The Quick Read: It depends on the file, because no fixed amount comes out. The cash is whatever is left of the new loan after the old first mortgage, the HELOC payoff and closing costs are paid. The new loan is capped by the program’s leverage limit, and that limit counts every lien. A HELOC used for anything other than buying the home makes the deal a full cash-out refinance, whether or not you take cash.
The Short Version of the Math
Here is the plain formula. Start with the home’s appraised value. Apply the program’s leverage cap to get the largest new loan. Subtract the payoff on your current first mortgage. Subtract the HELOC payoff. Subtract closing costs if they come out of the loan. What remains is your cash.
On a conventional cash-out refinance, the verified program figure is 80% LTV on a one-unit principal residence. Two- to four-unit principal residences, second homes and investment properties cap at 75%. Those are guideline figures that vary by lender and are subject to full file review.
Two things surprise people. First, the HELOC payoff is the balance owed, not the credit limit. Second, the cash can land at zero, or the file may not work at all, when the two payoffs and costs eat the whole cap.
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.
Key Terms Defined
Ended-draw HELOC: A home equity line of credit whose borrowing period is over, so you can no longer pull money and must repay the balance.
Cash-out refinance: A new first mortgage that pays off the old one and any other liens, with the leftover coming to you as cash.
Limited cash-out refinance: A refinance that pays off the existing first mortgage, closing costs and a purchase-money second, with only a small incidental amount of cash back. Lenders also call it a rate-and-term refinance.
LTV: Loan-to-value, the total loan balance divided by the appraised value.
Payoff letter: A lender’s written statement of exactly what is owed on a date, including accrued interest.
Seasoning: How long you have owned the home or held a loan before a refinance is allowed.
Why an Ended Draw Does Not Change the Category
The draw status of the HELOC does not decide how the refinance is classified. What the HELOC money paid for does.
Fannie Mae’s Selling Guide on limited cash-out refinances allows only subordinate liens that were used to buy the property to be paid off in that category. The lender has to document that all of the lien’s proceeds went to the purchase. A purchase-transaction title policy that shows the second lien is one acceptable form of proof.
So the sorting works like this:
- A HELOC that funded the purchase and is paid off with no extra cash is a limited cash-out file.
- A HELOC used for repairs, debt, a car, tuition or anything else is a cash-out file.
- A HELOC used partly for the purchase and partly for something else does not get limited treatment.
A HELOC opened after the purchase and spent on the house or on everyday life belongs in the second group. That means the full cash-out rules apply, including the lower leverage cap and cash-out pricing on agency loans.
The purchase-money case is rare but real. If your HELOC was a piggyback second used at the original closing, the file may qualify as limited cash-out. Cash back is then restricted to a small, capped amount, and the agencies set that cap differently. Fannie Mae and Freddie Mac use different formulas for it, so the lender names the agency when quoting the figure.
What Changes When the Draw Period Ends
The borrowing stops and repayment starts. The Consumer Financial Protection Bureau explains that after the draw period you can no longer borrow, and payments are often significantly higher in repayment. In some cases the whole balance can come due when repayment begins.
That payment jump is the reason most people at this stage look at a cash-out refinance. Rolling the HELOC into one first mortgage gives you one payment instead of two. The trade-off is real: you replace the first mortgage you have with new terms, including a new rate and term, so weigh what you give up in that first mortgage as carefully as what you gain on the HELOC.
Read your HELOC agreement for its end-of-draw terms. The repayment shift happens however much principal you paid during the draw. Do not assume the line is closed or frozen in a way that makes the lien go away. The balance and the lien stay until they are paid or released.
How the Cash Gets Calculated, Step by Step
Here is the order a file follows.
1. Classify the loan. The lender asks what the HELOC money paid for. If it was not the purchase, the file is cash-out.
2. Order the appraisal. The appraised value sets the ceiling. A lower value shrinks the cap and the cash with it. Appraisal reconsideration is possible when comps come in light, but it needs recent, closely matched sales.
3. Apply the leverage cap. On a conventional cash-out for a one-unit principal residence, the cap is 80% of value. That cap covers the new loan in full, which means the old first mortgage, the HELOC and your cash all fit inside it.
4. Pull the payoff letters. Get one for the first mortgage and one for the HELOC. Each includes accrued interest and a daily charge, so the figure at closing is slightly different from the statement balance.
5. Subtract costs. Closing costs come out of the proceeds unless you pay them separately. Whatever remains after the payoffs and costs comes to you, and title pays off the first mortgage and the HELOC directly from the new loan funds.
Run it as percentages. Say a home is appraised at a given value and the cap is 80%. The first mortgage payoff is 45% of value and the HELOC balance is 15% of value. That leaves 20% of value before costs. If closing costs run 3% of value, about 17% of value comes to you. If instead the first mortgage were 60% of value and the HELOC 20%, nothing is left before costs, and the file does not produce cash. Those percentages are modeled assumptions, not quotes.
Three Cases That Decide the Number
| Case | First mortgage + HELOC vs. cap | Result |
|---|---|---|
| Comfortable equity | Well under 80% | Cash comes out |
| Thin equity | Close to 80% | Little or none; costs can erase it |
| Over the cap | At or above 80% | Cash needed at closing, or no deal |
The thin-equity case trips people up. The lender’s cap counts the HELOC balance, so a large line balance with a large first mortgage can leave nothing. In that spot, the refinance may still make sense for payment structure, but the cash is gone. A borrower who wants cash should size the HELOC balance against the cap before ordering anything.
Costs matter at the margin. If costs are paid from the loan, they reduce the cash. If you pay them out of pocket, the cash stays higher, but you spend your own money at closing. Either way, the loan estimate and closing disclosure show the real figures on a consumer mortgage.
Seasoning: The Clocks That Can Block the File
Cash-out refinances have waiting periods, and an ended-draw HELOC borrower can hit them. Under Freddie Mac’s Guide §4301.5, at least one borrower must have been on title six months before the note date. The first mortgage being paid off must also be at least 12 months old, counted note date to note date.
The verified parameters for the wholesale programs match those two clocks: 12 months on the first mortgage and 6 months on title, with exceptions for delayed financing, inheritance and legal awards.
A few practical points follow:
- The 12-month test attaches to the first mortgage, not the HELOC. A recent first-lien refinance resets the clock.
- If your last refinance was recent, check the note date before you order an appraisal.
- A HELOC of any age can generally be paid off in a cash-out refinance. The seasoning issue is the first lien.
The No-Mortgage-Insurance Lane
On the agency path (Fannie Mae and Freddie Mac), mortgage insurance is required above 80% LTV, with the wholesale no-mortgage-insurance cash-out lane as the one exception. Where it applies, you can request cancellation at 80% of the original value with good payment history, and the servicer must end it automatically at 78%.
Across the wholesale programs Lendmire works with, that exception lane reaches 89.99% LTV on a thirty-year fixed, primary residence, conforming balance, with a 680 score, a 50% ratio ceiling and its own six months of seasoning.
That lane matters for the ended-draw case because the cap is higher than 80%, which can leave more room for cash when equity is thin. It is not written in Texas, where a cash-out on a homestead is capped at 80% of the home’s value by the state constitution. Some other states add their own cash-out rules as well. Terms are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Documents to Gather Before You Apply
Clean paperwork keeps a cash-out file from stalling. Expect to supply:
- The current first mortgage statement and a payoff letter request.
- The HELOC agreement, recent statements and a payoff letter.
- Proof of what the HELOC funded, if you claim it was purchase money.
- A signed request to close or freeze the line, since lenders usually want the account closed at payoff.
- Income, asset and credit documents for the new loan.
If you claim purchase use, the proof matters. A purchase-transaction title policy or settlement paperwork that shows the second lien is the cleanest form. Without it, the file defaults to cash-out.
Credit and Ratio Floors
The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files. The total ratio ceiling is 50% on the automated path. Manually underwritten loans use 36% or 45%, with reserve and score factors from the Eligibility Matrix. These are program guidelines and vary by borrower and file.
An ended-draw HELOC raises a ratio question. If your HELOC payment has jumped, your current debt load looks heavier. The new loan replaces that payment, and the lender reviews your file on the new structure, but the file still has to show the whole picture.
Government Loans: Not a Cash-Out Path to Pay Off a HELOC
If your first mortgage is FHA or VA, the streamline products do not help here.
The FHA Streamline is for an existing FHA loan, with limited credit review and a net tangible benefit test. It is not a cash-out product. The VA IRRRL is for an existing VA loan, and it does not put cash in your hands. The VA path to equity is a VA cash-out refinance, and the rate-reduction test for that type is in the VA’s Pamphlet 26-7, Chapter 6. For a closer comparison, see Lendmire’s piece VA Cash-Out Refinance vs. Conventional Cash-Out to Pay Off a HELOC Whose Draw Period Ended.
Standard FHA cash-out is generally limited to owner-occupied principal residences, so check that against your situation.
Mistakes That Shrink Your Cash
- Using the credit limit, not the balance. The payoff is what you owe.
- Forgetting the first mortgage payoff. The cap covers all liens together.
- Ignoring per-diem interest. Payoff figures change daily.
- Assuming the draw status makes it a rate-and-term deal. Use of funds decides it.
- Skipping the seasoning check. A recent refinance can block the file.
- Leaving the HELOC open. A line left in place has to be resubordinated and counts in combined leverage, which cuts the room for cash.
- Treating the cap as a promise. The appraised value and lender guidelines set the real number.
Alternatives to Compare
| Option | What it does | Trade-off |
|---|---|---|
| Cash-out refinance | One new first mortgage, pays off HELOC | Replaces your current first mortgage terms |
| Limited cash-out | Pays off first and purchase-money second | Only if the HELOC was purchase money |
| Keep the first, new second | Leaves first mortgage in place | Another lien, still counts in leverage |
| Pay down from savings | Reduces the balance directly | Uses your own cash |
If your first mortgage has terms worth keeping, the question becomes whether a new second lien costs less than replacing the first. That is a comparison to run with the actual numbers on your file. Lendmire’s how to plan and use a cash-out refinance to pay off a HELOC whose draw period ended walks through that decision, and the cash-out refinance programs page lays out the leverage options by occupancy.
Frequently Asked Questions
Can I get cash back if my HELOC is the only thing I’m paying off besides the first mortgage?
Only if the leverage cap leaves room. The cap counts the first mortgage, the HELOC and your cash together. If equity is thick, the remainder comes to you after costs. If equity is thin, little or nothing remains, and a very high combined balance can mean no workable loan.
Does paying off a HELOC count as cash-out even when I take no cash?
Yes, unless the HELOC funded the purchase. Fannie Mae treats payoff of a non-purchase-money second as a cash-out refinance whether or not extra cash is taken. Cash-out leverage caps and pricing apply, even with zero dollars to you.
Does the ended draw period change how lenders classify the loan?
No. Classification turns on what the HELOC money was used for, not on whether you can still draw. An ended-draw line used for repairs or debt is still a non-purchase lien and puts the file in the cash-out category.
Will the 12-month rule apply to my HELOC?
No, it attaches to the first mortgage being paid off. That loan must be at least 12 months old, note date to note date, and a borrower must have six months on title. A recent first-lien refinance can reset the clock.
Can an FHA Streamline or VA IRRRL pay off my HELOC?
No. Both are rate-reduction products for existing government loans and neither is a cash-out product. A VA cash-out refinance is the VA route to equity, and standard FHA cash-out is limited to owner-occupied principal residences.
What if the numbers leave me with nothing?
Then the refinance may only work as a payment restructure. If the HELOC balance and first mortgage together exceed the cap, the borrower would have to bring cash to closing. Other routes, like paying down the line first, may fit better.
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 (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.
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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 Selling Guide B2-1.3-02, Limited Cash-Out Refinance Transactions
2. Consumer Financial Protection Bureau
4. VA Pamphlet 26-7, Chapter 6
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 Without an Appraisal on the New Loan? · How Much Cash Comes Out of a Cash-Out Refinance to Consolidate a Larger Amount of Debt? · How Much Cash Can You Pull Out With a Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.