The Quick Read: It depends on your home’s appraised value, the leverage cap for your program and occupancy, and what has to be paid off at closing. The check equals the new loan minus your existing liens and closing costs. On a conventional one-unit primary residence, the new loan can reach 80% of the appraised value, subject to lender guidelines and full file review. Streamline-style refinances pay out little or nothing.
The Formula in Plain Words
Start with the appraised value. Multiply it by the loan-to-value (LTV) cap for your program. That is the largest new loan you can get. Then subtract three things:
1. The payoff of your current first mortgage.
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.
2. The payoff of any other liens being retired, such as a second mortgage or HELOC.
3. Your closing costs.
What remains is your cash. Equity is not cash. The LTV cap leaves a cushion in the home, and the costs and payoffs come off the top.
Lendmire’s cash-out refinance programs page lays out the equity each program reaches. As a mortgage broker licensed for consumer lending in 16 states, Lendmire arranges these loans through wholesale lenders. It does not lend directly.
What Are the Leverage Caps?
For a conventional cash-out, the cap is 80% LTV on a one-unit principal residence. It drops to 75% on two- to four-unit principal residences, second homes and investment property. Occupancy sets the leverage. A cash-out can be written on a primary residence, a second home or an investment property.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. It is the one exception to the usual rule that mortgage insurance applies above 80% LTV. Texas homestead loans do not use this lane. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
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, whatever the property type.
| Situation | Typical leverage cap |
|---|---|
| One-unit primary, conventional | 80% LTV |
| Two- to four-unit primary | 75% LTV |
| Second home | 75% LTV |
| Investment property | 75% LTV |
| Wholesale no-MI lane (primary, conforming) | 89.99% LTV |
| Texas homestead cash-out | 80% of value |
These are program guidelines, not promises. Credit, ratios and property type can all lower the number.
A Worked Example in Percentages
Say you own a one-unit primary residence appraised at 100% of its value. You owe 50% of that value on your first mortgage and nothing else. At an 80% cap, the new loan can be up to 80% of value. Subtract the 50% payoff and you have 30% of value before closing costs. Costs then reduce it further.
Now suppose you owe 70%. The same cap leaves only 10% of value, before costs. Same home, same cap, very different check. The bigger your existing balance, the smaller the payout.
Appraisal risk matters here. If the appraisal comes in lower, every figure shrinks. A home you believed was worth more may support a smaller loan, and the cash drops with it. It can drop to zero.
Why Your Number May Come in Lower
Check this list before counting on the formula’s result:
- A low appraisal. The cap applies to appraised value, not your estimate.
- Occupancy. Second homes and investment property sit at the lower cap.
- Property type. Two- to four-unit properties carry a lower cap than one unit.
- Credit score. Wholesale conventional programs start at a 620 decision score, and some lanes need more.
- Debt ratios. For most files, the result of the automated underwriting findings governs, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45%.
- Mandatory payoffs. Liens being retired come out of the proceeds first.
- Closing costs. These reduce the check, whether paid in cash or rolled into the loan.
- Reserves. Fannie Mae’s eligibility matrix notes minimum reserves on some cash-out files with higher debt ratios.
- Mortgage insurance. Above 80% LTV on the agency path it applies, except in the wholesale no-MI lane above. It cancels on request at 80% of original value and ends automatically at 78%.
Seasoning: How Long Must You Have Owned It?
You cannot cash out the day after buying. 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 six months. Fannie Mae’s SEL-2023-01 states both clocks.
Freddie Mac’s Guide section 4301.5 carries the six-month title rule and lists exceptions. Delayed financing, inheritance and legal-award situations are among them. A recent all-cash buyer may cash out inside the six months if the purchase is documented.
What If You Own the Home Free and Clear?
A new loan on a paid-off home still counts as a cash-out refinance. Freddie Mac’s guide says so directly. Because no first mortgage is being paid off, the 12-month first-lien rule does not apply. The title and leverage rules still do.
Which Programs Pay Little or No Cash?
Some refinances are built to change your loan, not to hand you money.
- Rate-and-term (limited cash-out). The new loan pays off the first mortgage, closing costs and a purchase-money second lien. Only incidental cash comes back. 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. Leverage reaches 95% on a one-unit primary residence.
- FHA Streamline. This program refinances an existing FHA loan with no appraisal, limited credit review and a net tangible benefit. It is built around your current balance, not today’s value.
- VA IRRRL. This program refinances an existing VA loan, with a 0.5% funding fee unless exempt, no VA appraisal and a net tangible benefit. VA’s pamphlet says an IRRRL cannot take equity out.
Rolling closing costs into a loan does not make it a true cash-out. The CFPB’s research counts a refinance as cash-out only when the new loan plus junior liens is more than 5% larger than the loans it replaced.
Should You Take the Maximum?
Not necessarily. Every extra dollar borrowed is repaid with interest over the life of the loan. A larger loan replacing your current one may lengthen your payoff time and raise your monthly payment, as the CFPB’s home equity guide notes.
Two questions help decide:
- What is the cash for? Paying off high-cost debt or funding a repair is different from covering everyday spending.
- What loan are you giving up? Replacing a first mortgage you like with a new one just to reach equity is a real cost. Keeping your existing first mortgage and adding a home equity loan or HELOC is the main alternative.
| Option | Structure | Main tradeoff |
|---|---|---|
| Cash-out refinance | One new, larger first mortgage | Replaces your current loan |
| Home equity loan | Second loan, fixed amount | Second payment; usually a shorter term |
| HELOC | Second line of credit | Variable draws; second payment |
The CFPB also flags added risk for cash-out borrowers, and its research found credit scores rose right after closing and then gradually worsened. Debt can creep back. Use the cash with a plan.
Check Your Own Number in Five Minutes
Fill in these lines with your own figures:
1. Estimated home value × 80% (or 75%) = maximum new loan.
2. Minus your current mortgage balance.
3. Minus any second lien or HELOC balance.
4. Minus estimated closing costs from a Loan Estimate.
5. The remainder is your rough cash.
Run it again at a value 5% to 10% lower to see how a weak appraisal changes things. Treat it as an estimate. Final figures come from the lender’s file review.
Key Terms Defined
Loan-to-value (LTV): the new loan amount divided by the appraised value of the home.
Seasoning: the minimum time you must have owned the home or held the loan being paid off.
Limited cash-out refinance: a refinance that pays off your first mortgage and costs but returns only incidental cash.
Lien: a legal claim against your home for a debt, such as a mortgage or HELOC.
Net tangible benefit: a required, measurable improvement for the borrower on a streamline refinance.
Frequently Asked Questions
Can I take out all of my equity?
No. The LTV cap keeps part of your equity in the home. On a conventional one-unit primary residence, the new loan tops out at 80% of appraised value. Payoffs and closing costs then reduce what you receive.
Does a cash-out refinance work if I own my home outright?
Yes. A new loan on a home with no mortgage is treated as a cash-out refinance. The 12-month first-lien seasoning rule does not apply because no first mortgage is being paid off, but title and leverage rules still do. Eligibility is subject to lender guidelines.
Will an FHA Streamline or VA IRRRL give me cash?
No. Both are streamlines for existing government loans. The IRRRL cannot take equity out, and the FHA Streamline is built around your current balance. If you need meaningful cash, a cash-out program is the structure to look at.
What happens if my appraisal is low?
The cash shrinks, and it can disappear. The leverage cap applies to appraised value, so a lower value lowers the maximum loan while your payoffs stay the same.
Is a cash-out refinance the same as a home equity loan?
No. A cash-out replaces your first mortgage with a larger one. A home equity loan leaves your first mortgage in place and adds a second loan, usually repaid over a shorter period.
Next Step
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. Program terms are subject to lender guidelines and full file review, and 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
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. Fannie Mae’s eligibility matrix
4. VA Pamphlet 26-7, Chapter 6
5. CFPB Office of Research blog on cash-out refinance borrowers
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 Cash Comes Out of a Cash-Out Refinance Based on Property Type? · How Much Cash Comes Out of a Cash-Out Refinance Without an Appraisal on the New Loan? · How Much Cash Comes Out of 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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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.