The Quick Read: It depends on the loan program’s leverage cap, not on your equity alone. On a conventional loan, the new mortgage generally tops out at 80% of the appraised value on a one-unit principal residence and 75% on two- to four-unit homes. The cash you receive is that maximum loan, minus the payoff of your current mortgage and any other required liens, minus the costs you finance. Credit, income, and debt ratios can shrink the number further, subject to lender guidelines and full file review.
The Formula Behind the Number
Maximum cash is a two-step subtraction. First, multiply the appraised value by the program’s cap. That gives the largest loan the program allows. Second, take out everything the new loan has to pay off before you see a dollar.
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.
That list is short:
- the balance on your current first mortgage
- any second lien or HELOC that must be paid
- closing costs you choose to roll into the loan
- prepaid items and escrow deposits financed with the loan
What’s left is cash to you. Equity is not the same as cash. A home can show plenty of equity on paper and still produce little cash once the cap, the payoff, and the costs are applied.
Run it in percentages. Say the first mortgage balance is 50% of the home’s appraised value. On a conventional one-unit primary residence at an 80% cap, the gap between 50% and 80% is 30% of the value. Costs financed into the loan come out of that 30%. The rest is your proceeds. A two- to four-unit home at the 75% cap leaves a 25% gap on the same balance. Same equity, less cash.
What Sets the Cap?
The program sets the ceiling, and occupancy and unit count move it. Across the wholesale programs Lendmire places loans with, a conventional cash-out refinance reaches 80% LTV on a one-unit principal residence. Two- to four-unit principal residences, second homes, and investment properties sit at 75%. Occupancy sets the leverage, so a cash-out on a second home is possible, just at the lower cap. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
| Property | Conventional cash-out cap |
|---|---|
| One-unit principal residence | 80% LTV |
| Two- to four-unit principal residence | 75% LTV |
| Second home | 75% LTV |
| Investment property | 75% LTV |
Texas homestead loans follow their own source of limits. A Section 50(a)(6) cash-out on a Texas homestead is capped at 80% of the home’s value by the state constitution, which matches the one-unit figure above but applies as a state rule whatever the program allows. The wholesale no-mortgage-insurance lane described below is not written there. State rules can add limits elsewhere too.
There is one lane that reaches further. A wholesale conventional option goes to 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence, a conforming loan balance, and its own six months of seasoning. It is the exception to the usual rule that mortgage insurance applies above 80%. Program figures are subject to lender guidelines, and nothing here is a commitment to lend.
Lendmire’s cash-out refinance programs page lays out the programs and the equity each one reaches.
How Do FHA and VA Change the Answer?
Government programs have their own ceilings, and they are older rules than most borrowers remember. FHA cut its cash-out limit to a lower share of the “Adjusted Value” in HUD Mortgagee Letter 2019-11, which itself followed an earlier cut in 2009. Anyone quoting the older, higher FHA cash-out limits is working from outdated information. HUD has since folded that letter into Handbook 4000.1, so the handbook is the live rule.
VA cash-out works differently. Per VA.gov, it lets you take cash from your equity or refinance a non-VA loan into a VA-backed loan. You need a Certificate of Eligibility, you must live in the home, the loan comes through a private lender, and the lender orders the appraisal. VA leverage is generally more generous than conventional, but many lenders set their own limits below the program’s, so the number on your file can be lower than the headline.
Then there are the streamlines. The FHA Streamline and the VA IRRRL are for existing FHA and VA loans. Neither is a cash product. The VA home loans overview describes the IRRRL as a “VA to VA” loan, and a federal summary notes the borrower may not receive cash from it. If cash is the goal, a streamline is the wrong tool.
What Shrinks Your Cash?
Five things cut the check, and each one is worth checking before you count on a number.
1. The appraisal. It sets the value, and the cap applies to that number. A low appraisal lowers the maximum loan one-for-one. If the appraisal comes in light, a documented reconsideration request with recent nearby sales is a normal step.
2. The payoff. Your first mortgage balance comes off the top. So does any second lien the new loan must clear.
3. Financed costs. Every cost rolled into the loan uses room under the cap. Financing costs is not the same as taking cash, but it reduces your proceeds just the same.
4. Credit, income, and ratios. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run tighter ratios of 36% or 45%, with reserve and score factors. Per Fannie Mae’s cash-out guide, a DU loan with a debt-to-income ratio above 45% needs six months of reserves.
5. Pricing on cash-out. Fannie Mae applies loan-level price adjustments to certain cash-out loans based on LTV and credit score, so a cash-out can cost more to carry than a rate-and-term refinance. That is a cost of the product, not a quote.
The cap is the ceiling. Debt ratios can set a lower limit. Many borrowers can legally borrow more than their income will carry.
Seasoning: The Clock That Catches Recent Buyers
Cash-out is not available the day after a purchase. Per Freddie Mac’s Guide §4301.5, at least one borrower must have been on title for six months before the note date. When the proceeds pay off a first mortgage, that mortgage must be at least 12 months old, counted note date to note date. Named exceptions exist, including delayed financing after a cash purchase, inheritance, and legal awards.
Files that assume the seasoning requirement away are the ones that get kicked back. The wholesale no-MI lane has its own six-month seasoning clock on top.
Edge Cases That Change the Math
Free-and-clear homes. A new loan on a home with no lien is still a cash-out. Fannie Mae’s limited cash-out rules list “no outstanding first lien” as ineligible for limited treatment.
Delayed financing. If you paid cash for the home recently, the six-month title rule can be waived when the closing statement shows no financing against the property. It is still treated as cash-out.
Co-owner buyouts. Buying out a co-owner under a written agreement, as in a divorce, is a limited cash-out transaction at both Fannie Mae and Freddie Mac. Fannie Mae requires the property to have been jointly owned for at least 12 months.
Second liens. Paying off a second lien only counts as limited cash-out when that lien funded the purchase of the home. Otherwise the loan becomes a full cash-out.
Properties listed for sale. The listing must be withdrawn before disbursement.
“Limited” Cash-Out Is Not Zero Cash
A refinance that is written as a limited cash-out, often called a rate-and-term refinance, pays off the existing first mortgage, the closing costs, and a purchase-money second lien, with only small incidental cash back. Fannie Mae caps that cash at the lesser of 2% of the new loan amount or $2,000. Freddie Mac sets its cap at the greater of 1% of the new loan amount or $2,000, so the two agencies differ. Cash above the cap converts the loan to a full cash-out, with the lower leverage and pricing that follow.
For a rate-and-term refinance, leverage runs to 95% LTV on a one-unit principal residence, 97% where the existing loan is agency-owned and the first-time-buyer program allows. That is a much higher ceiling because you are not taking meaningful cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Mortgage Insurance and What It Means for Cash
Mortgage insurance is required above 80% LTV on the agency path, except in the wholesale no-MI cash-out lane described above. Since conventional cash-out generally stops at 80%, most borrowers will not carry it on a standard cash-out. Where it does apply, Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. You can request cancellation at 80% of the original value with a good payment history, no subordinate liens, and no decline in value. The servicer must terminate it automatically at 78%, under the Homeowners Protection Act.
Should You Take the Maximum?
Not by default. The maximum is what the program allows. It is not what suits your budget.
A cash-out refinance may extend the time it takes to pay off your mortgage, and your payment may also increase because you are replacing your current mortgage with a larger loan. Lenders also typically want you to keep a share of your home value as equity.
Consider three things before pulling the maximum:
- Your existing loan is replaced entirely. The new loan has its own terms, so compare what you give up as well as what you get.
- Rolled-in costs reduce your net. Financing them does not make them free.
- Debt payoff is the common use, and it only helps if the balances stay down.
You also get a safety valve. On a refinance of your principal dwelling, you have until midnight of the third business day after the transaction to rescind, and Saturdays count. Cash is disbursed after that period ends. Rescind, and you still owe the original loan.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the appraised value, shown as a percentage.
CLTV: Combined loan-to-value, which adds any other liens to the first mortgage before dividing by value.
Seasoning: The minimum time you have held title, or the existing loan has been open, before a cash-out is allowed.
Limited cash-out: A refinance that pays off the current loan and costs and returns only small incidental cash.
Adjusted Value: The figure FHA applies its cash-out cap against, which is not always the raw appraisal.
Delayed financing: A cash-out on a home you recently bought with cash, which waives the usual six-month title wait.
Frequently Asked Questions
Can I take out all of my equity?
No. Every program caps the new loan as a percentage of value, so some equity always stays in the home. Conventional cash-out on a one-unit principal residence stops at 80% LTV on the standard path. Lender overlays can be tighter than the program.
Does the cap change on a second home or a duplex?
Yes. Two- to four-unit principal residences, second homes, and investment properties sit at 75% LTV on conventional cash-out, versus 80% on a one-unit primary residence. Occupancy and unit count set the leverage. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
How soon after buying a home can I do a cash-out refinance?
Not right away. At least one borrower generally needs six months on title, and the first mortgage being paid off must be at least 12 months old. Delayed financing, inheritance, and legal-award exceptions exist, subject to lender guidelines.
Does an FHA Streamline or VA IRRRL give me cash?
No. Both are for existing government-backed loans and are built to lower the cost of a loan you already have, not to return equity. Cash from a VA loan requires the VA cash-out, which can also refinance a non-VA loan into a VA loan.
What if the appraisal comes in low?
The maximum loan drops with it, since the cap is applied to appraised value. A documented reconsideration request with recent comparable sales is the usual first step, and the lender decides whether it changes the value.
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 — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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. HUD Mortgagee Letter 2019-11
2. VA.gov, Cash-Out Refinance Loan
3. VA Home Loans overview (VBA)
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance Transactions
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 After Buying and Seasoning? · How Much Cash Comes Out of a Cash-Out Refinance When the Appraisal Comes Lower?
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
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.