The Quick Read: The loan-to-value cap sets the size of the new loan, and the equity left in the house is whatever the cap does not allow you to borrow. On a one-unit primary home, a conventional cash-out generally caps at 80%, so about 20% of the appraised value stays put. The cash you receive is smaller than the cap suggests, because the payoff of your old loan, closing costs and any financed fees come out of the new loan first.
That last point is easy to miss. A cap of 80% does not mean 80% of your home’s value arrives as cash. It means the whole new mortgage can’t go past 80%. Everything else comes out of that same bucket.
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.
This article walks through the mechanics step by step, shows how the cap changes by program and property type, and covers the places where the general rule breaks. Lendmire’s cash-out refinance programs page covers the loan types in more detail.
Key Terms Defined
Loan-to-value (LTV): The new loan amount divided by the appraised value of the home.
Combined LTV (CLTV): The first mortgage plus any other liens, such as a home equity line, divided by the appraised value.
Equity: The home’s appraised value minus what is owed against it.
Net cash: What reaches you after the old mortgage is paid off and closing costs are taken from the new loan amount.
Cash-out refinance: A new mortgage that pays off the old one and delivers the difference to you 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.
What Does the LTV Cap Actually Limit?
The cap limits the total new loan, measured against the appraised value. It is a ceiling on borrowing, not a cash payout figure.
Equity left after closing is roughly 100% minus the loan-to-value of the new loan. Hit an 80% cap and about 20% of the value remains as equity. Borrow less than the cap and more stays.
Where other liens remain, the combined ratios apply. Freddie Mac’s Guide defines the combined ratio so that an open home equity line counts at its full credit limit, not just the drawn balance. A homeowner with a large unused line can find the cap tighter than expected.
How Is the Maximum Cash Worked Out, Step by Step?
Four steps, in this order.
1. Start with the appraised value. The lender orders an appraisal, and an appraisal waiver applies on some conventional loans. The number that comes back drives everything else.
2. Apply the cap. Pick the program, the occupancy and the unit count. That gives the maximum LTV. If other liens stay in place, the combined ratio applies too.
3. Find the maximum new loan. Appraised value times the cap.
4. Subtract what comes out first. The existing mortgage payoff, any liens that must be paid, unpaid interest and any closing costs rolled into the loan all reduce the amount. What is left is your cash.
Here is a percentages-only example. Say a home appraises at 100 units of value and you owe 50% on the first mortgage. At an 80% cap, the new loan can reach 80% of value. The first 50 units pay off the old loan. That leaves 30 units before costs. Financed closing costs shrink that further. You walk away with somewhat less than 30% of the home’s value in cash, and 20% equity stays in the house.
Working backward is just as useful. If you need cash equal to 25% of the home’s value and you owe 50%, you need a loan at 75% of value plus whatever costs you finance. Under an 80% cap that works. Under a 75% cap, with costs financed, it probably falls short.
What Are the Caps by Program and Property Type?
The cap depends on the program, the occupancy and the unit count. The table below uses the figures across the conventional and wholesale programs Lendmire places files with.
| Scenario | Maximum LTV | Equity left behind |
|---|---|---|
| Conventional cash-out, one-unit primary home | 80% | About 20% |
| Conventional cash-out, two- to four-unit primary | 75% | About 25% |
| Conventional cash-out, second home | 75% | About 25% |
| Conventional cash-out, investment property | 75% | About 25% |
| Wholesale no-MI lane, primary, conforming | 89.99% | About 10% |
| Texas homestead cash-out (Section 50(a)(6)) | 80% | About 20% |
Occupancy sets the leverage. A cash-out is written on a primary residence, a second home or an investment property, and the cap tightens as the property moves away from the one-unit primary home.
The Fannie Mae Eligibility Matrix lists limited cash-out and cash-out limits by occupancy and unit count. It is the document to check for the live figures, since the agencies adjust the matrix over time.
The no-MI lane in the table is a wholesale option. It reaches 89.99% on a thirty-year fixed, primary residence, conforming balance, with a 680 score, a 50% ratio and its own six months of seasoning. It is not available in Texas. It is also the one exception to the usual rule that mortgage insurance is required above 80% LTV.
Everything above is subject to lender guidelines and full file review. None of it is a commitment to lend.
How Do the Government Programs Differ?
They run on different rules. FHA and VA both treat cash-out differently from the conventional matrix.
FHA cash-out is limited to owner-occupied principal residences, and the cap is generally 80% of the home’s adjusted value. FHA Streamline is a different product. It is a no-cash-out refinance of an existing FHA loan, with no appraisal in most cases, limited credit review and a net tangible benefit test. It does not pay you cash.
VA is the outlier. Under the interim rule, VA’s lender-call materials say a cash-out loan may go as high as 100% of reasonable value for applications on or after February 15, 2019. The cap drops to 90% when certain discount charges are included in the loan amount. Chapter 6 of the VA Lenders Handbook also limits a Type I fixed-to-ARM cash-out to 90% when certain discount charges apply. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Many lenders set their own VA caps well below 100%. That is lender policy, not VA rule. The VA IRRRL, the VA’s streamline, is a VA-to-VA refinance with no appraisal required by VA, and it carries a 0.5% funding fee unless the veteran is exempt. It is not a cash-out product.
A non-VA loan can be refinanced into a VA cash-out. An IRRRL cannot refinance a conventional or FHA loan.
What Shrinks the Cash Below the Headline Number?
Four things come out of the new loan before you see a dollar.
- The payoff. Your current first mortgage is paid in full. Any required lien payoffs go with it.
- Closing costs. When costs are financed, they use up room under the cap. Cash you could have taken is spent on fees.
- Unpaid interest. Interest owed on the old loan comes off the top.
- Other liens counting at their limit. An open home equity line counts at its credit limit in the combined ratio, which can lower the maximum first-mortgage amount.
There is also a ceiling on loan size. Above the conforming limit, the jumbo lanes take over. On the jumbo lanes Lendmire places, leverage reaches 90% and loans go to $5,000,000, with a 660 decision score and a 50% ratio ceiling on the fixed lanes. The conforming ceiling can cap your cash before the LTV does.
Where Does the General Rule Break?
Several edge cases change the answer.
Limited cash-out versus cash-out. A limited cash-out refinance allows only incidental cash back. Fannie Mae’s cap is the lesser of 2% of the new loan amount or $2,000. Go over that amount and the loan becomes a cash-out, with the lower LTV limits that come with it. A rate-and-term refinance can reach 95% LTV on a one-unit primary residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows. Mortgage insurance applies above 80%, except in the wholesale no-MI lane described earlier. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Seasoning. The first mortgage being paid off must be at least 12 months old, measured note date to note date, per Fannie Mae announcement SEL-2023-01. A borrower must also generally be on title for six months, with exceptions for delayed financing, inheritance and legal awards. A recent cash-out resets the 12-month clock, so borrowing again can be blocked for a time.
Free-and-clear homes. A paid-off home can take a cash-out. The cap still applies to the new loan.
Student loans. Fannie Mae’s cash-out rules waive the loan-level price adjustment when proceeds pay off eligible student loans, but the standard LTV limits still apply.
Buying out a co-owner. Under a written agreement, this is a limited cash-out transaction at both agencies.
Manufactured homes. Lower LTV limits apply under both agencies’ special sections.
High-LTV relief. Freddie Mac’s Enhanced Relief Refinance serves existing Freddie Mac loans where LTV is above the standard limit. It is a no-cash-out product with limited uses of proceeds.
Texas. A cash-out on a homestead is capped at 80% of the home’s value by the state constitution. The wholesale no-MI lane is not written there.
Agency Rule, Lender Overlay or State Rule: How Do You Tell?
An agency rule is the published ceiling. A lender overlay is a tighter limit a particular lender adds on top of it. A state rule is a legal limit that applies no matter which lender you choose.
Ask which one is holding the number down. If the agency matrix allows more than the lender offers, an overlay is at work, and another lender may price the same file differently. If the limit comes from state law, as in Texas, no lender can move it.
Some lenders also set a higher credit-score floor than the baseline. The wholesale conventional programs Lendmire places files with start at a 620 decision score, or 640 on an adjustable rate under manual underwriting. Most files follow the automated finding, with a total ratio ceiling of 50%. Manually underwritten loans run at 36% or 45%, with reserve and score factors from the Eligibility Matrix.
Credit events carry agency waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.
What Does This Mean for the Borrower?
A lower cap means less cash and more equity left in the house. A higher cap means more cash and a thinner cushion.
A larger loan can raise the monthly payment and stretch the payoff period. The CFPB’s guide on using home equity notes lenders typically want 10% to 20% of home value to remain as equity. It also notes the payment may rise and the term may lengthen.
Conventional loans above 80% LTV carry mortgage insurance, except in the wholesale no-MI lane. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. The borrower may request cancellation at 80% of the original value with good payment history, no subordinate liens and no decline in value, and the servicer must end it automatically at 78%. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
A loan-level price adjustment based on LTV and credit score can apply to cash-out loans, so a higher-leverage cash-out generally costs more.
After closing, a refinance on your principal home generally carries a three-business-day right to cancel, per the CFPB. Cancel and you still owe the original loan.
What Are the Common Misconceptions?
“80% LTV means I get 80% of my home’s value in cash.” No. The cap covers the whole new loan, including the payoff and financed costs. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
“All programs cap at 80%.” No. VA allows up to 100% of reasonable value, subject to lender overlays, while conventional caps drop to 75% for second homes, investment property and multi-unit homes.
“A cash-out is the same as a home equity loan.” A cash-out replaces the first mortgage. A home equity loan or line sits behind it.
“A streamline lets me take cash.” FHA Streamline and VA IRRRL are no-cash-out programs.
“Rolling in closing costs is a cash-out.” Financing costs is not cash-out by itself, but it does use up room under the cap.
What If the Cap Leaves Too Little Cash?
You have three realistic options.
1. Wait. Values rise and balances fall. A year of payments and appreciation can open room.
2. Borrow less or pay down. Reducing the payoff or the other liens widens the gap under the cap.
3. Use a different structure. A home equity line behind your current mortgage may suit a borrower with a low existing loan they want to keep. Weigh it against a cash-out that replaces the first mortgage.
The CFPB’s research on cash-out borrowers found many use proceeds to pay down credit card and auto debt. Credit scores rose at first, then gradually worsened, though they stayed above pre-refinance levels.
Frequently Asked Questions
Can I take 100% of my equity out?
No on conventional and FHA. The cap leaves roughly 20% to 25% of value in the home on a conventional cash-out, depending on occupancy and units. VA is the exception, since its cash-out can reach 100% of reasonable value, though many lenders set a lower cap. All of it is subject to lender guidelines and file review.
Does a home equity line reduce how much I can cash out?
Yes, if it stays in place. An open line counts at its full credit limit in the combined ratio, not the drawn balance. A large unused line can lower the maximum first-mortgage amount.
Do I need a new appraisal?
Usually, yes. The appraised value sets the cap. Some conventional loans qualify for an appraisal waiver. FHA Streamline and VA IRRRL generally skip the appraisal because they are streamlines, not cash-out loans.
How soon can I cash out again after a cash-out refinance?
The first mortgage being paid off must be at least 12 months old, measured note date to note date, on the conventional path. A recent cash-out resets that clock.
Why is my cash lower than the cap suggests?
The payoff, closing costs, unpaid interest and any financed fees all come out of the new loan first. Cash to you is what remains, so a cap of 80% can still deliver far less than 80% of 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.
Limits change as the agencies update their matrices, so confirm the current figures before you plan around any number here.
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 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. Freddie Mac Guide, LTV, TLTV and HTLTV definitions
2. Fannie Mae Eligibility Matrix
4. VA Lenders Handbook, Chapter 6
5. Fannie Mae Announcement SEL-2023-01
6. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
7. CFPB, Using home equity guide
8. CFPB
9. CFPB’s research on cash-out 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 to Qualify and Apply for a Cash-Out Refinance With Little Equity · Cash-Out Refinance vs Home Equity Loan for Repairs Without a Contractor · How Much Cash Comes Out of a Cash-Out Refinance With High Equity and Low Income?
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.