The Quick Read: Yes, usually. A standard conventional cash-out refinance on a one-unit primary residence stops at 80% loan-to-value, which is the point where mortgage insurance would begin. Stay at or under that line and the new loan carries no PMI. One wholesale lane reaches 89.99% LTV with no mortgage insurance, and FHA cash-out is a different story because it carries its own insurance.
What Is the Short Answer by Loan Type?
Conventional cash-out generally carries no PMI because the loan can’t go above 80% LTV. FHA cash-out carries mortgage insurance no matter how much equity you hold. VA cash-out has no monthly mortgage insurance but charges a funding fee. The label differs by program, and so does the answer.
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.
| Loan type | Monthly insurance? | What applies instead | Best fit |
|---|---|---|---|
| Conventional cash-out (80% cap) | No | Cash-out pricing adjustments | Borrowers keeping 20%+ equity |
| Conventional wholesale no-MI lane | No | Stricter score and ratio tests | Primary residence, conforming balance |
| FHA cash-out | Yes | FHA mortgage insurance | Lower credit scores, ample equity |
| VA cash-out | No | VA funding fee | Eligible veterans and service members |
Avoiding PMI isn’t the same as avoiding cost. Cash-out loans are priced with adjustments that rate-and-term refinances don’t carry, so “no PMI” describes one line item, not the whole file.
Why Does the Answer Turn on the New Loan’s LTV?
PMI is triggered by leverage on the new loan, not by your current balance. The agencies’ charter rules require mortgage insurance on the portion of a conventional loan above 80% of value, as the Fannie Mae Selling Guide restates. Coverage tables begin at 80.01% LTV, per Fannie Mae’s mortgage insurance coverage requirements. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Now the cash-out cap. Per the Freddie Mac Seller/Servicer Guide, a cash-out refinance on a one-unit primary residence tops out at 80%, and 75% on two- to four-unit primary residences. Lendmire’s wholesale programs follow the same envelope: 80% on a one-unit primary residence, 75% on two- to four-unit primary homes, second homes and investment property. Since the cap sits at the insurance trigger, there is no band in which a standard cash-out needs PMI.
Occupancy sets the leverage. A cash-out can be written on a primary residence, a second home or an investment property, each at its own ceiling.
Freddie Mac also rounds the ratio up to the next whole number, so 94.01% counts as 95%. At an 80% cap, that matters at the edge. A loan that lands at 80.4% is treated as 81% and falls outside the lane.
Three things set the new loan’s LTV:
- The appraised value, which sets the ceiling.
- The payoff of your existing first mortgage and any other liens.
- Financed closing costs, which count inside the cap.
If you’re comparing programs, Lendmire’s cash-out refinance programs page lays out the equity each one reaches.
What Do the Key Terms Mean?
PMI (private mortgage insurance): Insurance on a conventional loan above 80% LTV that protects the lender, paid by the borrower. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
MIP (mortgage insurance premium): The insurance FHA loans carry, which applies regardless of equity.
Funding fee: A one-time VA charge in place of monthly mortgage insurance.
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
Limited cash-out refinance: A refinance that pays off the old loan and costs, with only incidental cash back.
Seasoning: How long you’ve owned the home or held the loan before a cash-out is allowed.
How Does the Math Work in Practice?
Say a home appraises at 100 units of value and the owner has paid the first mortgage down to 50. A cash-out at the 80% cap allows a new loan of 80. After the 50 payoff, financed costs come out of what’s left. The rest is the cash in hand.
The 80% isn’t cash to you. It caps the whole new loan, and payoffs, other liens and costs come out first. A second lien or HELOC that stays in place counts toward total leverage too.
Now the variant that pushes someone over. Same home, but the owner still owes 70 and wants 15 in cash. The new loan would be 85 before costs, which is above the cap. Standard cash-out isn’t available at that size. The owner can take less cash, wait for more equity, or look at a different structure.
An appraisal that comes in lower than expected cuts the available cash dollar for dollar at the cap. Value is the lever most borrowers can’t control.
What Does a Lender Check Before Approving the Loan?
Approval rests on equity, value, credit, ratios and seasoning. Across the wholesale programs placed through Lendmire, the standard conventional lanes start at a 620 decision score, or 640 on an adjustable rate under manual underwriting. Automated findings govern most files, with a total ratio ceiling of 50%. Manually underwritten loans run 36% or 45%, with reserve and score factors from the Eligibility Matrix. All of it is subject to lender guidelines and full file review.
Seasoning is the check people miss:
- The first mortgage being paid off must be at least 12 months old, counted from note date to note date.
- A borrower must have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
Delayed financing helps a recent all-cash buyer who wants to pull cash back out. It still counts as cash-out for leverage and pricing. Seasoning wording and exceptions can change, so confirm the current terms with the lender on your file.
Credit events carry waiting periods under agency rules: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Does Existing PMI Block a Cash-Out Refinance?
No. PMI on your current loan doesn’t stop a cash-out. What matters is the new loan’s LTV against the cash-out cap. The old policy ends when the old loan is paid off.
That has a practical upside. A borrower paying PMI on a high-leverage purchase loan who has since built equity may qualify for a cash-out with no PMI at all, provided the new loan fits the cap.
If you only want to drop PMI and don’t need cash, there’s a cheaper route to ask about first. Lendmire’s piece Best Cash-Out Refinance Program to Remove Private Mortgage Insurance walks through it.
How Is Cash-Out Different From a Limited Cash-Out Refinance?
A limited cash-out (rate-and-term) refinance allows higher leverage but only incidental cash, and PMI returns above 80%. A cash-out pays you meaningful proceeds and caps leverage at 80% on a one-unit primary residence. Confusing the two is a common mistake. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
| Feature | Cash-out | Limited cash-out |
|---|---|---|
| Max LTV, one-unit primary | 80% | 95% (97% in some structures) |
| Cash back | Any amount that fits the cap | Incidental only |
| PMI above 80% | Not applicable | Yes |
| Existing-loan age rule | 12 months | Not the same test |
Incidental cash has a ceiling. At Fannie Mae it’s the lesser of 2% of the new loan amount or $2,000, and at Freddie Mac it’s the greater of 1% of the new loan amount or $2,000. The new loan pays off the first mortgage, closing costs and a purchase-money second lien. Buying out a co-owner under a written agreement counts as limited cash-out at both agencies.
Needing cash while owing more than 80% of value is the hard case. Limited cash-out doesn’t deliver real proceeds, and the standard cash-out cap blocks the rest.
Is There Any Route Above 80% With No PMI?
Yes, one. A wholesale lane reaches 89.99% LTV with no mortgage insurance. It’s the one exception to the rule that mortgage insurance is required above 80%. It comes with conditions. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
- A 680 score.
- A 50% ratio ceiling.
- A thirty-year fixed rate.
- A primary residence with a conforming loan balance.
- Its own six months of seasoning.
The tradeoff is structural. The lane is narrower than the standard path, and it asks for stronger credit. It isn’t written in Texas, where a homestead cash-out is capped at 80% of the home’s value by the state constitution. Pricing and availability vary by lender, and a lane that exists isn’t a lane every file fits.
A borrower at 85% LTV with a 700 score on a primary residence is the profile it was built for. A borrower at 85% on a second home isn’t, because the lane is limited to primary residences. Check the property type first. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
What About FHA and VA?
FHA cash-out carries mortgage insurance regardless of equity. That’s the central difference from conventional, and it’s why the FHA cost doesn’t disappear when you hold a lot of equity. Call it MIP, not PMI.
VA cash-out has no monthly mortgage insurance. It charges a funding fee, one time, in its place. Veterans weighing that path can read Lendmire’s VA cash-out refinance without mortgage insurance article.
Federal cancellation rules apply only to private insurance. Neither FHA nor VA follows them.
Which Route Fits You?
Match your equity and profile to the lane:
- Keeping 20% or more after cash-out: standard conventional cash-out, no PMI.
- Keeping 10% to 20%, primary residence, strong credit: ask about the wholesale no-MI lane.
- Owing more than 80% and needing real cash: expect that standard cash-out won’t reach, and compare against waiting or a smaller draw.
- Eligible veteran: VA cash-out may skip monthly insurance in favor of a funding fee.
- Lower credit with deep equity: FHA cash-out is an option, with insurance attached.
None of these is a promise. Each is subject to lender guidelines, appraisal and full file review.
What Mistakes Do Borrowers Make?
1. Treating 80% as cash in hand. It caps the whole loan, with payoffs and costs first.
2. Assuming no PMI means no extra cost. Cash-out pricing adjustments still apply.
3. Ignoring the 12-month clock on the loan being paid off. Six months on title alone isn’t enough.
4. Forgetting financed costs. They count inside the cap and shrink your proceeds.
5. Mixing up cash-out and rate-and-term. PMI comes back above 80% on the latter.
6. Assuming a new appraisal ends old PMI on a refinance you keep. That’s not how cancellation works, as the next section explains.
How Does PMI End if You Do End Up With It?
On borrower-paid PMI, you can request cancellation at 80% of the original value, with good payment history, no subordinate liens and no decline in value. The servicer must terminate it automatically at 78%, under the Homeowners Protection Act. The CFPB’s bulletin on PMI cancellation and termination stresses that original value is the basis. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance, which is why the date this ends matters.
If you’re 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, and loans are placed through wholesale lenders, subject to lender guidelines. Nothing here is a commitment to lend.
Frequently Asked Questions
Does a cash-out refinance require PMI?
Not on the standard conventional path. A one-unit primary residence caps at 80% LTV, the point where mortgage insurance starts, so a loan inside the cap carries no PMI. Cash-out pricing adjustments still apply, so the cost isn’t zero. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Can I roll mortgage insurance into a cash-out loan?
Conventional cash-out at the 80% cap has no insurance to roll in. FHA is different, since its premium is part of the program. Whatever you finance counts inside the LTV cap and reduces the cash you receive.
Does a small existing balance remove insurance?
It helps you stay under the cap, but the rule is about the new loan. A low balance gives you room for more cash. Cash taken, payoffs and financed costs all raise the new LTV.
Can a cash-out go above 80% without PMI?
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance. It has its own six months of seasoning and isn’t written in Texas. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Does cash-out work on a second home or a rental?
Yes, with lower leverage. Occupancy sets the ceiling, and second homes and investment property sit at 75% LTV. Lender guidelines and file review decide each case. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. 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
2. Fannie Mae Selling Guide B7-1-02, Mortgage Insurance Coverage Requirements
3. Freddie Mac Seller/Servicer Guide §4203.1
4. CFPB Compliance Bulletin 2015-03 on PMI cancellation and termination
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Approved for a Cash-Out Refinance Into a 15-Year Loan Removing PMI? · Cash-Out Refinance Requirements to Remove Private Mortgage Insurance · Cash-Out Refinance Options When You Have Private Mortgage Insurance on Your 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.