The Quick Read: A standard conventional cash-out refinance sets no dollar limit on repairs. The limit is the equity left after the loan-to-value cap, the payoff of your current mortgage and the closing costs. Cash comes to you as an unrestricted lump sum, sized on the home’s current appraised value rather than its value after the work. Loans built for renovation size the amount on the finished value instead, with their own rules.
What Is a Conventional Cash-Out Refinance?
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference in cash. The federal consumer-finance regulator describes it this way and notes you often pay closing costs. Repairs are a common use. A federal consumer-finance regulator release on cash-out borrowers lists needed home repairs among the reasons people take one.
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.
“Conventional” means the loan follows Fannie Mae or Freddie Mac guidelines. Lendmire’s cash-out refinance programs page covers the options in more detail. Lendmire is a mortgage broker, so it arranges these loans through wholesale lenders in the 16 states where it is licensed for consumer lending. Every figure below is subject to lender guidelines and full file review, and none is a commitment to lend.
Key Terms Defined
- Loan-to-value (LTV): the new loan balance divided by the home’s appraised value.
- Cash-out refinance: a new mortgage larger than the payoff, with the extra delivered as cash.
- 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.
- As-is value: what the home appraises for today, in its current condition.
- As-completed value: the appraiser’s estimate of the home’s value after planned work is finished.
- Seasoning: how long you have held the home or the loan before refinancing.
How Is the Repair Cash Calculated?
The formula is simple. Take the home’s appraised value, multiply it by the allowed LTV, then subtract your current mortgage payoff and the closing costs. What remains is your repair cash.
Across the wholesale programs placed through Lendmire, a conventional cash-out reaches 80% LTV on a one-unit primary residence. Two- to four-unit primary residences, second homes and investment property top out at 75%, so occupancy sets the leverage. In Texas, a cash-out on a homestead is capped at 80% of the home’s value by the state constitution. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Here is how it plays out as shares of the home’s value. Say your home appraises at 100% of value and your current mortgage is 50% of that value. At an 80% cap, you have roughly 30% of value to work with before closing costs. If your repair budget is 20% of the home’s value, you clear it, with some room left over. If the budget is 35%, you do not. The cap decides, not the project.
Tighten the picture further:
| Step | What happens |
|---|---|
| 1. Appraised value | Set on current condition |
| 2. Apply LTV cap | 80% on a one-unit primary home |
| 3. Subtract payoff | Existing first mortgage, plus any financed costs |
| 4. Subtract closing costs | Reduces cash you actually receive |
| 5. Remainder | Your repair cash, paid as a lump sum |
Pricing also matters here. The agencies add loan-level price adjustments or a credit fee to cash-out loans, tied to credit score and LTV. Fannie Mae’s cash-out guidance points to its Eligibility Matrix for the exact caps, which is where the program’s leverage limits live.
Why Doesn’t a Planned Remodel Raise the Limit?
Because a standard cash-out appraisal values the house as it stands. The appraiser does not credit a kitchen you have not built. Fannie Mae’s guide allows improvements on a cash-out refinance, but then all standard cash-out policies apply.
This cuts both ways. If the house needs work that drags the appraised value down, the cap applies to that lower number. Deferred repairs can shrink the cash you receive at the moment you need it most. A leaking roof or a gutted bathroom shows up in the appraisal.
Borrowers often budget against the value they expect after the work, and the appraisal answers with the value they have today.
Who Qualifies? The Eligibility Checklist
Equity is the first test. Beyond that, the file is reviewed on several points:
- Credit: the wholesale conventional programs start at a 620 decision score, and the automated finding governs most files.
- Debt-to-income: the total ratio ceiling is 50% on an automated approval. Manually underwritten loans use 36% or 45%, depending on reserves and score factors.
- Seasoning: the first mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
- Occupancy: the property type and use set the LTV cap, as shown above.
Freddie Mac’s Guide section 4301.5 spells out the six-month title rule and lists exceptions, including one for renovation mortgages. If an LLC held title, that history can count toward the six months when conditions are met.
When the No-Mortgage-Insurance Lane Applies
Mortgage insurance is required above 80% LTV on the agency path, apart from the one wholesale no-mortgage-insurance cash-out lane described next. It can be cancelled at the borrower’s request at 80% of original value, and the servicer must end it automatically at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance.
The exception is a wholesale cash-out lane that reaches 89.99% LTV with no mortgage insurance, beyond the 80% cap that applies to a standard one-unit primary residence cash-out. This lane requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning and is not written in Texas. For a borrower whose repair budget needs more than the 80% cap allows, this lane is worth a conversation, though it is subject to lender guidelines and full review.
What About Renovation Loans That Use After-Repair Value?
Renovation products are the way to borrow against the value your home will have after the work. The loan is sized on the as-completed appraisal, and the money is held back and released as work finishes.
Fannie Mae HomeStyle Renovation. On a refinance, renovation costs cannot exceed 75% of the as-completed value. The cap is 50% for manufactured homes, and do-it-yourself work is limited to 10% of as-completed value. LTV is the loan amount divided by the as-completed value, and the loan must stay within the agency’s maximum mortgage amount. Leftover funds can reduce the loan balance, or reimburse documented extras with paid receipts.
The HomeStyle Renovation FAQ adds two rules. Work must be completed within a set period after closing, which varies by file and lender, and funds may only pay for new improvements.
Fannie Mae HomeStyle Refresh. This covers smaller projects, up to 15% of as-completed value, on purchases and limited cash-out refinances. It is a limited cash-out loan, so it follows those rules. A cash-out refinance that includes improvements is not classed as Refresh.
Freddie Mac CHOICERenovation. This is Freddie Mac’s counterpart to HomeStyle Renovation. Freddie’s guide names “Renovation Mortgage” as a category, but its caps should be confirmed with a lender rather than assumed to match Fannie Mae’s.
One misreading to avoid: the 75% figure caps the renovation cost, not the cash you can pull. The total loan stays subject to the maximum mortgage amount and LTV.
Lump Sum or Staged Draws? A Comparison
| Factor | Standard cash-out | Renovation loan | Home equity loan or HELOC |
|---|---|---|---|
| Value used | Current (as-is) | As-completed | Current, behind first mortgage |
| How cash arrives | Lump sum at closing | Held back, released as work is done | Lump sum or credit line |
| Use restrictions | None | Approved work, set completion window | Generally none |
| First mortgage | Replaced | Replaced | Stays in place |
| Best fit | Equity is ample, work is flexible | Equity depends on finished value | Current loan is worth keeping |
The CFPB notes that home equity loans and HELOCs leave the first mortgage in place, and that cash-out can cost more or less than a HELOC depending on terms.
The decision rule is fairly clean. If your equity comfortably covers the budget at today’s value, the lump sum is simpler. If the numbers only work on the finished value, a renovation loan is the structure built for it, at the cost of more paperwork, contractor plans and draw administration.
Repair First or Refinance First?
| Situation | Better path |
|---|---|
| Equity is ample at current value | Refinance first, repair after |
| Condition is lowering the appraisal | Consider a renovation loan, or repair the worst items first |
| Current loan is one worth keeping | Look at a second-lien product instead |
| Project is small and cosmetic | Cash-out or Refresh, whichever fits the equity |
Repairing first with savings and then refinancing can lift the appraised value, which raises the cap. It also ties up cash. Refinancing first keeps savings intact but sizes the loan on a lower value. Neither is automatically right, and the better answer depends on how much of your budget the as-is appraisal actually supports.
How Existing Second Liens Count
A second mortgage or HELOC sitting behind your first mortgage matters. In a cash-out refinance, the new loan generally pays off the first mortgage, and the lender must decide what happens to the second lien. If it stays, it counts toward the combined limits. If it is paid off, it comes out of your proceeds before you see cash. Either way, it shrinks the repair money.
Where the General Rule Breaks
- PACE liens. Fannie Mae’s older cash-out guidance restricts borrowers who could pay off a PACE loan but choose not to. That page may be stale, so check the current guide. Fannie Mae says homeowners paying off PACE debt may use HomeStyle Refresh or a standard cash-out.
- Manufactured homes. The renovation cost cap drops to 50% of as-completed value.
- Recent purchase or inheritance. The six-month title rule applies unless an exception fits.
- A home that needs work. Condition lowers value, which lowers the cash.
What Happens to Your Loan Terms?
A cash-out loan replaces your whole mortgage and resets the full balance. Repair money borrowed this way is repaid over the new loan’s term, which can lengthen the time to pay off the home, per the CFPB’s home equity guide. The Federal Reserve also cautions that taking out equity means you own less of your home and it takes time to rebuild. Compare the terms of the loan you have against the new one, and count the closing costs against the cash you receive.
Frequently Asked Questions
Is there a maximum amount I can spend on repairs with a cash-out refinance?
No dollar limit applies to the repairs themselves. The ceiling is the equity left after the LTV cap, your payoff and closing costs. Spend it on any repair, though a renovation loan is a different product with its own cost caps.
Will the appraisal count the repairs I plan to make?
Not on a standard cash-out. The appraisal reflects the home’s current condition. Only renovation loans such as HomeStyle Renovation are sized on the as-completed value.
Do I need to have owned the home for a certain time?
Usually, yes. The first mortgage being paid off must be at least 12 months old, and a borrower must have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards. Freddie Mac’s guide lists its own documented exceptions.
Can I use a cash-out refinance on a second home to pay for repairs?
Yes, but occupancy sets the leverage. Second homes top out at 75% LTV, below the 80% available on a one-unit primary residence. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Is it better to use a HELOC instead?
Sometimes. A HELOC leaves your first mortgage untouched, which matters if your current loan is one worth keeping. A cash-out replaces everything. The better choice depends on the terms of the loan you have and the equity you need.
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.
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.
For the program’s current guidelines, see conventional loan programs.
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. CFPB
2. CFPB release on cash-out borrowers
3. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
4. Fannie Mae Selling Guide B5-3.3-01, HomeStyle Refresh
5. Freddie Mac Seller/Servicer Guide Section 4301.5
6. Fannie Mae Selling Guide B5-3.2-02, HomeStyle Renovation
7. Fannie Mae HomeStyle Renovation FAQ
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 Borrow Again With a Conventional Cash-Out Refinance · How PMI Works on a Conventional Cash-Out Refinance · How Much a Conventional Cash-Out Refinance Lends Inside Seasoning
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.