The Quick Read: On a $700K home, the loan-to-value cap runs out long before the conforming loan limit does. A conventional cash-out on a one-unit primary residence tops out at 80% of the appraised value. The limit only matters when the new loan itself would be larger than the limit, and that takes a much more expensive home. For your $700K house, the real questions are your current balance, your appraisal, and the clocks on your title and your existing loan.
Key Takeaways
- The conforming limit is tested against the new loan amount, not your home’s value.
- Loan-to-value (LTV) is the share of the home’s appraised value you borrow against. For a conventional cash-out on a one-unit primary residence, the cap is 80%.
- Two- to four-unit primary residences and second homes are held to 75%.
- A cash-out loan is a different product from a rate-and-term refinance, which allows far higher leverage but only incidental cash back.
- Your cash is what’s left after the payoff, any other liens, and closing costs. It is never the full 80%.
- Two clocks apply: six months on title and a 12-month-old existing first mortgage. The exceptions are narrow.
Does the Conforming Limit Cap Cash-Out on a $700K Home?
No. On a home this size, the equity cap binds first and the loan limit never comes into play.
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: 7.32% as of October 22, 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 mechanical reason. The conforming loan limit is a ceiling on the size of the new mortgage. Your new loan is capped at 80% of the appraised value. To reach the baseline limit, a loan would have to be larger than your home is worth. That is not a loan anyone writes.
Picture the break-even line. For a one-unit primary residence, the limit starts to bind only when the home is worth about one and a quarter times the limit. Dividing the limit by 0.80 gives that number. A $700K house sits far below that line.
The misconception usually runs the other way. People hear that limits just went up and assume more cash is coming. It isn’t, unless your home is near the break-even value. (Headlines about the limit are written for buyers of pricier homes, not for you.)
One more thing to keep straight: the limit is not a property-value limit. A $2 million home can carry a conforming loan if the loan itself is small enough.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting a cash-out follows a fixed order: define the transaction, check the clocks, set the value, apply the LTV cap, then test credit, ratios, and reserves. Each step can shrink the loan or stop it. Knowing the order tells you which step is likely to cost you cash.
Lendmire places these files with wholesale lenders, and the sequence below is how they unfold. If you want the program-level view, Lendmire’s cash-out refinance programs page covers the structures a broker can arrange.
Step 1: The loan has to be a cash-out. A cash-out refinance pays off your existing mortgage with a new first mortgage on the same property and hands you the difference. It can also be a new loan on a home you own free and clear. Closing costs are often charged on it, as the CFPB notes in comparing it with a home equity line.
Step 2: The title clock. At least one borrower must have been on title for six months before the new loan funds. The Fannie Mae Selling Guide sets that rule for cash-out transactions. This is the clock that trips up recent buyers.
Step 3: The loan-age clock. Seasoning is the waiting period a lender requires before a loan or a title can be refinanced. Here it means the first mortgage you are paying off must be at least 12 months old, counted from note date to note date. Refinancing with the same servicer doesn’t skip it.
Step 4: The appraisal sets the value. Everything downstream is a percentage of that number. If the appraisal comes in low, your maximum loan falls by 80% of the shortfall. Not ideal, and out of your hands once the appraiser leaves.
Step 5: The LTV cap counts every lien. The 80% limit covers the first mortgage, any second mortgage, and any home equity line. A second lien is paid off or counted inside the cap. People forget that the cap is on total debt against the home.
Step 6: Credit, ratios, and reserves. Across the wholesale conventional programs Lendmire works with, the starting point is a 620 decision score. The automated underwriting finding governs most files, with a total debt-to-income ceiling of 50%. Manually underwritten loans run tighter, at 36% or 45%, with reserve and score factors from the agency’s Eligibility Matrix. All of it is subject to lender guidelines and a full file review.
Step 7: Pricing adjustments. Cash-out loans usually carry loan-level price adjustments, which are pricing add-ons based on LTV, credit score, and loan purpose. They show up inside your pricing rather than as a separate fee line. They are one reason a cash-out costs more than a plain refinance at the same balance.
Where Does the Conforming Limit Come From?
The Federal Housing Finance Agency (FHFA) sets the limit once a year, and it moves with home prices. The FHFA’s announcement shows the 2026 one-unit baseline rose 3.26%, tracking its house price index. A statute called HERA requires the yearly adjustment.
The baseline is not the only number. In counties where 115% of the local median home value exceeds the baseline, the area limit is higher, up to a ceiling of 150% of the baseline. Loans above the baseline but inside a high-cost county’s limit are called high-balance loans. High-balance pricing and caps can differ from standard conforming.
Where does that leave you? Look up your county on FHFA’s loan limit data page if your loan is large relative to your home value. For a $700K house, it’s a formality.
Next year’s limit is usually announced in late November and takes effect January 1. Some lenders advertise early figures before that announcement. Treat those as marketing, not as the official number.
What Does a $700K Home Actually Look Like?
On a $700K home, the room for cash depends almost entirely on how much you still owe. The new loan can be 80% of value at most, and your payoff, other liens, and costs come out of that first.
Run the numbers in percentages of value. These are modeled assumptions, not quotes.
| Existing payoff (% of value) | Max new loan | Room before costs | Limit binds? |
|---|---|---|---|
| 40% | 80% of value | 40% of value | No |
| 60% | 80% of value | 20% of value | No |
| 75% | 80% of value | 5% of value | No |
The limit never binds in any row. The only column that changes is the room, and it shrinks as your balance grows.
Now subtract the costs. Closing costs, the appraisal fee, and prepaid items come out of that room. A 5% cushion can disappear entirely. That is why a small cash-out often isn’t worth doing. (The paperwork is the same for a big one and a small one.)
A rule of thumb: if the room before costs is thin, price the whole deal before you order the appraisal. Ask for the Loan Estimate and read the cash-to-close line. That’s the number that matters, not the 80%.
Here is a pattern Lendmire’s team sees often with homeowners near the middle of this range. They estimate the cash as 80% of value minus their balance, then discover that the payoff figure runs higher than the balance. It includes accrued interest, and any HELOC balance counts as well. Get a payoff statement before you plan anything.
How Is This Different From a Rate-and-Term Refinance?
A rate-and-term refinance, also called a limited cash-out refinance, pays off your existing first mortgage and the closing costs. You get only incidental cash back. In exchange, the leverage allowed is much higher. On a one-unit primary residence it reaches 95% LTV, and 97% where the existing loan is agency-owned and the first-time-buyer program allows. Mortgage insurance applies above 80%. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
That matters because people mix the two up. The 95% to 97% figures you see online belong to this product, not to a cash-out. If you want cash in hand, the cap is 80%.
Which one fits depends on what you want:
| Goal | Better fit | Why |
|---|---|---|
| Cash for repairs or debts | Cash-out | Only this product pays you the difference |
| Change the term, no cash | Rate-and-term | Higher leverage allowed |
| Drop mortgage insurance | Depends on the file | Cash-out has none at 80% |
One note on property type. A one-unit principal residence gets the 80% cap. Second homes get the 75% cap, the same as two- to four-unit principal residences. Occupancy decides leverage.
What Structures and Variations Exist?
Beyond the standard 80% loan, a few variations change the math. Most of them bear on your timing or your leverage.
An 89.99% wholesale lane. Lendmire can place some files in a wholesale lane that reaches 89.99% LTV with no mortgage insurance. It requires a 680 score and a 50% ratio, on a thirty-year fixed rate, for a primary residence with a conforming balance. It carries its own six months of seasoning. It is not available everywhere. Texas homestead cash-outs are capped by the state constitution at the agency figure, and this lane is not written there. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Mortgage insurance. On a standard cash-out at 80%, there is none. Above 80% LTV, mortgage insurance is required, and it can be cancelled on request at 80% of the original value with good payment history. By law, the servicer must end it automatically at 78%. Published typical annual premiums run 0.58% to 1.86% of the balance. That’s a range, not a quote.
Student-loan option. The Fannie Mae guide lets a borrower waive the cash-out pricing adjustment when the proceeds pay off eligible student loans. The standard LTV caps still apply.
Manufactured homes. These carry a lower LTV cap than a site-built home. Confirm the figure for your property type with the lender.
Where Does the General Rule Break?
The rule says six months on title and a 12-month-old loan. Several exceptions are real, and they are narrow.
Delayed financing. If you bought the home with cash, a lender can allow a cash-out inside the six-month window. The purchase must be documented as an arm’s-length transaction, and the source of funds must be documented. The new loan is capped near what you put into the property. It is a real exception, but it is not a loophole.
Inheritance and legal awards. Inheritance, divorce, and similar legal awards can change how the title clock runs. Each file turns on the paperwork, so the lender will tell you what it needs.
Trust ownership. If a revocable trust held the title before closing, its holding time can count toward the six months. That works if you are the primary beneficiary.
HELOCs and co-owner buyouts. Freddie Mac’s 12-month seasoning rule has exemptions for certain co-owner buyouts and for cases where the first lien is a HELOC. The agency’s own page is Freddie Mac Guide section 4301.5.
Taxes and delinquencies. Real estate taxes more than 60 days delinquent can’t be financed unless an escrow account is set up.
Occupancy. For a primary-residence cash-out, every borrower on the loan must occupy the home.
Listed for sale. A property listed for sale at closing is generally not eligible for a cash-out. Check this with your lender before you list anything.
Credit events. The agencies set waiting periods after credit events. These are four years from a chapter 7 discharge, seven years from a foreclosure, and four years from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Above the limit. If your loan would exceed the limit for your county, jumbo lanes take over. Those programs start at a 660 decision score, and leverage and cash-out caps are set lane by lane. Lendmire’s piece Conforming vs Jumbo Cash-Out Refinance for a Loan Above the Limit walks through that fork. It isn’t your situation at $700K, but it matters if your equity is larger than you think.
What Does the Decision Look Like in Practice?
The decision is rarely “how much can I get.” It’s “what do I do with the cash, and does this loan make sense compared with keeping what I have.” The first question matters more than most people expect.
The CFPB found that “paying off other bills or debts” was a common reason borrowers took cash out. The agency’s report on cash-out borrowers puts it above 50% each year from 2014 to 2019 and above 40% in the two years after. Home repairs ranked second.
Debt consolidation deserves a hard look. You are swapping unsecured debt for debt secured by your home. If you can’t keep up, a missed credit card payment costs you credit, but a missed mortgage payment can cost you the house.
Walk through a short checklist before you apply:
1. Get a payoff statement for your current loan and any second lien. 2. Check that you have been on title for six months and that your loan is at least 12 months old. 3. Estimate your room as a percentage of value, then subtract closing costs. 4. Decide whether a smaller loan, a home equity line, or keeping your current loan fits better. 5. Ask for the Loan Estimate and compare the cash-to-close line, not just the headline cap.
A cash-out refinance also resets your terms across the entire balance. The CFPB’s guide to using home equity warns that it can lengthen the payoff period and may raise the monthly payment. It also can’t turn 100% of your equity into cash.
Common Mistakes With the Limit
- Treating the limit as a cap on cash. It caps the new loan, and the LTV cap comes first on your home.
- Using the 95% to 97% figures. Those belong to rate-and-term refinances.
- Skipping the clocks. Both the six-month title rule and the 12-month loan-age rule apply.
- Forgetting the second lien. It counts toward the cap.
- Planning around an unofficial number. Early lender figures for next year are not official.
- Ignoring closing costs. They come out of your proceeds.
If you’d like to see how costs behave on bigger loans, Lendmire also covers what closing costs look like above the conforming limit.
Key Terms Defined
Conforming loan limit: the largest mortgage amount Fannie Mae and Freddie Mac can buy, set each year by FHFA.
Cash-out refinance: a new mortgage that pays off your old one and gives you the difference in cash.
Loan-to-value (LTV): the new loan divided by the home’s appraised value, shown as a percentage.
Seasoning: the waiting period required on a loan or on your title before you can refinance.
High-balance loan: a loan above the national baseline limit but within a high-cost county’s limit.
Loan-level price adjustment: a pricing add-on based on factors like LTV, credit score, and loan purpose.
Delayed financing: an exception that allows a cash-out soon after a cash purchase.
Frequently Asked Questions
Will the conforming limit reduce my cash-out on a $700K home?
No. The 80% LTV cap on a one-unit primary residence is far lower than the limit. The cap is the number to plan around. Your payoff, other liens, and closing costs then reduce the cash you receive. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Does the limit apply to my cash or to my whole loan?
It applies to the whole new loan. That loan includes the payoff of your old mortgage, any liens paid off, and any financed costs, plus your cash. If the total would be larger than the limit for your county, the loan is no longer conforming.
Can I get a cash-out right after buying my home?
Usually not. You need six months on title and a first mortgage at least 12 months old. Delayed financing is a narrow exception for homes bought with cash, with documentation required.
Is a cash-out refinance the same as a HELOC?
No. A cash-out replaces your whole mortgage and resets its terms. A home equity line adds a second loan and leaves your first mortgage alone. The CFPB says either can cost more or less depending on the terms.
What if I want more cash than 80% allows?
Take a smaller amount, consider a home equity line, or look at a different structure. Some wholesale lanes reach higher leverage under specific conditions, such as an 89.99% LTV lane for qualified primary residences. Nothing here is a commitment to lend.
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.
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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References
1. CFPB
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. FHFA — Conforming Loan Limit Values
4. FHFA — Conforming Loan Limit data page
5. Freddie Mac Guide Section 4301.5
6. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
7. CFPB — Older Americans home equity guide
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Refinance a Conventional Loan on a Condo · How to Refinance a 2-4 Unit Primary Home to Drop PMI · Can a Conventional Cash-Out Refinance Close Without an Appraisal?
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
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.