The Quick Read: The standard ceiling on a conventional cash-out refinance of a one-unit principal residence is 80% loan-to-value, and it is set by the agency behind the loan, not by each bank. Lenders can add stricter limits on top, which is why quoted maximums differ. The best program for your situation depends on your equity, credit, property type and the loan you hold today.
Who Actually Sets the Ceiling?
The agency or insurer sets the ceiling. The lender can only be stricter. Fannie Mae, Freddie Mac, FHA and VA each publish their own limits, and a bank that sells loans to one of them follows that rulebook.
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.
That is the first misconception to clear up. “Each bank sets its own LTV” is wrong. Two lenders can quote different maximums on the same house because one added an overlay, such as a higher credit floor or a lower cap on certain property types.
Across the wholesale programs Lendmire places files with, the conventional cash-out ceiling is 80% on a one-unit principal residence and 75% on a two- to four-unit home. Those figures are subject to lender guidelines and full file review. Fannie Mae publishes its caps in its Eligibility Matrix, and the lenders that write this loan follow those caps, adding overlays only to be stricter.
What Is a Cash-Out Refinance, Start to Finish?
A cash-out refinance replaces your current first mortgage with a new, larger one and pays you the difference. The new loan pays off the old lien at closing. Closing costs come out of the proceeds. Whatever is left goes to you.
Per Fannie Mae’s Selling Guide, a cash-out refinance pays off existing mortgage loans with a new first mortgage on the same property. It can also be a new mortgage on a home that carries no lien today. A paid-off home is not exempt. Any new lien on a free-and-clear house counts as cash-out.
Lendmire is a mortgage broker, not a lender. It shops multiple wholesale lenders and matches your scenario to a program. Lendmire’s cash-out refinance programs page lays out the options in plain terms.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value, shown as a percentage.
CLTV: Combined LTV, which counts every lien on the home, not only the first mortgage.
Seasoning: The minimum time a loan or your ownership must exist before a cash-out is allowed.
Limited cash-out (rate-and-term): A refinance that pays off the old loan and costs, with only small incidental cash back.
Mortgage insurance: Coverage the borrower pays for on higher-LTV conventional loans, with cancellation rules tied to the balance.
How Is the Loan Underwritten, Step by Step?
Underwriting runs in a fixed order. Each step can lower the cash you can actually take, even when the ceiling looks generous.
1. Occupancy. Occupancy sets the leverage. A one-unit principal residence gets the highest cap, 80% LTV. Two- to four-unit principal residences, second homes and investment property are written at 75% LTV.
2. Seasoning. The first mortgage being paid off must be at least 12 months old, measured note date to note date. A borrower must also have been on title for 6 months. Freddie Mac’s Guide carries the same 12-month and six-month tests, with listed exceptions.
3. Value. The appraised or accepted value sets the dollar ceiling. A low appraisal cuts cash directly.
4. Credit and ratios. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Freddie Mac’s product page also sets a 620 minimum Indicator Score.
5. Reserves. On Fannie Mae automated casefiles, a debt-to-income ratio above 45% triggers a six-month reserve requirement. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
6. Pricing. Fannie Mae lists loan-level price adjustments for cash-out, and those adjustments, together with the market rate, flow into the pricing you see. The Loan Estimate shows what you pay.
7. Payoff and funding. The old lien is paid, and the remainder is yours.
How Do You Figure the Cash You’ll Actually Get?
Start with the appraised value and multiply by the ceiling percentage. That is your maximum new loan. Subtract the payoff of your current first mortgage. Subtract any second lien you cannot or will not pay off, since every lien counts toward the cap. Subtract closing costs if they come out of proceeds.
Picture a homeowner with a one-unit primary home at an 80% ceiling and a current balance near 50% of value. On paper, the difference between the ceiling and the current balance, measured as a share of value, is what is available. Then closing costs come out. Then a lower appraisal shrinks the base.
Check the “Closing Costs Financed” line. The CFPB’s guide to the Loan Estimate and Closing Disclosure explains where it sits and how to read the cash-to-borrower line.
What Changes the Ceiling in Practice?
Four things move it: unit count, occupancy, loan type and state law.
| Scenario | Conventional cash-out cap |
|---|---|
| One-unit principal residence | 80% LTV |
| Two- to four-unit principal residence | 75% LTV |
| Second home | 75% LTV |
| Investment property | 75% LTV |
Texas homestead cash-out is its own case. A Section 50(a)(6) loan on a homestead is capped at 80% of the home’s value by the state constitution. The wholesale no-mortgage-insurance lane described below is not written there.
Mortgage insurance is the other piece. Above 80% LTV, conventional loans require it, with one exception: the wholesale no-MI cash-out lane covered next. On cash-out, the standard ceiling sits at 80%, so most conventional cash-out files avoid mortgage insurance by staying at or under it. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Is There Any Lane That Goes Higher?
Yes, one. Across the wholesale programs Lendmire places files with, a lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance. It carries its own six months of seasoning. It is the one exception to the mortgage-insurance rule above, and it is subject to lender guidelines and full file review.
Where Does the General Rule Break?
Several named edge cases change the picture.
Delayed financing. A cash purchaser can take cash out inside the six-month title window. It is a listed exception and Freddie Mac has an equivalent path.
Six-month title exceptions. Buying out a co-owner under a written legal agreement is one. Inheritance and legal awards are also reported as exceptions.
PACE loans. A borrower with enough equity who chooses not to pay off a PACE loan can be ineligible for cash-out.
Limited cash-out versus cash-out. Limited cash-out allows far higher leverage on a one-unit primary home, up to 95% LTV, or 97% where the existing loan is agency-owned and the first-time-buyer program allows. But cash back is capped at a small amount. Fannie Mae allows the lesser of 2% of the new loan amount or $2,000. It does not let you take equity out. Fannie Mae’s page on limited cash-out refinances draws that line. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
FHA. HUD Mortgagee Letter 2019-11 cut FHA’s cash-out LTV from 85% to 80%. Anyone still quoting 85% is working from old advice. The FHA Streamline is a different product. It refinances an existing FHA loan with no cash out, no appraisal and limited credit review, and it requires a net tangible benefit.
VA. The IRRRL is for existing VA loans only and pulls no cash. It carries a 0.5% funding fee unless exempt, no VA appraisal and seasoning of the later of 210 days and 6 payments. VA’s cash-out refinances fall into two categories, Type I and Type II. VA will not guarantee a refinance above 100% LTV, and many lenders set their own limit below that. Confirm against current VA rules.
Jumbo. Above the conforming limit, jumbo lanes take over, with a 660 decision score and leverage to 90% on some programs. Loans run to $5,000,000, with a 50% ratio ceiling on the fixed lanes.
What Does the Decision Look Like in Practice?
Most borrowers face a short list of questions.
- Do you want cash, or only a different loan? If only a lower or different rate or term, a limited cash-out or a streamline may fit better.
- Does a bigger balance help? A larger balance generally raises the monthly payment even when the rate falls. Rolling closing costs in raises the balance. The CFPB’s research on cash-out refinances notes that accessing equity brings origination, appraisal, title and tax costs.
- Are you over the ceiling? Options include paying down the balance, waiting for value to rise, or looking at a program with a different structure.
- Do you have a second lien? It counts toward the cap and cuts your cash.
A lower rate does not always mean a lower payment. A bigger balance or a longer term can cancel the gain.
How to Check Any Lender’s Current Guidelines
Lender pages go stale. Before you commit, run this checklist.
- Ask which agency or insurer the loan will be sold to.
- Ask for the lender’s overlays in writing, including credit floor and property-type limits.
- Ask how the lender treats a second lien and financed closing costs.
- Confirm seasoning against your note date and title date.
- Compare the Loan Estimate line by line.
A broker shops several wholesale lenders against one scenario, so the overlay differences surface before you apply, not after. That is the practical difference between a single retail bank and a broker. The right match depends on your property type, credit profile, leverage need and documentation.
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.
Frequently Asked Questions
Do banks set their own LTV limit on a cash-out refinance?
No. The agency or insurer behind the loan sets the ceiling, and each lender can only add stricter overlays. That is why different lenders can quote different maximums for the same home. A broker can compare those overlays across several wholesale lenders.
What is the standard LTV ceiling for a conventional cash-out on a primary home?
It is 80% on a one-unit principal residence and 75% on a two- to four-unit principal residence. Confirm the current figure on the live Fannie Mae Eligibility Matrix. Program figures are subject to lender guidelines and full file review.
How long do I have to own the home before cashing out?
Two clocks apply. The first mortgage being paid off must be at least 12 months old, note date to note date. Separately, a borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist.
Can I go above 80% on a conventional cash-out?
Sometimes. A wholesale lane 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 has its own six months of seasoning. It is not written on Texas homesteads, where the limit is 80%. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Is a limited cash-out refinance a way to take equity out?
No. It pays off the existing loan and costs with only incidental cash back. It allows higher leverage, but it is built for changing the loan, not pulling equity.
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. Freddie Mac Guide Section 4301.5
3. Freddie Mac cash-out refinance product page
4. CFPB’s guide to the Loan Estimate and Closing Disclosure
5. Fannie Mae Selling Guide B2-1.3-02
6. HUD Mortgagee Letter 2019-11
7. CFPB’s research on cash-out refinances
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash-Out Refinance Options Using Projected Rent From Part of the Primary Residence · Is a Cash-Out Refinance Worth It for a Large Expense? · Banks That Offer a Cash-Out Refinance That Fits Your Debt-to-Income Ratio
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.