The Quick Read: Your new balance is your current payoff, plus any costs you roll in, plus the cash you want. That total has to fit under the program’s loan-to-value cap, which is a percentage of what the home appraises for. Your new payment then depends on that balance, the interest rate, the term, any mortgage insurance, and escrow for taxes and homeowners insurance.
Key Takeaways
- The cap applies to the whole new loan, not just the cash. Payoff and rolled-in costs use up room first.
- Equity and available cash are different numbers. Equity is value minus what you owe. Cash is whatever the cap leaves after payoff and costs.
- A bigger balance generally means a bigger principal-and-interest payment. Term and rate can push it either way.
- Taxes, insurance and mortgage insurance sit on top of that payment, so compare total housing cost, not one line.
- Your Loan Estimate shows the real figures. Your own math gets you close before you apply.
What You Need Before You Start
Gather five inputs. You can pull most of them from a recent mortgage statement.
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: 7.18% as of November 5, 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.
1. Your best guess at the home’s appraised value.
2. Your current payoff, which runs a bit above the statement balance because of accrued interest.
3. The cash you want to receive.
4. The closing costs you expect to roll in, if any.
5. Your current payment, split into principal and interest versus escrow.
The appraised value is the one input you do not control. It also sets the ceiling on everything else. Treat your value guess as a range, not a point.
What a Cash-Out Refinance Does to Your Loan
A cash-out refinance replaces your current first mortgage with a larger one and pays you the difference. Freddie Mac’s Guide describes it as a refinance with no restriction on how the proceeds are used. The same section treats a loan placed on a home you own free and clear as cash-out too.
This is not a home equity loan or a line of credit. Those add a second lien and leave your first mortgage alone. A cash-out refinance swaps the first mortgage itself. One loan, one payment, one new term.
If you want a look at the programs Lendmire places, see Lendmire’s cash-out refinance programs page. Everything below applies whichever program you land on, subject to lender guidelines and full file review.
Step 1: Find the Maximum Loan Your Home Supports
Maximum loan equals the program’s maximum LTV times the appraised value. LTV, or loan-to-value, is the loan amount divided by the home’s value.
On a conventional cash-out, the cap depends on the home and how you use it:
| Property | Cash-out max LTV |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Occupancy sets the leverage, so a second home or rental gets a lower cap than the home you live in. Fannie Mae’s Eligibility Matrix lists these maximums, and the matrix gets revised, so confirm the current version.
Texas has its own rule. A cash-out on a homestead there is capped at 80% of the home’s value by the state constitution. The wholesale lane that reaches higher leverage is not written in Texas.
Step 2: Build the New Balance
Add three things to get your new balance:
- Your current payoff.
- Closing costs and prepaid items you choose to finance.
- The cash you want in hand.
Any financed program fee is added to the closing costs you finance, in the second item. Then compare the total with the cap from Step 1. If it fits, you get the cash you asked for. If it is over, you take less cash or bring money to closing.
Two common beliefs trip people up here. One: “My cash equals my equity.” It does not. Say your home is worth 100 and you owe 55. Your equity is 45. An 80% cap leaves only 25 points of room before costs. Two: “Closing costs sit outside the limit.” Costs you roll in sit inside it and shrink your cash.
A Worked Example in Percentages
Run the numbers on a one-unit primary residence with an 80% cap. Express everything as a percentage of appraised value. These inputs are modeled assumptions, not typical costs.
| Scenario | Payoff | Costs financed | Cash out | New balance |
|---|---|---|---|---|
| A: costs rolled in | 55% | 2% | 15% | 72% |
| B: costs paid in cash | 55% | 0% | 15% | 70% |
| C: wants more cash | 55% | 2% | 23% | 80% |
In scenario A, 55 + 2 + 15 gives 72% LTV. That is 8 points under the cap. In scenario B you skip the roll-in, so the balance is 70%, but you spend your own cash at closing. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Scenario C is where the cap bites. Suppose you hoped for 25% in cash instead of the 23% shown in the table. The total would hit 82%, which is 2 points over. The most cash available is 80 − 55 − 2 = 23, which is the figure the table uses. The cap, not your wish, decides.
Now stress the value. Suppose the appraisal comes in 5% lower than you hoped. The cap becomes 80% of 95, or 76% of your original estimate. Scenario A still fits. Scenario C shrinks to 19% in cash (76 − 55 − 2). A low appraisal hits the cash, not the payoff.
Step 3: Decide How to Handle Closing Costs
You can pay costs in cash, have them netted from your proceeds, or finance them. Financing raises the balance. Netting lowers the cash you receive. Paying upfront keeps the balance smaller but drains savings.
No single percentage fits every file. Costs vary by program, state and loan size, so describe them to yourself as a range and get the real number from your Loan Estimate. That form separates costs financed from cash to close. Compare the Loan Estimate with your Closing Disclosure before you sign.
Financing costs is not wrong. It is a tradeoff: you keep cash today and pay interest on those costs for the life of the loan. Interest is a real cost even when it feels invisible.
Step 4: Estimate the New Principal-and-Interest Payment
Principal and interest depend on three inputs: the new balance, the interest rate and the term. Your Loan Estimate gives the rate and term. This article does not quote rates, and any rate you see in a rough estimate is a placeholder until you have one in writing.
Here is the useful shortcut. Hold rate and term fixed, and the payment moves in proportion to the balance. In the example, going from a 55% balance to 72% is a balance roughly 31% larger (72 ÷ 55). Same rate, same term, and principal and interest would run roughly 31% higher.
Term changes the picture. If you have 22 years left and reset to a 30-year loan, the payment may rise less than the balance did, or even fall. But you restart the clock, and total interest over the life of the loan can climb even when the monthly figure looks easy. A refinance changes the payment and the total cost in different directions. Check both.
Step 5: Add the Rest of the Monthly Payment
Your real housing payment has layers. The CFPB’s explanation of payment components lists them: principal, interest, mortgage insurance if it applies, and escrow for homeowners insurance and property taxes.
Mortgage insurance. On the agency (Fannie Mae and Freddie Mac) path, it is required above 80% LTV, except the wholesale no-MI cash-out lane. That lane reaches 89.99% LTV at a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance, with its own six months of seasoning. Where insurance does apply, you can request cancellation at 80% of original value, and the servicer must end it at 78%, under the Homeowners Protection Act. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is a program-sheet range, not a quote. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Government loans. FHA charges an upfront and an annual mortgage insurance premium. A VA cash-out carries a funding fee that is higher than the fee on a VA streamline. Either can usually be financed, which raises the balance. Check HUD’s and VA’s schedules for the figures that apply to you.
Escrow. The CFPB’s escrow overview notes your total payment changes when taxes or premiums change. A payment is not fixed for life just because the rate is. You may also pay into escrow at closing, which counts toward cash to close.
Compare Old and New on Equal Terms
Put both loans side by side before you decide. Use the same layers for each.
| Item | Current loan | New loan |
|---|---|---|
| Balance | Today’s payoff | Step 2 total |
| Principal and interest | From your statement | Loan Estimate |
| Mortgage insurance | If any | If any |
| Escrow | Current | Re-estimate |
| Years remaining | Actual | Full new term |
Compare principal and interest first, then total payment. The CFPB advises comparing offers on principal and interest alone if escrow handling differs between lenders. Add the remaining-term row last. It shows what the reset costs you.
Who Qualifies and What Gets Checked
Underwriting looks at the file in layers. Across the wholesale programs Lendmire places files with, the conventional lanes start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45% with the reserve and score factors in the Eligibility Matrix. That matrix also notes that reserves apply to some cash-out files with a ratio above 45%.
Seasoning matters too. The first mortgage you are paying off must be at least 12 months old, counted note date to note date. You also need to have been on title for six months. Fannie Mae’s cash-out topic describes a delayed financing exception for recent cash buyers, and it also allows student loan payoff as a cash-out purpose. Inheritance and legal-award exceptions exist as well.
Whatever the seasoning path, the cash you plan around should not rest on a hoped-for value. Run Step 2 with a conservative value first. If the plan survives a low appraisal, it is sturdy.
Where the Rule Breaks
The general method holds. A few situations bend it.
- Free-and-clear homes. A new loan on a home with no mortgage is still cash-out, even though there is no payoff to subtract.
- Recent cash buyers. Delayed financing lets you take cash out inside the six-month window. The loan is still priced as cash-out.
- Two- to four-unit, second homes and rentals. The cap drops to 75%, so the room in Step 1 shrinks.
- Texas homesteads. The 80% constitutional cap applies, and the no-MI lane is not available.
- Manufactured housing. Eligibility is tighter, and some single-width homes are not eligible for cash-out.
- Above the conforming limit. Jumbo lanes take over. Across those programs, a 660 decision score, leverage up to 90% and loans up to $5,000,000 are the program figures, with a 50% ratio ceiling on the fixed lanes.
- Limited cash-out. A rate-and-term refinance pays off the first mortgage and closing costs and allows only small incidental cash back. If you take real cash, it is a cash-out. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The FHA Streamline and VA IRRRL are for existing government loans. They aim to lower cost, they do not pull equity, and they follow different rules.
Honest Limits on Your Estimate
Your math is an estimate. Four things move it:
1. Payoff includes interest accrued to the closing date.
2. The appraisal may differ from your guess.
3. Pricing adjustments rise with higher leverage and lower credit scores.
4. Escrow amounts get re-estimated.
A good check is to run your estimate three ways: a low value, your best value and a smaller cash amount. If all three leave a payment you could carry comfortably, you have a plan. If only the best case works, rethink the amount.
Then ask whether the cash is worth it. The CFPB’s guidance on similar loans cautions you to weigh the new interest rate against your current one. If your existing rate is low, taking a second lien may cost less than replacing the whole mortgage. That is a comparison worth running.
Key Terms Defined
Loan-to-value (LTV): the loan amount divided by the home’s appraised value, shown as a percentage.
Payoff: the amount needed to retire your current mortgage on the closing date, including accrued interest.
Seasoning: how long a loan or ownership has existed before a new loan can be written.
Escrow: the account your servicer uses to pay property taxes and homeowners insurance from part of your monthly payment.
Mortgage insurance: coverage paid by the borrower that protects the lender when LTV is high.
Limited cash-out refinance: a refinance that pays off the first mortgage and costs and allows only small incidental cash back.
Frequently Asked Questions
How much cash can I actually take out?
Take the maximum LTV times your appraised value, then subtract your payoff and any costs you roll in. On a one-unit primary residence with an 80% cap, that means 80% of value minus your payoff and any rolled-in costs. If the answer is small, your equity is mostly spoken for by the existing loan.
Will my monthly payment go up?
Usually the principal-and-interest portion rises because the balance is larger. A longer term or a different interest rate can offset that. Escrow and any mortgage insurance move the total too, so compare total housing cost on the Loan Estimate.
Do rolled-in closing costs reduce my cash?
Yes. Financed costs sit inside the loan cap, so every point you finance is a point of cash you cannot take. Paying costs out of pocket keeps the balance lower but uses savings.
What if the appraisal comes in low?
The cap shrinks with the value, so your available cash drops first. Payoff and costs stay the same. Build your estimate on a conservative value so a low result does not upend the plan.
Is a cash-out the same as a HELOC?
No. A cash-out replaces your first mortgage with one new loan. A HELOC or home equity loan adds a second lien and leaves the first mortgage in place. Which costs less depends on your current loan terms and how much you need.
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
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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. Freddie Mac Guide Section 4301.5
2. Fannie Mae Eligibility Matrix
3. CFPB: Principal and interest versus total monthly payment
4. CFPB: What is an escrow or impound account
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. CFPB’s guidance on similar loans
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Cash-Out Refinance Make Sense to Fund a Down Payment on a New Home? · How Lenders Underwrite a Cash-Out Refinance When It Resets the Mortgage to a New 30 Years · How a Cash-Out Refinance Works When You Buy Before You Sell
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.