The Quick Read: Two rule sets decide your conventional cash-out refinance. National agency rules set the loan’s size and shape, and state property law decides who signs the lien papers and whether homestead protection adds conditions. A spouse who is not on the loan can often stay off the note but may still sign the mortgage. In a few states, Texas being the clearest, state law can change the loan type itself.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off your current one and hands you some of your equity in cash.
Homestead: The home you live in, which many states shield from certain creditors and from some kinds of liens.
Non-borrowing spouse: A spouse who is not on the loan but may still have legal rights in the home.
Note: The signed promise to repay the loan. Whoever signs it is personally liable.
Security instrument: The mortgage or deed of trust. It puts the lien on the home and does not, by itself, make the signer owe the debt.
Joinder: A spouse signing a document to give up or subordinate marital or homestead rights in the property.
Community property: A state system where most property earned during the marriage belongs to both spouses.
What Does a Conventional Cash-Out Actually Do?
A conventional cash-out refinance replaces your current first mortgage with a larger one and pays you the difference. Fannie Mae’s Selling Guide on cash-out refinance transactions says the new loan can pay off the existing first mortgage, finance closing costs, pay off other liens, and put equity in your hands “for any purpose.”
Across the wholesale programs Lendmire places consumer files with, the leverage rules for owner-occupied homes look like this:
- One-unit primary residence: up to 80% loan-to-value (LTV), meaning the new loan can be 80% of the home’s appraised value.
- Two- to four-unit primary residence: up to 75% LTV.
- Second homes and investment property: also 75%.
Compare that with a purchase, where a primary residence can reach 95% LTV, or 97% for a first-time buyer. Cash-out is capped lower because you are pulling equity out, not adding it. The Fannie Mae Eligibility Matrix lays out these limits by occupancy and unit count. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Two seasoning rules also apply. The first mortgage being paid off must be at least 12 months old, counted note date to note date. And you generally need to have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist. All of this is subject to lender guidelines and full file review.
Who Decides What: Agency, State, Lender
Three layers sit on top of each other. Keep them straight and most surprises disappear.
| Layer | What it decides | Example |
|---|---|---|
| Agency (Fannie Mae, Freddie Mac) | Loan size, leverage, seasoning, occupancy | 80% LTV on a one-unit home |
| State law | Who signs, homestead conditions, sometimes loan type | Spouse joinder; Texas constitution |
| Lender overlay | Extra credit or document rules | A higher score floor than the agency |
The agencies do not override state law. The lender must follow both, which is why two borrowers with the same credit and equity can face different paperwork in different states.
Lendmire is a mortgage broker licensed for consumer lending in 16 states, and it arranges these loans through wholesale lenders. The lender, not the broker, reviews and decides on the file.
Does a Spouse Who Isn’t on the Loan Have to Sign?
Often, yes, but only on the lien document. Not on the note. This is the most misunderstood point in the whole topic.
Federal credit law draws the line. Under the CFPB’s Regulation B rule on spousal signatures, a lender generally cannot demand a spouse’s signature when you apply for credit on your own and qualify alone. There is a narrow exception for secured loans. A lender may require the spouse to sign instruments that state law makes necessary to create a valid lien, pass clear title, or waive marital or homestead rights.
In plain terms:
- Qualify alone: your spouse does not have to be a co-borrower.
- Spouse on the note: generally not required of them.
- Spouse on the mortgage or deed of trust: may be required if your state’s property law needs it.
The CFPB’s official commentary adds a useful detail. A lender may not require the spouse to sign the note if signing the mortgage alone makes the property available on default. If state law requires both spouses to sign the note to create an enforceable lien, then the lender may ask. The commentary also expects the lender’s belief to rest on a real review of state law, not habit.
Fannie Mae’s uniform security instrument points the same way. It refers to waiving “any right of homestead, dower, or similar marital right” when a waiver is needed to protect the lender’s interest. That is the agency-side hook for a spouse’s signature on the lien papers.
Signing Is Not the Same as Owing
When a non-borrowing spouse signs the mortgage, they are acknowledging the lien and giving up rights that could block it. They are not promising to repay. Here is how the documents usually break down:
| Document | Who signs | What it does | Personal debt? |
|---|---|---|---|
| Note | Borrowers only | Promise to repay | Yes |
| Mortgage or deed of trust | Borrowers; spouse if state law requires | Puts the lien on the home | No, for a non-borrower |
| Rescission notice | Often each person with an ownership interest | Confirms the right to cancel | No |
| Disclosures and acknowledgments | Varies by state | Confirms receipt or consent | No |
That table is general. Your state, your title company and your closing attorney decide the exact set.
How Do State Property Systems Change the Answer?
State law generally falls into a few patterns. Exact rules differ by state, so treat this as a map, not a statute.
Community property states. Income and assets earned during the marriage are usually owned jointly. A spouse often has rights in the home even if only one name is on title. Lenders commonly ask that spouse to sign the security instrument.
Homestead joinder states. The home you live in carries protection, and a mortgage on it may not be valid unless both spouses join. Here the signature is about the home’s status, not about who earns the income.
Dower and curtesy states. These old marital rights can give a spouse a claim on real estate. A signature or waiver clears the claim so the lien is clean.
Other states. Where only the titled owner’s signature is needed, a spouse not on title may sign nothing at all. Even then, a lender may ask for a statement about marital status.
Many states fit more than one pattern. A single state can be a community property state with a homestead overlay. That is why a general rule of thumb (“spouses only sign in community property states”) fails often enough to cost people a closing.
Where the Rule Breaks: Texas and Homestead Cash-Out
Texas is the clearest named exception, because its constitution can change which loan you get. Texas homestead equity loans fall under a provision known as Section 50(a)(6). If your cash-out is on a Texas homestead, you may be steered into that structure no matter what the agency calls the transaction.
Both agencies say so. Fannie Mae’s Texas Section 50(a)(6) eligibility rules say Texas law decides whether a loan is a 50(a)(6) loan, while Fannie Mae policy decides how it is delivered. The lender must determine whether the section applies “regardless of Fannie Mae’s definitions.” Freddie Mac’s guide section 4301.7 makes the same point. The question is whether a refinance of a Texas homestead must be originated under 50(a)(6), whatever the cash-out definitions say.
What that means in practice:
- A “no cash-out” refinance can still be caught. A refinance that looks like rate-and-term to the agency may still fall under Section 50(a)(6) if state law says so.
- Product choices narrow. Freddie Mac describes eligible loans as conventional first liens that are fixed-rate or certain adjustable types, and not special-purpose cash-out refinances.
- Leverage is capped. On a Texas homestead cash-out, the state constitution holds leverage to the agency figure. The higher-leverage wholesale lane that reaches 89.99% LTV without mortgage insurance is not written in Texas.
- Land and trust conditions. Fannie Mae requires the homestead to stay within the state’s acreage limit, with evidence such as a survey if you own adjacent land. A living trust may be a borrower only if it also meets Texas “qualifying trust” requirements.
- An exit path exists. A later loan under Section 50(a)(4) that pays off a 50(a)(6) loan and meets Texas requirements can be treated as a no-cash-out refinance.
Several statute-level details, such as waiting periods between loans, fee limits and where closing must happen, are Texas constitutional rules. Confirm them against the Texas Constitution text or with a Texas title company. This article describes them only in general terms. Lendmire’s piece VA Cash-Out vs. Conventional Cash-Out When Texas Homestead Rules Apply goes deeper on that choice.
Do a Spouse’s Debts Count Against You?
It depends on the program and the state, and it is not safe to assume either way. Agency policy generally counts debts for the people on the loan. Some programs reportedly treat a non-borrowing spouse in a community property state differently, and conventional is often described as lighter on this than FHA or VA. Those descriptions come from secondary sources, not agency text. Ask your loan officer to confirm how the specific lender treats it before you plan around it.
Which Occupancy and Property Types Get Homestead Rules?
Homestead protection generally attaches to the home you live in. That is also where cash-out leverage is highest, at 80% on one unit. A second home or an investment property sits at 75%, and homestead rules often do not apply to it. Occupancy therefore sets both the leverage and which state rules show up.
What Can Block a Conventional Cash-Out?
Several situations fall outside the standard cash-out box:
- A loan with a temporary buydown.
- Certain property-assessed clean energy (PACE) loan situations.
- Installment land contract payoffs.
- Energy-improvement transactions under a specific renovation product.
On the credit side, the wholesale conventional programs start at a 620 decision score. The automated underwriting finding governs most files, with a total debt-to-income ratio ceiling of 50%. Manually underwritten loans use tighter ratios of 36% or 45%, with reserve and score factors from the Eligibility Matrix. After a credit event, agency waiting periods apply: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Mortgage insurance is required above 80% LTV. On a standard cash-out at 80%, you are right at the line, so it typically does not apply. When it does apply, you may request cancellation at 80% of original value, and the servicer must end it automatically at 78%.
Lenders also charge loan-level pricing adjustments on cash-out loans. They come on top of the base price. This article describes them qualitatively only, because exact figures change.
Three Scenarios Without Dollar Figures
Spouse on title, one borrower, homestead joinder state. One spouse applies alone and qualifies. The other spouse is on title but stays off the note. Both sign the mortgage at closing because state law requires joinder. One signs a promise to repay, and the other signs to confirm the lien.
Spouse not on title, community property state. The home is in one name, bought before the marriage. Marital rights may still arise from payments made during the marriage. The lender may ask the spouse to sign the security instrument or a waiver. The title company tells you which.
Separated spouse. Here the paperwork can stall a closing. If state law needs the spouse’s signature and the spouse is absent or unwilling, some lenders will not proceed. A waiver, a recorded document or a court order may be an alternative. A family-law attorney and the title company should lead here.
If the other spouse lives out of state and needs to sign remotely, the logistics are a separate problem. Lendmire’s article DSCR Cash-Out Signing Rules for a Spouse Who Lives Out of State covers that from the DSCR side, and the mechanics of signing are similar even though the loan is not.
Your Pre-Application Checklist
Get these answers early. They prevent most last-minute problems.
1. Is the home your primary residence and do you claim homestead on it? 2. Who is on title, and who is on the note? 3. Is your state a community property, homestead joinder or dower state, or some mix? 4. Is the current first mortgage at least 12 months old, and have you been on title for 6 months? 5. If you are in Texas, does the loan fall under Section 50(a)(6)? 6. Does the spouse or a co-owner live elsewhere, and can they attend closing or sign in advance? 7. Is the property held in a trust or LLC? 8. Does any existing lien, such as a home equity line, need to be paid off or subordinated?
You will receive a Loan Estimate after applying and a Closing Disclosure before closing. Read the signature page on each one. Tell your loan officer early if anyone with an interest in the home cannot sign.
Weighing a Cash-Out Against Your Other Options
If your current first mortgage is already a good fit, a cash-out replaces it with a bigger balance. That is the real cost of the cash. Some borrowers prefer a separate second lien, which leaves the first mortgage alone. Others explore Lendmire’s cash-out refinance programs because they want one loan instead of two. Neither is better in every case. A higher balance, a lower leverage cap on cash-out than on a rate-and-term refinance, and added state conditions all belong in the comparison.
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
Can my spouse refuse to sign and still let me refinance?
Only if state law does not require the signature. If the law requires your spouse to sign the lien documents, the lender cannot close without them. If it does not, you may proceed alone when you qualify on your own. Your title company can confirm which applies.
Does signing the mortgage make my spouse responsible for the debt?
Not by itself. A non-borrowing spouse who signs the mortgage or deed of trust is acknowledging the lien and giving up conflicting rights. The note, which carries personal liability, is signed by the borrowers.
Does Texas treat every cash-out the same as other states?
No. Texas law can place a homestead cash-out under Section 50(a)(6), which changes the product options and caps leverage at the agency figure. Both Fannie Mae and Freddie Mac tell lenders to apply the state test regardless of how the agency classifies the loan.
Do these homestead rules apply to a second home or rental?
Generally not. Homestead protections attach to the home you live in. Occupancy also sets leverage: 80% on a one-unit primary residence, 75% on a second home or two- to four-unit property.
How do I know what my state requires?
Ask your loan officer and your title company before you apply. State law changes, and no general article can replace a review of your state’s statutes. A real estate attorney can answer the hard cases, such as separation or a trust.
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. All 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.
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. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. CFPB Regulation B, §1002.7 Rules Concerning Extensions of Credit
4. CFPB Regulation B Official Interpretation of §1002.7
5. Fannie Mae Selling Guide B5-4.1-02, Texas Section 50(a)(6) Loan Eligibility
6. Freddie Mac Seller/Servicer Guide §4301.7
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: Texas Conventional Cash-Out Refinance Rules for a Lock-in Homeowner · Conventional Cash-Out Seasoning Rules for a Recent Cash Buyer · Can a Texas Homestead Conventional Cash-Out Be Refinanced Later?
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.