The Quick Read: The best program for you is the one that sizes your new loan at or below 80% of your home’s value. PMI (private mortgage insurance) is tied to that line. A standard cash-out refinance on a one-unit primary home tops out at 80%, so it normally comes without PMI. The catch is that the same cap limits how much cash you can take, and a cash-out only makes sense if you also want the cash or a fresh loan structure.
Key Takeaways
- PMI applies when the new loan is above 80% of the home’s appraised value. A standard cash-out on a one-unit primary home stops at 80%.
- Your old PMI ends when the old loan is paid off. The new loan is judged on its own leverage.
- A low appraisal is the main way PMI sneaks back in. It raises your loan-to-value ratio without changing the loan amount.
- If you only want PMI gone, asking your servicer to cancel it is often cheaper than refinancing.
- The best program depends on your equity, credit, property type and how much cash you need.
What “Best Program” Means Here
The best program is the one that ends PMI, delivers the cash you need, and costs the least over the time you keep the loan. Those three goals pull against each other. That is why no single program wins for everyone.
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.
Four tests decide the answer:
1. PMI outcome. Does the new loan land at or below 80% of value?
2. Cash available. How much equity can you actually pull out under that cap?
3. Total cost. A new loan means a new appraisal, title work and lender charges. It also means a larger balance and a restarted term.
4. Eligibility. Your property type, credit, income and how long you have owned the home all matter.
Honest framing matters here. A cash-out refinance is one route to a PMI-free loan, not the only one. It fits when you want cash or a restructure along with PMI relief. If you want only PMI relief, read the cancellation section below before you apply.
How a Cash-Out Refinance Ends PMI
A cash-out refinance replaces your current mortgage with a new, larger one and hands you the difference in cash. The new loan pays off the old one. When the old loan is paid, its mortgage insurance policy ends with it. Ask your servicer whether any unearned premium comes back to you.
PMI on the new loan depends on one number: the new loan amount divided by the appraised value. At 80% or below, PMI is not required. Above 80%, it is, except in the wholesale no-MI cash-out lane described below.
Here is how the process runs on the wholesale programs a broker places files with:
1. Leverage check. Divide the new loan amount by the expected value. For a one-unit primary home, a standard cash-out sits at 80% LTV (loan-to-value, the loan as a percentage of the home’s value). Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
2. Seasoning check. Seasoning is the waiting period before you can refinance. The loan being paid off must be at least 12 months old, counted from note date to note date. You also need to have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
3. Appraisal. The appraised value is the bottom of the fraction. It decides whether PMI disappears.
4. Underwriting. Automated underwriting reviews credit, income, assets and your debt-to-income ratio. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%.
5. Closing. The old loan is paid off, the old PMI policy ends, and the new loan starts.
Lendmire’s cash-out refinance programs page lays out how Lendmire, a mortgage broker, matches borrowers to these wholesale lanes. Everything here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
One mechanical point trips people up. Mortgage insurance cannot be financed into a conventional cash-out loan. That is another reason the 80% line matters so much.
The Programs Side by Side
Four routes come up when a homeowner wants PMI gone. This table compares how each handles PMI and cash.
| Route | PMI outcome | Cash access | Main catch |
|---|---|---|---|
| Standard cash-out (one-unit primary) | None at 80% LTV or below | Up to the 80% cap | Needs 12 months of seasoning |
| Wholesale no-MI lane | None, up to 89.99% LTV | More equity reachable | Stricter score, ratio and loan type |
| Rate-and-term refinance | Stays above 80% LTV | Only incidental cash back | PMI can remain at high leverage |
| Servicer PMI cancellation | Ends without refinancing | None | Needs enough equity and a clean record |
The Fannie Mae Eligibility Matrix lists the 80% maximum for a one-unit cash-out. It shows much higher ceilings for limited cash-out refinances. That gap is the source of a common mistake. Many borrowers see 95% or 97% figures and assume cash-out can go that high. Those ceilings belong to rate-and-term refinances, not to standard cash-out.
How Much Cash Can You Take and Still Avoid PMI?
Take the 80% cap, subtract your current balance as a share of value, and you have your room. Closing costs rolled into the loan also use up some of it.
These are modeled examples, in percentages of value, with no dollars.
Example 1: Plenty of room. Your balance is 60% of the home’s value. A standard cash-out can take the new loan to 80%. That leaves about 20 points of value for cash and any financed costs. No PMI.
Example 2: Near the line. Your balance is 77% of value. The cap leaves about 3 points. Once closing costs come out of that, the cash is small. You would be paying for a new loan to net very little.
Example 3: Over the line. Your balance is 85% of value. A standard cash-out cannot even pay off the old loan at 80%. You would have to bring money to closing (a “cash-in” refinance) to reach 80%. Otherwise PMI stays.
Example 4: The low appraisal. You plan a new loan at 78% of the value you expect. The appraisal comes in 5% lower. The same loan is now about 82% of the appraised value. That is over 80%. Either PMI returns or the loan shrinks, and so does your cash.
Example 4 is why you should not plan on a number you do not control. Build in a cushion below 80% if you can.
The Wholesale Lane That Reaches Past 80%
Some wholesale lanes reach higher. One cash-out lane reaches 89.99% LTV with no mortgage insurance. It has tighter conditions. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
- A 680 score
- A 50% ratio ceiling
- A thirty-year fixed loan
- A primary residence
- A conforming loan balance
- Its own six months of seasoning
In Texas, a cash-out on a homestead is capped by the state constitution at 80% of the home’s value. So this wholesale lane is not written there. Whether this lane fits you depends on your credit, your property and your state.
Where the General Rule Breaks
The 80% rule is simple. These edge cases bend it.
Second homes and investment properties. Cash-out is capped at 75%, and the same cap applies to two- to four-unit principal residences. Occupancy sets the leverage. A smaller cap means less cash and a lower chance of ever needing PMI.
Rate-and-term refinances. A limited cash-out refinance reaches 95% LTV on a one-unit principal residence. It reaches 97% where the existing loan is agency-owned and the first-time-buyer program allows. Mortgage insurance applies above 80% on the agency path; the wholesale lane that reaches 89.99% LTV carries no mortgage insurance. Cash back is only incidental. This route can lower the payment or change the term, but it will not remove PMI at high leverage. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
FHA loans. FHA mortgage insurance is a different product. It generally does not follow the PMI cancellation rules. Many borrowers with FHA insurance refinance into a conventional loan to end it. An FHA Streamline can lower costs on an FHA loan, but it does not turn FHA insurance into conventional PMI.
Recent cash buyers. Delayed financing lets someone who bought with cash take money out soon after purchase. It still uses cash-out pricing and caps.
Student-loan cash-out. Some programs let proceeds pay off student loans at standard cash-out limits.
Credit events. Waiting periods follow agency rules: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. They are shorter with documented extenuating circumstances.
Affordable-lending programs. HomeReady and Home Possible carry an income limit of 80% of area median income. They offer reduced mortgage insurance on some loans, but that is a purchase and rate-and-term topic.
Cash-Out or Just Cancel PMI?
If your only goal is dropping PMI, cancellation may beat refinancing. You can ask your servicer to cancel PMI once your balance reaches 80% of the home’s original value. Under the Homeowners Protection Act, the servicer must end it automatically at 78%. The Consumer Financial Protection Bureau explains the conditions for requesting cancellation:
- You ask in writing.
- You have a good payment history.
- You have no second mortgage or other junior lien.
- The property has not dropped below its original value.
There is also a second track. If your home has gained value, your balance may now be at 80% or less of current value. Fannie Mae’s servicing guide separates original-value requests from current-value requests. The current-value path usually requires a new valuation, and you pay for it. That cost is far smaller than a full refinance, which means a new appraisal, title work and lender charges.
Lendmire’s conventional program sheet lists typical annual PMI premiums from 0.58% to 1.86% of the loan balance. That is a range, not a quote. Your own premium depends on your credit and leverage.
| Your situation | Likely best route |
|---|---|
| Want cash and PMI gone | Standard cash-out sized at 80% or below |
| Want PMI gone, balance near 80% of current value | Request cancellation using current value |
| Want a lower payment or new term, PMI stays | Rate-and-term refinance |
| Have FHA insurance | Compare a conventional refinance with staying put |
| Balance far above 80% of value | Keep paying down, or consider a cash-in refinance |
This is the part where a cash-out can be the wrong tool. A cash-out resets your term and raises your balance. The PMI you save has to outweigh what the new loan costs. That math improves the longer you keep the loan and the more cash you truly need. It gets worse if you plan to sell within a few years. If the equity is going to fund a renovation or pay off higher-cost debt, the trade can make sense. If it is going to sit in a savings account, probably not.
Common Mistakes
- Planning to the dollar. The appraisal decides your LTV. Leave a cushion.
- Forgetting closing costs. Costs financed into the loan eat into your 80% room.
- Assuming a 95% ceiling applies. That is a rate-and-term figure.
- Skipping the seasoning clock. A loan under 12 months old cannot be paid off in a standard cash-out.
- Refinancing when cancellation would do. Check your balance against original and current value first.
- Ignoring the reset. A new term can cost more total interest even when the monthly figure looks better.
What to Prepare
Have these ready before you talk to a broker:
1. Your current loan statement, with the note date and the PMI details.
2. Your best estimate of today’s value, and a clear reason you want cash.
3. Income and asset records for automated underwriting.
4. Your credit picture, including any recent credit event.
5. A decision on what you want first: lowest cost, most cash, or simplest PMI removal.
A broker’s value is in matching your situation to the program. The wholesale lenders that write these loans differ on score floors, leverage and property types. A broker can compare them for you, but no one can promise an outcome before a full file review.
Key Terms Defined
PMI (private mortgage insurance): Insurance on a conventional loan that protects the lender, required when the loan is above 80% of the home’s value.
LTV (loan-to-value): The loan amount divided by the home’s appraised value, shown as a percentage.
Cash-out refinance: A new, larger mortgage that pays off the old one and gives you the difference in cash.
Rate-and-term (limited cash-out) refinance: A refinance that changes your rate or term, with only incidental cash back.
Seasoning: The waiting period before a loan or title qualifies for a refinance.
Original value vs. current value: Original value is the price or appraisal when you bought. Current value is a new valuation of the home today.
Note date: The date you signed the loan, used to count seasoning.
Frequently Asked Questions
Does PMI on my current loan block a cash-out refinance?
No. PMI itself is not a barrier. The tests are leverage, seasoning, credit and income. Once the old loan is paid off, its policy ends. The new loan is judged only on its own leverage.
Will a cash-out refinance bring PMI back on the new loan?
Only if the new loan lands above 80% of the appraised value. A standard cash-out on a one-unit primary home stops at 80%, so PMI normally does not return. A low appraisal is the main risk. It can push the same loan over the line.
How soon after buying can I do a cash-out refinance?
The first mortgage being paid off must be at least 12 months old, counted from note date to note date. You also need to have been on title for 6 months. Fannie Mae’s cash-out seasoning notice sets the 12-month rule. Delayed financing, inheritance and legal awards are exceptions.
Should I refinance just to drop PMI?
Usually not, unless you also want cash or a new structure. Cancellation through your servicer is often cheaper. You can request it at 80% of original value, or at 80% of current value with a new valuation. A refinance makes sense when your equity is high but the servicer’s path is blocked.
Does mortgage insurance work differently on a second home or rental?
Leverage is lower on those properties. Cash-out on a second home or investment property is capped at 75%. Occupancy decides the cap, so the answer to PMI follows from the loan-to-value on that property.
Weighing Your 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. Lendmire is a mortgage broker licensed for consumer lending in 16 states. Programs and figures are subject to lender guidelines and full file review.
For your own numbers, request a scenario review with Lendmire.
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.
For the program’s current guidelines, see conventional loan programs.
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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 Eligibility Matrix
2. Consumer Financial Protection Bureau: removing PMI
3. Fannie Mae Servicing Guide B-8.1-04: termination of conventional mortgage insurance
4. Fannie Mae capital markets notice on cash-out refinance seasoning
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Best Cash-Out Refinance Program Within Months of Closing on a Conventional Mortgage · Can You Get Approved for a Cash-Out Refinance When You Want PMI to Go Away? · Best Cash-Out Refinance Program to Get Rid of PMI on the Current Loan
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.