The Quick Read: It depends on your equity, and the number is smaller than most people expect. On a one-unit primary residence, a conventional cash-out refinance tops out at 80% loan-to-value. Your cash is that capped loan, minus the mortgage you pay off, minus financed closing costs. No program sets a dollar limit or a “luxury” rule. Leverage and loan age set the ceiling.
The Formula in Plain English
Cash equals the new loan minus what the new loan must pay off. That is the whole calculation.
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.
Step 1: Start with appraised value. An appraiser sets the home’s value as it stands today, before your project.
Step 2: Apply the leverage cap. Multiply that value by the program’s maximum loan-to-value. For a conventional cash-out on a one-unit primary residence, that is 80%. The result is the largest new loan you can get.
Step 3: Subtract the payoffs. Your current first mortgage comes out first. Any other lien being paid off comes out next. Then closing costs, if you roll them into the loan.
Picture a home with a very high appraisal and a mortgage balance around half its value. The 80% cap leaves roughly 30% of the value, before costs, as potential cash. Now picture the same home with a balance near 70% of value. In that case, roughly 10% of value is left. Same house, same remodel dream, a very different check.
That is the part that surprises people. The cap applies to the whole loan, not to the cash. A common mistake is reading “80%” as “I can pull out 80% of my equity.” You can’t.
Does a “Luxury” Project Change the Math?
No. The rules look at your home and your loan, not your contractor’s quote. A $60,000 kitchen and a pool-and-guesthouse build get the same formula.
What the rules do cover is the type of loan. Fannie Mae’s Selling Guide, section B2-1.3-03 defines a cash-out refinance as one where you take more than incidental cash. How you spend the money isn’t part of that test.
Here is the catch for big projects. The appraisal values your home as it is today. Your planned pool, addition, or custom finishes don’t count. So a luxury budget often runs into a ceiling set by today’s value.
What Shrinks Your Cash
Several things come off the top before you see a dollar. Across the wholesale programs Lendmire places files with, these are the usual ones:
- Your existing first mortgage balance.
- Any second lien or home equity line being paid off.
- Closing costs you choose to finance instead of paying out of pocket.
- A lower-than-expected appraisal, which lowers the cap on the whole loan.
- Mortgage insurance, where it applies (more on that below).
Run the appraisal sensitivity yourself. A 5% drop in appraised value cuts the maximum loan by 4% of the original value at an 80% cap. All of that loss comes straight out of your cash, because your payoff doesn’t shrink.
Where the Percentages Sit by Program
Here is how the leverage ceilings compare for the home you live in.
| Program | Cash-out leverage | Notes |
|---|---|---|
| Conventional, one-unit primary residence | 80% LTV | Standard cash-out |
| Conventional, 2-4 units, second homes | 75% LTV | Occupancy sets leverage |
| Conventional wholesale lane | Up to 89.99% LTV | No mortgage insurance; credit score, debt-ratio and conforming-balance requirements apply |
| FHA cash-out | 80% of Adjusted Value | Lowered by HUD |
| Texas homestead cash-out | 80% of value | State constitution cap |
On FHA, HUD Mortgagee Letter 2019-11 cut the maximum LTV and CLTV on cash-out refinances to 80% of Adjusted Value, down from 85%. So the old advice that FHA lets you borrow more no longer holds.
The wholesale lane that reaches 89.99% is narrow. It needs a primary residence, a conforming loan balance, a thirty-year fixed loan, a 680 score, a 50% ratio ceiling, and its own six months of seasoning. It is also not written in Texas. For the right file, it changes the math a lot. All figures are subject to lender guidelines and full file review.
Do Waiting Periods Block You?
Sometimes. On a conventional cash-out, the first mortgage you’re paying off generally needs to be at least 12 months old, counted note date to note date. You also need to have been on title for 6 months. There are exceptions for delayed financing, inheritance, and legal awards.
Buying a home and gutting it a few months later? This is the rule that stops you. Your improvements may raise value, but they don’t shorten these clocks.
What About Mortgage Insurance?
On the agency (Fannie Mae and Freddie Mac) path, mortgage insurance is required above 80% LTV, with one exception: the wholesale no-MI cash-out lane, which 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. Since a standard conventional cash-out is capped at 80%, most of those cash-outs never trigger insurance. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
If insurance does apply on a conforming file, you can ask to cancel it at 80% of the original value. The servicer must end it automatically at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. Treat that as a program-sheet range, not a quote.
Jumbo and High-Value Homes
Luxury homes often sit above the conforming limit. That moves you into jumbo lending. Across the jumbo lanes Lendmire works with, the usual markers are a 660 decision score, leverage up to 90%, loan amounts up to $5,000,000, and a 50% ratio ceiling on the fixed lanes. Cash-out leverage on jumbo can differ from the figures above, so confirm the exact cap for your file.
Expect closer appraisal scrutiny at higher values. A thin-comparable luxury home is where appraisal risk bites hardest.
When a Renovation Loan Beats Cash-Out
If your project is big and your equity is thin, a renovation mortgage can work better. It lends against the home’s value after the work is done.
Fannie Mae’s HomeStyle Renovation FAQs say that on a refinance, renovation costs can’t exceed 75% of the as-completed appraised value. The same page says Fannie Mae treats a HomeStyle refinance as a limited cash-out in its underwriting system. Do-it-yourself work has its own cap, and 2-4 unit homes need a 10% contingency reserve.
| Option | Best fit | Watch out for |
|---|---|---|
| Cash-out refinance | Plenty of equity, lump-sum needs | Replaces your whole loan |
| Renovation mortgage | Big project, thin equity today | Paperwork, inspections, contractor rules |
| Home equity line | Keeping a low existing first mortgage | Separate payment and variable draws |
The Real Cost: You Replace the Whole Loan
A cash-out refinance doesn’t add a second loan. It replaces your mortgage with a bigger one. The CFPB notes that you often pay closing costs and that, depending on terms, it may cost more or less than a HELOC.
That means the new terms apply to your entire balance, not just the cash slice. If your current loan has terms you like, giving them up is part of the price. A payment can rise, and the payoff timeline can stretch.
So weigh the break-even. A cash-out makes the most sense when you need a large lump sum and your current loan terms aren’t something you’d mind losing. If you love your current loan and need modest cash, a separate home equity product may serve you better.
One more practical point. The cash arrives as a single lump sum, but contractors get paid in stages. Set aside the overrun cushion before you spend. Luxury projects run over more often than people plan for.
Can Lendmire Help You Size It?
Lendmire’s cash-out refinance programs page lays out the options, and its team can run your value, balance, and leverage through the programs that fit your home. Lendmire is a mortgage broker, so it arranges loans through wholesale lenders rather than lending directly.
Key Terms Defined
Loan-to-value (LTV): The new loan amount divided by your home’s appraised value.
Combined loan-to-value (CLTV): Your total liens, first mortgage plus any others, divided by value.
Seasoning: The minimum age of your loan or your time on title before you can cash out.
Payoff: The balance of any loan the new mortgage must retire at closing.
Adjusted Value: The FHA’s value measure for applying its leverage cap.
Frequently Asked Questions
Can I take out all my equity?
No. The leverage cap applies to the whole new loan, so you always leave equity in the home. At 80% LTV, you keep at least 20%. The no-MI wholesale lane reaches higher leverage, but it has score, occupancy, and loan-type requirements, and it isn’t written in Texas. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Does a lower appraisal really cut my cash that much?
Yes, dollar for dollar. Your payoff stays the same while the maximum loan falls, so the whole drop comes out of your proceeds. On thin-equity files, a modest appraisal miss can eliminate the cash-out entirely.
Will the appraisal count my planned renovation?
Not on a standard cash-out. The appraiser values the home as it is today. A renovation mortgage, by contrast, can use the as-completed value, subject to its own limits.
Can I use a streamline refinance to fund a remodel?
No. FHA Streamlines and VA IRRRLs refinance an existing government loan and don’t return cash for projects. According to the VA’s lender pamphlet, cash needs a cash-out refinance.
If my home is paid off, is it still a cash-out?
Yes. Borrowing against a free-and-clear home counts as a cash-out refinance, and the same leverage cap applies.
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 serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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 B2-1.3-03
2. HUD Mortgagee Letter 2019-11
3. Fannie Mae HomeStyle Renovation FAQs
4. CFPB
5. VA Pamphlet VAP26-7, 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 on Your Home? · How Much Cash Comes Out of a Cash-Out Refinance to Move From a 30-Year to a 15-Year Term?
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
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.