The Quick Read: On a conventional loan, a cash-out refinance on a one-unit primary home generally tops out at 80% loan-to-value (LTV), the new loan divided by the home’s appraised value. Two- to four-unit homes, second homes and investment property step down to 75%. You also need a first mortgage at least 12 months old and a borrower on title for 6 months. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Key Takeaways
- Occupancy and unit count set the leverage cap, and the appraisal sets the ceiling in dollars.
- Two seasoning clocks apply: the loan being paid off and your time on title.
- A cash-out replaces your first mortgage, so the whole balance is reset.
- VA, FHA and conventional loans each follow different rules.
- Borrowing below the cap often leaves you a safer equity cushion.
What Is a Cash-Out Refinance?
A cash-out refinance is a new first mortgage that pays off your old one and hands you the difference in cash. You borrow more than you owe. The gap, after costs, comes to you.
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: 7.24% as of October 29, 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.
That makes it different from a home equity loan or HELOC. Those sit behind your first mortgage and leave it alone. The CFPB draws the same line: a cash-out loan replaces the original mortgage. Your entire balance gets repriced, not just the new money.
Compare it with a refinance. That loan swaps one mortgage for another and gives you only incidental cash. Lenders call it “limited cash-out.” Across the wholesale programs Lendmire places files with, the limit is 95% LTV on a one-unit primary home. Cash-out leverage is lower because you are pulling equity out, and lenders want a bigger cushion left behind. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Lendmire’s cash-out refinance programs page lays out the options. Lendmire is a mortgage broker, so it arranges these loans through wholesale lenders rather than lending directly.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting follows a fixed order. Each step can shrink the cash you receive.
1. The lender classifies the loan. Fannie Mae’s Selling Guide topic B2-1.3-03 governs cash-out refinances. A refinance that pays off a mortgage and returns more than incidental cash is cash-out. Paying off a free-and-clear home with a new loan also counts.
2. The two seasoning clocks get checked. Seasoning means a waiting period. For conventional cash-out, the first mortgage being paid off must be at least 12 months old, measured note date to note date. At least one borrower must also have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards.
3. Occupancy and property type set the cap. On conventional loans, one-unit primary homes reach 80% LTV. Two- to four-unit primary residences, second homes and investment property reach 75%. Occupancy sets the leverage; it does not decide whether you can do a cash-out at all. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
4. The appraisal fixes the value. LTV is the new loan divided by the appraised value. The maximum loan is the value times the cap. Your cash is that maximum, minus your payoff, minus closing costs.
5. Credit, ratios and reserves are reviewed. The wholesale conventional programs start at a 620 decision score, and 640 on an adjustable rate under manual underwriting. The automated finding governs most files, with a total debt-to-income (DTI) ceiling of 50%. DTI is your monthly debts divided by your monthly gross income. Manually underwritten loans use 36% or 45%, depending on score and reserves. Fannie Mae publishes the detail in its Eligibility Matrix and pricing pages.
6. Pricing adjusts for risk. Cash-out usually costs more than a no-cash-out refinance because lenders price the added risk. Higher LTV and lower credit scores push that cost up. That is a main reason borrowing less than the cap can help.
7. You document the file. Expect income, assets, credit, title and the appraisal. The lender also needs proof of the payoff loan’s note date, which usually comes from the credit report or title commitment.
What the Cash Math Looks Like
You do not need dollar figures to see how this works. Use the formula.
Maximum loan = appraised value × LTV cap. Cash to you = maximum loan − payoff − closing costs.
Picture a one-unit primary home where you owe about half the value. At an 80% cap, the gap between 50% and 80% is your room, before costs. Now say the appraisal comes in several percent low. The value drops, so the maximum loan drops, but your payoff stays the same. A small appraisal miss can eat a large share of your cash.
Two limits can bind. Sometimes it is LTV. Other times it is DTI, because a bigger loan means a bigger payment, and the ratio ceiling stops you first. Reserves or loan-size limits can also bind. Whichever hits first sets your number.
What Do Different Occupancy Types Allow?
| Property use | Conventional cash-out LTV |
|---|---|
| One-unit primary home | 80% |
| Two- to four-unit primary home | 75% |
| Second home | 75% |
| Investment property | 75% |
That is all this article says about rentals. Occupancy sets the leverage, and the rest of the file works the same way.
Texas has its own rule. A cash-out on a homestead is capped at 80% of the home’s value by the state constitution, whatever the property type. Manufactured homes can also face tighter limits under agency rules, so ask early if that applies to you.
Is There a Cash-Out Loan With No Mortgage Insurance?
Mortgage insurance is required above 80% LTV on the agency path, except on the one wholesale lane described here. Cash-out loans normally stop at 80%, so insurance rarely comes up. Across the wholesale programs Lendmire places files with, one lane goes to 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 balance and its own 6 months of seasoning. It is not written in Texas. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
Mortgage insurance, where it applies, can be cancelled at your request at 80% of the original value with a good payment history, no subordinate liens and no drop in value. The servicer must end it automatically at 78%. Programs are subject to lender guidelines.
Where Does the General Rule Break?
Several situations bend the standard timeline or cap.
Delayed financing. If you bought a home with cash, you can skip the 6-month title wait. The loan is still a cash-out and priced as one. Per Fannie Mae’s earlier guide text, the lender documents your original purchase, and the new loan is capped at your documented investment plus certain costs. Confirm the current version with your lender.
Student-loan cash-out. Fannie Mae allows a version where the cash goes to pay off student debt. The standard LTV limits apply. Cash back to you is limited to the lesser of 1% of the new loan or $2,000.
Co-owner buyouts. Buying out a co-owner under a written agreement is treated as limited cash-out at both agencies, not full cash-out.
Recent buyers and recent refinancers. The 12-month note-to-note rule can block you. If you refinanced last spring, the clock restarts on the new loan.
Government loans. VA is the standout. A VA cash-out can reach well beyond the conventional cap, with financed fees counted inside the limit on reasonable value, per VA Circular 26-19-05. All VA cash-outs must show a net tangible benefit, and many lenders set their own lower caps. For the full picture, see Lendmire’s piece VA Cash-Out Refinance Eligibility and LTV Limits for Veterans.
FHA also offers a true cash-out, but the FHA Streamline is not one. HUD’s streamline page limits cash back to $500. The VA IRRRL is likewise a streamline for existing VA loans, not a cash-out route.
Program Rules at a Glance
| Program | Cash-out available? | Key limit |
|---|---|---|
| Conventional | Yes | 80% one-unit primary; 75% otherwise |
| VA cash-out | Yes | Above conventional; fees count inside the limit |
| FHA Streamline | No | $500 cash cap |
| VA IRRRL | No | Streamline only |
What Should You Weigh Before Deciding?
The decision is rarely about whether you qualify. It is about whether the trade makes sense.
First, your whole mortgage resets. If your current loan carries terms you like, a cash-out gives them up. A HELOC or home equity loan leaves the first mortgage alone, which can matter a great deal.
Second, the payment may rise and the payoff may stretch longer, because the loan is bigger. The CFPB’s equity guide also notes that lenders typically want you to keep 10% to 20% of the home’s value as equity. Treat the cap as a ceiling, not a target.
Third, think about what the cash is for. The CFPB’s report on cash-out borrowers found paying off other debts was the most common reason. Paying off a card with your house only works if the card stays paid off.
Here is how lender practice looks from the broker’s side. Many files that stall are not credit problems. They are timing problems: a recent purchase, a loan only ten months old, or an appraisal that lands under the number the borrower had in mind. Checking both seasoning clocks and your realistic value before you apply saves the most frustration.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
Seasoning: The waiting period a lender requires, such as how long a loan or title has existed.
Limited cash-out refinance: A refinance that replaces your loan and gives you only small incidental cash.
Net tangible benefit: A test showing the refinance clearly improves your position, required on VA cash-outs and FHA and VA streamlines.
Delayed financing: A cash-out exception for buyers who paid cash and want to borrow against the home soon after.
Pre-Application Checklist
1. Find the note date on your current first mortgage.
2. Confirm how long you have been on title.
3. Estimate your value, then plan for a lower appraisal.
4. Subtract your payoff and expected costs from the 80% or 75% maximum.
5. Total your monthly debts to see whether DTI could stop you first.
6. Decide what the cash is for, and whether a HELOC fits better.
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
How much equity can I take out of my home?
On a conventional loan, up to 80% LTV on a one-unit primary home and 75% on two- to four-unit homes, second homes and investment property. VA can reach higher, with fees counted inside the limit. Lenders also commonly want you to keep some equity, so the practical amount is often lower.
How long do I have to own my home before a cash-out refinance?
Conventional loans generally need a borrower on title for 6 months. The first mortgage being paid off must also be at least 12 months old. Delayed financing, inheritance and legal awards are exceptions.
Does a cash-out refinance need an appraisal?
Typically yes. The appraised value sets your maximum loan, so a low appraisal shrinks your cash directly. FHA and VA streamlines can skip the appraisal, but they do not provide cash-out.
Will a cash-out refinance affect my credit?
Applying triggers a credit check, and the new, larger loan replaces your old one. Results vary by borrower.
Can I use a cash-out refinance on a second home or rental?
Yes. Occupancy sets the leverage: second homes and investment property are capped at 75% on conventional loans, below the primary-home figure.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. 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. CFPB
2. Fannie Mae Selling Guide B2-1.3-03
3. Fannie Mae Eligibility & Pricing
5. HUD Single Family Streamline Refinance
6. CFPB Older Americans housing guide
7. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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 Requirements for a Divorce Buyout · Cash-Out Refinance Document and Appraisal Requirements · Cash-Out Refinance Requirements for First-Time Borrowers
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
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.