The Quick Read: The most cash you can take is set by a leverage cap, not by how much equity you own. On a conventional loan for a one-unit principal residence, that cap is 80% of the home’s appraised value. The formula is: appraised value × the cap, minus what you owe, minus closing costs and financed fees. What is left is your cash. Program details are subject to lender guidelines and full file review.
Key Takeaways
- The appraisal sets the value, and the value sets the ceiling.
- Conventional cash-out tops out at 80% on a one-unit principal residence and 75% on two- to four-unit homes, second homes and investment property.
- Costs and any payoff of a second lien come out of your proceeds before you see a dollar.
- A rate-and-term refinance can reach 95% LTV, but only incidental cash comes back.
- The cap is a ceiling. Credit, ratios, seasoning and appraisal can pull your real number lower. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
What Is a Cash-Out Refinance, Exactly?
A cash-out refinance replaces your current mortgage with a larger one and hands you the difference. You pay off the old loan, pay the closing costs, and keep what remains. The new loan is bigger, so you owe more afterward. That is the whole trade.
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.
Lenders limit how large the new loan can be through the loan-to-value ratio, or LTV. It is the new loan balance divided by the home’s appraised value. At 80% LTV, you must keep 20% of the home’s value as equity. Lendmire’s cash-out refinance programs page lays out the loan options Lendmire arranges as a mortgage broker through wholesale lenders.
Here is the part people miss. The cap applies to the whole new loan, not to the cash. If you owe a lot, most of your allowed loan goes to paying off the old one.
How Does LTV Set Your Maximum Cash?
Your maximum cash is the appraised value times the LTV cap, minus your payoff, minus costs. Run it in order and the number stops being a mystery.
1. Get the value. The lender orders an appraisal. That figure, not your purchase price or your own estimate, is the denominator.
2. Apply the cap. Multiply the appraised value by the program’s LTV limit. That is your maximum new loan.
3. Subtract the payoff. Take out the balance on your current first mortgage. Any second lien you want to clear comes out too.
4. Subtract costs. Closing costs come out of proceeds, or get financed into the loan. Either way, they shrink your net cash.
Picture a home that appraises at an even 100 units of value. At an 80% cap, the maximum loan is 80 units. If you owe 50, you have 30 units of room before costs. Say costs take a few units. You walk away with a bit under 30. That is the gap between “maximum” and “in hand.”
Now watch what an appraisal does. Same loan, same cap, but the home appraises at 95 units. The maximum loan falls to 76. Your room drops from 30 to 26 before costs. A 5% swing in value moved your cash by more than 13%. Appraisals matter more than most borrowers expect, because the cap multiplies the swing.
Which LTV counts: LTV, CLTV and HCLTV?
LTV looks at one loan. Combined LTV, or CLTV, adds any second mortgage on top of the first. HCLTV goes one step further and counts the full credit line on a home equity line of credit, drawn or not. If you have a HELOC, the lender may count the whole line. Tell your loan officer about every lien up front. Surprises here change the math late in the file.
What Are the Cash-Out Refinance Requirements?
Beyond the LTV cap, lenders check credit, ratios, how long you have owned the home, and how you use it. Across the wholesale programs Lendmire works with, these are the main gates for conventional cash-out. Each is subject to lender guidelines and full file review.
| Requirement | Typical standard | How it can limit your cash |
|---|---|---|
| Leverage | 80% LTV, one-unit primary home | Sets the loan ceiling |
| Other occupancy | 75% on 2-4 units, second homes, investment | Lowers the ceiling |
| Credit | 620 decision score to start | Weaker scores narrow options |
| Total ratio | Up to 50% on automated findings | Caps the payment you can carry |
| Loan seasoning | Loan being paid off at least 12 months old | Blocks a recent refinance |
| Title seasoning | On title 6 months | Blocks a recent buyer |
Two details deserve a closer look.
Seasoning is the waiting period before you can cash out. The first mortgage you are paying off must be at least 12 months old, counted from note date to note date. You also generally need to have been on title for 6 months. Exceptions exist for delayed financing, inheritance and legal awards. Delayed financing lets a cash buyer pull money out soon after purchase. It still counts as a cash-out, though. Per the Fannie Mae Selling Guide, delayed financing and student-loan cash-out refinances still get cash-out pricing and must meet the other cash-out requirements.
Credit and ratios work together. Automated underwriting findings govern most files, with a 50% total ratio ceiling. That ratio compares your monthly debts, including the new payment, to your monthly income. Manually underwritten files run tighter, at 36% or 45%, depending on reserves and score factors in the Eligibility Matrix. Prior 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.
Does it have to be your home? No. Occupancy sets the leverage, not eligibility. A principal residence gets 80%, while second homes and investment property get 75%. That is the only rental note this article needs.
Why Is Your Real Number Lower Than the Cap?
Because the cap is only one of several limits, and the tightest one wins. The headline LTV tells you the most a program allows. Your file decides what you can actually use.
Work through these in order and find the binding constraint:
- LTV. Most common. Your balance is already high relative to value.
- Appraisal. A low value cuts the ceiling dollar for dollar, and then the cap multiplies it.
- Ratios. Your income may support a smaller payment than the maximum loan would create.
- Credit. A score near the floor can narrow program choices.
- Seasoning. A loan or title that is too new can stop the file before the math starts.
- Loan size. Above the conforming limit, jumbo lanes take over with their own rules.
- Liens and costs. A second mortgage payoff and financed costs eat into proceeds.
A quick test: if your payoff is small, LTV is rarely your limit. Income usually is. If your payoff is large, LTV binds first. Know which side you are on before you ask for a number.
Does a financed cost count toward the cap?
Yes. Costs you roll into the loan raise the balance, and the balance is what the cap measures. Financing costs do not create extra room. They use room you already had.
What If You Need a Specific Amount?
Work backward. Take your target cash, add your payoff, and add estimated costs. That sum is the loan you need. Divide it by the LTV cap, and you have the appraised value the home must reach.
Say you want your payoff plus a certain cash amount, and the sum equals 70% of the home’s value. At an 80% cap, you clear it with room to spare. If the sum equals 85%, no conventional cash-out program reaches it. You can either borrow less or look at a different path.
Borrowing less than the maximum is often smart. A smaller balance leaves a bigger equity cushion, which matters if values slip. It also keeps your ratios healthier. Honestly, the borrowers who push to the cap are often the ones surprised by a low appraisal. Taking a bit less leaves slack.
Is There a Higher-Leverage Option Without Cash Back?
Yes, but it does not put cash in your pocket. A rate-and-term refinance, also called a limited cash-out refinance, reaches 95% LTV on a one-unit principal residence. It can reach 97% where the existing loan is agency-owned and the first-time-buyer program allows. Fannie Mae’s guidance on 97% LTV options says the option applies to loans Fannie Mae owns, on fixed-rate terms. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
The new loan pays off your first mortgage, closing costs and any purchase-money second lien. Cash back is incidental only. Fannie Mae’s limit is the lesser of 2% of the new loan amount or $2,000. Cross that line and the loan becomes a cash-out, with the lower cap and higher pricing. Buying out a co-owner under a written agreement is treated as limited cash-out at both agencies.
Mortgage insurance applies above 80% LTV on the agency path. You can request cancellation at 80% of the original value with good payment history, no subordinate liens and no decline in value. The servicer must end it automatically 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. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Where Does the General Rule Break?
The 80% cap is a starting point. These cases move it.
- The no-mortgage-insurance lane. One wholesale lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, a conforming balance, and its own six months of seasoning. It is the one exception to the 80% pattern, and to the rule that mortgage insurance applies above 80%.
- Texas homesteads. A cash-out on a Texas homestead, known as a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The no-mortgage-insurance lane is not written there.
- A home with no mortgage. A new loan on a free-and-clear home is still a cash-out.
- FHA cash-out. HUD states the FHA cash-out maximum is 80% of adjusted value for case numbers assigned on or after September 1, 2019. Earlier cases carried an 85% cap. Combined first and subordinate liens are tested too.
- VA cash-out. VA.gov says a VA-backed cash-out can take equity out or move a non-VA loan into a VA loan. You need a Certificate of Eligibility. The loan comes through a private lender. VA sets its own value-based ceiling, and lenders may add limits. VA also warns borrowers to be careful with refinance offers.
- Manufactured homes. Cash-out limits are tighter, and a single-width home is generally not eligible. Confirm with a lender.
- Streamlines. The FHA Streamline and VA IRRRL are for existing government loans. They lower a payment or rate. They do not return equity. The IRRRL carries a 0.5% funding fee unless exempt, requires net tangible benefit, and has seasoning of the later of 210 days and six payments.
Rules change. HUD updates its handbook periodically, so confirm current limits with a lender before you plan around a number.
What Does Cash-Out Cost You?
More than a no-cash-out refinance. Cash-out loans carry pricing adjustments tied to leverage and credit, so conventional cash-out generally costs more than a rate-and-term loan. The Loan Estimate and Closing Disclosure show every cost. Compare total cost across offers, not just the monthly payment.
Three effects matter most:
1. Costs reduce net cash. They come out of proceeds, or you finance them and owe more.
2. The balance grows. More debt is secured by your home. If you cannot repay, the home is the collateral.
3. The payment can reset. A new balance, term or structure changes what you owe each month.
Alternatives exist: a home equity loan, a HELOC, or keeping your current loan and borrowing against equity separately. If your current first mortgage is already well suited to you, a second lien may preserve it. That is a real trade-off, not a footnote.
Key Terms Defined
Loan-to-value (LTV): The new loan balance divided by the appraised value of the home.
Combined LTV (CLTV): The first mortgage plus any second loans, divided by the appraised value.
Seasoning: The waiting period before a loan or ownership counts as old enough to cash out against.
Limited cash-out refinance: A refinance that pays off your loan and costs, with only a small, capped amount of cash back.
Appraised value: The lender’s ordered estimate of what your home is worth, used as the denominator in every LTV test.
Delayed financing: An exception that lets a cash buyer take a cash-out loan inside the usual title wait.
How Do You Prepare Before You Apply?
Start with your numbers, then gather paper. A few steps make the process cleaner.
1. Find your current payoff and list every lien on the home.
2. Estimate value conservatively, then test the formula at a lower value too.
3. Decide how much cash you actually need, and whether less will do.
4. Pull your income documents, asset statements and ID.
5. Check your title and loan dates against the seasoning rules.
6. Compare the Loan Estimate from each lender line by line.
Lendmire is a mortgage broker that arranges these loans through wholesale lenders, so it never lends directly. Nothing here is a commitment to lend, and every figure is subject to lender guidelines and full file review. For a look at the 90%-and-up end of the range, see Lendmire’s piece Cash-Out Refinance Options With a High Loan-to-Value Ratio.
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
Is 100% LTV possible on a cash-out refinance?
No. Conventional cash-out stops at 80% on a one-unit principal residence, and one wholesale lane reaches 89.99% with no mortgage insurance under tight conditions. You always keep some equity. Subject to lender guidelines.
What if my appraisal comes in low?
Your maximum loan falls with it, and cash drops by more than the value gap because the cap multiplies the change. You can borrow less, wait, or ask the lender what documentation a reconsideration needs. Test your numbers at a lower value before you apply.
How long must I wait before a cash-out?
Typically the loan being paid off must be 12 months old, and you should have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist. The no-mortgage-insurance lane has its own six months.
Do closing costs count toward the cap?
Yes, if you finance them. They raise the loan balance, and the cap measures the balance. If you pay them from proceeds, they simply shrink your cash.
Can I use a cash-out to pay off a second lien?
Yes. The payoff comes out of your proceeds, and the combined balance must stay within the cap. A second lien you leave in place is counted in the combined LTV test.
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 Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae FAQs: 97% LTV Options
3. HUD
4. VA.gov, Cash-Out Refinance Loan
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 and Whether the Loan Term Starts Over · Cash-Out Refinance Requirements for a Second Cash-Out Refinance in a Row · Cash-Out Refinance Requirements After a Job Change
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- 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.