The Quick Read: No single provider is the right one for everyone, and no neutral source ranks them. The best fit depends on your equity, credit profile, occupancy, and the size of the cash you need. A cash-out refinance replaces your current mortgage with a larger one and pays you the difference. Freddie Mac treats the proceeds as unrestricted, so a major purchase or investment is allowed. Because the loan is secured by your home, the risk of using it that way is yours.
What Does a Cash-Out Refinance Actually Do?
A cash-out refinance is a new, larger first mortgage that pays off the old one and hands you the extra amount in cash. Your entire balance moves onto the new terms, not just the cash portion. That is the key difference from a home equity loan or HELOC, which leaves your first mortgage alone and adds a second payment.
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.
Freddie Mac’s Guide places no specific restrictions on how the proceeds are used. A new mortgage on a home you own free and clear also counts as cash-out.
Lendmire is a mortgage broker, not a lender. It arranges these loans through wholesale lenders, and the programs below reflect what those lenders typically write. Every figure is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Why There Is No Honest “Top Five” List
Any ranked list of named providers would be guesswork. Fannie Mae, Freddie Mac, HUD, and the VA set the rules, and lenders apply them. A league table cannot tell you what fits your file.
A broker approaches it differently. Lendmire’s cash-out refinance programs page outlines the lanes available. Because a broker can shop several wholesale lenders, the useful question is which program matches your file, not which brand name ranks first. Those lenders differ on documentation style, leverage, and property type.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting follows a fixed sequence, and each step can stop the file.
1. Equity test. The appraised value and the program’s maximum LTV cap the new loan. It must cover the payoff, closing costs, and your cash out.
2. Seasoning. The first mortgage being paid off must be at least 12 months old, measured from note date to note date, and a borrower must generally have been on title for 6 months.
3. Occupancy. Conventional cash-out can be written on a primary residence, a second home, or an investment property. Occupancy sets the leverage.
4. Credit, income, and ratios. The automated finding governs most files. Wholesale conventional programs start at a 620 decision score, with a total ratio ceiling of 50% on automated approvals.
5. Documents. Expect a current mortgage statement showing the original note date, an appraisal, income and asset documents, and a title commitment. The mortgage statement and the note dates are what evidence seasoning.
6. Disclosures and closing. You receive a Loan Estimate and a Closing Disclosure. On a refinance of your home you generally have three business days to cancel after signing, per the federal consumer-finance regulator. Funds do not reach you on signing day.
Seasoning is where most borrowers get tripped up. The Fannie Mae Selling Guide measures loan age from the old note to the new one. A recent rate-and-term refinance resets that clock, because the new note must itself be 12 months old.
How Much Can You Borrow Against the Home?
Conventional cash-out tops out at 80% LTV on a one-unit principal residence. Occupancy and unit count set the leverage, so two- to four-unit principal residences, second homes, and investment properties go to 75%. Texas is a separate case: a cash-out on a homestead there (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
One wholesale lane stretches further. It reaches 89.99% LTV with no mortgage insurance, at a 680 score and a 50% ratio, on a thirty-year fixed, primary residence, conforming balance. It carries its own six months of seasoning and is not written in Texas. It is the one exception to the usual rule that mortgage insurance applies above 80% LTV. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A plain-language look at what that means: a home worth a given price, financed at 80%, leaves you borrowing up to four-fifths of its value in total, including the payoff of your old loan. Your cash out is whatever remains after the payoff and costs. The more you still owe, the less cash comes out.
Choose by Situation
| Your situation | Likely lane | What to check |
|---|---|---|
| Plenty of equity, strong credit | Conventional cash-out | Seasoning, ratio ceiling |
| Need more than 80% LTV, primary home | Wholesale no-MI lane | 680 score, state eligibility |
| Bought for cash recently | Delayed financing | Six-month window, cash-out pricing |
| Existing VA loan, eligible veteran | VA cash-out | Certificate of Eligibility, seasoning |
| Loan above conforming limit | Jumbo lane | 660 score, 50% ratio |
| Only want a lower payment or term change | Rate-and-term | No meaningful cash back |
Where the General Rule Breaks
The 12-month, 6-month, and 80% rules cover most files. The edge cases are where a broker earns its keep.
- Delayed financing. Fannie Mae allows a cash-out refinance within six months of a cash purchase. It is still priced and leveraged as cash-out, not as a plain refinance.
- Co-owner buyout. Buying out a co-owner under a written agreement is treated as a limited cash-out transaction at both Fannie Mae and Freddie Mac, and the 12-month seasoning rule does not apply.
- Student-loan cash-out. Fannie Mae waives the cash-out price adjustment on this one, though standard cash-out LTV limits still apply. Only a small amount of cash back is allowed.
- PACE loans. A borrower with a PACE assessment who has enough equity to pay it off but chooses not to is ineligible for cash-out.
- Free-and-clear homes. A new mortgage on a paid-off home is classed as cash-out.
- Government loans. The FHA Streamline and the VA IRRRL are no-cash-out products. They cannot fund a purchase. FHA standard cash-out is limited to principal residences, and HUD caps its combined LTV at 80 percent.
- VA cash-out. The VA lets eligible borrowers take equity out or refinance a non-VA loan into a VA-backed one. You need a Certificate of Eligibility and you apply through a private lender, not through the VA directly. Lendmire’s piece Top VA Cash-Out Refinance Providers With the Fastest Approval on a VA Cash-Out goes deeper.
- Fannie Mae’s high-LTV refinance is currently paused.
Matching the Loan to What You’re Buying
The loan does not care what you spend the cash on. Your balance sheet does. Three tests help.
Is the return likely to beat the cost? Cash-out is priced higher than a plain rate-and-term refinance. The extra cost shows up as a higher rate or fees, built into the loan rather than listed separately. An investment has to outrun that cost, plus the cost of stretching your whole balance over a new term.
Is the asset liquid? A stock position can be sold. A business stake or a collectible may not be, and your mortgage payment is due regardless.
What is the downside? The debt is secured by your home. The CFPB notes that missed payments can lead to foreclosure. Its research also found that paying off other debts is a common reason people cash out, and that paying non-mortgage debts with mortgage debt can raise foreclosure risk. Treat any projected investment gain as a hope, not a plan.
Consider a homeowner with a paid-down primary residence who wants capital for a major purchase. At 80% LTV on a one-unit home, the cash available is what’s left after the old payoff and costs, and the new payment will likely be higher because a larger loan replaces the current one. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Seasoning: The minimum time a mortgage or ownership must exist before it can be refinanced in a cash-out.
Note date: The date you signed the mortgage note, used to measure loan age.
Limited cash-out: A refinance that pays off the old loan and costs, with only small cash back.
Delayed financing: A cash-out allowed soon after a cash purchase, within the agency’s window.
Mortgage insurance: Coverage the borrower pays for above 80% LTV on agency loans. It can be cancelled at 80% of original value and ends automatically at 78%.
When a Cash-Out Is the Wrong Tool
Skip it if you only need a modest sum and have a low-rate first mortgage you would rather keep. A HELOC or home equity loan leaves that loan untouched. Skip it if the cash would cover short-term spending, since converting short-term or unsecured debt into a longer mortgage can leave you paying for it long after the purchase has lost its value. And skip it if the extended term or higher payment would stretch your budget.
It is a genuine toss-up for borrowers with an excellent existing loan and a large need. The cash-out replaces everything, so the question is whether the total cost beats a second lien on top.
How to Prepare Before You Apply
- Pull your current mortgage statement and confirm the note date.
- Check how long each borrower has been on title.
- Gather income and asset documents.
- Review your credit for anything that falls near a score floor.
- Decide the cash you need, then work backward to the LTV it requires.
- Ask whether any waiting period after a credit event applies. The agencies set four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, with shorter periods for documented extenuating circumstances.
Frequently Asked Questions
Can I use cash-out proceeds for anything I want?
Generally yes. Freddie Mac and HUD both describe the proceeds as unrestricted. Individual lender policies can still vary, and the risk of borrowing against your home for an investment stays with you.
Does a cash-out refinance require that I live in the home?
Not always. Conventional cash-out can be written on a primary residence, a second home, or an investment property, and occupancy sets the leverage. FHA standard cash-out is limited to principal residences, and VA loans require owner occupancy.
How soon after buying can I cash out?
Usually the first mortgage must be 12 months old, with a borrower on title for 6 months. Cash buyers can use delayed financing within six months of purchase, though it is priced as cash-out.
Will I owe mortgage insurance?
On the agency path, mortgage insurance applies above 80% LTV, though the wholesale no-MI cash-out lane is the exception. Where it applies, you can request cancellation at 80% of original value, and it ends automatically at 78%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Can I cancel after signing?
For a refinance of your home you generally have three business days. Cancelling ends the refinance, not the old debt, so you still owe the original loan.
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 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
3. Fannie Mae Selling Guide B2-1.3-03
4. HUD Handbook 4000.1 transmittal
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 for a Cash-Out Refinance on a Co-Living House · How to Qualify and Apply for a Cash-Out Refinance on a Fourplex · How to Plan and Use a Cash-Out Refinance to Fund Large Renovations
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- 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.