The Quick Read: The best program is the one your specific restriction and its approving party allow. A deed restriction does not automatically block a cash-out refinance, but some restrictions require written sign-off first and others bar cash-out outright. Start with the type of restriction, then match a program to it.
- Age-based restrictions (55+) are the most widely accepted and usually the easiest to finance.
- Income-capped or price-capped homes often need the subsidy provider’s approval before cash-out.
- How the restriction behaves in a foreclosure drives how the home is valued.
- Conventional cash-out generally tops out at 80% LTV on a one-unit principal residence, so the restricted value matters.
- Read the recorded documents before you shop.
What Is a Deed Restriction, Really?
A deed restriction is a recorded limit on how a property can be owned, used or sold. Fannie Mae defines a resale restriction as a right, held in perpetuity or for a set number of years, written into a deed, mortgage, ground lease or similar instrument, according to its Selling Guide on resale restrictions. Allowable types include age-related rules and restrictions tied to group homes or residents with disabilities.
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: 7.24% as of October 29, 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.
The term covers very different things. An age rule for a 55+ community works nothing like a price cap on an affordable-housing resale. Lumping them together is a common mistake borrowers make.
This is where most searches go sideways. People look for a lender ranking. The better question is which restriction you have, because that decides which lenders and programs can touch the file.
Which Restriction Do You Have? (And How It Affects Cash-Out)
| Restriction type | Typical effect on cash-out |
|---|---|
| Age-based (55+) | Commonly accepted; borrower must meet the age criteria |
| Income-based resale | Cash-out usually needs the subsidy provider’s approval |
| Price-capped / shared equity | Hardest to cash out; resale formula limits usable equity |
| Use-based (group home) | Eligible in some cases; criteria must be met |
| Ordinary HOA covenants | Usually not a resale restriction; project rules still apply |
Across the wholesale programs Lendmire places files with, age-restricted properties are the ones that come through most smoothly. Income-restricted and price-capped homes take more steps, and the approving party often decides whether the deal works at all.
What Does “Best Program” Mean on a Restricted Property?
The best program is the one whose property-eligibility rules fit your restriction, not the one with the most attractive headline terms. Five questions sort it out:
- Who must approve? A monitoring agent, municipality, state agency or subsidy provider may need to sign off in writing.
- How is value set? It depends on whether the restriction survives foreclosure.
- Who must you be? You must still meet the restriction’s own income or age criteria.
- What liens exist? Assistance or subordinate liens may need to be handled.
- What paperwork is needed? Lenders ask for every instrument that creates or describes the restriction.
Freddie Mac’s Seller/Servicer Guide covers these properties in Chapter 4406, split into eligibility, restriction requirements and appraisal. Fannie Mae has its own parallel rules. Whether a given wholesale lender accepts the file depends on its own overlays, which is why a broker that shops several lenders matters more than any single name.
How the Loan Is Underwritten, Step by Step
1. Pull and classify the restriction. Get the recorded deed, covenant, ground lease or regulatory agreement. Sort it into age, income, price-cap or use-based.
2. Check your eligibility. Fannie Mae’s resale restriction eligibility rules require borrowers to meet the restriction’s own criteria. When both the restriction and the mortgage set income limits, the more restrictive one applies.
3. Confirm cash-out is permitted. For Freddie Mac’s income-based resale program, cash-out is allowed only with the subsidy provider’s approval. This is often the real gate.
4. Pick the loan structure. Fannie Mae requires a fixed-rate loan, or an adjustable loan with an initial fixed period of five years or more.
5. Order the appraisal. If the restriction ends automatically on foreclosure or deed-in-lieu, the appraisal reflects market value without it. If it survives, the appraiser must reflect its impact and support the value with comparable sales that carry similar restrictions. Either way, the report must comment on the restriction’s effect on value and marketability.
6. Meet the standard cash-out tests. The first mortgage being paid off must be at least 12 months old, measured note date to note date, per Fannie Mae’s cash-out eligibility update. The borrower must also have been on title for six months, with exceptions for delayed financing, inheritance and legal awards.
Why Your Equity May Not Be What It Looks Like
Equity on a restricted home is the number that surprises people most. A resale-restricted home can look like it holds a lot of equity on paper, but the lender may value it with the restriction in place. That shrinks the base the loan-to-value limit is applied to.
Consider a homeowner in a price-capped community who assumes the home is worth what nearby unrestricted homes sell for. The restriction survives foreclosure, so the appraiser needs restricted comparables. The value comes in lower, and the cash-out limit applies to that lower number. Conventional cash-out generally reaches 80% LTV on a one-unit principal residence, so every point of lost value cuts into the cash available. (This example is illustrative, not a prediction for any property.)
Where the restriction ends at foreclosure, the value can be set without it. Freddie Mac’s income-based program lets the lender choose whether restrictions survive or terminate, and that choice drives the LTV calculation. Ask for the valuation method in writing before you commit to a path.
Some restrictions also route part of the proceeds to the subsidy provider. Excess-proceeds provisions can send a share of equity there in certain foreclosure situations, so the equity is not always all yours.
Edge Cases Where the General Rule Breaks
Age-restricted communities. Fannie Mae treats age-related restrictions as allowable and generally attaches the age rule to the occupant. Often only one occupant must be 55 or older. Its project rules exclude continuing-care communities with long-term healthcare contracts.
Appraisal shortcuts. Fannie Mae announcement SEL-2022-10 says properties with resale price restrictions are not eligible for an appraisal waiver or desktop appraisal. Restrictions based only on income or age, with no price limit, remain eligible. Expect a full appraisal on a price-capped home.
Ordinary HOA rules. Paint colors and fence rules are generally not resale restrictions. Covenants that split ownership or curtail how you can use the property can make a condo project ineligible. Do not assume your HOA is harmless until the project is reviewed.
Manufactured housing. Fannie Mae has simplified project review for manufactured-housing communities with eligible deed or resale restrictions, including age-restricted ones. Cash-out treatment for these varies by lender.
FHA. FHA cash-out is for owner-occupied principal residences. Income from a non-occupant co-borrower cannot be used to qualify, and nonprofit and government entities are not eligible borrowers, per HUD Mortgagee Letter 2023-17. An FHA Streamline is a different product: it refinances an existing FHA loan with no cash out.
Limited versus full cash-out. A limited cash-out refinance (rate-and-term) pays off the existing first mortgage and closing costs with only incidental cash back. This article is about full cash-out. Make sure your lender is quoting the one you want.
Occupancy. On a second home or non-owner-occupied property, the leverage drops. Conventional cash-out on a second home runs to 75% LTV rather than 80%, and the restriction’s own occupancy terms still apply. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The Decision Path by Situation
| Your situation | Likely first move |
|---|---|
| 55+ community, no price cap | Shop conventional cash-out; confirm age eligibility |
| Income- or price-capped home | Get written approval from the approving party first |
| Assistance lien on title | Ask about subordination before applying |
| HOA covenants only | Confirm the project is eligible, then proceed normally |
| Cash-out barred | Consider a limited cash-out refinance or other options |
Lendmire’s cash-out refinance programs page lays out the standard conventional structures. The restriction layer sits on top of those, and a broker can screen which wholesale lenders will read the restriction at all.
What to Gather Before You Apply
- The recorded deed, covenants, ground lease or regulatory agreement.
- Any rider or regulatory agreement from the original purchase.
- Contact details for the monitoring agent or subsidy provider.
- Your income and age documentation if the restriction sets criteria.
- Records of any assistance or subordinate liens.
- Your current mortgage statement, to confirm the loan is old enough to be paid off in a cash-out.
Lenders request copies of every instrument that creates or describes the restriction. A missing document is the most avoidable source of delay.
When Cash-Out Is Not Available
Some restrictions bar cash-out or cap total borrowing. Alternatives exist. A limited cash-out refinance can lower your payment structure without pulling equity. A second lien or HELOC may be possible, though those often need the same approval. Agency-sanctioned improvement loans exist in some programs. Selling is the last option, and the resale formula then sets your proceeds.
If you already hold a government-backed loan, the streamline lanes (FHA Streamline, VA IRRRL) skip cash-out entirely.
Red Flags and Common Mistakes
- Closing without approval. An unapproved loan can put you in breach of the restriction.
- A lender who never asks for the restriction documents. If nobody reads them, the problem surfaces late.
- Assuming a deed restriction means you cannot refinance. Both Fannie Mae and Freddie Mac have written policies for these properties.
- Assuming all restrictions work alike. Age, income and price caps are treated very differently.
- Counting on market value. Restricted comparables may set the number instead.
How to Find the Rules Where You Live
Restrictions vary by state, municipality and originating program. The recorded document controls. Contact the monitoring agent or housing agency named in it, and ask in writing about refinance, cash-out and total-borrowing limits. A broker like Lendmire can then match the verified restriction to wholesale lenders whose guidelines fit.
Who This Is Not For
Cash-out on a restricted property is a poor fit if the approving party refuses consent, if the restricted value leaves too little equity under the LTV cap, or if you do not meet the restriction’s own criteria. Using the proceeds is a separate question. The Consumer Financial Protection Bureau’s research found borrowers often use cash-out to pay down credit card and auto debt, and their credit scores initially improved and then gradually worsened. A cash-out loan also resets the whole mortgage balance, not only the cash portion.
Key Terms Defined
- Resale restriction: a recorded limit on who can buy the home or at what price.
- Subsidy provider: the nonprofit or government body that imposed the restriction and often must approve cash-out.
- Monitoring agent: the organization that tracks compliance with the restriction.
- Subordination: an agreement letting an existing lien stay behind the new first mortgage.
- CC&Rs: covenants, conditions and restrictions recorded against the property or community.
- Seasoning: the minimum time you must have held the home or the loan being paid off.
Frequently Asked Questions
Can I do a cash-out refinance on a deed-restricted home?
Often, yes, but it depends on the restriction. Age-based restrictions are commonly accepted. Income- and price-capped homes usually need the subsidy provider’s written approval, and some bar cash-out. All terms are subject to lender guidelines and full file review.
Does a deed restriction lower my appraisal?
It can, depending on the restriction. If the restriction survives foreclosure, the appraiser must reflect its effect and use restricted comparables. If it ends at foreclosure, value may be set without it. Ask your lender which method applies.
How much equity can I take out?
Conventional cash-out generally reaches 80% LTV on a one-unit principal residence and 75% on two- to four-unit homes and second homes. The LTV applies to the appraised value, which may be lower on a restricted home.
Do I need permission before refinancing?
Frequently. Many restrictions require prior written approval from the monitoring agent or subsidy provider. Get it before you sign anything.
Is a cash-out refinance the same as a limited cash-out?
No. A limited cash-out pays off your first mortgage and closing costs with only incidental cash back. Full cash-out puts real equity in your hands and carries different leverage limits.
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. Nothing here is a commitment to lend.
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 broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. 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 B5-5.2-01: Resale Restrictions
2. Freddie Mac Seller/Servicer Guide
3. Fannie Mae Selling Guide B5-5.2-02: Eligibility, Collateral and Delivery
4. Fannie Mae: Cash-Out Refinance Eligibility Update
5. Fannie Mae Selling Guide B4-2.1-03
6. HUD Mortgagee Letter 2023-17
7. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve 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: Should Co-Owners Use a Cash-Out Refinance Buyout or Sell the Home? · How Much a Cash-Out Refinance Lends for a Large Expense · Can You Do a Cash-Out Refinance on a Home Under a Blanket Lien?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.