Cash-Out Refinance Requirements — The Quick Read: To get cash from your home’s equity, you generally need enough equity to stay at or under 80% loan-to-value on a one-unit primary residence. You also need a credit profile the lender accepts, a total debt ratio inside program limits, and some ownership history. Some files also need cash reserves, which are savings left over after closing. Every figure below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Key Takeaways
- Equity is the first gate. Conventional cash-out caps at 80% loan-to-value (LTV) on a one-unit primary home and 75% on two- to four-unit homes.
- Credit starts around a 620 decision score on the wholesale programs a broker places files with. The automated finding governs most files.
- The total ratio ceiling is 50% on automated files. Manually underwritten loans use 36% or 45%.
- Seasoning matters. The loan you are paying off must be at least 12 months old, and a borrower must be on title for 6 months.
- Streamlines are not cash-out. The FHA Streamline and VA IRRRL are separate programs built for rate-and-term changes.
What Counts as a Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a new, larger one and hands you the difference as cash. The new loan pays off the old loan, then pays you for the extra amount you borrowed against your equity.
Three details trip people up:
- A paid-off home still counts. Refinancing a home you own free and clear is cash-out, because you are creating new debt and taking money from it.
- Paying off a second lien can count. Clearing a second mortgage that was not part of your original purchase financing generally pushes the deal into cash-out.
- Limited cash-out is the other category. It is the “rate-and-term” refinance. It pays off your existing first loan, the closing costs and a purchase-money second lien, with only incidental cash back.
If you only want a different term or a lower payment, look at a rate-and-term refinance first. If you want money for a renovation, debt payoff or a big expense, you are in cash-out territory. Lendmire’s cash-out refinance programs page lays out the options a broker can place through wholesale lenders.
The Checklist at a Glance
Here is the whole file in one place. Each row gets its own section below.
| Requirement | Typical standard (conventional) |
|---|---|
| Equity (one-unit primary home) | Up to 80% LTV |
| Equity (2–4 units, second home, rental) | Up to 75% LTV |
| Credit | Starts at a 620 decision score |
| Total ratio | 50% on automated files |
| Manual underwriting ratio | 36% or 45% |
| Seasoning | 12-month-old loan, 6 months on title |
| Reserves | Required on some higher-ratio files |
| Appraisal | Sets the value and the borrowing ceiling |
Treat this as a screening list. A lender can add its own conditions on top.
Equity: How the 80% Test Works
LTV divides everything you would owe by the appraised value. The new first mortgage and any other liens go in the top number. The appraised value goes on the bottom.
Say your home appraises at 100 units of value, and you owe 55% of it today. An 80% cap leaves room for about 25% of value in new borrowing. Closing costs and any payoffs come out of that room first. What is left is your cash.
The Fannie Mae Eligibility Matrix sets this ceiling by occupancy. A one-unit primary residence tops out at 80%. Two- to four-unit homes and second homes sit at 75%.
You may be wondering whether a rental changes the answer, and it does. Occupancy sets the leverage, and a non-owner-occupied property takes the lower cap.
The appraisal can move your cash up or down. A lower value shrinks the room, and the cash shrinks with it. A higher value widens it. You are not borrowing against what you think the house is worth. You are borrowing against what the appraiser documents.
Some wholesale lanes reach further. One conforming-balance lane goes to 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and six months of seasoning. It is a narrow lane, and you should not assume your file fits it. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, so that lane is not written there. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Credit: Where the Floor Really Sits
Across the wholesale conventional programs, the starting point is a 620 decision score. On an adjustable rate under manual underwriting, it is 640. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review.
Those numbers are a starting line. The automated underwriting finding governs most files, and it weighs the whole picture: payment history, balances, reserves and the size of the loan against the value. A higher score can offset a tight ratio. A thinner score can sink an otherwise clean file.
Some lenders set a floor above the agency minimum. That is called an overlay. Two lenders can look at the same borrower and answer differently. For more on score tiers, see this breakdown of the minimum credit score for a cash-out refinance.
Recent credit events add waiting periods. The agencies set them:
- Four years from a chapter 7 discharge.
- Seven years from a foreclosure.
- Four years from a short sale or deed-in-lieu.
Documented extenuating circumstances can shorten these. Mortgage lates in the past year matter more than an old collection.
Ratios and Income: The 50% Ceiling
Your total debt ratio compares your monthly debts, including the new housing payment, with your gross monthly income. On automated conventional files, the ceiling is 50%. On manually underwritten loans, the limit is 36% or 45%, depending on the score and reserve factors in the matrix.
There is a common myth here. Many borrowers believe 43% is a federal maximum. It is not. The CFPB’s 2020 qualified mortgage rule replaced that hard cap with a pricing-based test. The practical ceiling today comes from the program and the lender.
Lenders also look at income stability. Expect to document a steady job history and two years of income on self-employed files. Remember that cash-out increases your loan balance, so your payment may rise even if your rate stays the same.
Reserves: The Requirement Most Checklists Skip
Reserves are the savings you hold after closing, counted in months of housing payments. Fannie Mae requires reserves on some automated cash-out files, mainly those with higher ratios, per the Fannie Mae Eligibility Matrix. Manual files carry reserve requirements that rise as the score drops or the ratio climbs. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Here is how that plays out. A borrower with a strong score, a modest ratio and a conservative LTV may need little in reserves. A borrower pushing 80% LTV with a ratio near the ceiling can see a reserve condition show up late in the file. Retirement accounts and stocks often count, at a discount.
Plan for this before you apply. Gather two months of statements for every account you may need to count.
Seasoning: How Long You Must Wait
Seasoning is the waiting period between events. For conventional cash-out, two clocks run:
1. The loan you are paying off must be at least 12 months old, counted note date to note date.
2. A borrower must be on title for 6 months.
Freddie Mac’s cash-out guide also requires every borrower to occupy the property on a primary residence cash-out, and at least one borrower must have been on title for six months. The wholesale 89.99% lane runs its own six-month seasoning.
The exceptions are specific:
- Delayed financing: A cash buyer can refinance within the six-month window. The purchase must be arm’s-length, the settlement statement must show no mortgage, and the source of funds must be documented. It is still priced as cash-out.
- Inheritance and legal awards: Ownership generally starts at transfer, so you do not wait for title seasoning.
- HELOC payoff: Freddie Mac exempts a home equity line being paid off from the 12-month first-lien clock.
Where the General Rule Breaks
The checklist above is the rule. Here is where it bends:
- Delinquent property taxes. Taxes can be rolled into the new loan if an escrow account is set up, per the Fannie Mae cash-out guide. Taxes that are seriously delinquent are treated differently.
- Energy-retrofit liens. A PACE lien paid off through a cash-out must be cleared in full.
- Listed-for-sale homes. If you recently listed the property, the matrix may cap your leverage. Confirm the current rule before applying.
- Thin credit. Borrowers with no credit score can qualify under a separate non-traditional credit process with its own reserve rules.
- Pricing add-ons. Fannie Mae applies loan-level price adjustments to certain cash-out files, based on LTV and score. They are pricing, not eligibility. A higher LTV with a lower score costs more.
The honest read: the more of these rows you touch, the more the file depends on one lender’s overlays.
Streamlines Are Not Cash-Out
The FHA Streamline and VA IRRRL are no-cash-out programs. They exist for people who already have an FHA or VA loan and want a better structure.
- FHA Streamline. Your existing loan must be FHA-insured and current. There is no appraisal and only a limited credit review. The refinance must give you a net tangible benefit, and only a token amount of cash can come back. An FHA rate-and-term with an appraisal reaches 97.75%.
- VA IRRRL. Your existing loan must be VA. There is no VA appraisal and no cash-out. It carries a 0.5% funding fee unless you are exempt, and it requires seasoning of the later of 210 days and six payments.
If you need real cash, these are the wrong tools. A cash-out is a different transaction with different rules.
What the Decision Looks Like in Practice
Cash-out replaces your current mortgage. So your rate, term and payment all reset. The CFPB notes that converting other debts into mortgage debt can put your home at risk, as covered in its cash-out and non-mortgage debt report. Paying off other debt can make sense when the total cost comes out lower than what you are paying now.
Closing costs and any mortgage insurance affect the break-even. So compare the full cost over the time you expect to keep the loan. A home equity loan or HELOC leaves your first mortgage in place. That is worth comparing if your current loan is one you want to keep.
Once you sign, a refinance on your primary home carries a right of rescission. You get until midnight of the third business day to cancel, per the CFPB’s rescission guidance. Funds are released after the window closes.
A short self-check before you apply:
1. Estimate your LTV from a realistic value, not a hopeful one. 2. Pull your credit and look for late payments. 3. Add up monthly debts and compare them with income. 4. Count the savings you could show as reserves. 5. Confirm how long you have owned the home and held the current loan.
Key Terms Defined
Loan-to-value (LTV): Your total mortgage debt divided by the home’s appraised value.
Seasoning: The waiting period a lender requires before you can refinance.
Reserves: Savings left after closing, counted in months of housing payments.
Debt-to-income ratio: Your monthly debts divided by your gross monthly income.
Limited cash-out refinance: A refinance that pays off the existing loan and costs, with only small cash back.
Overlay: A lender’s own rule that is stricter than the agency minimum.
Next Steps
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. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
How much equity do I need for a cash-out refinance?
On a one-unit primary home, you need enough equity to keep your new loan at or under 80% LTV. That means at least 20% equity stays in the house. Two- to four-unit properties and second homes carry a 75% cap. Closing costs and payoffs come out of the room first. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Can I do a cash-out refinance with a 620 credit score?
Often, yes. A 620 decision score is the starting point on wholesale conventional programs. But the automated finding governs most files, and it can say no on a thin profile. A higher score helps with ratios, reserves and pricing.
Do I need reserves for a cash-out refinance?
It depends on the file. Higher-ratio automated files and manually underwritten loans often require them. Strong scores and low ratios may need little. Retirement and brokerage accounts can count, usually at a discount.
Can I refinance right after buying my home?
Usually not for cash-out. A borrower must generally be on title for six months. Delayed financing is the exception, and it applies to cash buyers who can document the purchase and the source of funds.
Is the FHA Streamline a cash-out option?
No. It is for existing FHA loans, requires a net tangible benefit, and allows only a token amount of cash back. The same is true of the VA IRRRL, which allows no cash-out at all.
For the program’s current guidelines, see a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging government-backed purchase loans and the down payment assistance options that sit on top of them 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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
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 Eligibility Matrix
2. Freddie Mac Guide 4301.5: Cash-Out Refinance Mortgages
3. Fannie Mae Selling Guide B2-1.3-03: Cash-Out Refinance Transactions
4. CFPB: Cash-out refinances and paydown behavior of non-mortgage debt balances
5. CFPB: How long do I have to rescind?
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Cash-out Refinance For Home Improvements: What Lenders Require · Cash-out Refinance Vs A Second Lien: Choosing The Right Tool · Refinancing With Gaps In Employment Or A New Job
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
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.