The Quick Read: Three variables decide what you can do: your credit profile, how you use the property, and how much of its value the new loan would cover. On the wholesale conventional programs, a 620 decision score is the usual starting point. Leverage tops out at 80% on a one-unit home you live in, and at 75% on two- to four-unit homes you live in and on second homes. Beyond those caps, the details are timing rules, reserves, and the lender’s own overlays.
Key Takeaways
- Occupancy sets the ceiling. Your primary home gets the most room, and second homes and multi-unit homes get less.
- A 620 score is the floor on most wholesale conventional files. The automated underwriting finding governs, and a lender can ask for more.
- Two clocks apply: six months on title, and a loan being paid off that is at least 12 months old.
- Cash-out is capped lower than a rate-and-term refinance, which reaches 95% on a one-unit primary home.
- No program turns 100% of your equity into cash. Plan around the cap and your costs.
What Is a Conventional Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a new, larger one. The new loan pays off the old balance, and you keep the difference as cash. “Conventional” means the loan is not FHA or VA. It follows the conforming rules that let a lender sell it to the secondary market.
Lendmire’s cash-out refinance programs are built on those rules. A mortgage broker arranges the loan through wholesale lenders, and the lender makes the credit decision. The rules below come from the agency guidelines and from how these files actually move through underwriting.
A cash-out refinance is not a home equity line. It resets your loan. You get a new balance, a new term, and a new set of costs. That is why lenders look harder at these files than at a plain rate-and-term refinance, which only pays off the old loan and closing costs.
How Is the Loan Underwritten, Step by Step?
The process runs in a set order, and each step can change the answer at the next one.
1. Timing check. The lender confirms you have been on title long enough. It also confirms the loan being paid off is old enough.
2. Appraisal. The appraised value is the bottom of the LTV fraction. Loan-to-value (LTV) is the new loan amount divided by the home’s appraised value. A low appraisal shrinks your cash even when your credit is strong.
3. Occupancy and property type. Whether it is your primary home, a second home, or a multi-unit building sets the cap. Condos and some other property types can carry lower limits.
4. Automated underwriting. The lender’s system reviews your score, income, debts, reserves, and the file as a whole. On most files, that finding governs.
5. Pricing adjustments. Lenders add pricing adjustments tied to credit score and LTV. They run higher on cash-out than on rate-and-term at the same score. Your Loan Estimate shows how they land.
6. Closing. The payoff and your cash proceeds are disbursed together.
For the leverage side in more depth, see Lendmire’s explainer What Is The Maximum LTV For A Conventional Cash Out Refinance?.
What Do the Credit Requirements Look Like by Occupancy?
Occupancy is the first variable that moves your cap. The Fannie Mae Eligibility Matrix sets maximum cash-out LTV by occupancy and unit count. The wholesale programs follow those caps. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
| Occupancy | Max cash-out LTV | Credit starting point | Seasoning |
|---|---|---|---|
| Principal residence, 1 unit | 80% | 620 decision score | 6 months on title; 12-month-old loan |
| Principal residence, 2-4 units | 75% | 620 decision score | Same two clocks |
| Second home, 1 unit | 75% | 620 decision score | Same two clocks |
A rental property carries the same 75% cap on one unit, but this guide is about the home you live in. Occupancy decides the leverage, and the rest of the file follows from it.
Two cautions on the credit column. First, 620 is where the wholesale programs begin. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Second, a lender can set a higher floor than the agencies do. Some lenders do, especially at higher LTVs.
The full score-by-LTV grid for each occupancy lives in the Eligibility Matrix, and it changes as lenders and agencies update it. Check it, or ask your broker for the grid that applies to your file.
How Do Credit Score and LTV Work Together?
Score and LTV rarely block you separately. They combine. A strong score does not raise the cap, but it does improve the pricing and the automated finding at a given LTV. A weaker score near the cap is where files get stuck.
Picture two borrowers at the same LTV on the same type of home. The one with the higher score usually sees lower pricing adjustments and fewer questions. The one near the 620 floor may see a stricter automated finding, a request for reserves, or a lender overlay that trims the leverage.
When two people are on the loan, the lender picks one qualifying score. On most files, the lender takes the middle score from each borrower’s credit reports and works from the lowest of those. Adding a co-borrower with a thin or damaged file can pull the whole file down. Ask before you add someone to the loan for income alone.
Mortgage insurance is the other piece tied to LTV. It is required above 80% LTV. You can ask to cancel it at 80% of the original value, with good payment history, no second liens, and no drop in value. The servicer must end it automatically at 78%. Cash-out loans at the standard cap sit at or below 80%, so insurance usually is not part of the picture. One wholesale lane goes above that cap, and it is covered below.
Beyond the Score: What Else Do Underwriters Check?
Underwriters read the whole credit file, not just the number.
- Payment history. Recent late payments, especially on a mortgage, draw more attention than an old blemish.
- Credit events. The agencies set waiting periods: 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 these.
- Debt-to-income. The total ratio ceiling on the automated programs is 50%. Manual underwriting uses 36% or 45%, with reserve and score factors from the matrix.
- Reserves. When your ratio runs high, the Fannie Mae Selling Guide calls for cash reserves on the file. Thin savings can sink an otherwise clean cash-out.
- Listing status. If the home was listed for sale, it must be off the market by the time the loan disburses.
Agency Rules vs. Lender Overlays
An agency rule is a limit set by Fannie Mae or Freddie Mac. An overlay is a stricter rule a lender adds on top. Many articles blur the two, and borrowers end up confused when two lenders give different answers.
The 80% and 75% caps are agency maximums. A lender may choose a lower cap for certain property types or lower scores. That is a lender choice, not a rule, so a no from one lender is not always a no from another. That is where a broker earns the role: the same file can be placed with a lender whose overlays fit it.
Freddie Mac’s Guide section on cash-out refinances adds its own wording. For a primary-residence cash-out, every borrower on the loan must occupy the home. Its tables can differ from Fannie Mae’s, so confirm the current figures with a lender rather than relying on memory.
Where Does the General Rule Bend?
The caps and clocks above hold for most files. These are the named cases where they shift.
Two seasoning clocks. You need at least one borrower on title for six months. Separately, the first mortgage being paid off must be at least 12 months old, counted note date to note date. Fannie Mae’s Selling Guide Announcement SEL-2023-01 describes the 12-month clock as an addition to the six-month one. Freddie Mac applies a similar test, with listed exceptions such as certain co-owner buyouts.
Delayed financing. Buy a home with cash and you may be able to take cash out within the first six months. The original purchase must be arm’s-length, and the lender documents where the purchase funds came from. The title must show no liens.
Inheritance and legal awards. Title gained by inheritance or through a divorce or legal award can be treated differently from a normal purchase. Ask your lender how the current guide handles your case.
The higher-leverage wholesale lane. 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, a conforming loan balance, and six months of seasoning. It is not written on a Texas homestead, where the state constitution caps cash-out at the agency figure. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Property type. Lower limits can apply to certain condos. Manufactured homes carry a lower cash-out cap, and some other property types are restricted as well.
Back-to-back refinances. Agency rules restrict refinancing the same property twice in a short window. Sequence your steps before you apply.
Occupancy that changes. If a home you called a second home is rented out, a lender can reclassify it. That drops your cap and reprices the loan. State your real use on the application.
Three Borrower Profiles
These examples use percentages of value, not dollars. They are illustrations, not approvals.
Profile A: primary home, one unit. The balance is 60% of appraised value. The cap is 80%. That leaves about 20 points of value as the maximum new cash before costs and pricing adjustments reduce it.
Profile B: owner-occupied two-unit. The balance is 70% of value. The cap is 75%. The room is only about 5 points, so the cash may not cover the cost of the refinance.
Profile C: second home. The balance is 65% of value. The cap is 75%, so about 10 points of headroom exists. A score near 620 means the pricing and any overlay need a close look.
Profile B is the common surprise. The cap is real, the headroom is thin, and the borrower often figures it out only after the appraisal.
What If You Fall Short?
Most files that miss do so on one of four points. Each has a path.
- Score too low. Pull your reports, dispute errors, and pay down revolving balances. Then reapply. Even modest improvement can change the automated finding and the pricing.
- LTV too high. Borrow less, wait for the balance to fall, or wait for a stronger appraisal. A smaller cash-out amount can still clear the cap.
- Timing off. If a clock has not run, wait. Seasoning only gets better with time.
- Wrong product. If you only want a lower payment or to change the term, a rate-and-term refinance reaches 95% LTV on a one-unit primary home. It does not hand you the same cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Before you borrow, think about the trade. The CFPB’s guide to using home equity notes that a cash-out loan replaces your mortgage with a larger one. Your payment may rise, your payoff may stretch toward 30 years, and the terms reset. No home equity option converts 100% of your equity to cash. Paying other debts with mortgage debt can also raise foreclosure risk if the budget is tight.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
How Does It Compare With FHA and VA Cash-Out?
Conventional is not the only route. FHA and VA cash-out loans use different credit and equity rules, and they can fit borrowers with lower scores or military service. Lendmire’s guide FHA Cash-Out Refinance Rules: Occupancy, Loan-to-Value, and Credit covers the government side. Conventional tends to suit borrowers with solid credit and a clear equity cushion, since it can avoid ongoing mortgage insurance at the standard cap.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
Seasoning: The waiting period before a loan or ownership counts for a refinance.
Overlay: A stricter lender rule added on top of the agency minimum.
Qualifying score: The single credit score the lender uses to price and approve the file.
Pricing adjustment: A charge built into the loan’s terms that depends on score and LTV.
Reserves: Cash or liquid assets left after closing, kept for payments in an emergency.
Delayed financing: An exception that lets you take cash out soon after buying with cash.
Frequently Asked Questions
What credit score do I need for a conventional cash-out refinance?
A 620 decision score is the usual starting point on conventional programs. The higher-leverage no-mortgage-insurance lane asks for 680. Lenders can set stricter floors, so your actual minimum depends on the lender and the file.
Is the cap lower on a second home?
Yes. A second home is capped at 75% LTV, compared with 80% on a one-unit primary home. Two- to four-unit primary homes are also capped at 75%. The score floor does not change by occupancy, but the room you have does. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
How long do I have to own the home before I can cash out?
At least one borrower must be on title for six months. The first mortgage being paid off must also be at least 12 months old. Exceptions exist for delayed financing, inheritance, and legal awards, and they come with documentation.
Can I do a cash-out refinance after a foreclosure or bankruptcy?
Only after the agency waiting period passes. That is 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 these, subject to lender guidelines.
Do I need mortgage insurance on a cash-out refinance?
Mortgage insurance is required above 80% LTV. At the standard 80% cap on a one-unit primary home, it is usually not part of the loan. The wholesale lane that reaches 89.99% LTV is built to carry no mortgage insurance, at a 680 score and the other conditions listed above.
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. Program figures are subject to lender guidelines and a full file review. Nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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 Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Freddie Mac Guide Section 4301.5
4. Fannie Mae Selling Guide Announcement SEL-2023-01
5. CFPB, Using Your Home Equity guide
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: Fannie Mae Cash Out Refinance LTV Investment · Refinance Appraisal Came In High: Can You Borrow More Or Drop PMI Sooner? · Conventional Refinance Debt-to-income Limits: 45%, 50% And The Compensating Factors
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.