The Quick Read: Usually, yes. An heir who keeps the house can generally take a conventional cash-out refinance, and the normal six-month wait on title is waived when the lender documents an inheritance. The heir still has to be on title, live in the home for a primary-residence loan, and qualify on personal income and credit. Other rules, like the age of any existing mortgage, still apply.
What does “won’t sell” change for a lender?
Nothing, in one sense. A lender doesn’t care whether the family agrees on a sale. It cares whether the person signing the loan owns the house and can repay the debt.
That is good news for the heir who wants to stay. Refusing to sell doesn’t disqualify you. It just means you, personally, become the borrower, and the loan is built on your file.
A cash-out refinance replaces the financing on the home with a new first mortgage, and the proceeds can be used for any purpose. Lendmire arranges these through wholesale lenders, and its cash-out refinance programs follow the agency rules described below. Every figure here is subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Do you have to wait six months after inheriting?
No. The usual rule says at least one borrower must be on title for six months before the new loan funds. The Fannie Mae Selling Guide waives that wait when the lender documents that the borrower acquired the property by inheritance. The same exception covers a property legally awarded in a divorce.
Freddie Mac keeps its own six-month ownership requirement in Guide section 4301.5. Across the wholesale programs I place files with, the inheritance exception is the norm. Still, treat the exact wording as something the lender confirms on your file, not something to assume.
One trap: the exception waives the title wait only. It does not waive anything else.
What still applies after the exception?
Plenty. Here is the short list:
- Title. You must be the owner of record, not just a named beneficiary.
- Personal qualification. Income, credit, debt-to-income ratio (your monthly debts as a share of income) and reserves are all reviewed. The inheritance itself is not income.
- Appraisal. Value comes from a new appraisal, not an estate figure or a date-of-death value.
- Occupancy. A primary-residence cash-out means you live there.
- Existing mortgage age. If the house carries a first mortgage you are paying off, it must be at least 12 months old, measured from the old note date to the new one.
That last rule surprises people. The Fannie Mae guide lists carve-outs for subordinate liens and co-owner buyouts, but inheritance is not listed as waiving the 12-month rule. So if the heir is paying off a recent first mortgage on the house, ask the lender how it applies before you plan around it.
How much can you borrow?
Leverage depends on how you use the home. On the programs I work with, a conventional cash-out on a one-unit principal residence goes up to 80% loan-to-value (LTV), meaning the new loan can be 80% of the appraised value. Two- to four-unit principal residences, second homes and investment property are capped at 75%.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence, a conforming balance and its own six months of seasoning. (In Texas, cash-out on a homestead is capped by the state constitution, and that lane is not written there.) Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
For credit, the wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. A high ratio can also trigger reserve requirements. Fannie Mae asks for six months of reserves when the automated ratio runs above 45%.
If the house is a second home or a rental, occupancy decides the leverage, and the 75% cap applies.
What if the house is paid off?
It is still a cash-out. Freddie Mac says a mortgage placed on a property previously owned free and clear must be treated as a cash-out refinance. Heirs often assume that borrowing against a house with no loan is a plain refinance. It isn’t.
The upside: with no mortgage to pay off, the 12-month existing-loan rule has nothing to measure. Title and your personal file become the main gates.
Which situation is yours?
| Situation | Who decides | Can a cash-out happen yet? |
|---|---|---|
| Probate still open | Personal representative | Usually not; title isn’t in your name |
| Probate closed, you hold title alone | You | Yes, if you qualify |
| Title shared with co-heirs | All owners | Depends on the buyout structure |
| Heir not on title (tangled title) | Unclear | Not until title is cleared |
Probate and title clearing, not the six-month rule, are usually the real delay. Fannie Mae’s heirs’ property page says that without clear title, owners may be unable to access equity or obtain a mortgage. Fannie Mae will not buy a loan with an unacceptable title impediment. Get the deed sorted first.
What if a co-heir wants out and you want to stay?
This is the most common version of “won’t sell.” One sibling wants the house kept. The others want their share.
There are two ways a refinance can fund that buyout.
The limited cash-out route. Fannie Mae’s heirs’ property page describes a limited cash-out refinance for clearing title and vesting it in the rightful heirs, or for buying out one or several co-owners. It also says the 12-month seasoning requirements don’t apply to recent heirs. Fannie Mae added a rule that at least one borrower on the new loan must be a current owner of the property. The cash goes to the departing heirs, not to you. Expect to take only incidental cash back.
The cash-out route. A cash-out can also pay out co-owners. The guide carves out buying out a co-owner under a legal agreement from the usual rules. Freddie Mac has a similar “special purpose cash-out,” where the owner uses the proceeds to buy out a co-owner’s equity. Parties who inherited an interest are exempt from the occupancy-evidence requirement.
Either way, the lender will want the buyout agreement documented, and the departing heirs will have to sign the deed over. In practice, a written agreement among the family makes the file far easier to review.
Which route fits depends on the numbers. The rate-and-term version reaches higher leverage, 95% on a one-unit primary residence, but it pays only the existing first mortgage, closing costs and the buyout. The cash-out version tops out lower but lets you take proceeds for any purpose. A broker can price both against your equity.
Can you qualify alone?
The loan is yours personally, so your income and credit decide it. If you can’t qualify alone, a co-borrower can help. So can paying down other debts or holding more reserves. Some families agree to a staged buyout instead.
Sometimes the honest answer is that the numbers don’t work. Then the choices are:
- A sale, with the proceeds split.
- A home equity loan or line of credit, which sits as a second lien on top of any existing mortgage.
- A longer-term arrangement among the heirs.
Lendmire’s piece Can Heirs Who Will Not Sell Get a HELOC on an Inherited Home? covers that second-lien path.
What about a life estate or a trust?
Both come up with inherited homes, and both add paperwork.
Fannie Mae’s property eligibility rules say title must be held as fee simple, which may include a life estate. Life estate loans carry extra signature and vesting requirements, so ask the lender early.
Trusts are another case. Older Fannie Mae text let trust time count toward ownership when the borrower was the primary beneficiary. Treat that as background and confirm the current rule with the lender.
Why the house can’t be on the market
A small rule that catches heirs who first tried to sell: a property listed for sale must be taken off the market on or before the loan funds. If the family listed the house and then changed course, cancel the listing before closing.
What costs and risks come with it?
A cash-out replaces your existing financing with a new, larger first mortgage on the whole balance. It doesn’t add a second lien. Your monthly payment, interest cost and cash in hand all depend on that new balance. Closing costs apply to the full loan amount.
Mortgage insurance is the other piece. It is required above 80% LTV, can be cancelled at 80% of original value with good payment history, and must end automatically at 78%. On the 80% cash-out cap, it doesn’t come into play. Published typical annual premiums run 0.58% to 1.86% of the balance. That is a range, not a quote.
Your home becomes collateral for the debt. If the heirs’ agreement falls apart after you borrow, you carry the loan alone.
On a primary residence, a refinance also carries a federal three-day right to cancel. Regulation Z sets this out. Funds generally arrive after that window. It applies to primary residences, not second homes or rentals.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. An estate attorney can also help if title or the family agreement is unclear.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off the old one, with extra proceeds you can use for any purpose.
Seasoning: The waiting period a lender requires, such as time on title or the age of an existing loan.
Limited cash-out (rate-and-term) refinance: A refinance that pays off the existing mortgage and closing costs, with only incidental cash back.
Loan-to-value (LTV): The loan amount as a percentage of the home’s appraised value.
Heirs’ property: A home passed down without clear, updated title, which can block financing.
Fee simple: Full ownership of the property, the standard form of title lenders expect.
Frequently Asked Questions
Can I get a conventional cash-out before probate ends?
Usually not. You need to be the owner of record, and probate generally has to finish first. A named beneficiary isn’t yet an owner. Once title is in your name, the six-month wait doesn’t apply to inheritance.
Does the inheritance count as my income?
No. The lender underwrites you on your own income, credit, debts and reserves. The home’s value helps set how much you can borrow, but it doesn’t help you repay.
Can I take cash out if I’m buying out my siblings?
Not for yourself on a buyout structure. On the buyout route, proceeds are meant to pay the other owners. If you want cash beyond the buyout, that is a separate conversation with the lender about the cash-out structure and its leverage cap.
What if the house has a mortgage the deceased took out recently?
The existing first mortgage generally must be at least 12 months old, note date to note date. The inheritance exception isn’t listed as waiving that rule. Ask the lender how it applies to your file.
Does this work for a house I’ll rent out or use as a second home?
Yes, but occupancy decides the leverage. Second homes and investment property cap at 75% LTV on cash-out, below the 80% for a primary residence. 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
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.
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. Freddie Mac Guide Section 4301.5
3. Freddie Mac Bulletin on Free-and-Clear Properties
5. CFPB Regulation Z, Section 1026.23
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: How to Get a Conventional Cash-Out During and After a Divorce · Can You Challenge a Low Appraisal on a Conventional Cash-Out? · Conventional Cash-Out Refinance Limits on a Vacation Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.