The Quick Read: No official national average exists for a cash-out refinance on a second home, so any single number you see online is an estimate. Your total depends on loan size, title charges, the appraisal, prepaid items and how the loan is priced. A second home adds two twists: a lower leverage cap and pricing that can run higher than on a primary residence. Your Loan Estimate is the only figure that counts.
Key Takeaways
- No primary source publishes an average closing cost for this exact loan. Treat blog percentages as rough guesses.
- A second-home cash-out has a lower leverage cap than a primary-residence cash-out: 75% versus 80% of the appraised value.
- Closing costs you roll into the loan use the same room as your cash payout.
- Costs split into fees you can shop for, fees you cannot shop for, and prepaid items like taxes and insurance.
- Compare Loan Estimates line by line, not by the headline total.
What Counts as a Closing Cost on a Cash-Out Refinance?
Closing costs are the upfront charges to set up the new loan. A cash-out refinance replaces your current mortgage with a bigger one and hands you the difference in cash. The new loan has to be set up like any other mortgage.
Here is the plain breakdown I use with borrowers:
| Cost group | Examples | Can you shop for it? |
|---|---|---|
| Lender charges | Origination, underwriting, points | Yes, by comparing offers |
| Third-party services | Appraisal, credit report | Partly |
| Title and settlement | Title search, lender’s title policy | Often yes |
| Government | Recording fees | No |
| Prepaids and escrows | Taxes, homeowners insurance | No, but they are not fees |
That last row causes most of the confusion. Prepaid taxes and insurance are real cash you owe at closing. They are not lender fees. Some websites count them in “closing costs” and some do not. That is one big reason published ranges disagree.
Why Is There No Honest Average?
There is no honest average because nobody tracks one for this loan. The federal consumer-finance agency’s own cost data covers home purchase loans, not second-home refinances. Any “2% to 5%” rule of thumb you read comes from lender websites, not from a rule or a survey you can verify.
Several things make a single number useless:
- Loan size moves some costs, like title insurance, but many charges are close to flat.
- State and county recording and title practices differ.
- Lender credits can lower upfront costs but are built into the loan’s pricing.
- Escrow rules change how much you prepay.
The federal consumer-finance regulator’s closing-cost inquiry says the largest disclosed costs are lender origination charges, including points. Title fees are the next largest group. Other costs include recording fees, homeowners insurance and property taxes. That ordering is a useful guide to where your money goes.
If you want to see how these costs fit into a full loan, start with Lendmire’s cash-out refinance programs. For a side-by-side of primary and second homes, Lendmire’s piece Cash-Out Refinance Closing Costs for a Primary or Second Home goes deeper.
How the Loan Is Underwritten, Step by Step
Underwriting is the lender’s review of you, the property and the loan. Here is the path, and where each step touches your costs.
1. Application and Loan Estimate. You apply and receive a Loan Estimate. Page two totals loan costs, other costs and lender credits. It also shows your estimated cash to close. This form is your price list.
2. Eligibility gates. Conventional loans backed by Fannie Mae follow the Selling Guide’s cash-out rules. The mortgage you are paying off must be at least 12 months old, counted note date to note date. At least one borrower must have been on title for six months. Fail either test and you may be stuck, no matter how much equity you have.
3. Valuation. An appraisal sets the value. That value times the occupancy cap sets your maximum loan. Whether an appraisal can be waived on a second-home cash-out depends on the lender and the file. Plan on a full appraisal.
4. Underwriting. The lender checks credit, income, debts and reserves. Reserves are savings left over after closing. Higher debt ratios can trigger a requirement for more of them. Paying off any lien that was not used to buy the property, including a second mortgage, counts as cash-out.
5. Closing Disclosure. You get a final cost statement before you sign. Compare it to your Loan Estimate. If costs jumped, ask the lender to explain why. Charges for services you were allowed to shop for have limited room to rise, but check the details on your own forms.
I see the same pattern across the wholesale programs I place files with. Borrowers focus on the payout and discover the seasoning rules late. Confirm your title date and existing loan age before you pay for an appraisal.
What Changes on a Second Home?
Three things change: the leverage cap, the pricing and the occupancy rules. The cap is the one most borrowers miss.
On a one-unit primary residence, a conventional cash-out refinance reaches 80% of the home’s value. On a second home it stops at 75%. Fannie Mae’s eligibility matrix lists those caps by occupancy and transaction type.
Because the cap is lower, mortgage insurance rarely enters the picture on a second-home cash-out. Insurance applies above 80% leverage, and this loan tops out at 75%. That is one cost you can usually cross off.
Pricing is the second change. Fannie Mae publishes loan-level price adjustments. These are pricing add-ons based on credit score, loan purpose, occupancy, number of units and product type. Both “cash-out” and “second home” can add cost. The add-on is built into your pricing, so it does not appear as a separate line. It varies with credit score and leverage. Ask your loan officer how much of your offer comes from these adjustments.
Occupancy is the third change. A second home must be a place you actually use for part of the year. Occupancy decides the leverage cap and the pricing. Lendmire’s piece Conventional Cash-Out Refinance Credit Requirements for a Second Home covers the credit side.
Pricing policy has been under discussion in the industry. Do not count on a change.
How Much Cash Do You Really Walk Away With?
You walk away with the gross cash-out minus everything the new loan has to pay. Here is a worked example using percentages of value only.
Say your second home appraises at 100% of its value. The cap is 75%, so the new loan can reach 75%. Your current mortgage is 55% of value. That leaves 20% of value before costs.
Now subtract closing costs. If you roll them into the loan, they come out of that 20%. Every point of closing cost you finance is a point of cash you do not receive. If you pay them in cash instead, you keep the full 20% but need cash on hand.
Prepaid taxes and insurance work a little differently. You owe them at closing, but they fund your escrow account. You are not losing that money, just moving it earlier. Treat it as a cash-to-close item and keep it separate from true fees.
The CFPB notes that rolled-in closing costs accrue interest for the life of the loan. “Roll it in” is not the same as “free.”
Paying the Costs: Three Ways
| Method | What happens | Trade-off |
|---|---|---|
| Pay in cash | You write a check at closing | Less cash on hand |
| Roll into loan | Balance grows | Interest on the costs; less cash-out room |
| Lender credit | Lender covers some costs | Cost moves into pricing |
You will see “no-closing-cost” offers advertised. Read them carefully. The costs do not vanish. They shift into the loan balance or the pricing. That can be a fair choice if you will sell or refinance soon. It is a worse one if you will hold the loan for years.
Where the General Rule Breaks
The 75% cap and the seasoning rules cover most files. A few situations bend them.
- Limited cash-out. If you only pay off your existing first mortgage and closing costs, with minimal cash back, you may qualify for higher leverage than a true cash-out. Paying off a non-purchase second lien flips the deal back to cash-out.
- Delayed financing. If you bought the home with cash, an exception to the six-month title rule exists. It is the named workaround in the Selling Guide.
- Inheritance and legal awards. There is no waiting period if you acquired the property through inheritance, or were awarded it in a divorce or separation.
- Ownership through an LLC. Older guide versions let time held in a controlled LLC count toward the six months. Rules change, so verify the current version before you plan around it.
- Ineligible transactions. Some loans cannot be cash-outs at all. One example is financing property taxes more than 60 days delinquent without an escrow account.
- Manufactured homes. Single-width manufactured homes are not eligible for cash-out on a principal residence, and other manufactured-home limits apply.
The second-home 75% cap is also not the same as the 90% cap on a second-home purchase. The higher number applies when you buy, not when you pull cash out. That is a common mix-up.
How to Compare Offers
Here is how the decision looks in practice. Ask for Loan Estimates from at least two lenders, using the same loan amount and the same occupancy. Then do four things.
1. Compare page two, line by line. Look at lender charges separately from title and prepaids.
2. Check which fees you can shop for. Title services are often shoppable.
3. Ask whether points or credits are in play, and what each does to the rest of the loan.
4. Estimate your break-even. Divide the upfront cost by the monthly savings or benefit you expect. That tells you how long you must hold the loan for the costs to pay off.
On a second home, break-even matters more. You may hold the property for a shorter or longer time than a primary. Think about whether you plan to sell, and whether an alternative such as a home equity line makes more sense for a smaller need. Cash-out refinancing resets your whole mortgage. If your current loan is good and you only need a modest sum, keep that in mind.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Closing costs: The upfront charges to originate the loan and transfer or record ownership.
Loan Estimate: The standard form showing your estimated costs and cash to close.
LTV (loan-to-value): The loan balance as a share of the appraised value.
Seasoning: The minimum time you have owned the property or held the current loan.
Prepaids: Taxes and insurance you pay at closing to start your escrow account.
Loan-level price adjustment: A pricing add-on based on credit score, loan purpose, occupancy and similar features.
Reserves: Savings left after closing that a lender may require.
Frequently Asked Questions
Is there a standard percentage for cash-out refinance closing costs on a second home?
No standard exists in agency rules or federal data. Online ranges come from lender sites and differ because they count different things. Use your Loan Estimate, and ask each lender what is included.
Can I roll closing costs into a second-home cash-out?
Often yes, as long as the new loan stays under the 75% cap. The costs use up the same room as your cash payout, and they accrue interest over the life of the loan. Subject to lender guidelines and full file review.
Do I need mortgage insurance on a second-home cash-out?
Generally not, because the leverage cap sits below 80%. Mortgage insurance applies above that level. Your lender confirms what applies to your specific file.
Why is a second-home cash-out priced differently from a primary-residence one?
Occupancy and loan purpose both feed into pricing adjustments. Lenders treat second homes and cash-outs as carrying more risk than a primary-residence loan with no cash back. The adjustment is built into your pricing, not shown as its own fee.
Can I refinance soon after buying the second home?
Not usually. A borrower generally needs six months on title, and the existing first mortgage must be at least 12 months old. Exceptions such as delayed financing, inheritance and legal awards may apply.
Your Next Step
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. A second-home file turns on the 75% cap, so a quick look at your balance against value shows whether the numbers leave you real cash after costs.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see conventional loan programs.
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References
1. CFPB Request for Information on Mortgage Closing Costs
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Fannie Mae Eligibility Matrix
4. Fannie Mae Loan-Level Price Adjustment Matrix
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Is a Conventional Cash-Out Refinance Worth It for Your Home? · Can You Use a Conventional Cash-Out Refinance on a Paid-Off Home? · Cash-Out Refinance Closing Costs on a Conventional Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.