The Quick Read: The cap is a percentage of your home’s appraised value, not a percentage of your equity, and it applies to the whole new loan. On a one-unit primary home, a conventional cash-out generally tops out at 80% loan-to-value. Two- to four-unit homes and second homes sit at 75%. What lands in your pocket is what remains after the old mortgage, other liens and financed costs come out, subject to lender guidelines and full file review.
How Does the Cap Actually Work?
The cap limits the total new loan against appraised value. It does not limit the cash you take as a share of equity.
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.
Here is the formula in three steps:
1. Multiply the appraised value by the program’s maximum loan-to-value (LTV).
2. Subtract the payoff of your current first mortgage and any other liens being paid.
3. Subtract closing costs, points and prepaids you choose to finance. What’s left is your cash.
Say a home appraises at a value that supports an 80% cap. You can’t borrow 80% of your equity. You can borrow a new loan up to 80% of value, and the old balance comes out of that first. Whoever owns more of the house going in keeps more room.
The CFPB describes the structure plainly: a cash-out refinance replaces your mortgage with a larger one, pays off the old loan, and hands you the difference. The cap does that work by itself.
What Are the Cash-Out Refinance Requirements by Occupancy?
Occupancy and unit count set the leverage. Across the wholesale programs Lendmire places files with, the conventional cash-out caps are 80% LTV on a one-unit principal residence and 75% on two- to four-unit principal residences, second homes and investment property. A cash-out can be written on any of those. It is not limited to a primary residence on the conventional side.
| Property | Conventional cash-out max LTV |
|---|---|
| One-unit primary home | 80% |
| Two- to four-unit primary home | 75% |
| Second home | 75% |
| Investment property | 75% |
Texas adds a state rule. A cash-out on a homestead there (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution.
FHA works differently. HUD sets the FHA cash-out maximum at 80% of adjusted value, and standard FHA cash-out is for owner-occupied principal residences. Some lenders add their own overlays on top of agency limits, so one lender’s ceiling can sit lower than another’s.
For help comparing, Lendmire’s cash-out refinance programs page lays out the options the brokerage arranges in the 16 states where it offers consumer lending.
Is There a Higher-Leverage Option?
Yes, in one narrow lane. A wholesale program reaches 89.99% LTV with no mortgage insurance. The conditions are tight: a 680 decision score, a 50% total ratio ceiling, a thirty-year fixed rate, a primary residence, a conforming loan balance and six months of seasoning. It is not written in Texas. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Mortgage insurance is otherwise required above 80% LTV on the agency path, and this lane is the one exception. For most standard cash-out files, the 80% line is the practical ceiling.
What Else Limits Your Number Besides the Cap?
The cap is only the first gate. Four other things shrink the number even when equity looks fine.
- Appraisal. Value drives everything. A low appraisal lowers the maximum loan by the same percentage, and the cash drops faster than the value does.
- Credit and ratios. The wholesale conventional programs start at a 620 decision score. The total ratio ceiling is 50% on an automated finding. Manual underwriting uses 36% or 45% with reserve and score factors.
- Other liens. A second mortgage or HELOC counts toward combined LTV. If it stays, it eats into the same cap. If it’s paid off, it comes out of your proceeds.
- Financed costs. Every dollar of closing cost rolled into the loan is a dollar you can’t take as cash. Fannie Mae’s guide treats financed closing costs, points and prepaids as permitted uses of cash-out proceeds.
Cash-out pricing also carries a loan-level adjustment that depends on LTV and credit score, per the same Fannie Mae topic. Higher leverage and lower scores cost more. That is a reason to take less than the cap, not more.
How Long Must You Own the Home First?
Seasoning is where quiet files fail. The first mortgage being paid off must be at least 12 months old, measured from the existing note date to the new note date. At least one borrower must have been on title for six months.
Exceptions exist. Delayed financing covers a buyer who paid cash. Inheritance and legal-award transfers are handled separately. Paying off a subordinate lien or buying out a co-owner under a written agreement doesn’t trigger the same 12-month test.
A homeowner who refinanced eight months ago and wants cash now will usually be told to wait. Check the note date on the current loan before anything else.
Where the General Rule Breaks
The 80% rule holds for the standard case. These edge cases move it.
Limited cash-out is not a cash-out. A rate-and-term refinance, which Fannie Mae calls limited cash-out, pays off the first mortgage, closing costs and a purchase-money second, with only incidental cash back. On a one-unit primary home it reaches 95% LTV. If you want real cash, it won’t deliver. Fannie Mae and Freddie Mac set different incidental-cash limits, so ask which agency owns the loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Streamlines are not cash-out tools. The HUD FHA Streamline page says cash above $500 cannot be taken and closing costs can’t be added to the new mortgage. The VA IRRRL refinances only the existing VA loan, with no other liens and no equity pull.
Student loan cash-out. Fannie Mae allows a cash-out to pay student loans. The standard LTV limits still apply, but the loan-level price adjustment is waived when the requirements are met.
A paid-off home. On the FHA side, a new loan on a home owned free and clear is still treated as cash-out, so FHA cash-out limits apply.
Manufactured homes. Cash-out eligibility is narrower. A single-width manufactured home has historically been ineligible for cash-out on a principal residence at Fannie Mae. Confirm any manufactured-home file with the lender before assuming it works.
What Does the Borrower Decision Look Like?
Start from the cash you need, then work backward.
Take a homeowner who wants cash equal to about 10% of the home’s value. Add the payoff, and add costs if they plan to finance them. If the total lands above 80% of the appraised value, it doesn’t fit. Either the cash target comes down or the file needs a different structure.
A short self-check before applying:
- Pull the current loan’s note date and confirm 12 months of seasoning.
- List every lien, including any HELOC.
- Estimate value conservatively. Appraisers don’t round up.
- Decide whether closing costs will be financed or paid out of pocket.
- Pull your credit and know your approximate ratio.
Taking the maximum has a cost. A new loan near the cap leaves a thin cushion if values soften. The CFPB notes the payment may rise and the payoff may take longer. Its research on cash-out borrowers also found many use the proceeds to pay down credit card and auto debt, and that moving unsecured debt into a mortgage puts your home behind it.
A HELOC or home equity loan may fit better when you want a smaller sum and your current first mortgage is worth keeping. A cash-out replaces the whole loan and charges closing costs on all of it, not just the cash you take.
What Happens at Closing?
Because a refinance is a non-purchase-money mortgage on your home, most borrowers get a three-business-day right to cancel. Per the CFPB, business days include Saturdays but not Sundays or legal public holidays. The clock starts only after you’ve received the required notices and disclosures. Cash arrives after that window.
If you rescind, you still owe the original loan. Rescission doesn’t wipe it out.
Key Terms Defined
Loan-to-value (LTV): The new loan amount divided by the appraised value of the home.
Combined LTV (CLTV): Total of all loans secured by the home, including a HELOC or second mortgage, divided by appraised value.
Seasoning: The minimum time a loan or title must be in place before a cash-out is allowed.
Loan-level price adjustment: A pricing add-on tied to factors such as LTV and credit score on certain cash-out loans.
Limited cash-out refinance: A refinance that pays off the existing loan and costs with only a small amount of cash back.
Frequently Asked Questions
Can I borrow all of my home equity?
No. Conventional cash-out stops at 80% of value on a one-unit primary home, and FHA stops at 80% of adjusted value. That leaves a cushion of equity untouched by design, and payoffs and costs reduce the cash further.
How much equity do I need to qualify?
Enough that the payoff, other liens and financed costs sit well under the cap with room left over. On a one-unit primary home you need to own more than 20% of the value just to qualify, and meaningfully more to receive useful cash. Credit, ratios and the appraisal still decide the file.
Does a second mortgage or HELOC count against my limit?
Yes. Combined LTV includes seconds and HELOCs. If the lien stays in place, it uses part of the cap. If it’s paid off in the refinance, it comes out of your proceeds.
Can I cash out on a second home or rental?
Yes, but occupancy sets the leverage. Conventional second homes and investment property are capped at 75% LTV, below the 80% available on a one-unit primary home. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Does the appraisal change my number?
Directly. The maximum loan is the appraised value times the cap, so a lower value reduces your cash by more than the value dropped. Pre-estimates are a starting point only.
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. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
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 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. CFPB Older Americans Housing Guide: using home equity
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. HUD Streamline Refinance Your Mortgage
4. CFPB: right of rescission on a 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: Cash-Out Refinance Requirements to Tap Home Equity · Best Cash-Out Refinance Program to Borrow the Maximum Equity Allowed · Cash-Out Refinance Requirements and LTV Limits
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.