The Quick Read: A conventional cash-out refinance on a home you live in usually stops at 80% loan-to-value (LTV), which is the point where mortgage insurance normally stops applying. That is why most primary-home cash-outs carry none. To qualify, you need time on title, an existing loan of the right age, owner occupancy, a decision score and debt ratios the lender accepts, and enough appraised value to leave equity behind. Everything below is subject to lender guidelines and full file review.
Why a Cash-Out Usually Has No Mortgage Insurance
Mortgage insurance protects the lender when you borrow a large share of the home’s value. On conventional loans it is required above 80% LTV. LTV is the new loan balance divided by the appraised value. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
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.
A conventional cash-out on a one-unit primary home generally caps at 80% LTV, per the Fannie Mae Eligibility Matrix. So the cap and the insurance trigger sit at the same line. Stay at or under 80%, and insurance is typically not part of the deal.
That is an outcome of the math, not a separate rule that says “cash-out loans are exempt.” Hold that thought, because it explains where the “no mortgage insurance” idea breaks down. Government programs and higher-leverage lanes work differently, and later sections cover them. For a wider look at when insurance applies on a cash-out, see Lendmire’s piece Do You Pay Mortgage Insurance on a Cash-Out Refinance?.
Lendmire arranges these loans through wholesale lenders as a mortgage broker. Its cash-out refinance programs run through the same agency framework described here.
Key Terms Defined
Cash-out refinance: a new first mortgage that pays off your old one and gives you the leftover equity as cash, with no limit on how you use it.
Rate-and-term (limited cash-out) refinance: a new loan that pays off the old first mortgage and closing costs, with only incidental cash back to you.
LTV (loan-to-value): the new loan amount divided by the home’s appraised value.
Seasoning: the waiting period a lender requires, either on how long you have owned the home or how old your current loan is.
DTI (debt-to-income, or “total ratio”): your monthly debts divided by your gross monthly income.
Reserves: money left in your accounts after closing, counted in months of housing payments.
Decision score: the credit score the lender uses to decide eligibility.
The Requirements Stack
Think of the requirements as gates. You must clear every one. Here they are side by side for a conventional cash-out on a principal residence.
| Gate | The standard | Where files trip |
|---|---|---|
| Leverage | 80% LTV, one unit | Appraisal comes in low |
| Units | 75% LTV on two to four units | Assuming the one-unit cap applies |
| Loan age | Existing first mortgage 12+ months old | Refinanced recently |
| Title time | Borrower on title 6 months | Recent purchase or transfer |
| Occupancy | Principal residence | Co-borrower doesn’t live there |
| Credit | 620 decision score on most wholesale programs | Score just under the line |
| Ratios | Automated finding governs; 50% total ratio ceiling | Debts higher than expected |
The wholesale conventional programs we place files with start at a 620 decision score. The automated underwriting finding governs most files. Manually underwritten loans use tighter ratios of 36% or 45%, tied to score and reserve factors. Fannie Mae also applies reserves to cash-out loans when DTI is above 45%, per the matrix cited above.
Credit and ratios are usually known in advance, because you can look up your score and add up your debts. Value and timing are not known until the appraisal comes back and the lender counts the clocks.
How Much You Can Borrow (Step by Step)
Your cash comes from a short chain of steps. Walk through it with percentages and you will see the result before any lender does.
1. Get the appraised value. The appraisal sets the number everything else hangs on.
2. Apply the cap. For a one-unit primary home, take 80% of that value. That is the largest new loan.
3. Subtract the payoff. Your existing first mortgage is paid off from the new loan.
4. Subtract closing costs. Costs apply to the whole new loan, and they come out of the same room.
5. What remains is your cash. If the number is small or negative, the refinance does not produce meaningful cash.
The cap applies to the total new loan, not to the cash you receive. A home with a low balance leaves a lot of room. A home bought recently with a small down payment may leave almost none. Lendmire’s article How Much Down Payment a Primary Home Cash-Out Refinance Creates shows how that equity math plays out.
Picture a homeowner whose current loan already sits near 70% of the home’s value. The 80% cap leaves a modest gap, and closing costs eat into it. Compare that with a homeowner who owns the home free and clear, who typically has far more room under the same cap.
Pulling every last dollar is rarely wise. Lenders typically expect you to keep some equity, and the CFPB’s home equity guide for older adults notes lenders commonly want 10% to 20% left. A bigger balance also means a larger payment and a longer path back to full ownership.
Seasoning: The Two Clocks
Two separate waiting periods apply, and they answer different questions.
The title clock. The lender wants to know you have owned the home for a real stretch. Every borrower on a cash-out must also occupy the home, and a free-and-clear home is treated as a cash-out too.
The loan clock. The first mortgage being paid off must generally be at least 12 months old, counted from note date to note date. This stops borrowers from cashing out right after a purchase or a recent refinance.
Why two clocks? One guards against flipping and quick equity grabs. The other guards against churning loans. You can pass one and fail the other. A person who has owned a home for ten years but refinanced four months ago fails the loan clock.
The standard exceptions are delayed financing, inheritance and legal awards. Delayed financing covers a home bought with cash. The lender must see proof that no mortgage money was used for the purchase, per Fannie Mae’s cash-out section. Treat the exact conditions as something your loan officer confirms against the current guide.
Occupancy: Who Has to Live There
A cash-out on a primary home means you live in it. That catches families who add a parent or adult child as a co-borrower for help with income. If that person does not live in the home, the file changes.
Other occupancy edge cases come up often:
- Moving soon after closing. A loan written as a primary residence assumes you intend to live there. Plans to relocate shortly after closing deserve an honest conversation before you apply.
- Two- to four-unit homes. If you live in one unit, the home can still be a primary residence, but the cash-out cap drops to 75%.
- Second homes and rentals. Occupancy decides the leverage there, and the same 75% cap applies. Those are different loans, so this article stays on the home you live in.
The Exception Lane: Up to 89.99% With No Mortgage Insurance
Here is the one place the “80% means no insurance” logic bends. Across the wholesale programs we place files with, one lane reaches 89.99% LTV with no mortgage insurance. The conditions are tight. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
- A 680 decision score.
- A 50% total ratio.
- A thirty-year fixed rate.
- A primary residence with a conforming loan balance.
- Its own six months of seasoning.
It is not available everywhere. In Texas, a cash-out on a homestead is capped by the state constitution at the agency figure, so this lane is not written there. It is also not a rule of the market. It is one program with a defined box, and a file that falls outside the box falls back to the 80% cap.
This lane is the answer to a question the standard rules leave open: what do you do if you are close to the line? Sometimes the answer is a lane built for it. Sometimes the answer is borrowing less.
Where the General Rule Breaks
Several situations look like “no mortgage insurance” but are not. Sort them out before you plan around one.
| Your structure | Mortgage insurance? | Why |
|---|---|---|
| Conventional cash-out, one unit, 80% LTV | Typically none | At or under the 80% line |
| Rate-and-term (limited cash-out) above 80% | Yes | Higher cap brings insurance back |
| Conventional wholesale lane to 89.99% | None, if you fit the box | Program feature, tight conditions |
| VA cash-out | No private mortgage insurance | Funding fee may apply |
| FHA cash-out | FHA mortgage insurance applies | Government premium on the new loan |
Rate-and-term is not a cheaper route to cash. The limited cash-out cap is far higher, at 95% LTV on a one-unit principal residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows. Per Fannie Mae’s guide on limited cash-out, it replaces the existing first mortgage, and only a purchase-money second lien can be rolled in. Mortgage insurance applies above 80%. The goal there is a better loan, not cash.
VA cash-out. The VA says an eligible owner-occupant can borrow up to 100% of appraised value with no private mortgage insurance, according to the VA’s cash-out page. The old loan does not need to be a VA loan. The catch is that a funding fee generally applies unless you are exempt. Individual lenders also often set their own lower caps and higher credit floors than the VA itself.
FHA. An FHA cash-out carries FHA mortgage insurance, so it does not fit the no-insurance goal. The FHA Streamline is a separate product for people who already hold an FHA loan. It lowers the payment, requires a net tangible benefit, and gives no meaningful cash back, per HUD‘s handbook chapter on Streamlines. The VA’s IRRRL works the same way for existing VA loans. Both are rate-and-term tools, not cash-out tools.
Jumbo. Above the conforming limit, jumbo lanes take over with their own score and leverage standards. The conforming-loan lane described above does not carry over.
Credit, Income and Documents
A decision score of 620 is the floor on most wholesale conventional programs, though a higher score opens the 89.99% lane and tends to improve the file. A recent bankruptcy, foreclosure or short sale adds a waiting period set by the agencies. Four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed in lieu are the standard periods. Documented extenuating circumstances can shorten them.
The document set is the normal full package:
- Pay stubs and other income documents the lender requests
- Recent bank and asset statements
- A payoff statement for your current mortgage
- Proof of homeowners insurance
- A title commitment for the new loan
Existing second liens must be paid off or subordinated, if the program allows it. A home-equity line sitting behind your first mortgage is the usual surprise here.
Is Cash-Out the Right Tool?
Compare your options before you decide. Each one trades something.
| Option | Replaces your first mortgage? | Best fit |
|---|---|---|
| Cash-out refinance | Yes | Large sum, willing to reset the loan |
| Rate-and-term refinance | Yes | Better terms, no real cash |
| Home equity loan or line | No | Smaller sum, keep current first loan |
If your current first mortgage is one you want to keep, a second lien may fit better than replacing it.
The CFPB found that borrowers most often use cash-out money to pay off other debts, with home repairs second, according to the CFPB’s cash-out report. The same research warns of a real tradeoff. Moving credit card or auto debt into your mortgage puts your home behind it. Missing a card payment hurts your credit. Missing a mortgage payment can cost you the house. The 2025 CFPB paper on paydown behavior makes that point directly.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
If You Don’t Qualify
Most failed files miss on one gate. Match the fix to the gate.
- Appraisal short. Borrow less, wait, or pay down the current balance. Cash-out math follows value, not wishes.
- Seasoning short. Wait until the clock runs. Check the exceptions first, since inheritance or a cash purchase may change the answer.
- DTI too high. Pay off a monthly debt or add qualifying income. Past 45% DTI, reserves also come into play.
- Score too low. A few months of lower card balances often moves the score further than anything else.
- Need above the cap. Ask about the 89.99% lane if you fit its box. If not, a second lien or a smaller project may be the honest answer.
What Happens, Start to Finish
The process runs in a predictable order. You apply and the lender pulls credit. An appraisal sets value. Underwriting reviews income, assets, payoff figures and title. You receive a Loan Estimate early and a Closing Disclosure before closing, so you can compare costs. At closing, the old loan is paid off, a new first lien is recorded, and the remaining proceeds come to you. Timing varies by file, so ask your loan officer what to expect.
Frequently Asked Questions
Does a cash-out refinance on a primary home require mortgage insurance?
Typically not on a conventional loan at 80% LTV or below. Mortgage insurance is required above 80%, and the conventional cash-out cap sits at that line for a one-unit home. FHA cash-outs carry FHA mortgage insurance, and VA loans carry no private mortgage insurance.
Can I borrow more than 80% without mortgage insurance?
Sometimes. One wholesale conventional lane reaches 89.99% LTV with none, at a 680 decision score and a 50% total ratio on a thirty-year fixed primary residence with a conforming balance. It carries its own six months of seasoning and is not written on Texas homesteads. All of it is subject to lender guidelines.
How long do I have to own the home before a cash-out?
At least one borrower generally needs to be on title for six months. The first mortgage you are paying off must also be at least 12 months old. Exceptions exist for delayed financing, inheritance and legal awards.
Is a rate-and-term refinance a way to get cash without insurance?
No. It allows only incidental cash back, and its leverage cap is much higher, so mortgage insurance appears above 80%. It is built to improve your loan, not to pull equity.
If I have mortgage insurance now, can I get rid of it?
Federal rules let you request cancellation at 80% of the original value, and the servicer must end it automatically at 78%, per the CFPB’s PMI page. A rate-and-term refinance into a loan at or under 80% is another route.
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 your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Eligibility Matrix
2. CFPB’s home equity guide for older adults
3. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
4. Fannie Mae Selling Guide B2-1.3-02: Limited Cash-Out Refinance Transactions
5. VA Purchase and Cash-Out Refinance
6. HUD
7. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
8. CFPB paper on paydown behavior
9. CFPB: When can I remove PMI?
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a 2-4 Unit Primary Home Cash-Out Refinance Need Higher Credit? · Can You Drop Mortgage Insurance With a Cash-Out Refinance? · Can You Get a Cash-Out Refinance With a Lien on the Home?
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
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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.