The Quick Read: The cash you can take out is set by a loan-to-value cap, not by a fixed dollar limit. On a one-unit home you live in, the new first mortgage can reach 80% of the appraised value, and 75% on two- to four-unit principal residences, second homes and investment property. Your actual cash is what remains after the old loan, other liens, closing costs and fees are paid from that amount. Everything below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Key Takeaways
- The cap is a percentage of appraised value, applied to all liens combined.
- Cash to you is the maximum new loan minus payoffs and costs. It is never the simple gap between the cap and your balance.
- The 95% and 97% figures you may have seen belong to the limited cash-out (rate-and-term) refinance, not the standard cash-out.
- The existing first mortgage must be at least 12 months old, and a borrower must have been on title for 6 months, unless an exception applies.
- On expensive homes, the conforming loan limit can stop you before the LTV cap does.
What Is a Fannie Mae Cash-Out Refinance?
A cash-out refinance replaces your current first mortgage with a larger one and hands you the difference as cash, after costs. Fannie Mae doesn’t lend to you. It sets the rules a lender must follow for the loan to be eligible for purchase.
Under the Fannie Mae Selling Guide, the new loan can pay off the existing first mortgage, finance closing costs, points and prepaid items, and pay off subordinate liens of any age. It can also include real estate taxes, and the equity taken out may be used for any purpose. A new loan on a property with no mortgage at all is also treated as cash-out.
Three refinance types get confused, so here is the split:
| Refinance type | What it does | Cash to borrower |
|---|---|---|
| Standard cash-out | Pays off liens, then releases equity | Meaningful, up to the cap |
| Limited cash-out (rate-and-term) | Pays off first mortgage, costs, purchase-money second | Only incidental |
| No-lien property loan | Puts a new loan on a free-and-clear home | Treated as cash-out |
Lendmire is a mortgage broker, and its cash-out refinance programs are arranged through wholesale lenders in the 16 states where it handles consumer lending. The rules below are the agency’s, and the program details come from what those wholesale lanes use day to day.
How Does the Loan-to-Value Cap Decide Your Cash?
The cap is the whole game. Fannie Mae’s Eligibility Matrix sets a maximum LTV, CLTV and HCLTV for each occupancy type and unit count. Those three measures include any second mortgage or HELOC that stays in place, so a lien you keep counts against the same ceiling.
| Property and occupancy | Cash-out cap |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| Second home | 75% |
| Investment property | 75% |
| Manufactured home, principal residence | 65% |
Across the wholesale programs placed through Lendmire, the conventional cash-out lane works the same way: 80% on a one-unit primary home, 75% on the other categories above. One wholesale lane goes further, reaching 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance, plus its own six months of seasoning. It isn’t Fannie Mae’s rule, and it isn’t written in Texas, where a homestead cash-out is capped by the state constitution at the agency figure. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
An 80% cap means you keep at least 20% equity after closing. The limit protects you as much as it restricts you.
The Formula, Step by Step
The math is a short subtraction chain. Walk through it in this order:
1. Start with appraised value. The appraisal drives everything, so a lower value shrinks the cash directly.
2. Multiply by the LTV cap. That gives the maximum new first-lien amount.
3. Subtract the existing first mortgage payoff.
4. Subtract other required lien payoffs, such as a HELOC or second you’re closing out.
5. Subtract financed closing costs and prepaid items, plus any loan-level price adjustment built into the deal.
6. What’s left is your cash.
Picture a hypothetical one-unit home you live in, appraised at a round value and owed on at roughly half that value. At the 80% cap, the new loan could reach 80% of value. Subtract the payoff, which is about 50% of value, and the gap is around 30% of value. Closing costs, prepaids and fees then come out of that 30%, so your check is smaller. Now suppose a HELOC of about 5% of value is also paid off. The gap drops to about 25% before costs. No dollar amounts are needed to see the shape: every payoff and fee comes off the top.
That’s why “cash equals 80% of value minus what I owe” is only a first approximation. The final number depends on payoffs, fees, prepaids and underwriting approval.
What Shrinks Your Number Below the Cap?
Several things pull your cash under the ceiling, and most borrowers meet at least two.
The appraisal. If the home appraises below your expectation, the cap applies to the lower figure. Nothing else you do fixes that.
Closing costs. Origination, appraisal and title fees are the main items. The CFPB’s research on cash-out refinances notes that these costs can be substantial. You either pay them at closing or finance them into the loan, and financing them reduces cash dollar for dollar.
Loan-level price adjustments. Fannie Mae charges these on cash-out refinances, set by credit score and LTV. They are cumulative and based on the gross LTV. Cash-out pricing is generally higher than for a no-cash-out refinance, and the cost shows up either in pricing or in fees. Higher leverage and lower scores generally mean a larger adjustment.
Credit and ratios. Across the wholesale conventional programs, the floor starts at a 620 decision score, and the automated finding governs most files, with a total ratio ceiling of 50%. Credit minimums tier with LTV, so the highest-leverage cash-out generally asks for more. On automated cash-out files with a high ratio, minimum reserves can apply.
Lender overlays. Some wholesale lenders set tighter limits than Fannie Mae’s own. That’s why two lenders can quote different maximums on the same home.
When the Conforming Loan Limit Binds First
Fannie Mae can only buy loans up to the conforming limit set by the FHFA. The limit rises in high-cost counties and is revisited each year, usually with an announcement in late fall.
For most homes, the 80% LTV cap binds first. On a high-value home, it can flip. If 80% of the value exceeds the county limit, the new loan stops at the limit, and your cash is smaller than the LTV math suggests. Above the limit, jumbo lanes take over, with their own credit and leverage rules. Check your county’s limit before you assume the full 80%.
Eligibility Gates Before the Cap Matters
You can have plenty of equity and still be blocked by timing. Two seasoning rules apply, introduced in Fannie Mae’s announcement SEL-2023-01:
- The existing first mortgage must be at least 12 months old, measured from the existing note date to the new note date.
- At least one borrower must have been on title for at least six months, unless an ownership exception applies.
This catches two groups: recent buyers and anyone who refinanced within the past year. If you did a rate-and-term refinance eight months ago, a standard cash-out isn’t open yet. Waiting out the clock is often cheaper than finding a workaround.
The exceptions are real, though. Delayed financing, inheritance and legal-award situations can relax the title rule.
Where the General Rule Breaks
The 80% headline has several named exceptions. Some help you. Some close the door.
Delayed financing. A cash buyer can refinance without waiting out the six-month title period, as long as the original purchase was documented as having no mortgage financing. A settlement statement from the purchase is the usual proof. The Selling Guide limits this loan to the documented investment plus closing costs and fees, within the maximum LTV on current value. So it is not unlimited cash. Confirm the current limit in the guide before relying on it.
Limited cash-out is a different product. A limited cash-out refinance allows far higher leverage: 97% on a one-unit principal residence when the existing loan is agency-owned and the first-time-buyer program allows, and 95% otherwise, with 95% available on two- to four-unit homes. The trade-off is that you can’t take real cash. It pays off your first mortgage, closing costs and a purchase-money second, with only incidental cash back. Mortgage insurance applies above 80% LTV. The top band has tighter conditions: the existing loan must be Fannie Mae-owned, the home a one-unit primary residence, and the loan a fixed rate underwritten through the automated system. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Manufactured housing. The cap on a one-unit principal-residence manufactured home is 65%. Treatment of single-width homes is inconsistent across the agency’s materials, so lean on the lender for the current answer.
Student loan payoff. The Selling Guide has a feature that pays off student loan debt and waives the cash-out price adjustment when its requirements are met.
Programs that don’t mix with cash-out. HomeReady is for purchases or limited cash-out only. Community Seconds aren’t permitted with cash-out refinances. A mortgage with a temporary rate buydown has historically been ineligible for cash-out, and so has refinancing around certain PACE loans. Rules like these change, so check current text.
Co-owner buyouts. Freddie Mac handles these as a special-purpose cash-out refinance, and Fannie Mae has comparable treatment for buying out a co-owner. Lenders generally look for a period of joint ownership and primary-residence occupancy. Ask your loan officer for the current conditions.
Freddie Mac. The other agency has its own rulebook, including six months on title and a new appraisal. It publishes its own LTV limits, which can differ from Fannie Mae’s, so a lender may offer one or both.
Cash-Out or Something Else? The Decision in Practice
The right tool depends on what you need the money to do. Here’s how the main paths compare:
| Goal | Better fit | Why |
|---|---|---|
| Large lump sum, current loan is costly to keep | Cash-out refinance | Replaces the whole loan |
| Just lower the balance cost, no cash | Limited cash-out | Higher leverage, simpler |
| Small amount, want to keep your first mortgage | Second lien or HELOC | Leaves the first untouched |
| Existing FHA or VA loan | Government streamline | Fewer hurdles, no cash |
Resetting the term is the quiet cost. Cash-out replaces your first mortgage entirely, so you restart the clock and carry a larger balance, which raises the monthly obligation. If your current loan is one you’d like to keep, that alone can tip the choice toward a second lien. If you want a single payment and a clean slate, cash-out makes more sense.
Think about the equity cushion too. After an 80% cap loan, you’ve used most of what the agency lets you borrow against. A drop in home values then leaves less room than you started with.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
From Application to Disbursement
The sequence is the same for most files:
1. Eligibility check. Confirm the age of your existing mortgage, time on title, occupancy and property type.
2. Appraisal. It sets the value the cap applies to.
3. Payoff tally. The lender totals your first mortgage and any other liens being retired.
4. Underwriting. The automated system or a manual review looks at credit, ratios and reserves.
5. Disclosures. The Loan Estimate shows estimated closing costs and cash to close, and the Closing Disclosure shows the final figures. The CFPB’s Loan Estimate explainer is the best neutral guide for comparing offers side by side.
6. Closing. The old mortgage is paid off from the new loan’s proceeds, and the remainder is disbursed to you.
Compare Loan Estimates from more than one lender. Same cap, different costs, is a common outcome.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the home’s appraised value, shown as a percentage.
CLTV / HCLTV: Versions of LTV that add other liens, such as a second mortgage or the full HELOC limit, to the first mortgage.
Seasoning: The required age of your current loan and time on title before you can do a cash-out.
LLPA (loan-level price adjustment): A pricing add-on set by credit score and LTV, higher on cash-out than on a no-cash-out refinance.
Conforming loan limit: The maximum loan size Fannie Mae can buy, set annually by the FHFA. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Delayed financing: An exception letting a cash buyer take out a loan without waiting out the six-month title rule.
Common Misconceptions
- “I can borrow 95% to 97% of my value.” Those numbers belong to limited cash-out. Standard cash-out on a one-unit home tops out at 80%.
- “The cap is the same for every property.” It changes with occupancy, unit count and housing type.
- “I can refinance for cash any time after buying.” The title and note-age rules say otherwise, delayed financing aside.
- “Cash-out is just a rate-and-term refinance with a bigger number.” Fannie Mae treats them as separate loan purposes with different caps and pricing.
- “Conforming limits don’t matter on a refinance.” They cap the new loan like any other.
If you’re weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Related reading: Lendmire’s piece Fannie Mae LLC Seasoning Rules for BRRRR Cash-Out Refinance covers how the 12-month and six-month clocks are counted in more detail.
Frequently Asked Questions
What is the most cash I can take out of a home I live in?
Up to the amount that brings the new first mortgage to 80% of the appraised value on a one-unit principal residence, less payoffs and costs. Two- to four-unit homes, second homes and investment property cap at 75%. Lender overlays, credit, ratios and the conforming limit can reduce it further, subject to lender guidelines and full file review.
Can I roll closing costs into the new loan?
Yes. The Selling Guide allows the new loan to finance closing costs, points and prepaid items. The catch is that financed costs come out of the same capped amount, so they reduce your cash rather than adding to it.
Do I have to wait before a cash-out refinance after buying?
Usually, yes. At least one borrower must have been on title for six months, and the mortgage being paid off must be at least 12 months old. Delayed financing, inheritance and legal-award exceptions can change the title requirement, so ask which one fits your file.
Does a HELOC or second mortgage change how much I can get?
It does. Fannie Mae’s combined measures count every lien. If a second stays in place, it eats into the same ceiling, and if it’s paid off through the refinance, that payoff comes out of your cash.
Is a cash-out refinance the same as a limited cash-out refinance?
No. Limited cash-out allows leverage up to 95%, or 97% in a narrow case, but you receive only incidental cash. Standard cash-out caps at 80% on a one-unit home and is the one built for taking real equity out. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
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 research on cash-out refinances and non-mortgage debt paydown
4. FHFA
5. Fannie Mae Selling Guide announcement SEL-2023-01
6. CFPB, Loan Estimate explainer
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 Much Equity a Conventional Cash-Out Refinance Leaves in Your Home · How Much a Conventional Cash-Out Refinance Lends on a Second Home · How Much You Can Borrow With a Conventional Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- 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.