The Quick Read: On a conventional cash-out refinance, your credit score and your leverage set the ceiling together, and the leverage cap is lower than on a purchase or a rate-and-term refinance. On a one-unit home you live in, the standard cap is 80% of the appraised value. Two- to four-unit homes, second homes and investment property drop to 75%. Combined LTV only matters when a second lien stays on the property. Subject to lender guidelines and full file review, a higher credit score can open lanes a lower one cannot.
What Is a Cash-Out Refinance, Exactly?
A cash-out refinance replaces your current mortgage with a bigger one and hands you the difference in cash. The new rate and terms apply to the whole balance, not just the cash. The loan gets bigger, and the payment often does too.
A rate-and-term refinance is different from a cash-out refinance. Lenders also call a rate-and-term refinance a limited cash-out refinance. It pays off your existing first mortgage, the closing costs and any purchase-money second lien, with only incidental cash back. Because little or no cash leaves the deal, the agencies allow much higher leverage. Across the wholesale programs Lendmire places files with, a rate-and-term refinance on a one-unit principal residence reaches 95% LTV, and 97% where the existing loan is agency-owned and the first-time-buyer program allows it. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Take real cash and the deal works to a different grid. The cap falls, the pricing changes and the seasoning rules tighten.
This page covers the conventional (conforming) version. FHA, VA and USDA loans run on their own rules. If you are comparing structures, Lendmire’s cash-out refinance programs page lays out the conventional lane next to the others.
Key Terms Defined
LTV (loan-to-value): Your loan balance divided by the home’s appraised value, shown as a percentage.
CLTV (combined loan-to-value): All the liens that will sit on the home after closing, added together, divided by the appraised value.
HCLTV: The same idea as CLTV, but it counts the full credit line on a home equity line (HELOC), drawn or not.
Decision score: The credit score the lender uses to qualify the file. With more than one borrower, lenders generally use the middle score of each person’s three bureau scores, then work from the lowest of those.
Seasoning: The waiting period before a cash-out is allowed. It covers how long you have been on title and how old the loan being paid off is.
LLPA (loan-level price adjustment): A pricing add-on the agencies attach to loans with riskier traits, such as lower credit or higher leverage. It shows up inside the rate or credits, not as a fee line.
Limited cash-out: A refinance that pays off the existing loan and costs, with only incidental cash back.
How Do Credit and Leverage Set the Ceiling Together?
Leverage is the hard cap. Credit decides which lane you are allowed to use and what that lane costs. The two work as a pair, not as one flat number.
Here is the honest truth about “tiers.” The agencies publish an eligibility matrix that sets maximum LTV, CLTV and HCLTV by transaction type, occupancy and unit count. The Fannie Mae Eligibility Matrix also carries credit score, reserve and ratio factors for manually underwritten loans. Most files, though, run through automated underwriting, and the automated finding governs.
Across the wholesale conventional programs Lendmire works with, the credit picture looks like this:
- 620 decision score is the starting floor.
- 640 applies on an adjustable rate under manual underwriting.
- 50% total ratio is the automated ceiling, meaning all your monthly debts against your gross income.
- 36% or 45% applies on manually underwritten loans, with the reserve and score factors of the matrix.
Some lenders set a higher floor than the agencies do. Those overlays are why one lender can say no while another says yes on the same file.
Past the floor, credit mostly changes cost and lane access. A higher score lowers the pricing adjustments stacked on the loan. It also unlocks one specific lane: the wholesale 89.99% no-mortgage-insurance option described below, which starts at a 680 score.
What Do the Leverage Tiers Look Like?
For a conventional cash-out, the cap depends on how you use the property and how many units it has. Cash-out and limited cash-out run on separate grids, and the gap is large.
| Property and use | Cash-out cap | Limited cash-out cap |
|---|---|---|
| 1-unit principal residence | 80% | 95% (97% in some cases) |
| 2–4 unit principal residence | 75% | — |
| Second home | 75% | — |
| Investment property | 75% | — |
These caps come straight from the program rules, and the agency’s dated eligibility matrix shows the same pattern by occupancy and units. One sentence covers the non-owner-occupied side: occupancy decides the leverage, so the home you live in gets the highest cash-out cap.
The common mistake is reading 97% and assuming it applies to cash-out. It does not. The 97% tier belongs to rate-and-term refinances with strict conditions. Take real cash from the same one-unit home and the ceiling is 80%.
Manufactured homes deserve a flag. Under the agency matrix, a single-width manufactured home is limited to purchase and limited cash-out on a principal residence, so there is no cash-out at all.
Is There a Way Past 80%?
Yes, on a narrow lane. One wholesale option reaches 89.99% LTV with no mortgage insurance. Here is what it requires. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
- A decision score of 680.
- A total ratio of 50% or lower.
- A thirty-year fixed rate.
- A principal residence.
- A conforming balance.
- Its own six months of seasoning.
Several of those conditions must hold at once. Miss any one and the file falls back to the standard 80% cap. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, so this wholesale lane is not written there.
This is the clearest place where credit changes leverage. A 679 and a 680 are neighbors on paper, but they sit on different sides of that lane. Programs and lender overlays change, so confirm the current lane against your file before you plan around it.
How Does Combined LTV Work on a Cash-Out?
On most cash-outs, CLTV and LTV are the same number. A cash-out refinance typically pays off your existing first mortgage and puts one new first mortgage on the home. If nothing else sits behind it, there is one lien and one percentage.
CLTV matters when something stays behind. Take a home with a first mortgage and a home equity loan you plan to keep. The new loan, if it is a cash-out, must pay off the first mortgage. The second stays, so the test becomes the new first plus the second, divided by value. That combined number has to fit under the cap too.
Three details trip people up:
- An undrawn credit line. In the agency’s pricing rules, the undrawn part of a HELOC is left out of CLTV for the subordinate-financing pricing adjustment. Eligibility can still look at the full line, which is the HCLTV idea above.
- Paying off a second lien. Under the limited cash-out rule, only a second lien used to buy the home counts as a rate-and-term payoff. Pay off any other second and the loan becomes a cash-out.
- Value, not price. The appraised value is the denominator, not what you paid. Equity gains from appreciation count, which is why a home bought a few years ago can reach more cash than its original price suggests.
For a deeper look at how the cap interacts with credit by occupancy, Lendmire’s piece Conventional Cash-Out Refinance Credit Requirements by Occupancy and LTV goes through each lane.
How Is the Loan Underwritten, Step by Step?
Cash-out underwriting follows the same order on almost every file.
1. Classify the loan. The lender decides whether it is limited cash-out or cash-out. That label sets the cap, the pricing grid and the seasoning rules.
2. Check seasoning. The agency rules require at least one borrower on title for six months. The first mortgage being paid off must also be at least 12 months old, counted note date to note date. Both tests apply, per the Fannie Mae Selling Guide on cash-out refinance transactions.
3. Order the appraisal. The value sets the LTV and CLTV denominators. A low appraisal can push you over a cap.
4. Run underwriting. Automated underwriting reviews credit, income, assets and the property. Its finding governs most files, within the 620 floor and 50% ratio ceiling above.
5. Apply pricing. Pricing adjustments stack based on score, purpose, occupancy, units and leverage. Cash-out has its own base grid, and lower credit with higher leverage costs more. You usually see the result in the rate or credits.
6. Close and disburse. Existing liens are paid off and the cash is released. A home listed for sale at disbursement is not eligible.
Freddie Mac’s cash-out refinance section of its Guide has the same shape. It also requires every borrower to occupy a principal residence and seasons the first lien at 12 months. Details differ at the edges, so a file the other agency would decline sometimes works here, and the reverse.
Where Does the General Rule Break?
Several exceptions can change the answer.
Delayed financing. If you bought with cash, you can borrow against the home without waiting six months. The original purchase must be an arm’s-length deal with no mortgage financing on the settlement statement. The loan is still classified and priced as a cash-out refinance. It is a seasoning exception, not a different loan type.
Inherited or awarded property. No six-month wait applies to inherited property or property legally awarded in a divorce, separation or dissolution of a domestic partnership.
A recently refinanced first mortgage. The 12-month rule means a loan you took out last spring blocks a cash-out today. The same is true if you refinanced to lower your payment and now want cash. Count from note date to note date.
Credit events. After a past credit event, the agencies set waiting periods. They are 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. These are agency rules, and lenders may add overlays.
Ineligible structures. A loan with a temporary rate buydown is not eligible as a cash-out. A property with an energy-improvement (PACE) lien can also be ineligible if you could pay it off with your equity and choose not to.
Manufactured housing. As noted, no cash-out on a single-width home under the agency matrix.
Texas homestead. The cap is set by the state constitution at the agency figure, so the higher wholesale lane is unavailable.
What Happens When You Are Just Over a Line?
You have a few practical moves. Which one fits depends on which limit is binding.
| Situation | Practical move |
|---|---|
| Over the 80% cap by a little | Take less cash |
| Appraisal came in low | Reduce cash or wait for value to rise |
| Score just under a lane cutoff | Pay down card balances, then re-score |
| Second lien pushing CLTV over | Ask whether it can be paid off or subordinated |
| First mortgage under 12 months old | Wait until it seasons |
| Six months on title not met | Check delayed financing or another exception |
Think about which constraint binds first. If you want the most cash, work out the cap first: appraised value times the cap, minus what you owe and the closing costs. A score cutoff only matters if you are chasing the 89.99% lane or trying to trim pricing. Many borrowers chase score when the real limit is the appraisal. Sort that out before you spend time on credit repair.
Two Scenarios, Described in Percentages
Picture a homeowner on a one-unit principal residence who owes about 55% of the home’s value and has no second lien. The standard 80% cap leaves roughly 25 points of value to work with, before costs come off. Credit above 680 on a thirty-year fixed could, subject to lender guidelines, reach the 89.99% lane and leave around 35 points. That is real room, but only if every condition on that lane holds.
Now say you own a duplex and live in one half. The cap is 75%, not 80%, because the unit count moves it to the lower tier. The same 55% balance leaves about 20 points of value before costs. The home is the same type of equity, but the grid gives you less of it.
Both examples ignore the monthly payment on purpose. A bigger loan at a new rate and term changes your budget, and that part deserves its own look.
What Does It Cost You, Beyond the Cap?
Cash-out carries more pricing adjustment than a rate-and-term refinance does. That is the cost of the cash. The adjustment scales with score and leverage, so the same credit at 75% LTV and at 80% LTV prices differently. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The Consumer Financial Protection Bureau says a cash-out refinance can raise your monthly payment and lengthen your payoff time. It also notes that lenders typically require you to keep a share of your home’s value as equity. The caps above are that cushion in numbers.
One more thing. Using home equity to pay off cards or other bills turns unsecured debt into debt secured by your house. The CFPB’s research on cash-out borrowers explains that a missed mortgage payment can cost you the home, while default on a card generally cannot. The numbers can still work in your favor. Just price the risk, not only the interest.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Mistakes
- Comparing against the 97% headline. That is a rate-and-term cap, not a cash-out cap.
- Using purchase price as value. The appraisal decides it.
- Forgetting financed costs. Costs rolled into the loan raise the LTV.
- Ignoring the second lien. It stays in CLTV unless paid off.
- Treating second homes and one-unit primaries alike. Occupancy moves the cap from 80% to 75%.
- Assuming a “no-cost” refinance is free. The costs are built into the rate or added to the balance. Compare the Loan Estimate line by line.
- Chasing score before checking the appraisal. Value usually binds first.
For the cap itself, Lendmire’s explainer What Is The Maximum LTV For A Conventional Cash Out Refinance? stays on that one question.
Frequently Asked Questions
What credit score do I need for a conventional cash-out refinance?
Across the wholesale conventional programs Lendmire places files with, the starting floor is a 620 decision score. It is 640 on an adjustable rate under manual underwriting. Higher scores improve pricing and open the 89.99% lane at 680. Individual lenders can set higher minimums, and every program is subject to lender guidelines and full file review.
What is the maximum LTV on a conventional cash-out?
It is 80% on a one-unit principal residence. Two- to four-unit principal residences, second homes and investment property are capped at 75%. A narrow wholesale lane reaches 89.99% with no mortgage insurance, but it requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
Does combined LTV change anything if I am paying off my existing mortgage?
Usually not. When the new first mortgage replaces your old one and nothing sits behind it, CLTV equals LTV. It matters when a second lien stays in place. Then the first and second together must fit under the cap.
How long do I have to wait before taking cash out?
You need at least one borrower on title for six months, and the first mortgage being paid off must be at least 12 months old. Exceptions exist for delayed financing after a cash purchase, inheritance and property awarded in a legal proceeding.
Is a cash-out refinance the same as rate-and-term?
No. Rate-and-term pays off your loan and costs with only incidental cash back, and it reaches 95% LTV on a one-unit home. Cash-out puts real money in your hands, so the cap is 80%. Paying off a second lien that was not part of the original purchase also turns the loan into a cash-out. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
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. 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.
For the program’s current guidelines, see conventional loan programs.
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References
1. Fannie Mae Eligibility Matrix
2. Fannie Mae Eligibility Matrix (dated version)
3. Fannie Mae Selling Guide: Cash-Out Refinance Transactions
4. Freddie Mac Seller/Servicer Guide, Section 4301.5
5. CFPB: Using Home Equity Guide
6. CFPB cash-out and paydown paper
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: The Case for a Conventional Cash-Out Refinance in the Second-Lien Era · 5 Myths About Qualifying for a Conventional Cash-Out Refinance · Conventional Cash-Out Refinance Definition for a Primary Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.