The Quick Read: Which lender fits this loan depends on your situation, not on a ranking. A cash-out refinance replaces the mortgage on your current home with a larger one and hands you the difference. The cash has no use restrictions, so it can cover a down payment or closing costs on the next house. The refinance and the purchase are two separate loans, and each is underwritten on its own.
A broker does not rank lenders for you. A broker compares wholesale programs against your file and matches the scenario to the one that fits. Below is how the loan works, step by step, and where the general rule breaks.
Key Takeaways
- A cash-out refinance on your current home and the purchase of your next home are two loans with two approvals.
- Conventional cash-out carries a loan-to-value ceiling on a one-unit primary residence. That cap covers the whole new loan, not just the cash.
- Time clocks matter: the loan you pay off needs age, and you need time on title.
- Your new, larger payment counts in debt-to-income on the next loan, alongside the new house payment.
- Streamline products (FHA Streamline, VA streamline refinance) cannot pull equity out.
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.
What Is a Cash-Out Refinance, and Can It Fund Another House?
Yes, it can. A cash-out refinance pays off your existing mortgage with a new, bigger one and gives you the difference in cash. Freddie Mac’s Guide defines it as a mortgage with no specific restrictions on how the proceeds are used. That is why the cash can go toward a down payment, closing costs, or an all-cash purchase of another home.
Two things to keep straight. The new rate and terms apply to the entire balance, not just the cash. And the cash comes out of your equity, which turns equity into debt secured by the home you are keeping. Miss payments and that home is at risk.
The cash-out refinance programs page at Lendmire covers the program side. This article covers the mechanics around buying a second house with the proceeds.
Why “Top Providers” Depends on the File
No honest ranking exists. Fannie Mae, Freddie Mac, FHA and VA do not lend directly. They set rules, and private lenders originate under them. VA says this plainly: you go through a private bank, mortgage company or credit union, not VA itself.
So the real question is which program channel fits you, and then which wholesale lender writes that channel well for your scenario. Across the wholesale programs Lendmire places files with, the deciding factors are consistent:
- Property type and occupancy of the home you are refinancing
- Credit profile and the automated underwriting finding
- How much leverage you need
- Documentation: income, assets, source of funds
- Seasoning on the current loan and time on title
A lender that fits a 740-score borrower with plenty of equity may be wrong for a borrower at the edge of the ratio ceiling. A broker that shops several wholesale lenders can match the file to the program instead of forcing the file into one lender’s box. Lendmire is a mortgage broker, not a lender. The lenders review the file and decide.
How Is the Loan Underwritten, Step by Step?
1. Decide the structure. The common sequence is a cash-out on the current home, then a separate purchase of the new one. Decide whether the cash is for a down payment, closing costs, reserves, or the full price.
2. Check the clocks. There are two. The first mortgage you are paying off generally needs to be at least 12 months old, counted note date to note date. And at least one borrower needs to have been on title for 6 months. Both are subject to lender guidelines and the named exceptions below.
3. Appraisal sets the value. The leverage cap applies to the whole new loan. Payoff of the existing first mortgage, any liens left in place, and financed costs all come out of the cap before any cash reaches you. A low appraisal shrinks the cash directly.
4. Underwriting. The lender verifies income, credit, assets and the new payment. Conventional files run through automated underwriting first. 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 use 36% or 45% ratios, with reserve and score factors from the agency’s Eligibility Matrix. Subject to lender guidelines and full file review.
5. Disclosures and closing. You receive a Loan Estimate and later a Closing Disclosure. On a refinance of your principal residence, a three-business-day right to cancel generally applies after closing documents are signed. Funds are disbursed after that period ends.
6. Use the cash for the purchase. The purchase lender verifies where your money came from. Funds borrowed against an asset you own are generally treated differently from unsecured personal loans or credit-card advances. Expect to document the cash-out proceeds with the settlement statement and show the deposit trail.
What decides the outcome: equity left after payoff, time on title, age of the existing loan, occupancy, credit, debt-to-income including both housing payments, and the appraisal.
How Much Can You Actually Borrow?
Less than your equity. DSCR cash-out on an investment property is capped at 75% LTV, and that ceiling is lower than the leverage available on a conventional cash-out against a one-unit principal residence. Two- to four-unit principal residences, second homes and investment property sit at 75% under conventional guidelines as well. Occupancy sets the leverage, and a cash-out can be written on a primary residence, a second home or an investment property. The Fannie Mae Eligibility Matrix sets leverage by occupancy and unit count, and it can be superseded, so confirm the current version with your loan officer.
Here is the logic with percentages only. Say you own a home worth a given value and owe 50% of it. The cash is the gap between the cap and your payoff, minus closing costs that are paid out of proceeds or financed. If you owed 70% of value instead, the usable cash would be thin. If you owed 40%, it would be meaningful. The calculation always starts with the cap, not with the equity you feel you have.
Two special cases:
- Texas homestead. A cash-out on a Texas homestead (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution.
- No-MI wholesale lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed, a primary residence, a conforming balance, and its own six months of seasoning. It is not written in Texas. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Mortgage insurance is generally required above 80% LTV on the agency path, with the no-MI lane above as the exception. You can request cancellation at 80% of original value with good payment history, no subordinate liens and no decline in value. The servicer must terminate it automatically at 78% under the Homeowners Protection Act. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is the program sheet’s range, not a quote.
FHA, VA and Conventional: Which Channel Fits?
| Channel | Cash-out available | What to know |
|---|---|---|
| Conventional | Yes, 80% LTV on one-unit primary | 12-month loan age, 6 months on title |
| FHA cash-out | Yes, principal residence | Capped at 80% of Adjusted Value |
| VA cash-out | Yes, with a COE | Can also move a non-VA loan into VA |
| FHA Streamline | No meaningful cash | Existing FHA loan only |
| VA IRRRL | No | VA-to-VA only |
On FHA, a common belief is that it lets you borrow more than conventional. It does not on cash-out. HUD Mortgagee Letter 2019-11 cut the maximum LTV and CLTV on FHA cash-out refinances from 85% to 80% of Adjusted Value for case numbers assigned on or after September 1, 2019.
On VA, the cash-out refinance lets eligible borrowers take equity or refinance a non-VA loan into a VA loan, with a Certificate of Eligibility. VA’s own consumer news warns that a cash-out rarely lowers your monthly payment and adds to total interest paid. Veterans comparing options can read Lendmire’s piece Top VA Cash-Out Refinance Providers When Speed to Approval Matters Most.
The streamlines are a different animal. An FHA Streamline needs an existing FHA loan that is current, requires a net tangible benefit, and HUD limits cash to $500. The VA IRRRL is VA to VA only. Neither funds a down payment. Both are for lowering the cost of a loan you already have. The VA IRRRL carries a 0.5% funding fee unless exempt, with seasoning of the later of 210 days and 6 payments. The FHA rate-and-term option, which applies to an existing FHA loan, reaches 97.75% with an appraisal. Subject to lender guidelines.
Where the General Rule Breaks
These are the edge cases that derail files.
A recently purchased home. Conventional cash-out generally needs six months on title. The named exception is delayed financing for borrowers who bought with cash. Fannie Mae’s Selling Guide confirms the six-month title rule and the delayed-financing exception, and notes that cash-out pricing still applies to delayed financing. Inheritance and legal-award exceptions also exist.
A free-and-clear home. A new loan on a home with no lien is still a cash-out under both agencies’ rules.
Limited cash-out is not cash-out. A rate-and-term refinance pays off the existing first mortgage, the closing costs and a purchase-money second lien, with only incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan amount or $2,000. An amount that small cannot fund a down payment. If a loan does not qualify as limited cash-out, it is priced and underwritten as cash-out.
A second mortgage left in place. Taking cash while keeping a second lien is generally a cash-out. The second lender usually has to agree to stay behind the new first mortgage. Raise this with your loan officer early.
Occupancy change. If the old home turns into a second home or rental after you buy the new one, it falls into the lower leverage tiers. Plan the refinance while the old home is still your principal residence, if that is the plan.
Rescission. The three-business-day cancellation right applies to the refinance but not to the purchase loan. If you rescind a refinance, you still owe the original loan. The Loan Estimate and Closing Disclosure you receive help you track the dates, and your closing documents state the deadline for your file.
Credit events. Agency waiting periods apply after a bankruptcy, foreclosure or short sale: 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 It Do to the Next Loan?
The new payment on the refinanced home is larger, so it counts against you on the purchase file. The purchase lender adds both housing payments to your debt-to-income, plus taxes, insurance and any HOA dues on each home.
This is the failure mode on these files. Borrowers size the cash against the down payment and forget that the bigger payment shrinks what the second loan can approve. Run both payments together before you pull the cash, not after.
The sequencing is also a practical risk. If you refinance first and the purchase falls through, you are holding a larger loan and idle cash. If the appraisal on the old home comes in short, the cash shrinks and the down payment plan may not work. Have a fallback in place before the refinance closes.
Here is a worked example with no dollar figures. A buyer refinances a one-unit primary residence at the 80% cap and uses the cash for a 5% down payment on the next primary residence. The second loan sits at a high loan-to-value, within the program’s ceiling, with mortgage insurance above 80%. Both payments, both tax and insurance lines, and the mortgage insurance all land in the ratio. If the combined ratio stays under the 50% ceiling on the automated finding, the file can proceed, subject to lender guidelines and full file review. If it does not, the buyer needs a smaller cash-out, a larger down payment from other assets, or a different structure.
How Does It Compare With Other Ways to Fund the Purchase?
| Option | Keeps your first mortgage | Main trade-off |
|---|---|---|
| Cash-out refinance | No, replaces it | New rate applies to the whole balance |
| HELOC or home equity loan | Yes | Second lien; terms differ |
| Selling the current home first | Not applicable | Need housing in between |
| Financing contingency on purchase | Not applicable | Depends on seller acceptance |
A cash-out refinance rarely lowers a monthly payment, so it tends to fit best when you would replace your current first mortgage anyway. If you would rather keep that loan, a home equity option leaves it in place. A broker can lay out both paths on the same file.
How to Find the Right Provider Through a Broker
The best program for your situation comes from matching the file to a lender’s guidelines. A broker shops multiple wholesale lenders and compares what each will do with your property type, credit and leverage need. These are the questions worth asking any loan officer:
- Is my loan old enough, and am I on title long enough, for cash-out?
- What is the leverage cap for my occupancy, and what cash is left after payoff and costs?
- How does the new payment affect my ratio on the next purchase?
- Will mortgage insurance apply, and when can it come off?
- What do I need to document for the source of funds?
Bring the current mortgage statement, the settlement statement from your purchase, recent pay records, asset statements, and the purchase contract if one exists.
Key Terms Defined
Cash-out refinance: A new mortgage that pays off the old one and gives you the difference in cash.
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
Seasoning: The age requirement on the loan being paid off and the time you have been on title.
Delayed financing: A cash-out exception for borrowers who bought with cash and want to recover that money.
Limited cash-out refinance: A refinance that pays off the loan and costs, with only small incidental cash back.
Debt-to-income (DTI): Your monthly debts divided by your monthly income, counting both housing payments if you own two homes.
Frequently Asked Questions
Can I use cash-out refinance money as a down payment on another house?
Yes. The cash has no use restrictions under Freddie Mac’s Guide. The purchase lender will still underwrite the new loan separately and verify the source of funds. The refinance does not pre-approve the purchase.
How soon after buying my home can I do a cash-out refinance?
Conventional rules generally require at least one borrower on title for six months, and the first mortgage being paid off must be at least 12 months old. Delayed financing is a narrow exception for cash buyers. It still carries cash-out pricing. FHA has its own ownership and occupancy period, so confirm it with your loan officer.
Will a cash-out refinance lower my monthly payment?
Rarely. The new loan is larger, and the new rate applies to the full balance. VA’s consumer news says the same. The purchase loan on the next home adds a second payment, and both count in your debt-to-income.
Can an FHA Streamline or VA IRRRL give me cash for a down payment?
No. FHA limits cash to $500 on a Streamline, and the IRRRL is for existing VA loans only. Both are meant to lower the cost of a loan you already have. A cash-out refinance is the product that pulls equity.
Can I cancel a cash-out refinance after I sign?
Generally yes, on a principal residence, within three business days after you sign, receive the Truth-in-Lending disclosure and receive two copies of the notice. You still owe the original loan if you cancel. The purchase mortgage on the new home carries no such right.
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. Reach the team at 828-256-2183 or request a quote.
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 Eligibility Matrix
4. HUD Mortgagee Letter 2019-11
7. Fannie Mae Selling Guide B2-1.3-03
8. Fannie Mae Selling Guide B2-1.3-02
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 Pay Out an Ex Without Selling Using a Cash-Out Refinance · Top Cash-Out Refinance Providers for Seniors on a Fixed Retirement Income · How to Run the New Payment on a Cash-Out Refinance Before Signing
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
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.