The Quick Read: The fees on a conventional cash-out refinance for a second home come in two layers: ordinary closing costs, plus an agency risk-based pricing adjustment that is higher for a second home than for the home you live in. The pricing adjustment usually reaches you through the rate or points rather than as a separate line. The maximum loan-to-value is also lower, at 75% on a second home against 80% on a one-unit primary residence, so the same equity yields less cash.
What Counts as a “Fee” Here?
Two different things get called fees, and mixing them up is how borrowers misjudge a quote.
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: 7.40% as of October 15, 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.
Layer one is risk-based pricing. Fannie Mae calls these loan-level price adjustments. Freddie Mac calls them credit fees. They are built from several pieces: a base amount set by credit score and loan-to-value, plus add-ons for traits like second-home occupancy or a second lien on the property. A cash-out loan has its own base grid, separate from a purchase or a limited cash-out refinance. Fannie Mae’s Selling Guide section on cash-out refinance transactions includes the loan-level price adjustments that apply to these loans.
Layer two is ordinary closing cost. Lender charges, the appraisal, title work, recording, prepaid items and escrow deposits. These are the same kinds of costs on any refinance.
Across the wholesale programs Lendmire works with, the first layer is the one borrowers rarely see named. It is folded into pricing. The second layer shows up as itemized lines. Neither layer is quoted here as a price, because the numbers move and depend on your file. The Loan Estimate is where they become real.
Key Terms Defined
Loan-level price adjustment (LLPA): A risk-based charge Fannie Mae applies by credit score, loan-to-value, occupancy and other loan traits.
Credit fee: Freddie Mac’s version of the same idea, published in a grid of loan attributes that add together.
Second home: A one-unit dwelling you occupy for part of the year, suitable for year-round use, that you control and that is not a rental or timeshare arrangement.
Cash-out refinance: A new first mortgage that pays off the existing loan and gives you leftover equity as cash.
LTV (loan-to-value): The new loan balance divided by the appraised value of the home.
Seasoning: How long you have owned the property and how old the existing mortgage is before you can refinance.
Prepaids: Taxes, insurance and interest collected at closing for upcoming periods.
Why a Second Home Costs More Than Your Main Home
Lenders treat a second home as riskier than a primary residence. When money is tight, borrowers tend to protect the home they live in first. The agencies price that difference in directly.
In Fannie Mae’s redesigned pricing matrix, introduced in a 2023 lender letter, “second home” is its own additional row on the cash-out grid. That row steps up as LTV rises. Freddie Mac’s credit-fee exhibit works the same way, with a second-home row and a secondary-financing row, and the fees are cumulative.
So the total adjustment stacks up like this:
1. The base cash-out amount for your credit score and LTV.
2. The second-home attribute.
3. Subordinate financing, if you keep a second lien. This applies when combined LTV exceeds the first-mortgage LTV. The undrawn part of a HELOC is not counted.
4. Any other attributes on the file.
Here is the catch. You rarely write a check for this. A lender can price it as a higher rate, or you can pay points to buy it down. Two quotes can look different on rate while carrying the same underlying cost. Compare them on the same basis: the same rate, the same points, the same cash to you at closing.
The Fee Categories at a Glance
| Fee category | Who charges it | How it usually reaches you |
|---|---|---|
| Risk-based pricing (LLPA / credit fee) | Set by the agency, applied by the lender | Built into rate or points |
| Lender and processing charges | Lender or broker | Itemized on the Loan Estimate |
| Appraisal | Appraiser | Paid at or before closing |
| Title, settlement, recording | Title company, county | Itemized at closing |
| Prepaids and escrow deposits | Taxes, insurance, interest | Collected at closing |
Some of these lines are negotiable and some are not. Title and recording are mostly fixed by the market and the county. Lender charges are where comparison shopping pays off.
How the Loan Is Underwritten, Step by Step
Fees only matter if the loan is reviewed. Here is the path from start to finish.
Step 1: The property must qualify as a second home. Under Fannie Mae’s occupancy rules, a second home is a one-unit dwelling you occupy for some part of the year. It must be suitable for year-round use, and you must have exclusive control. It cannot be a rental or timeshare, and no management firm can control when it is occupied. Rental income can appear on a second home, but it cannot be used to qualify you.
Step 2: The transaction must be a true cash-out. That means the new first mortgage pays off the existing one and you take equity out. It also covers a new loan on a free-and-clear property. Acceptable uses include paying off the existing first mortgage (once it is at least 12 months old), financing closing costs, points and prepaids, paying off other liens, and taking cash for any purpose.
Step 3: Seasoning clocks. Two clocks run. The mortgage being paid off must be at least 12 months old, measured note date to note date. And at least one borrower must have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards.
Step 4: Leverage. Across the conventional programs Lendmire arranges, a cash-out on a second home reaches 75% LTV. A one-unit primary residence reaches 80%. The Fannie Mae Eligibility Matrix lists second homes as one-unit only. Your appraisal sets the value, so it sets the cash. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Step 5: Credit and ratios. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. The Fannie Mae Eligibility Matrix notes on reserves and Community Seconds say minimum reserves apply to automated cash-out refinance files above a 45% ratio. Community Seconds are not allowed on second homes or cash-out refinances. Details on credit are in Lendmire’s piece Conventional Cash-Out Refinance Credit Requirements for a Second Home.
Step 6: Automated underwriting. The loan runs through Desktop Underwriter and needs an Approve/Eligible finding.
Step 7: Pricing. The adjustments above are layered in and the lender issues pricing.
Step 8: Disclosures. You receive a Loan Estimate, which shows the estimated rate, payment and total closing costs. Receiving one does not mean you are approved, and you are not committed to that lender.
How Much Cash Do You Actually Walk Away With?
The cash is what is left after three subtractions. The new loan is capped at 75% of the appraised value. From that you subtract the payoff of your existing mortgage and any other liens. Then you subtract the costs you choose to finance.
Because second-home leverage is lower than primary-residence leverage, the same equity yields less cash. A borrower used to the 80% cap on a main home is often surprised by this.
Picture a homeowner with a second home that has a modest mortgage and meaningful equity. At 75% of value, the loan ceiling sits well below what the same equity would produce on a primary residence. If the borrower rolls closing costs into the loan, each financed cost reduces cash dollar for dollar and raises the balance and the LTV. If the file sits near the cap, financing costs may not be possible at all.
Pay at Closing, Roll It In, or Take It in the Rate?
This is the real decision. There are three ways to handle the cost stack.
| Approach | What it does | The tradeoff |
|---|---|---|
| Pay in cash at closing | Keeps balance and rate lower | Uses cash you may want to keep |
| Roll costs into the loan | Preserves cash on hand | Raises balance and LTV; you pay interest on it |
| Take a higher rate in place of points | Reduces cash due at closing | Costs are built into the rate for the life of the loan |
You will see “no closing cost” refinances advertised. The costs are not gone. They are built into the rate or the balance. The question is how long you will keep the loan. If you plan to hold it a long time, paying costs up front usually wins. If you might refinance or sell soon, building them into the rate can be cheaper overall. This one is a genuine judgment call, and it depends on your timeline more than on any rule.
Edge Cases Where the General Rule Breaks
Delayed financing. If you bought the second home with cash, you may not have to wait the full six months on title. Fannie Mae’s guide lists conditions: the purchase was arm’s length, the settlement statement shows no mortgage financing, and the buyer was a person, an eligible trust, or an LLC or partnership wholly owned by the buyer. Here is the common misconception. This waives the wait. It does not make the loan a cheaper rate-and-term refinance. It is still priced as cash-out.
Freddie Mac timing differs. Fannie Mae measures title time to the disbursement date. Freddie Mac measures to the note date. The difference rarely matters, but it can on a tight file.
Combining a second lien. If a refinance rolls an existing first mortgage together with a non-purchase-money second, it is treated as cash-out. The pricing difference between limited cash-out and cash-out is large, so structure matters. Ask how a lender is classifying your loan.
Ineligible situations. Some transactions cannot be done as a conventional cash-out. Examples in Fannie Mae’s guide include loans with a temporary rate buydown and installment land contract payoffs. Check the current guide, since lists like this get updated.
Manufactured housing. This is a narrow lane. Fannie Mae’s manufactured housing product matrix allows a cash-out on a single-width home only as a principal residence. For a second home, it lists only purchase and limited cash-out options. A manufactured second home therefore generally cannot be refinanced as a conventional cash-out, so do not plan around one.
Occupancy accuracy. A property you rent out much of the year may not meet second-home rules. Misstating occupancy affects both pricing and loan eligibility. If your use is mixed, say so up front.
What Else Does It Cost Beyond Closing?
A few costs sit outside the closing statement.
- Reserves. A second home often calls for cash reserves, and the amount rises with the ratio. Those are held-back assets, not fees, but they are a real cash requirement.
- Mortgage insurance. It is required above 80% LTV. Since the second-home cash-out cap is 75%, it generally does not apply to this loan.
- Insurance and escrow. Your new loan sets up fresh escrow deposits, and the old escrow account is refunded after payoff. Expect the timing to create a temporary swing in cash.
- Payment change. Replacing an existing loan resets the term and changes the payment. Review that against your budget, not only the fee total.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
How to Keep Fees Down
1. Compare on the same basis. Ask at least three lenders for a Loan Estimate on identical terms. The form is standard, so offers line up side by side.
2. Hold rate and points constant when you compare lender charges. Otherwise you are comparing different loans.
3. Read the cash-to-you line, not just the rate.
4. Keep leverage under the cap so you are not forced to finance costs.
5. Be exact about occupancy. It drives both eligibility and pricing.
6. Time the application with seasoning in mind. Missing the 12-month or 6-month clock means a denied file, not a higher fee.
A lender may charge only a small credit-report fee before issuing the Loan Estimate, so that is the only cost to expect while you shop.
Cash-Out Refinance or Another Way to Tap Equity?
A cash-out replaces your whole first mortgage. That is a fair trade if your current loan is not one you want to keep. If it is a loan you like, replacing it just to pull cash may not make sense, and a separate second lien may be the better fit. A second lien also triggers the subordinate-financing adjustment if you later refinance the first mortgage. Weigh the fees against how long you will hold the new loan, and against what you would give up by closing the old one. Lendmire’s cash-out refinance programs page lays out how the conventional options compare.
Frequently Asked Questions
Does a second-home cash-out refinance cost more than one on my main home?
Usually, yes. The agencies add a second-home pricing adjustment on top of the cash-out base, and the maximum LTV is lower at 75% versus 80% on a one-unit primary residence. Ordinary closing costs are similar in kind. The difference shows up mostly in pricing and in how much cash you can take.
Can I roll the fees into the new loan?
Often, yes. Financing closing costs, points and prepaids is an acceptable use of a cash-out refinance. Doing so raises your balance and LTV, so it only works if the total stays under the 75% cap. It also lowers your net cash dollar for dollar.
Will I pay mortgage insurance?
Generally not on this loan type. Mortgage insurance is required above 80% LTV, and a conventional second-home cash-out tops out at 75%. Terms vary by lender and file.
Does the Loan Estimate mean I am approved?
No. It is a standardized disclosure of estimated terms and costs, and you are not committed to the lender who issues it. Approval comes only after full file review, subject to lender guidelines.
Can I use rental income to qualify?
No. A second home may earn some rental income, but that income cannot be used to qualify. And if the property is rented in a way that gives someone else control of occupancy, it may no longer count as a second home.
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 current guidelines and terms, see Lendmire’s conventional loan programs page.
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 your own numbers, request a scenario review with Lendmire.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
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
1. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Lender Letter LL-2023-01
3. Freddie Mac Exhibit 19, Credit Fees
4. Fannie Mae Selling Guide B2-1.1-01, Occupancy Types
5. Fannie Mae Eligibility Matrix
6. Fannie Mae Eligibility Matrix (media/20786)
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Conventional Cash-Out Refinance Average Closing Costs on a Second Home · Conventional Cash-Out Refinance Fees for a Primary Home · Can a Conventional Cash-Out Refinance Close at Your Home?
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
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.