The Quick Read: A bank suits a retiree who wants one institution that already knows their accounts. A broker suits one who wants several wholesale lenders to review a file with mixed retirement income. The agency rules are the same in both channels. The differences come from lender overlays and access, subject to lender guidelines.
- The standard conventional cash-out cap is 80% LTV on a one-unit primary residence and 75% on a two- to four-unit primary residence. One wholesale lane, covered below, reaches higher on a one-unit primary residence.
- Pension, annuity, Social Security, and retirement-account distributions can count as income. Account distributions must be documented to continue for at least three years.
- A bank offers only its own program menu. A broker can place a file with a lender whose overlays on distributions fit better.
- Broker compensation is disclosed on the Loan Estimate, and federal rules bar paying a broker based on your loan’s terms.
- Compare written Loan Estimates from at least one bank and one broker on the same loan amount, term, and property value. Every figure is subject to lender guidelines and a complete file review.
A bank suits you if you want one institution that already knows your accounts. A broker suits you if you want several wholesale lenders to look at your file, especially when your income comes from pensions, annuities, or retirement-account withdrawals. What differs is access, lender-specific add-on rules, and how the lender or broker is paid. The agency standards do not differ.
Side-by-Side
Here is the comparison on the points that decide whether a retiree can cash out. Pricing is left off on purpose. You compare that on written Loan Estimates, not in an article.
| Factor | Bank (retail desk) | Broker (wholesale access) |
|---|---|---|
| Who lends | The bank, with its own money | A wholesale lender the broker places you with |
| Programs reachable | The bank’s own menu | Several lenders’ menus |
| Leverage, one-unit home | 80% LTV agency cap | 80% LTV standard; one wholesale lane reaches 89.99% |
| Two- to four-unit home | 75% LTV agency cap | 75% LTV agency cap |
| Credit floor | Agency rules plus the bank’s overlays | Agency rules plus each lender’s overlays |
| Mortgage insurance | Not a typical feature at cash-out leverage | Same, including the 89.99% lane |
| Occupancy | Primary residence gets the best leverage | Same |
| Retirement income | Pension, annuity, Social Security, distributions | Same agency list, applied by whichever lender you reach |
| Documentation | Award letters, statements, tax documents | Same documents, different lender preferences |
| Disclosures | Loan Estimate and Closing Disclosure | Loan Estimate and Closing Disclosure |
Most rows match, and that is the point. A cash-out refinance is the same agency product in both channels. The rows that differ are about which lenders and programs you can reach.
What a Cash-Out Refinance Actually Is
A cash-out refinance replaces your current mortgage with a new, larger one and hands you the difference. Your home’s appraised value sets the ceiling. On a one-unit primary residence, the standard conventional cap is 80% of that value. On a two- to four-unit primary residence, it drops to 75%.
Retirees often mix this up with a limited cash-out refinance, which is a different product. It is built to change your term or your loan, not to hand you cash. Fannie Mae’s announcement SEL-2025-08 caps the cash back on that product at the greater of 1% of the new loan balance or $2,000. Older articles still show a 2% cap. If you want real liquidity, you need the full cash-out refinance, with its lower leverage cap.
Lendmire’s cash-out refinance programs are the full version, arranged through wholesale lenders.
How Lenders Count Retirement Income
Retirees qualify without a paycheck. Age is not a barrier, and being retired is not a strike against you. The lender needs documented income that is likely to continue.
Pension, annuity, Social Security, and retirement-account distributions all count. Per Fannie Mae’s Selling Guide on retirement income, the lender verifies the amount with documents such as an award letter, a benefit statement, a bank or financial statement, a signed tax return, or a 1099. For account distributions, the lender documents that the income will continue for at least three years.
Two points trip people up. First, there is no minimum age for using 401(k) or IRA income, but you need unrestricted access without penalty, per Fannie Mae’s retirement-assets FAQ. Second, the old 30% haircut on stocks, bonds, and mutual funds when measuring continuance is gone. Older articles still repeat it.
Here is where the channels start to separate. Both apply the same agency rules. But individual lenders decide how they treat distributions, portfolio-based income, and thin-on-paper files. That is an overlay, which is a lender’s own rule layered on top of the agency rule. No neutral source measures how much overlays vary, so treat any blanket claim, in either direction, with suspicion.
The Rules That Do Not Change by Channel
Cash-out eligibility is written by the agencies. Under Fannie Mae Selling Guide B2-1.3-03:
- The first mortgage you are paying off must be at least 12 months old, measured from note date to note date.
- At least one borrower must have been on title for six months before disbursement. Exceptions exist, including delayed financing for a cash purchase and inheritance.
- A home that was listed for sale must come off the market by the disbursement date.
- On automated files where the debt-to-income ratio exceeds 45%, six months of reserves is required.
Across wholesale conventional programs, the automated finding governs most files, and the total ratio ceiling is 50%. The wholesale conventional floor is a 620 decision score, though some lenders set a higher one. Anything above those numbers is a lender choice, not an agency rule.
One wholesale lane goes beyond the standard 80% cap, and it is the exception worth knowing. It reaches 89.99% LTV with no mortgage insurance on a one-unit primary residence with a conforming balance. It requires a 680 score, a 50% ratio, and a thirty-year fixed loan, plus its own six months of seasoning. Because it is a wholesale lane, it sits on the broker side of the table, not in a typical bank’s own menu. It is not written on a Texas homestead, where the state constitution caps cash-out at the agency figure. Subject to lender guidelines and full file review, of course.
When a Bank Is the Better Fit
Choose the bank when its strengths line up with your file.
- You already have a deep relationship. If your pension deposits, savings, and brokerage sit at one institution, the bank can see your whole picture. That sometimes smooths documentation.
- Your file is simple. A single pension, Social Security, strong equity, and good credit usually fit any lender’s menu. A broker’s extra reach adds little.
- You prefer one point of contact. Some retirees want a branch, a familiar face, and one phone number. That has real value.
- The bank offers what you need. If its program matches your goal at your leverage, there is no reason to look further.
The catch is menu size. A retail desk offers only its own programs. If its overlay on retirement distributions is tight, you hear a no, or a smaller loan, from the only lender you asked. Some banks broker out products they do not offer. That is legal, and compensation rules apply either way.
When a Broker Is the Better Fit
Choose the broker when your file needs more than one lender’s view.
- Your income is mixed. Pension plus Social Security plus withdrawals from an IRA is common. Different lenders weigh that mix differently, and a broker can place the file where it fits.
- You were declined or trimmed elsewhere. A no from one lender is not a no from every lender. Overlays vary, and the agency rules still allow more than some lenders do.
- You want choice without doing the legwork. A broker sends one application to several wholesale lenders instead of you filling out several.
- Your leverage or occupancy is unusual. A two- to four-unit primary residence, or a file near the 80% line, benefits from comparing programs, including the wholesale lane described above.
The catch is that a broker does not lend. Per the CFPB’s lender-versus-broker explainer, a broker helps you find lenders or loans, and you pay the broker a loan-specific fee. That compensation is disclosed on your Loan Estimate. Federal rules also bar paying a broker based on your loan’s terms, and bar being paid by both you and the lender on the same loan. A bank loan officer follows the same compensation rules.
Practitioner note: on retiree files, the sticking point is rarely credit or equity. It is usually how the lender documents continuance on account distributions, and whether the file carries enough reserves. Gathering twelve months of statements and your award letters before you apply prevents most of the back-and-forth. Lendmire’s piece Can a Retiree Use Bank Statements for a Conventional Cash-Out Refinance? covers one alternative documentation route.
A Worked Example, Without Dollar Figures
Picture a retiree with a paid-down primary residence. Income is a pension, Social Security, and monthly IRA withdrawals. The home has substantial equity, and the retiree wants cash for a roof and some medical bills.
At the standard 80% of appraised value, the cap sets the maximum new loan. The retiree’s existing mortgage must be at least 12 months old, and title seasoning is easy to meet. The pension and Social Security are documented with award letters. The IRA distributions need three years of continuance, shown through account statements.
Now run it through both channels. At the bank, the file meets agency rules and the bank’s overlays. If the overlay on distributions is conservative, the usable income shrinks, and the loan amount or approval shrinks with it. Through a broker, the same file can go to a lender whose overlay treats distributions more generously. The agency rulebook is identical. The outcome differs only where overlays and program menus differ. Whether any lender approves is subject to credit review, appraisal, and full file review.
Before You Choose: Is Cash-Out the Right Tool?
A cash-out refinance replaces your current mortgage with a larger one. That means a new payment that must fit inside retirement income, and a loan term that restarts. Qualifying income is limited to what you can document and show will continue. Think hard about that last point before taking out cash.
Other options exist. A home equity line adds a second loan and leaves your first mortgage alone. A reverse mortgage requires no monthly mortgage payment, though you still owe taxes and insurance. The CFPB notes that its most common version is available only to homeowners 62 and older. Different tools, different tradeoffs.
Older homeowners also face heightened scam risk, so be wary of anyone who pressures you to sign.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
How to Compare Both Channels Fairly
Skip the guessing. Get Loan Estimates from at least one bank and at least one broker, all on the same assumptions: the same loan amount, the same term, the same property value. The CFPB’s Loan Estimate guide tells you to request several and compare. The FHFA-hosted CFPB shopping guide suggests comparing at least three offers.
Then compare the origination charges line by line. Broker compensation shows there, so you see the full cost either way. Ask each one:
- What overlays do you apply to pension, annuity, and distribution income?
- How many months of reserves will you require on my file?
- Will you count my IRA withdrawals, and how many months of statements do you need?
- What leverage does your program allow on my appraised value and occupancy?
The better answer is not always the cheaper one. A lender that counts your income correctly and delivers the loan you need beats a low estimate that falls apart in underwriting.
Key Terms Defined
Cash-out refinance: A new mortgage that pays off your old one and gives you the leftover equity as cash.
LTV (loan-to-value): The new loan divided by the home’s appraised value. The standard conventional cash-out cap is 80% on a one-unit primary residence.
Overlay: A lender’s own rule that is stricter than the agency requirement.
Seasoning: The waiting period before you can cash out, such as a first mortgage being at least 12 months old.
Wholesale lender: A lender that funds loans submitted by brokers rather than selling directly to the public.
Continuance: Proof that a retirement income source will keep coming, typically three years for account distributions.
Frequently Asked Questions
Can I get a conventional cash-out refinance if I’m retired and have no job?
Yes. Pension, annuity, Social Security, and documented retirement-account distributions can all count as income. The lender verifies each with award letters, statements, or tax documents. Account distributions must be shown to continue for at least three years. Approval depends on credit, equity, and full file review.
Is a broker cheaper than a bank?
It depends on the file. A broker is paid either by the lender or by you, and that compensation is disclosed on your Loan Estimate. A bank covers its costs in its own pricing. Compare the full Loan Estimates side by side rather than assuming either channel wins.
Do brokers have easier rules than banks?
No. The agency rules are the same. What varies is each lender’s overlays and which programs you can reach. A broker offers more lenders to choose from, not looser agency rules.
Is there a minimum age for using IRA or 401(k) income?
No stated minimum age exists. You need unrestricted access to the funds without penalty, plus documented continuance. If a withdrawal would trigger a penalty, that income does not count.
How much equity do I need to keep?
On a one-unit primary residence, the standard conventional cash-out cap is 80% of appraised value, so you keep at least 20% equity. A wholesale lane can reach 89.99% on a qualifying primary residence. On a two- to four-unit primary residence the cap is 75%. All of it is subject to lender guidelines.
The Verdict
Neither channel wins by default. Stay with the bank if your file is simple, your accounts live there, and its offer meets your goal. Use a broker if your income is mixed, you have been trimmed or declined, or you want several lenders to look at the same file. The agency rules are the same either way, so your best protection is comparing written Loan Estimates.
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.
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.
For current guidelines, see conventional loan programs.
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References
2. Fannie Mae Selling Guide B3-3.4-03, Annuity, Pension, or Retirement Income
3. Fannie Mae FAQ: Retirement and Employment-related Assets
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. CFPB: Can anyone take out a reverse mortgage
8. FHFA-hosted CFPB guide: Shopping for a Mortgage
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Does a Conventional Cash-Out Refinance Through a Broker Work the Same? · Can You Get a Conventional Cash-Out Refinance on a Vacation Home? · Conventional Cash-Out Refinance Limits for a 2-4 Unit Home
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
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.