The Quick Read: Your income type sets the paper list, and the cash-out part adds a second layer about the property. A salaried borrower sends paystubs and W-2s. A self-employed borrower sends signed traditional personal-income documentation, and a retiree sends award letters plus proof the money lands. Everyone also proves who owns the home, how old the current loan is, and what the home is worth.
The Short List
- Income documents change by borrower type. Property documents mostly do not.
- A conventional cash-out on a one-unit primary residence tops out at 80% loan-to-value. That is the loan balance as a percentage of the appraised value, and the cap includes any lien that stays.
- Two clocks run at once: the time you have been on title and the age of the loan being paid off.
- Most stalls come from mismatches, stale pages, or missing pages. Almost none come from the income itself.
What Is a Cash-Out Refinance, Paperwork-Wise?
A cash-out refinance replaces your current first mortgage with a new, larger one and hands you the difference. The extra paperwork comes from the “larger.” The lender needs proof the home can carry the bigger loan and that the equity is real.
Lendmire arranges these loans through wholesale lenders as a broker. Across the programs it places files with, the pattern is steady. Income documentation drives most of the back-and-forth, and property documentation is routine. The details of Lendmire’s cash-out refinance programs vary by lender, and every figure here is subject to lender guidelines and full file review.
One point surprises people. If you own the home free and clear, the new loan is still a cash-out refinance. No old mortgage to pay off does not change the label.
What Does Every Borrower Send?
Every file starts with the same base, whatever your income type:
- Government photo ID and Social Security number for each borrower.
- Two recent statements for the bank and savings accounts you list.
- Your current mortgage statement, and statements for any second lien or home equity line.
- Homeowners insurance declarations and the property tax bill.
- Statements for any debt you want paid off at closing.
- The HOA contact, if the home has one.
Think of it as the entry ticket. The income documents decide how long the line is.
The cash-out layer adds property-side items. The lender orders the title search, which confirms ownership and every lien. It also orders the appraisal, because appraised value sets the maximum loan. Plan on a full appraisal. Some automated findings allow a waiver at low leverage on certain one-unit homes, but only the system can offer it. You cannot ask for it.
Cash-out does not usually require you to prove how you will spend the money. Eligibility turns on equity and ownership, not on your shopping list.
The Master Matrix: Who Sends What
This table is the centerpiece. Find your row, then read the matching section below. For the longer version of how income types change a file, see Lendmire’s piece on documentation for every income type.
| Borrower type | Usual documents | What the underwriter checks |
|---|---|---|
| Salaried or hourly | Paystubs, W-2s | Job is current and stable |
| Variable pay | Pay history, employer detail | Bonus or overtime will continue |
| Self-employed | Signed returns, all schedules | Business income is steady |
| Newer self-employed | Returns plus prior work history | Same or similar field |
| Retired or on benefits | Award letter, statements | Money arrives and will continue |
| Co-borrower | Own set of documents | Each person’s income is verified |
| Entity-held title | Title and ownership records | Title moves to the borrower |
Salaried and Hourly Borrowers
The underwriter is asking one thing: is this job real, current, and likely to continue?
The lender verifies employment income for every borrower whose income counts. Per the Fannie Mae Selling Guide, the most recent paystub must be dated no earlier than 30 days before the application and show year-to-date earnings. W-2s cover the most recent one or two years, depending on the income type. The guide also says documentation standards are the same whether the loan runs through automated underwriting or is underwritten by hand.
So the packet is simple: current paystubs, W-2s, and the employer’s contact details for a verification. If you changed jobs or had a gap, add a short written explanation. Skip that, and the lender will ask anyway.
Common pitfall: a stub older than the window. Pull a fresh one the week you apply.
Bonus, Overtime, and Commission Earners
Variable pay counts only when it is stable, has a documented history, and is reasonably likely to continue. If your pay structure is moving lower, the lender uses the lower amount. That surprises people who had a strong year followed by a weak one.
Send the same paystubs and W-2s as a salaried borrower, plus the history that shows the pattern. A bonus paid for two straight years reads very differently from one paid once. Employers can also confirm how the plan works. Honestly, the best thing you can do is keep a simple log of what you were paid and when.
Self-Employed Borrowers
The underwriter is asking whether the business earns steady money after expenses. Deposits alone do not answer that, and gross deposits are not income.
The core packet is signed federal returns for the past two years, with all schedules. Business returns may be added, depending on how the business is set up. Ownership of 25% or more means you qualify as self-employed. The business structure matters too: sole proprietor, partnership, LLC, S corporation, or corporation. Each changes what the lender reviews.
Shorter history is possible. Some agency paths accept less than two years of self-employment when the lender documents prior work in the same or a similar field, with a written stability analysis. It is a narrower door, so expect more questions.
Common pitfall: returns that do not match the profit-and-loss statement or the transcript. Reconcile them before submitting.
If your income is better shown by bank deposits than by returns, that is a different, non-agency documentation path with its own terms. This article covers the conventional route.
Retired Borrowers and Benefit Recipients
Retired does not mean undocumented. Current receipt must still be shown. Acceptable proof includes an award letter or benefit statement, an organization statement, a bank or financial account statement, a signed tax return, a W-2, or a 1099.
History rules depend on the income. Fannie Mae’s published guidance says fixed payment streams have no minimum history, while variable streams need 12 months of receipt. Distributions from 401(k), IRA, and Keogh accounts get a continuance test, meaning the lender must see that the money will keep coming. The guide has been reorganized, so lenders will point you to the current topic. Details here move, so confirm them with your loan officer.
A pension and a Social Security award letter together make a clean file. Add the bank statement that shows the deposit. That three-piece packet answers the question before it is asked.
Co-Borrowers, Spouses, and Non-Occupants
Every borrower whose income is used must be verified. That means each person sends their own set of documents. Each person also signs their own tax authorization, unless the automated system has already validated that borrower’s income.
Here is where files go sideways: a spouse is on the loan but their income is not needed. Then their documents may be lighter, though credit and debts still count. If a parent or relative who does not live in the home is added to help with income, a conventional primary-residence cash-out can hit a wall.
Adding or removing someone also changes title and the loan’s mechanics.
Do the Ownership and Loan-Age Clocks Apply to You?
Two separate clocks run on a cash-out. Most people know only the first.
1. Title clock. At least one borrower must have been on title for 6 months.
2. Loan-age clock. The first mortgage being paid off must be at least 12 months old, measured note date to note date.
They run independently. A home you have owned for years can still fail the second test if you refinanced it recently. Documentation for the clocks is simple: the deed and your prior closing records.
Exceptions exist for delayed financing, inheritance, and legal awards. Delayed financing lets a cash buyer pull money out within six months of purchase. It needs an arm’s-length purchase with no mortgage used. The archived Selling Guide text shows it is documented with the settlement statement. A recorded trustee’s deed may substitute. Cash-out pricing and all other cash-out rules still apply.
Where the Rules Bend
Leverage by occupancy. A one-unit primary residence reaches 80% loan-to-value. Two- to four-unit primary residences, second homes, and investment properties cap at 75%. Occupancy decides the number, and that ends the rental question here. Fannie Mae’s Eligibility Matrix publishes the agency grid, and it also shows a lower cap for manufactured housing. Eligibility there is narrow, so check early.
Pricing adjusts with the file. Fannie Mae’s cash-out guide says loan-level price adjustments apply to certain cash-out transactions based on loan-to-value and credit score. In plain words, more leverage and a lower score both cost more. Your Loan Estimate shows the actual terms.
Buying out a co-owner. This is a special-purpose cash-out, and it has its own test instead of the six-month title clock. Freddie Mac’s guide on special-purpose cash-out says the borrower and co-owner must have owned the home jointly for at least 12 months before the application. Inherited interests are exempt. This comes up most often after a divorce or an inheritance. If the home sits in an LLC or similar entity, expect the title to move into your own name.
Other quirks. A student loan payoff cash-out is an option that must be underwritten in the automated system. Paying off a PACE obligation, an energy-retrofit assessment, must be done as a cash-out. Financing delinquent taxes without an escrow account is ineligible. So is paying off an installment land contract.
Limited cash-out is a different product. If you only want to replace the loan and the closing costs, with just incidental cash back, you are in rate-and-term territory. It has higher leverage and lighter seasoning. Taking a second lien that was not part of the purchase converts it to a true cash-out.
Texas. A cash-out on the homestead is capped by the state constitution at the agency figure. The wholesale lane described below is not written there.
One Lane to Know About: 89.99% Without Mortgage Insurance
Across the wholesale programs Lendmire places files with, one lane reaches 89.99% loan-to-value with no mortgage insurance. It has tight conditions: a 680 score, a 50% total ratio, a 30-year fixed rate, a primary residence, a conforming balance, and its own six months of seasoning. It is an exception to the 80% general rule, not a replacement. Fit it against your file, because most borrowers will land on the standard 80% structure.
The standard programs start at a 620 decision score. The automated finding governs most files, and the total ratio ceiling runs to 50%. Those are guideline figures, subject to lender review. A high ratio can also trigger a cash reserve requirement, meaning money left in your accounts after closing.
What Happens After You Sign?
On a primary residence, federal law gives you a right to cancel. The CFPB explains that you have three business days to cancel a refinance. You can waive it only for a bona fide personal financial emergency. In practice, funds are not released until the window closes. Plan your cash needs around that.
Second homes and investment properties sit outside this right, so the window is a primary-residence feature.
Three Sample Packets
These are scenarios, not real borrowers, and none use dollar figures.
The salaried couple. Two W-2 employees, one home, a decade of ownership. Nothing exotic.
The self-employed contractor. Sole proprietor, an LLC taxed as one. Likely extra: a letter explaining a dip in one year.
The retired homeowner. Pension plus Social Security, home owned free and clear. Packet: both award letters, bank statements showing deposits, insurance, tax bill, title information. The loan is still a cash-out, so the 80% cap applies even with no mortgage to pay off.
Why Files Stall, and the Fix
| Problem | Likely cause | Fix |
|---|---|---|
| Return and transcript differ | Amended or late filing | Send the amendment |
| Stub rejected | Too old | Pull a fresh one |
| Statement rejected | Pages missing | Send every page |
| Deposit questions | Mixed accounts | Explain in writing |
| Title issue | Home in an LLC | Transfer to your name |
| Cash short | Liens and costs reduce proceeds | Recheck the balance |
Notice what is missing from that table: the income itself. Paper trouble is far more common than income trouble.
When to Gather What
Before you apply, collect the baseline items, sign the tax authorization, and pull your newest paystubs. After the appraisal, the lender may order updates or ask follow-up questions about liens or deposits. A clean file up front shortens that back-and-forth. Keep every page of every statement, even the blank-looking ones.
Key Terms Defined
Cash-out refinance: A new, larger first mortgage that pays off the old one and gives you the difference in cash.
Loan-to-value (LTV): The loan balance as a percentage of the home’s appraised value.
Seasoning: The waiting period a loan or ownership must age before it qualifies.
Note date: The date you sign the loan’s promissory note.
Right of rescission: Your three-business-day right to cancel a refinance on your primary residence.
Frequently Asked Questions
Do I have to prove how I will spend the cash?
Usually no. Cash-out eligibility turns on equity, ownership, and your income, not on your plans. Debts you ask the lender to pay at closing do need payoff statements, though.
Can I use bank deposits instead of traditional personal-income documentation?
Not on the standard conventional path. Fannie Mae relies on returns and an analysis of the business, not deposits alone. Deposit-based documentation belongs to separate, non-agency programs.
Does a free-and-clear home count as a cash-out?
Yes. A new mortgage on a property with no lien is still a cash-out refinance, so the 80% one-unit cap and the cash-out rules apply.
Can a non-occupying co-borrower help me qualify?
Often not on a primary-residence cash-out.
Will the three-day cancellation window always exist?
The right exists today. Rules can change, so check the CFPB for the current status.
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 stay 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.
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 Selling Guide B3-3.2-01, Employment and Income Documentation
2. Fannie Mae Selling Guide B2-1.3-03, archived text on delayed financing
3. Fannie Mae Eligibility Matrix
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
5. Freddie Mac Guide 4301.6, Special purpose cash-out refinance Mortgages
6. CFPB: Can I waive my right to rescind?
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: Can You Get a Conventional Cash-Out Refinance on a Vacation Home? · Can a Cash Buyer Do a Conventional Cash-Out Refinance in Six Months? · How to Plan a Conventional Cash-Out Refinance in a Divorce Buyout
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.