The Quick Read: There is no single best program; the best program for your situation depends on your current loan, your equity, and how long you have owned the home. A conventional cash-out refinance on your current home is the usual tool, and it caps at 80% LTV on a one-unit principal residence. The cash must arrive before you write the offer, and the new loan must carry both housing payments. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Key Takeaways
- A cash-out refinance replaces your current first mortgage with a bigger one and hands you the difference.
- Conventional cash-out on a one-unit primary home reaches 80% LTV. Streamlines (FHA Streamline, VA IRRRL) do not pay cash.
- The refinance has to close before the new purchase, so the new lender sees the larger payment.
- Lenders count both housing payments. Rent on the home you’re leaving rarely rescues the math.
- A cash-out costs real money, so it only makes sense when the equity is truly needed. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
What Does a Cash-Out Refinance Do in This Situation?
A cash-out refinance pays off your current mortgage with a new, larger one. You keep the difference in cash and use it for the next home’s down payment, closing costs, or reserves.
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 new loan sits on the home you plan to leave. It stays there until that home sells, and the sale proceeds then pay it off.
Think of it as borrowing against the old house to buy the new one. The cost is a bigger balance and a bigger payment while you own both homes.
Lendmire’s cash-out refinance programs page lays out the structures. Lendmire is a mortgage broker, so it shops these loans across wholesale lenders instead of lending its own money.
Which Program Fits? Start With the Loan You Already Have
The loan you hold today narrows your options before anything else. Across the wholesale programs we place files with, the sorting is simple.
| Your current loan | Cash available? | What it means here |
|---|---|---|
| Conventional | Yes, via cash-out | 80% LTV on a one-unit primary home |
| FHA | Not from the Streamline | Streamline is rate-and-term only |
| VA | Not from the IRRRL | IRRRL is for existing VA loans, no cash |
| Any, above conforming limit | Jumbo lanes | Leverage to 90% on jumbo, 660 score |
The FHA Streamline and the VA IRRRL are built to swap one loan for a better one. They skip most underwriting, and in exchange they do not put cash in your hands. A common mistake is expecting a streamline to fund a down payment. It won’t.
A limited cash-out (rate-and-term) refinance pays off your first mortgage and closing costs, with only incidental cash back. On a one-unit primary home it reaches 95% LTV, subject to lender guidelines. It pays off debt. It does not fund your next purchase.
What Is the Leverage Limit on a Cash-Out Refinance?
Conventional cash-out on a one-unit principal residence goes to 80% LTV. Two- to four-unit homes, second homes, and investment property go to 75%. Your equity above those lines stays locked in the house. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
So the math starts with your current value and payoff. Take 80% of the value, subtract what you owe, and you have your ceiling. Costs come out of that cash before it reaches your down payment.
There is one wholesale lane that goes further. It reaches 89.99% LTV with no mortgage insurance, at a 680 score and a 50% ratio. It requires a thirty-year fixed, a primary residence, a conforming balance, and its own six months of seasoning. Texas homestead loans are excluded, because the state constitution caps cash-out there. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
All figures are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Cash-out loans also price differently than rate-and-term loans. Fannie Mae’s Selling Guide applies cash-out pricing to these transactions. Expect that to show on your Loan Estimate.
Can Your Current Home Qualify?
Not every home or borrower clears the test. Here is what the lender checks.
- Occupancy: The home is your principal residence. Occupancy decides the leverage.
- Loan age: The first mortgage you’re paying off must be at least 12 months old, measured note date to note date.
- Time on title: You must be on title for at least 6 months. Delayed financing, inheritance, and legal-award exceptions exist.
- Credit: The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%.
- Equity: Enough value must remain under the 80% cap after the payoff.
- State: Some states limit cash-out on a home, and Texas is the clearest example.
Lendmire holds consumer lending licenses in 16 states. If your home sits outside them, a different broker will have to help.
The Sequence, Step by Step
Order matters more here than anywhere else in the process. Skip a step and the deal can break.
1. Get preapproved with both homes in the picture. Ask the lender to show you what you can borrow while you own the old home and the new one.
2. Confirm the cash-out number. Value, payoff, the 80% cap, and costs tell you what’s left for the purchase.
3. Close the cash-out refinance first. The funds must be in your account before you write an offer.
4. Write the offer on the new home. You now qualify with the larger payment already counted.
5. Close on the new home. Then list or sell the old one.
6. Pay off the refinance from sale proceeds. The larger loan disappears when the old home closes.
There is no bridge feature inside a standard conventional cash-out. You cannot refinance after you’ve written the offer and expect it to land in time.
How Do Lenders Count Two Housing Payments?
The lender counts both. Your debt-to-income ratio (DTI), which compares monthly debts to monthly income, includes the full payment on the old home plus the new one. That is the main hurdle.
Rent from the home you’re leaving usually doesn’t help. Fannie Mae’s rental income rules say rental income from a principal residence generally cannot be used to qualify, with limited exceptions. Exceptions have their own conditions, including landlord history.
Fannie Mae’s Quality Insider guidance adds detail. To count positive rental income, you generally need a current housing expense and at least one year of rental income history or property-management experience. It also flags a defect pattern: a lease used on a departure home that gets listed for sale or rent right after closing.
Lenders check listing sites, and they look at whether rent looks reasonable. Treat a lease on the old home as a bonus at best. Plan to qualify without it.
Where the Rules Break: Edge Cases
You hold an FHA or VA loan. The streamlines won’t produce cash. A VA cash-out is a separate product with a full appraisal and full underwriting, and it can pay off a non-VA loan. Check the VA home loans page for current terms.
You bought recently. The 12-month loan age and 6-month title rules can block a quick cash-out. That’s the rule, not a lender quirk.
You’re above the conforming limit. Jumbo lanes take over. They run a 660 decision score, leverage to 90%, loans to $5,000,000, and a 50% ratio ceiling on fixed lanes. Jumbo cash-out guidelines differ by lender, so ask about the specific lane.
You plan to keep both homes. That is a different decision. The old home turns into a rental, and the occupancy rules shift.
You’re tempted to fudge occupancy. Fannie Mae flags a fraud pattern where a borrower buys a new home, stays in the old one, and offers the new one for rent. Don’t.
Is a Cash-Out Refinance the Right Tool?
Sometimes. Other tools can reach the same goal, and each has tradeoffs.
| Tool | Leaves first mortgage? | Main tradeoff |
|---|---|---|
| Cash-out refinance | No, replaces it | Bigger balance, closing costs |
| Home equity loan or HELOC | Yes | Second lien, extra payment |
| Bridge loan | Varies | Short-term, specialized |
| Sale contingency | Yes | Weaker offer |
A cash-out replaces your whole first mortgage. A HELOC or home equity loan leaves it alone and adds a second lien. If your current loan is already a good one, keeping it and adding a second lien can make more sense. If you’d refinance anyway, cash-out can do both jobs.
Costs matter either way. The CFPB’s research on cash-out refinances says consumers can face substantial costs, including origination, appraisal, and title fees. It adds that using equity to pay off other debt makes sense only when the cost of extracting the cash is low enough. Fair warning that applies here too.
Refinancing a home you’ll sell within a short stretch means paying closing costs on a loan that may last only a short time. Run that against the alternatives before you commit. Your Loan Estimate shows the real costs.
What If the Old Home Doesn’t Sell on Schedule?
You carry both payments. That is the real risk, and it is why the lender stress-tests your ratio up front.
If the sale drags, your cushion is reserves. If it sells for less than hoped, the larger loan still gets paid first, and your equity takes the hit. A cash-out also leaves less equity to absorb a price drop.
If it sells fast, the larger loan pays off from proceeds and the extra payment goes away. After the sale, some borrowers ask their new servicer about a recast, which lowers the payment after a lump-sum paydown. Availability depends on the loan and servicer.
If the equity cost worries you, a smaller cash-out, or a different tool, may fit better.
What Does the Lender Want to See?
Gather these before you apply.
- Your current mortgage statement
- Income and asset documents
- Proof of the payment on the home you’re leaving
- Rental documentation, where rent is allowed to count
- Preapproval numbers for the next home, run before you refinance
Fannie Mae uses worksheets for rental income, including Form 1037 for a principal residence or a two- to four-unit property. Your loan officer will handle those.
Key Terms Defined
Cash-out refinance: A new mortgage larger than your current one, with the difference paid to you in cash.
LTV (loan-to-value): Your loan balance divided by your home’s value, shown as a percentage.
DTI (debt-to-income ratio): Your monthly debts divided by your monthly income.
Seasoning: The waiting period a loan or title must age before you can refinance.
Limited cash-out refinance: A refinance that pays off the first mortgage and costs, with only incidental cash back. Also called rate-and-term.
Mortgage insurance: Coverage the borrower pays above 80% LTV. It cancels on request at 80% of original value, and ends automatically at 78%, under the Homeowners Protection Act. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Frequently Asked Questions
Can I refinance after I list the old home?
Usually not in a way that helps. A cash-out needs time to close and fund, and the sale clock keeps running. If the home is already listed, lenders look hard at whether the refinance makes sense. Refinance before you list, or choose another tool.
Does a streamline refinance give me cash?
No. The FHA Streamline and VA IRRRL swap one existing government loan for another. Cash needs a conventional cash-out or a VA cash-out, subject to lender guidelines.
Do I have to live in the new home?
If you’re financing it as a principal residence, yes, that’s the occupancy you’re representing. Occupancy decides the leverage, so misstating it is a serious problem.
Is a cash-out refinance cheaper than a HELOC?
Not automatically. A cash-out replaces your whole mortgage and carries closing costs. A HELOC adds a second lien and leaves your first loan alone. Compare total costs on the Loan Estimate, not one number.
Which Path Fits You?
If your loan is conventional, you have the equity under the 80% cap, and your income carries two payments, a cash-out refinance can work. If your loan is FHA or VA, check the cash-out version of each. If you’d rather keep a good first mortgage, price a second lien.
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. Lendmire’s piece Can You Use a Cash-Out Refinance to Buy a New Primary Home? covers the purchase side.
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 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.
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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, Cash-Out Refinance Transactions (B2-1.3-03)
2. Fannie Mae Selling Guide, General Rental Income Information
3. Fannie Mae Quality Insider, Solving Rental Income Challenges
5. CFPB, Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: High-LTV Cash-Out Refinance vs Home Equity Loan on a Primary Home · How to Get a Cash-Out Refinance After Buying a Home With Cash · How to Use Cash-Out Refinance Proceeds on a Primary Home Wisely
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.