The Quick Read: Yes. Fannie Mae caps cash-out refinance loan-to-value at 80% on a one-unit principal residence, and at 75% on a two- to four-unit primary home. The cap counts every lien against the appraised value, so a second mortgage or HELOC that stays in place eats into it. Freddie Mac sets the same 80% figure for a one-unit primary home. Eligibility rules on seasoning, time on title and reserves apply on top of the cap, and individual lenders can set tighter limits.
What Does the 80% Cap Actually Measure?
The cap measures total debt against appraised value. Fannie Mae’s Eligibility Matrix lists maximum LTV, CLTV and HCLTV for each transaction. Those are three versions of the same idea:
- LTV is the new first mortgage divided by the appraised value.
- CLTV adds any other loans secured by the home.
- HCLTV adds the full credit line on a HELOC, drawn or not.
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: 7.32% as of October 22, 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.
On a one-unit primary home, the ceiling for a cash-out refinance is 80% on all three. The same matrix applies it to fixed-rate and adjustable-rate loans.
Here is where files go wrong. A borrower thinks the cap only applies to the new first mortgage. If a second lien stays in place, it counts. If the second lien gets paid off in the new loan, it shows up in the payoff line rather than the cap math.
The appraisal sets the denominator. The new loan cannot exceed the matrix percentage of appraised value. Freddie Mac’s Guide Section 4203.1 also treats appraised value as the basis for refinance LTV. A low appraisal shrinks the maximum loan directly. A home that appraises 5% below what the borrower expected loses 5% of the ceiling, and the cash to the borrower takes the hit because the payoff does not change.
Why Is Cash-Out the Tightest Transaction on a Primary Home?
Cash-out carries the lowest ceiling because the borrower is pulling equity out, not just changing the terms. The agencies price that as higher risk. The same matrix that sets 80% for cash-out shows far higher limits for a rate-and-term refinance. Across the wholesale programs Lendmire works with, a limited cash-out refinance on a one-unit primary home reaches 95% LTV, and 97% where the existing loan is agency-owned and the first-time-buyer program allows. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
That gap causes the most misreadings. A reader sees 97% somewhere and assumes it applies to cash-out. It does not.
| Factor | Cash-out refinance | Rate-and-term (limited cash-out) |
|---|---|---|
| One-unit primary LTV | 80% | 95%, up to 97% in some cases |
| Cash back to borrower | Yes, any amount within the cap | Only incidental |
| Pays off | First mortgage, plus any liens and costs | First mortgage, costs, purchase-money second |
| Mortgage insurance | Generally not needed at 80% or below | Required above 80% |
If the file is a cash-out, 97% is off the table. If the file only pays off the existing loan and costs, a different ceiling applies. Classify the transaction first. Everything else follows from that.
How the Cap Changes by Property and Occupancy
The cap is not one flat number. The matrix steps it down by units, occupancy and property type.
| Property | Cash-out LTV cap |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| One-unit second home | 75% |
| One-unit manufactured principal residence | 65% |
Those figures come from the Fannie Mae matrix and the older PDF version, which also carries the manufactured housing cap. Occupancy decides the leverage. A home you do not live in gets 75% at best on a cash-out, and this article stays on the home you do live in.
Texas works differently. A cash-out on a homestead there is capped by the state constitution at the agency figure, and the wholesale high-leverage lane described below is not written there.
How Do You Size the Loan?
The maximum new loan is the appraised value times the cap. Cash to the borrower is what is left after the payoff, any liens paid off in the transaction and closing costs.
Run it as a sequence, using percentages only:
1. Start with the appraised value of the home.
2. Multiply by 80% for a one-unit primary residence. That is the maximum new loan.
3. Subtract the payoff of the existing first mortgage.
4. Subtract any second lien or HELOC being paid off.
5. Subtract closing costs that come out of proceeds.
6. What remains is cash to the borrower.
The headline equity figure and the cash in hand are not the same. A borrower with 40% equity does not walk away with 20% of value. The existing payoff and costs come out first, and the loan still has to fit under the cap.
Say a homeowner owes 55% of appraised value and wants cash. The 80% cap leaves 25% of value as the maximum gross cash before costs and any other liens. Add a second lien at 10% of value that has to be paid off, and the room drops to 15%. Then subtract costs. The cap did not change. The pile of things sitting underneath it did.
The Consumer Financial Protection Bureau’s guide on using home equity notes that lenders typically require borrowers to keep 10% to 20% of home value as equity on a cash-out refinance, home equity loan or HELOC. The 80% cap puts the agency version of that at the 20% end.
What Rules Sit Next to the Cap?
Staying under 80% does not make a file eligible. Fannie Mae’s Selling Guide topic B2-1.3-03 adds conditions that decide a lot of files before LTV ever matters.
- Seasoning of the existing loan. The first mortgage being paid off must be at least 12 months old, measured from the existing note date to the new note date. Fannie Mae created that rule in Selling Guide Announcement SEL-2023-01. It does not apply to subordinate liens paid off in the transaction, or to a buyout of a co-owner under a legal agreement.
- Time on title. At least one borrower must have been on title for six months before the new loan is disbursed, unless an exception applies.
- Delayed financing. A cash purchase can be refinanced with cash out before the six months pass, with documented source of funds.
- Listing status. A home that was listed for sale must come off the market on or before the disbursement date.
- Reserves. On a Desktop Underwriter loan with DTI above 45%, six months of reserves are required.
- Other exceptions. Inheritance and legal-award situations are handled as exceptions to the ownership rule across the wholesale programs. The Guide’s ownership section controls the exact terms.
The seasoning point is where files get kicked back. A borrower closes a rate-and-term refinance, gets excited about equity growth, and applies for cash-out some months later. The 12-month clock runs from the note date of the loan being paid off, not from when the borrower bought the home. A refinance resets it.
Credit matters too. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Those are program-level floors, subject to lender guidelines. The LTV cap and the credit floor are separate tests. A strong score does not raise the 80% ceiling.
What the Cap Does Not Depend On
Credit score, income and loan size do not move the 80% ceiling on a standard cash-out. They affect other things:
- Pricing. The agency’s LLPA Matrix has a separate cash-out table, with adjustments based on credit score and LTV. Cash-out pricing is higher than limited cash-out. Those adjustments are built into the pricing, so they may not show up as a separate line item.
- Eligibility. Credit, ratios and reserves decide whether the file qualifies at all.
- Rate type. Fixed and adjustable carry the same 80% figure on a one-unit primary home.
The old high-LTV refinance option is not a cash-out path. The matrix states that acquisition of high-LTV refinance loans is suspended, and that option never applied to cash-out in the first place.
Is There a Way Past 80%?
One wholesale lane reaches higher. Across the programs Lendmire places files with, a cash-out lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance, with its own six months of seasoning. It is not an agency cap change. It is a lender program with its own rules, and it is not written in Texas. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Think about it as a trade. The agency cap is the baseline. A lender lane can exceed it for borrowers who fit a narrower box. Fit the box or you are back at 80%.
When a borrower wants more than the cap allows, the real options look like this:
| Option | What it does | Trade-off |
|---|---|---|
| Cash-in refinance | Pay down to meet the cap | Uses savings to reach the ceiling |
| Keep first mortgage, add second lien | Leaves existing loan in place | Combined balance still counts toward CLTV |
| HELOC or home equity loan | Sits behind the first mortgage | Separate terms, separate lender rules |
| Wait | Equity grows or balance falls | Delays the need |
| Higher-leverage lender lane | May exceed 80% for some profiles | Narrow eligibility, own seasoning |
The CFPB’s research blog draws the structural line. A cash-out refinance replaces the original mortgage. A home equity loan or HELOC leaves the first mortgage in place. Those are different products, and borrowers often treat them as interchangeable.
What About Lender Overlays?
Individual lenders can set lower limits than the agency caps. The agency publishes the ceiling. It does not require a lender to lend up to it. A lender might cap cash-out lower on certain property types, require a higher score at higher leverage, or ask for more reserves than the Guide does. That is why two lenders can look at the same file and return different maximums.
This is also why the published cap is a starting point. The Eligibility Matrix is the agency rule. The wholesale lender in front of the file adds its own layer.
What Should a Borrower Weigh Before Cashing Out?
The new loan is larger than the old one, so the monthly obligation and total interest cost can rise. Turning other debt into mortgage debt also changes the risk. The CFPB’s report on cash-out refinances and paydown behavior notes that converting non-mortgage debt into debt secured by the home can put the home at risk of foreclosure if payments become unsustainable.
Cash back is not free money. The home secures the larger debt. Pricing is higher on cash-out than on a rate-and-term refinance. Closing costs apply to the new loan, and they are not a footnote.
A quick checklist before applying:
- Confirm the transaction is cash-out, not limited cash-out.
- Confirm the existing first mortgage is at least 12 months old, note date to note date.
- Confirm time on title, or whether an exception applies.
- List every lien on the home, including any HELOC and its full line.
- Plan for the appraisal to come in below your estimate.
- Compare the new monthly obligation to what you pay today.
How Do You Verify the Current Cap?
Check the primary documents. The Fannie Mae Eligibility Matrix lists the caps, and Selling Guide topic B2-1.3-03 covers the conditions. Freddie Mac’s Guide Section 4203.1 lists its own maximums. Matrices get updated, and secondhand summaries lag. The agency page is the reference. A loan officer should be able to show the matrix line that applies to the file.
Key Terms Defined
- LTV (loan-to-value): The new first mortgage divided by the home’s appraised value.
- CLTV (combined LTV): All loans secured by the home added together, divided by appraised value.
- HCLTV: CLTV that counts the full credit limit on a HELOC, not just the drawn balance.
- Cash-out refinance: A new mortgage that pays off the old one and gives the borrower cash.
- Limited cash-out (rate-and-term): A refinance that pays off the loan and costs, with only incidental cash back.
- Seasoning: The minimum age of the loan being paid off or time on title before a cash-out.
- LLPA: A loan-level price adjustment, a pricing add-on based on credit score and LTV.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the cash-out refinance programs and the equity each one reaches, subject to lender guidelines and full file review. This is not a commitment to lend.
Frequently Asked Questions
Does Fannie Mae let me cash out down to 3% equity?
No. The 97% figure applies to limited cash-out and purchase loans, not to cash-out. On a one-unit primary home, a cash-out refinance tops out at 80% LTV, which leaves about 20% equity in the home. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Does a HELOC count toward the 80% cap?
Yes. The cap applies to LTV, CLTV and HCLTV, so a second lien or HELOC that stays in place counts. If it is paid off in the new loan, it comes out of your proceeds instead. Whether the payoff makes the loan cash-out or limited cash-out depends on the Guide’s rules for that lien.
Can I do a cash-out right after buying the home?
Usually not, with exceptions. At least one borrower must be on title six months before disbursement, and an existing first mortgage being paid off must be at least 12 months old. A cash purchase can use the delayed financing exception with documented source of funds.
Is the cap the same for a duplex?
No. On a two- to four-unit principal residence, the cash-out cap drops to 75%. Fannie Mae and Freddie Mac both use that figure for multi-unit primary homes.
Can a lender set a lower limit than Fannie Mae?
Yes. The agency sets the ceiling for loans it buys. A lender can apply tighter overlays on LTV, score or reserves, so the maximum on your file can be lower than the published cap. Exact terms depend on lender and investor guidelines, credit profile, reserves, and property review.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans 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.
For the program’s current guidelines, see conventional loan programs.
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References
1. Fannie Mae Eligibility Matrix
2. Freddie Mac Guide Section 4203.1
3. Fannie Mae Eligibility Matrix (earlier PDF)
4. CFPB guide on using home equity
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. Fannie Mae Selling Guide Announcement SEL-2023-01
7. LLPA Matrix
9. CFPB: CFPB Cash Out Refinances and Paydown Behavior of Non Mortgage Debt Balances
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Refinance a 2-4 Unit Primary Home to Drop PMI · How to Refinance Out of PMI After Buying at the Wrong Time · Does a Fannie Mae No Cash Out Refinance Allow Any Cash Back?
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.