The Quick Read: The best program depends on what kind of restriction is recorded on your deed, because no single loan wins for every restricted home. Age limits and plain use covenants usually cause few problems. Income limits and resale-price formulas add a step: the group that holds the restriction often has to approve the cash-out in writing before any lender will move. Conventional loans are the main path, and the survive-or-terminate question drives how the home is appraised.
What Does “Deed Restriction” Actually Mean?
A deed restriction is a private agreement, recorded with the deed, that limits how a property can be used. HUD defines it in just those terms. That one phrase covers very different things.
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.
Here is the sort that matters for a refinance:
| Restriction type | Who enforces it | Cash-out impact |
|---|---|---|
| Age-related (such as 55+) | Association or developer | Usually minor |
| Income or resale-price limits | Housing agency or nonprofit | Approval often required |
| HOA or use covenant | Association | Depends on project rules |
| Land trust ground lease | Land trust | Specialty appraisal |
Across the wholesale programs Lendmire places files with, the first question is always which row you are in. Two borrowers can both say “my home has a deed restriction” and need completely different loans.
Can You Take Cash Out at All?
Usually yes, with conditions. Conventional financing does not shut out restricted homes. Fannie Mae buys loans with several kinds of resale restriction: income, age, employment, occupancy, and first-time-buyer requirements. Its Selling Guide also says the loan must be a fixed rate, or an adjustable rate with an initial fixed period of at least five years.
Here is how it breaks down by type:
- Age-restricted communities. These are the most widely accepted. Age rules generally apply to the occupant, and often only one occupant must be 55 or older.
- Income-based or resale-price homes. Freddie Mac allows cash-out refinances here, but only with prior written approval from the subsidy provider or program administrator. Without that approval, there is no cash-out.
- Plain use covenants. Most need no outside approval. The lender checks them against the project’s eligibility rules instead.
- Land trust homes. These sit on a ground lease. Fannie Mae’s rider requires any resale restrictions to end at foreclosure.
Borrowers also have to keep meeting the restriction’s own tests. If both the restriction and the mortgage set income limits, the stricter one applies.
What Does “Best Program” Mean for This Property?
The best program for your situation is the one whose rules fit your restriction and your goal. Think of it as matching, not ranking.
Across the wholesale programs we place files with, conventional cash-out on a primary residence tops out at 80% LTV on a one-unit home. LTV, or loan-to-value, is the new loan balance divided by the home’s appraised value. Two- to four-unit homes, second homes, and investment properties cap at 75%. Those are program guidelines, subject to lender review, and restricted collateral can land below them.
The seasoning rules still apply on top of everything else. Seasoning is the minimum time you must hold a loan or title before cashing out. The first mortgage being paid off should be at least 12 months old, and a borrower should have been on title for six months. Fannie Mae’s cash-out section describes the six-month title rule, along with exceptions such as delayed financing.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed, a primary residence, a conforming balance, and its own six months of seasoning. Restricted properties may or may not fit that lane, and lender overlays vary. Some lenders accept only age restrictions and decline other resale limits. That is why a broker who shops several wholesale lenders matters more here than on a standard home. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The government options are narrower:
| Program | Cash out? | Restricted-home note |
|---|---|---|
| Conventional cash-out | Yes | Main path |
| FHA cash-out | Yes, owner-occupied only | Appraiser reports restriction effects |
| VA cash-out | Yes, veteran must occupy | Resale limits get close review |
| FHA Streamline / VA IRRRL | No | Rate-reduction only |
If you want meaningful cash, the Streamline and the IRRRL are not tools for the job, even if your home qualifies for them.
How Does the Restriction Change the Cash You Can Reach?
It can shrink it a lot. Cash-out is limited by appraised value, and a restriction changes which value the lender uses.
The deciding fact is whether the restriction ends or survives if the lender forecloses.
- It terminates at foreclosure. The appraisal should reflect market value as if the restriction did not exist.
- It survives foreclosure. The appraisal must reflect the restriction’s impact. It must also be supported by comparable sales of homes with similar restrictions. Fannie Mae requires loans like this to be delivered with Special Feature Code 631, a tag the lender handles.
Picture a home with a resale-price formula that survives foreclosure. The market might say it is worth far more than the formula allows. The lender works from the restricted value, so the same 80% ceiling reaches less cash. A subsidy provider may also cap proceeds or claim a share of appreciation.
Be careful with restrictions that look like they terminate. Some contain revival clauses. Have the recorded documents reviewed before you count on the higher value.
Conventional programs do not add a special price adjustment just because a home has a resale restriction, according to the same Fannie Mae section. Other pricing factors still apply to your file.
What Is the Step-by-Step Process?
The order matters, and approval comes before the lender, not after.
1. Identify the restriction. Pull the deed, rider, or covenant. The title search will surface it anyway.
2. Find the right authority. For income or resale-price homes, that is the subsidy provider named in your documents. For HOA covenants, it is the association.
3. Request written approval. Your letter should state the amount you want, why you want it, and the existing liens and balances to be paid off. Many administrators also want a lender commitment letter.
4. Gather the documents. Bring the recorded covenant, any ground lease or rider, and the subsidy provider’s contact details.
5. Apply and appraise. The appraiser identifies the restriction and picks comparable sales to match.
6. Underwrite. The usual checks apply: seasoning, LTV on the right value basis, credit, debt ratios, and occupancy.
7. Close. Expect a payoff or consent from the administrator, and a new mortgage coordinated with the covenant.
Skipping step three is the costly mistake. A cash-out that violates the restriction can put the loan and the home at risk. Extra steps like administrator review and specialty appraisals also mean this file moves on other people’s schedules.
For credit, the usual conventional floor at the wholesale level is a 620 decision score, though the automated finding governs most files and individual lenders may set higher minimums. Everything here is subject to lender guidelines and full file review.
Where Does the General Rule Break?
Several named situations do not follow the pattern.
- Occupancy. Freddie Mac now requires all borrowers to occupy the home on a primary-residence cash-out, per its selling update. A non-occupant co-borrower cannot simply be added to help the file. FHA and VA cash-out are owner-occupant products too.
- Ineligible projects. Fannie Mae will not take loans in condo or co-op projects where covenants split ownership or curtail how a borrower can use the property.
- Massachusetts. Fannie Mae can purchase loans subject to that state’s Affordable Housing Restriction document without further approval. It is a named exception, not a national pattern.
- Manufactured housing. Treat this as a narrow case, not a safe default. Many lenders decline these files outright, and a restriction outside the eligible types can take the home off the conventional path. Do not plan around a cash-out on a manufactured home until a lender has reviewed the recorded documents and confirmed in writing that the property is eligible.
- Appraisal waivers. Restrictions based on income or age can still qualify for a desktop appraisal or waiver. Resale-price restrictions that override market pricing cannot.
- Texas homestead. The state constitution caps cash-out on a homestead at 80% of the home’s value, and the wholesale 89.99% lane is not written there.
- Rentals or second homes. Occupancy decides leverage: 75% rather than 80% on the conventional cash-out.
Cash-Out Refinance, Second Mortgage, or Equity Line?
A cash-out refinance replaces your entire first mortgage with a bigger one. A second mortgage or equity line leaves the first loan alone and adds a separate lien. Both usually need the same restriction approval, so ask the administrator about all of them in one letter.
Which one fits depends on what you are protecting. If your current first mortgage is something you want to keep, a second lien may suit you better. If the first loan should change anyway, a cash-out refinance does both jobs. A broker can compare how each reaches your equity.
CFPB research found that cash-out borrowers cut credit card and auto balances at closing. Card balances then trended back toward their earlier levels over the following year. The lesson is to decide what the cash is for before you apply.
How Do You Find the Right Fit?
Start with the paperwork, then match it to a lender. Lenders vary far more on restricted homes than on ordinary ones. One may accept only age limits, another may take income-based resale restrictions, and a third may decline anything beyond a plain covenant.
That is where a broker earns the role. Lendmire is a mortgage broker that works with a network of wholesale cash-out refinance lenders, and it can shop your scenario against several of them. Lendmire’s cash-out refinance programs page lays out the basic structures. The right lender depends on your restriction type, credit profile, leverage need, and documents.
Before you call anyone, gather:
- The recorded deed restriction, rider, or covenant
- Any ground lease
- The subsidy provider’s contact information
- Your current mortgage statement
- A clear reason and target amount for the cash
Key Terms Defined
Deed restriction: A recorded agreement that limits how a property can be used or sold.
Subsidy provider: The agency or nonprofit that created an income or resale-price restriction and often must approve a cash-out.
Survive vs. terminate: Whether a restriction stays on the home after a foreclosure or ends automatically. It decides the appraisal basis.
LTV: The new loan balance divided by the home’s appraised value.
Seasoning: The minimum time you must have held title or the existing loan before cashing out.
Limited cash-out refinance: A refinance that pays off the old loan and costs, with only small incidental cash back.
Frequently Asked Questions
Can I refinance a home with a deed restriction at all?
Yes. Fannie Mae and Freddie Mac both buy loans on restricted homes, including age, income, and resale-price types. What changes is the paperwork. Income and resale-price homes need the subsidy provider’s approval before cash-out, and the appraisal follows the restriction’s rules.
Who approves a cash-out on a resale-restricted home?
The subsidy provider or program administrator named in your covenant. Freddie Mac requires their prior written approval for cash-out and no-cash-out refinances on income-based resale-restricted homes. Your approval request should state the amount, the reason, and the liens to be paid off.
What if I am not sure what kind of restriction I have?
Read the recorded deed, rider, or covenant, or ask your title company for a copy. The document usually names who enforces it. If it is unclear, have a broker or attorney review it before you apply, since the type decides which programs fit.
Will a deed restriction lower my cash-out amount?
Yes, it can. If the restriction survives foreclosure, the appraisal reflects it, and the same LTV ceiling reaches less cash. A subsidy provider may also cap proceeds or share in appreciation.
Can I use an FHA Streamline or VA IRRRL to get cash?
No. Both are rate-reduction products by design. For cash, you would look at a cash-out refinance, and FHA and VA cash-out require you to live in the home.
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. Program details are 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.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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. HUD Handbook 4000.1 Glossary
2. Fannie Mae Selling Guide B5-5.2-02
3. Fannie Mae Selling Guide B2-1.3-03
4. Freddie Mac selling update on cash-out occupancy
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 Rules in a Community Property State · Cash-Out Refinance Requirements on a Fourplex · Is a Cash-Out Refinance Allowed Right After a Cash Purchase?
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.