs. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Loan-to-value (LTV): The new loan balance divided by the home’s appraised value.
Gross cash: The room between your payoff and the LTV ceiling, before any costs.
Net cash: The money you actually receive after payoffs, costs and prepaids.
Prepaids: Interest, insurance and tax deposits collected at closing.
Seasoning: The minimum time you must have held the home or the loan being paid off.
Limited cash-out: A refinance that returns only a small capped amount of cash.
Frequently Asked Questions
Can I take 80% of my home’s value in cash?
No. The 80% cap applies to the entire new loan, so your payoff and any financed costs come out first. On a home with a mortgage balance at 45% of value, the most you could reach before costs is the 35% gap. Closing costs reduce that figure further.
Do closing costs come out of my cash-out proceeds?
Only if they are financed or deducted from proceeds. You can also pay them from your own funds, which keeps the loan smaller. The Loan Estimate separates the two with its Total Closing Costs line and its financed-costs line.
Can an FHA Streamline or VA IRRRL give me cash?
Almost never. The FHA Streamline allows $500 back at most, and the VA IRRRL allows none. Both are built for lowering costs on an existing government loan, not for pulling out equity.
What happens if the appraisal comes in low?
The LTV ceiling drops with it, so gross cash shrinks, sometimes sharply. Costs do not shrink, so net cash falls by more than the appraisal gap alone suggests. If the math turns negative, you would need to bring cash or scale the loan back.
Does paying off my HELOC make this a simple refinance?
Not if the HELOC funded anything other than buying the home. Under Fannie Mae’s rules, paying off a non-purchase-money second lien makes the loan a full cash-out, with the cash-out LTV cap and pricing.
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. Lendmire’s cash-out refinance programs page is a good place to start, and the cash you can reach always depends on your appraisal, your payoff and the costs on your own Loan Estimate, subject to lender guidelines and full file review. Program details are not a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
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.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 document
2. CFPB Loan Estimate explainer
5. Closing Disclosure explainer
6. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
7. HUD Single Family Streamline
8. FDIC-hosted VA IRRRL fact sheet
9. CFPB cash-out research 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 With Closing Costs Rolled In · How Much a Cash-Out Refinance Gives an S-Corp Owner
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.