The Quick Read: On a conventional loan, the most you can borrow against a one-unit primary residence is 80% of its appraised value. That cap covers the whole new loan, not just the cash you receive. Your payoff and closing costs come out of it first, and what remains is yours. Two waiting periods also apply, one for the loan you are paying off and one for how long you have owned the home. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Key Takeaways
- The cap applies to the entire new loan. Cash to you is the cap amount minus your payoff minus costs.
- Two- to four-unit homes, second homes and investment property are capped at 75% LTV on a conventional cash-out.
- Conventional loans have two separate clocks: the loan you are paying off must be at least 12 months old, and at least one borrower must have been on title for six months.
- FHA Streamline and VA streamline refinance loans are rate-and-term products. They are not cash-out loans.
- Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
What Is a Cash-Out Refinance?
A cash-out refinance replaces your current mortgage with a bigger one and hands you the difference in cash. The federal consumer-finance regulator describes it the same way and notes that you often pay closing costs. It also says the cost compared with a home equity line of credit (HELOC) depends on the terms. So cash-out is not automatically cheaper or pricier.
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.
Loan-to-value (LTV) is your loan balance divided by your home’s appraised value. A standard refinance changes the rate or the length of the loan and pays off the old balance and costs. Lenders call this a rate-and-term refinance, or a limited cash-out refinance, because it allows only incidental cash back. Any refinance that puts real cash in your hands is treated as cash-out. That moves it into stricter limits and different pricing.
One more case: a home with no mortgage at all. Lenders generally treat a new loan on a lien-free home as cash-out, because you are pulling cash from the property.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting a cash-out follows a fixed order, and each step can shrink what you walk away with. This is how the files I arrange through wholesale lenders move from start to finish. Lendmire’s cash-out refinance programs page lays out the options these steps apply to.
1. Equity and the cap. Conventional guidelines set a maximum LTV against appraised value. The cap covers the whole new loan, so the number that matters is value times the cap, not equity alone.
2. The two clocks. The lender checks how long you have been on title and how old the loan being paid off is.
3. Appraisal. The appraised value drives the LTV. A low appraisal lowers the ceiling directly.
4. Full underwriting. Credit, income, assets and the property all get reviewed. Streamlines are the exception, and cash-out is not one.
5. Pricing. Cash-out carries risk-based price adjustments that depend on credit score and LTV. For the exact limits, Fannie Mae’s own page sends readers to its Eligibility Matrix.
6. Closing and funding. The cash arrives at closing, after the old loan is paid off.
How Much Can You Borrow? The Two-Step Formula
The maximum is a formula, and it runs in two steps. First, multiply your appraised value by the program’s LTV cap to get the largest total loan allowed. Second, subtract your current payoff and your closing costs to find the cash that lands in your account.
Picture a home appraised at 100 units of value, with a conventional 80% cap. The largest new loan is 80 units. If your payoff is 50 units and costs are 3 units, you receive 27 units. These are illustrative units, not dollars. Now say the appraisal comes in 5% lower, at 95 units. The cap falls to 76 units, and your cash drops to 23. That is a drop of about 15% in cash against a 5% drop in value, because the payoff and costs stay fixed. Even a modest change in value can shrink your proceeds noticeably.
Second liens matter too. If you have a HELOC or second mortgage, it must be paid off in the refinance, and it comes out of the same pot. Leave it out of your estimate and your cash will come in short.
Can You Take Out All Your Equity?
No. Agency caps force you to leave equity in the home. A federal home equity guide says lenders typically want you to keep 10% to 20% of your home’s value as equity. At an 80% cap on a one-unit primary residence, you keep 20% by design.
Maximum LTV by Program and Property Type
Occupancy and property type set the leverage on a conventional cash-out. The figures below come from the programs I place files with. All are subject to lender guidelines.
| Property | Conventional cash-out max LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
A cash-out can be written on a primary residence, a second home or an investment property. Occupancy simply sets the cap.
There is one exception at the top. Across the wholesale programs I work with, one lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% total ratio, a thirty-year fixed rate, a primary residence, a conforming loan balance, and its own six months of seasoning. Otherwise, mortgage insurance is required above 80% on the agency path. Exact terms depend on lender guidelines, credit profile, and property review.
Texas works differently. A cash-out on a Texas homestead, known as a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The wholesale no-mortgage-insurance lane is not written there.
For FHA and VA, the picture differs. VA lets you take cash from equity or refinance a non-VA loan into a VA loan. VA’s cash-out page says you need a Certificate of Eligibility and must meet VA and lender standards for credit and income. The ceiling on VA loans can be higher than on conventional loans, but exact limits depend on the loan type and the lender.
FHA also offers a separate cash-out loan with a full appraisal and full underwriting.
What Are the Core Cash-Out Requirements?
Beyond the LTV cap, lenders check four things: credit and ratios, seasoning, mortgage insurance and the property itself.
Credit and ratios. The wholesale conventional programs I place start at a 620 decision score, or 640 on an adjustable rate under manual underwriting. The automated finding governs most files, with a total debt-to-income ratio ceiling of 50%. Manually underwritten loans use 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, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Seasoning. This is the waiting period before you can cash out. It has two parts, covered next.
Mortgage insurance. On the agency path, mortgage insurance applies above 80% LTV, except in the wholesale no-MI cash-out lane described above. You can request cancellation once the balance reaches 80% of the original value, with good payment history, no subordinate liens and no decline in value. Federal law also requires the servicer to end it automatically at 78%.
Property status. A home that is listed for sale at disbursement is generally not a fit for a cash-out refinance, so take the listing down before you apply.
The Two Seasoning Clocks
Conventional cash-out has two separate waiting periods, and one does not cover the other. That surprises people who have owned a home for years but refinanced recently.
The first clock is the age of the loan you are paying off. Under Freddie Mac’s guide, the first lien being paid off must be at least 12 months old, measured from the old note date to the new note date. The second clock is title. At least one borrower must have been on title for six months before the new note date, with listed exceptions.
So a refinance 10 months ago can block a cash-out today, even if you bought the home a decade back. The 12-month rule does not apply to special-purpose cash-outs, construction-to-permanent loans, renovation loans or converting a manufactured home to real property.
Exceptions to the title clock exist:
- Delayed financing. If you bought with cash, you can take a cash-out inside the six-month window when all listed conditions are met. It is still priced as cash-out. The exception waives only the wait.
- Inheritance and legal awards. Both can waive the title wait.
- Co-owner buyouts. Buying out a co-owner under a written agreement is a special-purpose transaction under Freddie Mac. It is exempt from the 12-month first-lien rule.
Where the General Rule Breaks
The general rules of thumb fail in a few named places, and it pays to know them before you plan around a number.
FHA Streamline is not cash-out. Cash in excess of $500 may not be taken out, and closing costs cannot be rolled into the new loan amount. In the programs I work with, it carries no appraisal and limited credit review.
VA IRRRL is rate-and-term only. It refinances an existing VA loan. It carries a 0.5% funding fee unless you are exempt, no VA appraisal, a net tangible benefit test and seasoning of the later of 210 days and 6 payments. It gives you no meaningful cash.
Limited cash-out is a different loan from a cash-out. Lenders call it a rate-and-term refinance or a limited cash-out refinance, and it is not written under the cash-out rules. On a one-unit primary residence it can reach 95% LTV, and the exact ceiling depends on the program and on who owns the existing loan. Cash back is incidental only. Fannie Mae allows the lesser of 2% of the new loan amount or $2,000. Take more than that and the loan reclassifies as cash-out, with the lower cap. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Above the conforming limit. Jumbo lanes take over. The programs I place there use a 660 decision score, leverage to 90%, loans to $5,000,000 and a 50% ratio ceiling on the fixed lanes. Which limit binds first, the LTV cap or the loan size ceiling, depends on your home’s value.
Texas homesteads. As noted above, the 80% cap is written into the state constitution.
Costs and What Cash-Out Does to Your Budget
Cash-out changes the loan itself, and it can cost more than a limited cash-out refinance. You pay closing costs, and risk-based pricing adjustments can add to the cost of a cash-out. The bigger balance, and possibly a longer payoff period, can raise your payment. You lose the terms of your current mortgage because the new loan resets them.
If your current loan has terms you like, a cash-out replaces them across the whole balance, not just on the cash you took. A HELOC or home equity loan leaves your first mortgage alone. Run that comparison before you commit.
Taking equity out also thins your cushion. If values fall, you have less room. And the money often goes to debt. A federal report on cash-out borrowers found that borrowers often use proceeds to pay down credit card and auto debt. Credit scores rose in the quarter after the refinance, then gradually worsened. Card balances trended back toward earlier levels within a year, though not fully to their pre-refinance level.
Should You Borrow the Maximum?
The maximum is a ceiling, not a target. Borrow what the plan requires, and keep the rest as equity.
Here is the decision as I walk borrowers through it:
| Option | Keeps your first mortgage? | Best when |
|---|---|---|
| Cash-out refinance | No, replaces it | Your current terms are not worth keeping |
| HELOC | Yes | You need flexible, smaller draws |
| Home equity loan | Yes | You need one fixed amount |
| Limited cash-out | No, replaces it | You want better terms, not cash |
Quick Eligibility Self-Check
Run through these before you talk to anyone:
- Is the loan you would pay off at least 12 months old?
- Have you been on title for six months, or does an exception apply?
- Is the home one unit and your primary residence, for the 80% cap?
- After payoff of every lien, is there enough room under the cap to be worth the costs?
- Is your credit score at or above the program floor?
- Is the total debt-to-income ratio at or under the program ceiling?
- Does the new loan’s reset of your terms still make sense?
Key Terms Defined
LTV (loan-to-value): Your loan balance divided by your home’s appraised value.
Seasoning: The waiting period a lender requires before you can refinance or cash out.
Limited cash-out refinance: A refinance that pays off your mortgage and costs and allows only incidental cash back.
Note date: The date you signed the loan note, used to measure the age of a loan.
Delayed financing: An exception that lets a cash buyer take a cash-out refinance inside the usual six-month title wait.
Net tangible benefit: A test that the refinance leaves you measurably better off, required on streamlines.
Frequently Asked Questions
Can I take out 100% of my equity?
No. Conventional caps leave you at least 20% equity on a one-unit primary residence, and lower caps apply to other property types. The federal home equity guide says lenders typically want you to keep 10% to 20% of the home’s value. Even the highest-leverage wholesale lane stops short of full value.
What is the 80% rule?
It is the conventional cap on a cash-out for a one-unit primary residence: the new loan cannot exceed 80% of appraised value. It applies to the total loan, including your payoff and costs. The one exception I work with is a wholesale lane that reaches 89.99% with no mortgage insurance, under strict conditions.
How long must I wait before a cash-out refinance?
Conventional loans need the first mortgage you are paying off to be at least 12 months old, and a borrower on title for six months. Delayed financing, inheritance and legal awards are exceptions to the title wait.
Can an FHA or VA streamline give me cash?
No. The FHA Streamline and the VA IRRRL are rate-and-term products, not cash-out loans. If you want real cash from an FHA or VA home, you need a program built for cash-out, with a full appraisal and underwriting.
Does a cash-out refinance hurt my credit?
It can in the short run, and it does not have to hurt over time. The application involves a credit review, and a larger balance changes your debt picture. Results depend on what you do with the proceeds, such as whether you pay down other debt and keep it paid down.
Next Step
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.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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. CFPB: What other loans are similar to a HELOC
2. Fannie Mae Selling Guide B2-1.3-03
3. CFPB: Using home equity to meet financial needs
6. CFPB newsroom: cash-out borrowers’ credit scores
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 a Lender Reads a Cash-Out Refinance for Home Improvements · Best Cash-Out Refinance Program When the Home Is Jointly Owned · Cash-Out Refinance Requirements to Borrow the Highest Possible Cash-Out Amount
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.