The Quick Read: On the conventional side, “program” mostly means which set of agency rules fits your file, not which brand name you pick. A standard cash-out loan on the home you live in generally tops out at 80% of its value. A narrower wholesale lane goes higher, but only for a tight borrower profile. The best program for your situation depends on your equity, your credit, how old your current loan is, and how long you have owned the home.
Key Takeaways
- Two clocks run on every conventional cash-out. You need 6 months on title, and the loan you are paying off must be at least 12 months old.
- Leverage depends on the home. One-unit primary homes reach 80%. Two- to four-unit primary homes, second homes and investment property are held to 75%.
- Costs you roll into the new loan eat into your cash. They come out of the leverage cap first.
- Leaving FHA or VA for conventional is a cash-out question like any other. The same rules apply.
- Cash-out is not a HELOC. It replaces your first mortgage and re-sets the whole balance.
What “Best Program” Actually Means on a Conventional Loan
Almost every conventional cash-out loan is built to one of two rulebooks, Fannie Mae’s or Freddie Mac’s. Those are the agencies that buy conforming loans. So you are not choosing between a dozen unrelated products. You are choosing a structure.
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 main structures are these:
- Standard cash-out refinance. You take out a new first mortgage that pays off the old one and hands you the difference.
- Limited cash-out (rate-and-term) refinance. You change the loan but take only incidental cash back.
- Special-purpose variants. These cover things like a co-owner buyout or a student loan payoff feature.
- A higher-leverage wholesale lane. It is narrower and has its own rules.
Across the wholesale programs Lendmire places files with, the match comes down to a short list of facts. Those are occupancy, leverage needed, score, ratios, the age of the current loan, and the home’s value path. A mortgage broker shops those facts across several wholesale lenders. Lendmire’s cash-out refinance programs page lays out the lanes it arranges for homeowners.
No single lender or program wins for everyone. A borrower with 40% equity and a clean file needs something different from one with 22% equity and a high debt load.
How a Conventional Cash-Out Is Underwritten, Step by Step
Here is the sequence a file follows, start to finish.
1. The loan gets classified. If you take more than incidental cash back, it is cash-out. That is true even on a home with no mortgage at all.
2. The two clocks get checked. Title seasoning is 6 months. Loan seasoning is 12 months, measured from the note date of the old loan to the note date of the new one.
3. You apply and receive a Loan Estimate. It lists costs and the loan amount. Compare it across lenders before you commit.
4. Automated underwriting runs. Most wholesale conventional programs start at a 620 decision score. The automated finding governs most files, and the total ratio ceiling is 50%.
5. Value gets established. Most cash-out loans use a full appraisal. Some qualify for an appraisal alternative with a lower leverage ceiling. Two- to four-unit homes are excluded from it.
6. Title and payoff get confirmed. The new loan has to be a first lien. The payoff statement sets what comes off the top.
7. The new loan closes. Cash to you is what remains after the payoff, any other liens and the costs.
The whole new loan is measured against the home’s value. That is the part most borrowers miss. You are not borrowing “up to your equity.” You are borrowing up to a percentage of value, and the payoff and financed costs fill that space first.
The Fannie Mae Selling Guide section on cash-out refinance transactions spells out the 12-month rule and the extra reserves that can apply when your debt load runs high. The Fannie Mae Eligibility Matrix sets leverage by occupancy, unit count and loan purpose.
The Lanes, Side by Side
The standard lane covers most borrowers. The higher-leverage lane covers a narrower group. Limited cash-out is a different animal, and it is here for comparison.
| Lane | Leverage | Who it fits |
|---|---|---|
| Standard cash-out, one-unit home you live in | 80% | Most owner-occupants with solid equity |
| Cash-out, 2–4 units, second home, investment | 75% | Multi-unit owner-occupants and non-primary homes |
| Higher-leverage wholesale lane | 89.99%, no mortgage insurance | 680 score, 50% ratio, 30-year fixed |
| Limited cash-out (rate-and-term) | 95%, only incidental cash | Changing the loan, not pulling equity |
The 89.99% lane has fine print. It applies to a primary residence, a conforming loan balance and a thirty-year fixed loan. It carries its own six months of seasoning. It is not written in Texas, where state law caps a homestead cash-out at the agency figure.
Second homes and investment property sit at the lower leverage tier. Occupancy decides the cap, and that is all this article will say about them.
Mortgage insurance deserves a note. Above 80% leverage, conventional loans carry it. You can request cancellation at 80% of original value with good payment history, no second liens and no decline in value. The servicer must end it automatically at 78%. A standard cash-out stops at 80%, so it usually avoids mortgage insurance by design.
Moving From FHA, VA or Another Loan Into Conventional
Leaving a government-backed loan for conventional cash-out works. The agencies treat it as any other cash-out. Two things decide whether you can do it now.
The loan-age clock. The FHA or VA loan you are paying off must be at least 12 months old, note date to note date. Refinanced eleven months ago? You wait, even if the home has plenty of equity.
The title clock. At least one borrower must have been on title for 6 months. A refinance of your existing loan does not reset this. A purchase does start it.
People move to conventional for a few common reasons. Government loans carry their own insurance or fee structure. Conventional mortgage insurance cancels. And at 80% leverage a standard cash-out has none. FHA insurance does not behave that way, which is why a lot of borrowers with real equity decide to switch. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Here is the catch. Conventional cash-out gives you less leverage than you may be used to. Some FHA and VA structures reach higher. If you need the extra leverage more than you need the insurance relief, conventional may not be your answer.
Veterans have a separate option.
If your existing loan is an FHA or VA loan and you want only a lower balance or a changed term, a government streamline may fit better. Streamlines do not hand you cash.
Where the Rules Bend (and Where They Don’t)
Most surprises live in the exceptions. These are the ones that come up most often.
Delayed financing. You paid cash for the home and want money back now. Fannie Mae and Freddie Mac both waive the 6-month title wait in this case. The purchase statement has to show no financing secured by the property was used. But the exception waives only the wait. Cash-out leverage limits and cash-out pricing still apply. It is not a loophole.
Free-and-clear homes. No mortgage, new first mortgage? Still cash-out. Many borrowers assume otherwise.
A HELOC as your first lien. A HELOC in first position can be paid off and treated as a first lien, with its own seasoning exception. Check how the HELOC is recorded before you plan around this.
Co-owner buyouts. Buying out an ex-spouse or sibling is a special-purpose cash-out. Ask about it up front.
Renovation and energy-improvement loans. These finance repairs, upgrades, or energy-efficiency work on a home, and lenders generally want the funds tied to the improvements rather than treated as open-ended cash. Worth raising early if the money is going into the property.
Student loan cash-out. Fannie Mae has a feature that lets you pay off student loans, limits the cash back to you, and prices the loan like a limited cash-out. Useful if student debt is your actual goal.
Homes listed for sale. A home listed for sale when the new loan funds is not eligible for delivery to Fannie Mae. Take it off the market before you apply, not after.
Manufactured housing. Fannie Mae’s rules are tighter here, and single-width homes have been ineligible for primary-residence cash-out. Treat this property type as limited and ask early.
High-LTV refinance. Fannie Mae’s high-LTV refinance acquisition is suspended. It is not a cash-out route.
State law. Some states add rules of their own. Texas is the best-known example.
Loan size. The new loan has to fit the conforming limit. Above it, you are in jumbo territory with different lanes.
A Worked Example
Say you live in a one-unit home and the appraisal supports a value we will call 100%. Your current first mortgage balance is 60% of that value.
- Standard cash-out cap: 80%.
- Minus payoff: 60%.
- Room left for costs and cash: 20 points of value.
Now the costs come out of that 20. If you finance closing costs into the loan, they use up part of that space before you see a dime. The Loan Estimate shows this on a “Closing Costs Financed” line.
Two more things change. Your monthly obligation is re-set because the whole balance is re-priced and re-amortized, not just the new money. And the term often restarts. Borrowers focus on the cash and forget they are replacing a loan they may have already paid down for years.
Which Program Fits Your Situation?
| Your situation | Likely fit | Why |
|---|---|---|
| Strong equity, one-unit primary home | Standard cash-out at 80% | Broadest lender pool |
| Need more than 80% leverage, 680+ score | Higher-leverage lane | No mortgage insurance, narrow rules |
| Want a new loan but little cash | Limited cash-out | Higher leverage, simpler pricing |
| Bought with cash recently | Delayed financing | Skips the 6-month title wait |
| Student loan payoff is the goal | Student loan feature | Capped cash back, pricing relief |
| Loan is under 12 months old | Wait or look elsewhere | The seasoning clock blocks it |
Pricing matters across all of these. Cash-out carries a loan-level price adjustment at Fannie Mae and a credit fee at Freddie Mac. Set by score and leverage, these adjustments make cash-out cost more than a rate-and-term refinance. That cost shows up in your terms. Compare Loan Estimates, not headlines.
When Cash-Out Is the Wrong Move
Sometimes the better answer is to keep what you have.
- Your current loan is strong and you need a small amount. A home equity line or loan leaves the first mortgage alone. The trade-off is a second lien and its own payment.
- You are close to the 12-month mark. Waiting a few months can open the door.
- The money is for debt. The CFPB’s research on cash-out borrowers found many use proceeds to pay down credit card and auto debt. It also found credit scores rose at first and then gradually worsened. Moving unsecured debt into a mortgage puts it against your home, and the card balances can creep back.
- Your equity cushion would get thin. A new loan at the cap leaves you little room if values dip.
What to Have Ready
- Your most recent mortgage statement and payoff information
- Proof of income and assets
- Evidence of when you took title and when your current loan closed
- Homeowners insurance details
- Any HOA information
- A plan for the cash
The loan age is usually confirmed from your credit report or title commitment. If your documents disagree, sort that out first.
Key Terms Defined
Cash-out refinance: a new first mortgage that pays off your old one and gives you the difference in cash.
Seasoning: the waiting period the agencies require, either on title or on the loan being paid off.
LTV (loan-to-value): the new loan amount divided by the home’s value.
Loan-level price adjustment: a pricing add-on based on score, leverage and loan type. Cash-out carries one.
Mortgage insurance: coverage the borrower pays on conventional loans above 80% LTV. It cancels at 80% on request and ends at 78% automatically. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Delayed financing: an exception that lets a cash buyer take equity out before the 6-month title wait ends.
Frequently Asked Questions
How long do I have to own my home before a conventional cash-out?
At least one borrower must be on title for 6 months. The loan being paid off must also be 12 months old. Delayed financing, inheritance and legal-award exceptions can change the title wait, but not the leverage or pricing rules.
Can I cash out right after refinancing?
Not usually. The loan you are paying off must be at least 12 months old, measured note date to note date. A refinance you did recently restarts that clock.
Does moving from FHA to conventional remove mortgage insurance?
A standard conventional cash-out stops at 80% leverage, which is the point where conventional mortgage insurance does not apply. Conventional insurance, when it does apply, cancels at 80% on request and ends at 78%. Your own file decides how it plays out. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Is a cash-out refinance the same as a HELOC?
No. A cash-out refinance replaces your first mortgage with a new, larger one. A HELOC is a second lien on top of the loan you have. The right pick depends on how much you need and how good your current loan is.
Can I roll closing costs into the loan?
Often, yes, within the leverage cap. Financed costs reduce your net cash because they sit inside the same cap. Review the “Closing Costs Financed” line on your Loan Estimate and compare it across lenders.
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. Every program figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
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 B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. CFPB: Cash-out refinance borrowers and credit scores
4. CFPB: Loan Estimate explainer
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Conventional Loan Refinancing for Owners Moving From ARM to Fixed · Prepaids vs Lender Credit for a Conventional Loan Buyer Short on Cash · Can You Use a Conventional Cash-Out Refinance Right After a Rehab?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.