The Quick Read: The lender caps the whole new loan, not the cash you receive. Your cash is whatever sits between that cap and what you must pay off. On a standard conventional loan for a one-unit primary home, the cap is 80% of the home’s value, so 20% stays behind. Your payoff, any liens and closing costs come out of the room under the cap first.
Key takeaways
- The cap applies to the new loan balance, so 80% does not mean 80% of your home’s value in cash.
- Cash equals value × cap, minus your payoff, minus costs.
- Occupancy, unit count and loan type change the cap.
- Low equity can mean zero cash, and a low appraisal shrinks the check.
- All figures here are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
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.
What a Cash-Out Refinance Lends After the Equity Cushion
A cash-out refinance replaces your current first mortgage with a new, larger one. You keep the difference as cash. The new loan pays off the old one, covers closing costs and sends the rest to you.
That is different from a refinance, which only swaps the old loan for a new one on new terms. A rate-and-term loan allows a small amount of cash back, but it is not built to pull equity out.
Lenders do not let you borrow every dollar of equity. They want a cushion left in the home. That cushion is the “minimum equity” in the title. It is simply the flip side of the cap. At an 80% cap, you leave 20% in the house.
Lendmire is a mortgage broker. Its cash-out refinance programs page lays out the options it arranges through wholesale lenders in the 16 states where it offers consumer lending. The leverage differs by program, and so does the cash you can reach.
Key Terms Defined
Loan-to-value (LTV): The new loan balance divided by the home’s appraised value, shown as a percentage.
Equity: The home’s value minus everything owed against it.
Cap: The highest LTV a program allows on the new loan.
Limited cash-out: A refinance that pays off the old loan and costs and returns only a small, set amount of cash.
Seasoning: The waiting period a lender wants between a purchase or an earlier loan and the new refinance.
Mortgage insurance: Coverage the borrower pays for on higher-LTV conventional loans. On the agency path it is generally required when leverage is above 80% LTV, though the wholesale no-mortgage-insurance cash-out lane described below is the exception. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Formula, Step by Step
The math has three steps. Run it before you call anyone.
1. Get the value. The appraisal sets it. The lender applies the cap to the appraised value, not to what you think the home is worth.
2. Multiply value by the cap. That gives the largest new loan allowed. Any lien that stays on the home, such as a second mortgage you keep, counts inside that ceiling.
3. Subtract what must be paid. Take out the payoff of the current first mortgage, any liens being cleared, closing costs and any financed fees. What remains is your cash.
Written out: cash = (value × cap) − payoff − liens − costs.
Here is a modeled example using percentages of value, not dollars. Say your home appraises at 100 units of value. You owe 50 units. At an 80% cap, the largest loan is 80 units. The gross room is 30 units. Closing costs and financed fees then come out of that 30. What reaches you is smaller.
The underwriting still has to pass. The cap is a ceiling, not a promise. Credit, income and the property all get reviewed. More on that below.
What the Check Looks Like at Different Equity Levels
The table shows gross room, before costs, as a percentage of the home’s value. Each row is a different balance owed. The columns are three common caps. These are modeled illustrations, not offers.
| You owe (% of value) | At 75% cap | At 80% cap | At 89.99% cap |
|---|---|---|---|
| 75% | 0% | 5% | about 15% |
| 70% | 5% | 10% | about 20% |
| 60% | 15% | 20% | about 30% |
| 50% | 25% | 30% | about 40% |
| 40% | 35% | 40% | about 50% |
Two things stand out. First, the cash climbs one-for-one as your balance falls. Second, a homeowner who owes 70% has little room at an 80% cap. Costs can eat most of the 10 points left. At a 75% cap, a homeowner who owes 75% has no gross room at all.
That is the break-even point. When your payoff plus costs reaches the cap, there is no cash to pull. A loan at that level is only a rate-and-term refinance in a different wrapper.
The 89.99% column is a special wholesale lane. It is covered in the edge cases below.
What Shrinks Your Cash
Four things take bites out of the gross room.
Your payoff. The old first mortgage is paid first. This is the biggest item.
Other liens. A second mortgage or HELOC you pay off at closing comes out of the same room. One you keep counts toward the ceiling.
Closing costs and financed fees. Rolling costs into the loan raises the balance, and the cap still applies. Every point of cost is a point less cash.
A low appraisal. This one surprises people. Run it with the same example: you owe 50 units and expected a value of 100. The appraisal comes in at 95. At an 80% cap, the largest loan drops from 80 units to 76. Gross room falls from 30 to 26. You lose four units of cash because the value dropped, even though nothing about your debt changed.
You can also reverse the math to find the value you need for a target amount. Say your payoff, costs and target cash add up to 100 units. At an 80% cap, you need a home valued at 125 units. At a 75% cap, you need about 133 units. The cap does a lot of work here.
One more detail on rounding. A cash-out on a one-unit principal residence is capped at 80%, and Freddie Mac’s Guide sets that figure. The 75% cap in the table applies to two- to four-unit principal residences, second homes and investment property. Ratios round up to the next whole number, so 94.01% becomes 95%. The same logic means a loan that lands barely over a cap can fail the test. Build in a small cushion.
How Much Equity Stays Behind, by Program
The leave-behind equity depends on the program. These are the caps for the main paths.
| Program | Cap on the whole new loan | Equity that stays |
|---|---|---|
| Conventional, one-unit primary home | 80% | 20% |
| Conventional, 2–4 unit primary, second home, investment property | 75% | 25% |
| Wholesale no-MI lane (conditions below) | 89.99% | just over 10% |
| FHA cash-out | 80% of Adjusted Value | 20% |
| VA cash-out | Up to 100% of reasonable value, fee included | Lender-set; often more |
| Texas homestead cash-out | 80% | 20% |
Conventional. The Fannie Mae Eligibility Matrix lists 80% for a one-unit principal residence cash-out and 75% for two- to four-unit principal residences. It also lists 75% for a one-unit second home. Occupancy sets the leverage. A cash-out can be written on a primary home, a second home or an investment property, and the cap steps down from 80%.
Compare that to a limited cash-out on a one-unit primary home. The same matrix shows 97% on a fixed rate and 95% on an adjustable. That gap is why cash-out is treated as the riskier loan.
FHA. HUD’s Mortgagee Letter 2019-11 cut the maximum LTV on FHA cash-out refinances from 85% to 80%. The 80% is measured on Adjusted Value, not simply the sale price or raw appraisal. HUD said it wanted stronger equity positions. If a page tells you FHA cash-out goes to 85%, it is out of date.
VA. VBA Circular 26-19-05 says VA will not guaranty a refinance when LTV exceeds 100%. A financed funding fee cannot push the loan above the property’s reasonable value. So VA’s ceiling is 100% including the fee. Many lenders set a lower limit of their own. Net tangible benefit standards apply to every VA cash-out.
Jumbo. Above the conforming limit, individual investors set their own cash-out limits. Those limits are lower. Ask for the specific guideline on your file.
Where the General Rule Breaks
The 80% rule is the starting point. Several cases bend it.
The Wholesale Lane That Leaves Less Behind
Across the wholesale programs Lendmire places files with, one lane reaches 89.99% LTV with no mortgage insurance. It has tight conditions: a 680 score, a 50% total ratio, a thirty-year fixed rate, a primary residence, a conforming balance and its own six months of seasoning. That lane is the one exception to the mortgage-insurance rule, which otherwise applies above 80% on the agency path. It is not written in Texas. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Limited Cash-Out Is Another Product
Rolling closing costs into the balance does not make a loan cash-out. A limited cash-out allows only incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan or $2,000. Freddie Mac’s is the greater of 1% of the new loan or $2,000. Go past the limit and the loan is reclassified as cash-out, and the lower cap applies. Leverage on a one-unit primary home reaches 95%, or 97% where the existing loan is agency-owned and the first-time-buyer program allows it.
Delayed Financing
A cash buyer can refinance without first meeting the usual six-month title requirement. Fannie Mae’s Selling Guide names this exception. The loan is still cash-out. It carries cash-out pricing and the cash-out cap. The file needs the original settlement statement and proof of where the purchase funds came from.
Streamlines Are Not Cash-Out Tools
An FHA Streamline refinances an existing FHA loan with no appraisal and limited credit review. It needs a net tangible benefit. A VA IRRRL does the same for an existing VA loan, with no VA appraisal, a 0.5% funding fee unless exempt, and seasoning of the later of 210 days and six payments. If you want meaningful cash from an FHA or VA home, you are looking at a full cash-out instead. An FHA rate-and-term refinance that does use an appraisal reaches 97.75%.
Texas Homestead
In Texas, a cash-out on a homestead is capped at 80% of the home’s value by the state constitution. That is the Section 50(a)(6) loan. It overrides higher program ceilings.
A Second Draw
Taking cash out once does not block a second time, but the new cap still applies to the full balance.
Underwriting Beyond the Cap
Fitting under the cap is only the first test. The lender also checks four things.
Credit. The wholesale conventional programs start at a 620 decision score. Jumbo lanes start higher, at 660. The wholesale no-MI lane needs 680.
Debt-to-income. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run at 36% or 45%, with reserve and score factors from the Eligibility Matrix. The Fannie Mae matrix also notes that minimum reserves apply on cash-out refinances when the automated file shows a ratio above 45%.
Seasoning. The first mortgage being paid off must be at least 12 months old, counted note date to note date. You also need to be on title for six months. Delayed financing, inheritance and legal-award cases are the exceptions.
Documents. Expect a full application, income and asset documents, an appraisal and a payoff statement. VA files also need a Certificate of Eligibility.
Past credit events carry agency waiting periods: 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.
Cash-Out, HELOC, or Wait?
The honest answer depends on what you are replacing. A cash-out swaps your whole first mortgage for a new one. That resets the loan’s rate and term. A HELOC or home equity loan sits behind the first mortgage and leaves it alone.
Consider a few scenarios.
- You hold a loan you like and need a modest amount. A second lien may keep the first mortgage intact. A cash-out would replace a loan you want to keep.
- You want to refinance anyway and also need cash. A cash-out can combine both goals in one loan. Check that the cash left after costs justifies it.
- If the math gives zero or close to it. Waiting may be the better move. A year of principal payments or some appreciation shifts your equity. Re-run the formula then.
Also think about what the money does. A larger balance means a bigger payment, spread over the new term. Cash that pays down other debt only helps if the balances stay down.
Next Step
Start with your payoff, your best estimate of value and the cap for your occupancy type. Plug them into the formula. If the number looks thin after costs, consider a low-appraisal scenario too. 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 cash out 100% of my equity?
No. Programs cap the whole new loan, and on most paths that leaves 20% to 25% of the home’s value behind. The wholesale no-MI lane leaves just over 10%. VA’s federal ceiling is 100% of reasonable value including the funding fee, but many lenders set a lower limit of their own.
Does a second mortgage reduce my cash?
Yes. A second lien that gets paid off at closing comes out of the room under the cap. One that stays in place counts inside the cap, which shrinks the largest new first loan you can take. Either way, the total debt on the home must fit under the program’s ceiling.
What if the appraisal comes in low?
Your cash drops by the cap percentage times the missing value. At an 80% cap, each point of value lost removes 0.8 points of room. A lower value can also push your LTV over a limit. If that happens, you may need to bring cash, take less out or wait and re-appraise later.
Does FHA let me borrow more than conventional?
Not for cash-out. HUD cut FHA’s cash-out cap to 80% of Adjusted Value, which matches the conventional one-unit primary cap. FHA’s value basis is different, though, and FHA adds its own mortgage insurance. Compare the full terms on each Loan Estimate.
How do I find the home value I need for a target amount?
Add your payoff, costs and the cash you want, then divide by the cap. At an 80% cap, you need a value 1.25 times that total. At 75%, you need about 1.33 times. Home value and balance are the two numbers that move the answer most.
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.
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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. Freddie Mac Guide Section 4203.1
2. Fannie Mae Eligibility Matrix
3. HUD Mortgagee Letter 2019-11
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash-Out Refinance vs Home Equity Loan for Repairs Without a Contractor · How Much Cash Comes Out of a Cash-Out Refinance With High Equity and Low Income? · How to Plan and Use a Cash-Out Refinance to Access Cash From Home Equity
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.