The Quick Read: A cash-out refinance lends based on your home’s appraised value, the program’s maximum loan-to-value (LTV), and what you still owe, not on what the project costs. On a one-unit primary residence, conventional cash-out tops out at 80% LTV. Subtract your current payoff and closing costs from that ceiling, and what remains is your cash. If the project costs more than that number, the loan does not stretch to cover it. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
The formula in one line: appraised value × maximum LTV − existing payoff − closing costs = cash in hand.
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: 7.18% as of November 5, 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.
Key Terms Defined
As-is value: What the appraiser says the home is worth today, before any work is done.
Maximum LTV: The largest new loan a program allows, stated as a percentage of the home’s value.
Payoff: The balance on your current first mortgage, plus any liens the new loan must clear.
Gross cash vs. net cash: Gross is the room under the LTV ceiling after payoff. Net is what reaches you after closing costs and other items come out.
Limited cash-out refinance: A refinance that pays off the old loan and costs, with only a small amount of cash back. Lenders also call it rate-and-term.
How Is the Maximum Cash-Out Amount Calculated?
Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The new loan can be no larger than the appraised value times the program’s LTV cap. Everything else comes out of that ceiling first.
For a conventional cash-out refinance across the wholesale programs Lendmire works with, the caps are 80% LTV on a one-unit principal residence and 75% on two- to four-unit principal residences. Second homes and investment properties are also capped at 75%, so occupancy sets the leverage. Fannie Mae’s eligibility matrix is the agency reference for these limits. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
A common misread: 80% does not mean you get 80% of your home’s value in cash. It caps the whole new loan. Your existing mortgage is paid from it first. Then closing costs. Cash is what is left.
Picture a homeowner with a one-unit primary residence and a fairly small mortgage balance. At 80% LTV, a large share of that ceiling is still open. Now picture a homeowner who bought with 5% down several years ago and has paid the balance down only modestly. At the same 80% ceiling, the open room is thin. Same formula. Very different cash. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Does the Lender Use Today’s Value or the Finished Value?
Standard cash-out uses today’s value. The appraiser values the home as it stands, so a kitchen you have not built yet adds nothing to the number. This is a common reason projects come up short.
The exception is a renovation product. Fannie Mae’s HomeStyle Renovation is available only on a purchase or a limited cash-out refinance, and it sizes the loan against the “as completed” value. On a refinance, the renovation cost is capped at 75% of that as-completed value. The Selling Guide section on HomeStyle adds that do-it-yourself work cannot exceed 10% of the as-completed value, and leftover funds after the work can go to the loan balance or reimburse documented costs.
It is not a cash-out. You do not get a lump sum to spend. Money is released against the renovation plan. A borrower who wants flexible cash for a project and a borrower who wants a renovation-specific loan are using different tools.
How the Loan Is Sized, Step by Step
Work the numbers in this order before you talk to anyone.
1. Get contractor bids and add contingency. Take the highest credible bid and add a cushion for overruns. Projects drift. Plan for it.
2. Estimate today’s value. Use recent sales of similar homes nearby, but expect the appraisal to be the final word.
3. Apply the LTV cap for your occupancy and unit count. 80% for a one-unit primary residence, 75% for two to four units.
4. Subtract your payoff. Include any second lien or HELOC that must be cleared.
5. Subtract closing costs. They come out of proceeds unless you pay them separately.
6. Compare the result to your budget. That is your net cash against your target.
Underwriting is full documentation: income, assets, credit and debt-to-income. The wholesale conventional programs start at a 620 decision score, with the automated finding governing most files and a total ratio ceiling of 50%. Manually underwritten loans run at 36% or 45% depending on reserves and score factors. These are guidelines subject to lender review, not promises.
Three Scenarios: Fit, Tight Fit, Shortfall
Percentages tell the story better than dollars here.
| Scenario | Equity position | Project vs. available cash | What happens |
|---|---|---|---|
| Comfortable fit | Low balance, big gap under the cap | Budget plus contingency fits | Proceed |
| Tight fit | Moderate balance | Budget fits, contingency does not | Trim scope or phase work |
| Shortfall | Balance already near 80% | Budget exceeds room under cap | Change product or reduce project |
In the tight case, the appraisal decides everything. A modest miss on value can turn a tight fit into a shortfall, because the cap moves with value. A lower appraisal shrinks the ceiling, and the payoff stays the same.
What If the Appraisal Comes In Low?
You have four honest options. Ask for an appraisal reconsideration with recent comparable sales the appraiser may have missed. Trim or phase the project so it fits. Switch to a different product. Or wait and build more equity.
A reconsideration is routine. Give the lender specific sales, not opinions. It does not always change the number.
Does Closing Cost Reduce My Cash?
Yes. A cash-out is a new first mortgage, so closing costs apply, and the Consumer Financial Protection Bureau notes you often pay them. If they come out of proceeds, they shrink your net cash. You also get a Loan Estimate and a Closing Disclosure, so the final figures are in writing before you sign.
Do not size the project to gross cash. Size it to net.
Where the General Rule Breaks
Seasoning. The first mortgage being paid off must be at least 12 months old (note date to note date), and a borrower must have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards. Freddie Mac’s Guide section 4301.5 sets the six-month title rule.
Free-and-clear homes. A new loan on a home with no mortgage is a cash-out. Freddie’s renovation and energy products are the exception, treated as no cash-out when proceeds fund only eligible work.
Manufactured homes. Freddie does not allow cash-out renovation loans on manufactured homes, and HomeStyle’s refinance cap drops to 50%.
Texas. A cash-out on a homestead is capped at 80% of the home’s value by the state constitution. Other states add their own rules too.
Limited cash-out is not cash-out. Rate-and-term refinances can reach 95% LTV on a one-unit primary residence, but cash back is incidental. Fannie Mae allows the lesser of 2% of the new loan or $2,000. That small amount cannot fund a project. A refinance that fails the limited tests must be treated as cash-out, and paying off a HELOC can flip it, depending on how the HELOC was used. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Government streamlines. The FHA Streamline and VA IRRRL are no-cash-out products. They are for lowering costs on an existing government loan, not for funding work.
VA cash-out. VA allows cash-out on its own terms, and VBA Circular 26-19-05 sets a 100% LTV ceiling with net tangible benefit standards. Lenders may set lower caps. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The No-MI Lane Above 80%
Mortgage insurance is generally required above 80% LTV on the agency path. The wholesale lane is the exception: it reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance, with its own six months of seasoning. Across the wholesale programs Lendmire places files with, this lane is for the owner-occupant who wants more room under the ceiling. It is subject to lender guidelines and full file review, and it is not written in Texas.
Where mortgage insurance does apply, you can request cancellation at 80% of the original value with good payment history, and the servicer must end it at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is a program-sheet range, not a quote.
Cash-Out vs. Other Ways to Fund a Project
Lendmire’s cash-out refinance programs page covers the conventional lane in more detail. Here is how the tools differ.
| Tool | Touches first mortgage? | Best fit |
|---|---|---|
| Cash-out refinance | Yes, replaces it | Large project, current loan not a bargain |
| Renovation loan | Yes, replaces it | Work valued on finished home |
| Home equity loan | No | Fixed one-time cost, keep first loan |
| HELOC | No | Staged costs, uncertain total |
The key question is whether giving up your current mortgage is worth it. A cash-out replaces the whole loan, so the new balance carries the new terms. If your existing loan is a good one, a home equity loan or HELOC may protect it. A cash-out may cost more or less than a HELOC depending on terms, and you own less of your home afterward. Compare your current loan’s terms against the blended cost of the new one. That is the break-even.
What Happens If the Project Costs More Than the Cash?
Phase the work. Cut scope. Use savings for the gap. Or look at a renovation-specific product that values the finished home. Do not borrow to the ceiling just because the room is there. The CFPB’s home equity guide warns a cash-out may extend the time it takes to pay off the mortgage.
Build contingency into the target, but understand it eats leverage. Every dollar of cushion is a dollar borrowed against equity.
Qualification Checklist
- Appraised value that supports your cash need under the cap
- Decision score at or above the program floor
- Total debt ratio within the program ceiling
- Income and asset documents ready
- Seasoning on the current loan and on title
- Payoff statements for every lien to be cleared
- Contractor bids in hand, with contingency
Pros and Cons
Pros: One loan, one payment. Cash for any use. Possibly a different term on the whole balance.
Cons: A bigger balance. A replaced first mortgage. Closing costs. Less equity afterward.
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.
Frequently Asked Questions
Can I borrow 100% of my equity?
No on conventional cash-out. The ceiling is 80% LTV on a one-unit primary residence, and your payoff and costs come out of that first. VA cash-out can reach 100% LTV, though lender overlays are often lower.
Will the lender lend what my project costs?
Not on a standard cash-out. The loan is sized from value and LTV, not the budget. Renovation products work differently, tying the amount to the as-completed value and the renovation rules.
Can I use an FHA Streamline or VA IRRRL for a project?
No. Both are no-cash-out products meant to refinance an existing government loan. For project cash you would look at a cash-out program.
What if my home needs repairs before I refinance?
The appraiser values it as it stands, so condition can pull value down and shrink the ceiling. A renovation product values the finished home and may suit a home needing significant work better.
Does paying off my HELOC change the loan?
It can: depending on how the HELOC was used, paying it off can make the refinance a full cash-out rather than a limited one, which lowers the leverage ceiling.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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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 Eligibility Matrix
2. Fannie Mae HomeStyle Renovation
3. Fannie Mae Selling Guide B5-3.2-02, HomeStyle Renovation
4. Consumer Financial Protection Bureau
5. Freddie Mac Guide Section 4301.5
6. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance
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 Qualify and Apply for a Cash-Out Refinance in Six Months · How Much a Cash-Out Refinance Gives an S-Corp Owner · How to Pay Out an Ex Without Selling Using a Cash-Out Refinance
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.