The Quick Read: It depends on three numbers: your home’s appraised value, the loan cap for your program, and what you still owe. Cash equals the cap applied to value, minus your payoff, minus any costs rolled into the loan. On a conventional one-unit primary home, the cap is 80% of value, so you cannot pull out all your equity. Program details are subject to lender guidelines and full file review.
The Formula in One Line
Here is the whole idea: appraised value × the program’s cap − payoff of your current loan − financed costs = cash to you.
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.
The lender multiplies your appraised value by the cap for your loan type, which gives the largest new loan you can get. That loan first pays off your current mortgage. It then covers the closing costs you choose to finance. Whatever is left comes to you.
That is why “value minus mortgage” overstates your cash. It ignores the cap, and it ignores costs. Lendmire’s cash-out refinance programs page shows how the programs compare. The formula above works for every one of them. Only the cap changes.
Key Terms Defined
Appraised value: the value an appraiser assigns to your home. The lender uses it, not your own guess or an online estimate.
Loan-to-value (LTV): the new loan divided by the appraised value. An 80% LTV means the loan equals 80% of the home’s value. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Equity: appraised value minus what you owe. It is a paper number until a lender lets you borrow against it.
Payoff: the exact amount needed to close out your current first mortgage, including any interest owed at that point.
Net proceeds: the check you actually receive after the payoff and costs come out.
Seasoning: the waiting period a lender requires, such as how long you have owned the home or held the current loan.
A Worked Example (Percentages, Not Dollars)
Here is an illustration only. It does not describe any real borrower. Treat the expected appraised value as 100 units. Assume you owe 50 units on your first mortgage. Assume financed costs equal 3 units.
- The cap is 80% of value, so the largest new loan is 80 units.
- Subtract the 50-unit payoff. That leaves 30 units.
- Subtract 3 units of financed costs. You receive 27 units.
So in this illustration, you receive 27% of the home’s value. Your equity was 50% of value. Roughly half of it stays in the house.
Now change the balance. Same home, same cap, same 3 points of costs:
| What you owe | Cap room (80 − payoff) | Net cash |
|---|---|---|
| 30% of value | 50% of value | 47% of value |
| 50% of value | 30% of value | 27% of value |
| 70% of value | 10% of value | 7% of value |
| 80% of value | None | — |
Illustrative only. Real costs vary by file.
Notice the last row. Owing 80% of value means you have no cash-out room left at an 80% cap. Costs would also push you past the cap.
What Happens If the Appraisal Comes In Low?
A low appraisal cuts your cash directly, and it cuts it by nearly as much as the gap. The cap is a percentage, so the cap shrinks too. Your payoff does not.
Take the same borrower at three appraisals. Expected value is 100 points. Payoff is 50 points. Costs are 3 points.
| Appraisal | Cap (80%) | After payoff | Net cash |
|---|---|---|---|
| 105 points | 84 | 34 | 31 |
| 100 points | 80 | 30 | 27 |
| 95 points | 76 | 26 | 23 |
Illustrative only.
Compare the middle row with the bottom row. Value falls by 5 points, from 100 to 95, and net cash falls by 4 points, from 27 to 23, because the 80% cap takes 80% of that drop. The payoff stays fixed, so the whole shortfall comes out of your proceeds.
You can sanity-check your value before the appraisal. Look at recent sales of similar homes nearby, with similar size, condition and age. Treat online estimates as a rough range. The appraiser’s number is the one that counts.
How Does the Cap Change by Loan Type?
The cap depends on the program and on how you use the home. Here is how the figures sit across the programs Lendmire places files with. Everything is subject to lender guidelines and full file review.
| Situation | Typical maximum LTV |
|---|---|
| Conventional, one-unit primary home | 80% |
| Conventional, 2–4 unit primary home | 75% |
| Conventional, second home or investment property | 75% |
| Wholesale no-mortgage-insurance lane (primary home) | 89.99% |
| Texas homestead cash-out | 80% |
Two points on that table.
First, occupancy sets the leverage. A second home or rental sits under the lower cap. That is all this article says about it.
Second, the 89.99% lane has conditions. It needs a 680 decision score and a 50% total ratio. The loan must be a thirty-year fixed on a primary residence, at a conforming balance, with six months of seasoning. It is not available in Texas. In Texas, the state constitution caps a cash-out on a homestead at 80% of the home’s value.
FHA and VA work differently. An FHA cash-out sits at a firm percentage below full value. A VA cash-out can reach higher than conventional, but each lender sets its own limit. VA.gov says you need a Certificate of Eligibility and must plan to live in the home. The lender orders the appraisal. VA.gov also tells borrowers to understand how the new loan amount relates to the home’s value.
Streamlines pay no cash. The FHA Streamline and the VA IRRRL refinance an existing government loan. They exist to improve your terms, not to hand you equity. If you want cash, you need a true cash-out loan. VA’s home loan page describes the IRRRL as a VA-to-VA loan, separate from the cash-out program.
Why Mortgage Insurance Matters at Higher LTVs
Conventional loans above 80% LTV need mortgage insurance on the agency path. You can ask to cancel it at 80% of the original value. The servicer must end it automatically at 78%. The wholesale no-mortgage-insurance cash-out lane is the one exception to the eighty-percent rule. That is why it can reach 89.99% without it. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
What Comes Off Between Gross and Net Cash?
Gross cash is the cap minus your payoff. Net cash is what lands in your account. Here is the full list of deductions:
- Your first mortgage payoff, including interest owed up to the payoff date.
- Junior liens you pay off, such as a second mortgage or HELOC you choose to close.
- Closing costs you finance. Costs you pay at the table do not reduce proceeds, but financed costs do.
- Prepaid items, such as an escrow set-up for taxes and insurance, if your loan has one.
- Mortgage insurance or funding fees when they apply and are financed, described by the program, not as a quote.
You get a Loan Estimate that itemizes these, and a Closing Disclosure before you sign. Compare the cash figure on both. The final number can differ from your first estimate.
The CFPB reported median closing costs of $6,000 in 2022, in a release on closing-cost inquiry. That data covers purchase loans, so treat it as context only.
Second Liens, HELOCs and Free-and-Clear Homes
An existing second lien changes the math in one of two ways. If you pay it off at closing, it comes out of your proceeds, just like the first mortgage. If you want to keep it, the lender must agree to leave it behind the new loan. That can limit how much the new first mortgage can be. A cash-out replaces your first mortgage. It does not add a line of credit beside it.
A home with no mortgage still counts as a cash-out when you take a new loan on it. Both Fannie Mae and Freddie Mac treat a new loan on a free-and-clear home that way. The cap still applies. The payoff is simply zero.
Who Can Cash Out Right Now? Seasoning and Eligibility
Equity alone does not qualify you. Here is what lenders check.
- The mortgage being paid off must be at least 12 months old, counted from note date to note date.
- A borrower must have been on title for at least six months. Exceptions exist for delayed financing, inheritance and legal awards.
- Delayed financing lets you cash out soon after buying with cash. Fannie Mae caps that loan at your documented initial investment plus financed costs. It is still priced as a cash-out loan.
- Credit, income and assets are documented as for a purchase. The wholesale conventional programs start at a 620 decision score, and the total ratio ceiling on most files is 50%.
Freddie Mac also applies a credit fee in price to cash-out loans. The same section covers its seasoning and occupancy rules.
If you want only a little cash, that is a different loan. A limited cash-out refinance lets you take incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan or $2,000. Go above that, and the loan becomes a full cash-out with the lower cap and added pricing.
Manufactured homes can carry lower cash-out limits. Check the program matrix for your case.
Why Equity Is Not the Same as Cash
Lenders want you to keep some stake in the house. The CFPB’s guide to using home equity says lenders typically require you to keep 10% to 20% of your home’s value as equity. That is a typical range, not a program rule.
Three things then shrink the check:
1. The cap leaves a built-in cushion.
2. Costs and payoffs come off the top.
3. A low appraisal lowers both the cap and your proceeds.
So the honest answer to “how much of my equity can I get?” is: usually less than you expect. Many borrowers net well under their equity figure. A few points of value can swing the result.
How Much Should You Take?
Take what you need, not the maximum. A bigger first mortgage means a bigger balance. It also usually means more interest over the life of the loan. The CFPB guide notes that a cash-out can stretch out the time it takes to pay off the home. Every extra dollar you borrow is repaid with interest for as long as you hold the loan.
Think about what the cash is for. A kitchen remodel that adds value is one case. Paying off credit cards is another. On that second case, the CFPB found that cash-out borrowers’ credit scores rose sharply at first, then slipped. Credit card balances trended back toward their old levels within a year. Paying off the cards helps only if the spending stops.
If the cash is not enough, or the cap is too low, look at other options. A home equity loan or HELOC keeps your first mortgage in place. A smaller cash-out, or waiting until your balance falls or your value rises, can also work.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Mistakes
- Using your own value estimate in place of an appraisal. The lender’s number is the only one that counts.
- Forgetting that junior liens come out of proceeds.
- Assuming a streamline will pay cash. It will not.
- Counting financed costs as cash. They shrink your check.
- Ignoring seasoning. A recent purchase or a young loan can block a cash-out, even with large equity.
- Borrowing the maximum because the cap allows it.
Frequently Asked Questions
Can I take out 100% of my equity?
Rarely. Conventional cash-out loans on a one-unit primary home generally sit at 80% of value, and one wholesale lane reaches 89.99% with no mortgage insurance at a 680 score, so some equity always stays. Even where a program reaches higher, the cap is a ceiling on the loan, not a promise of cash. A low appraisal, existing liens and costs all reduce what you receive.
Is an appraisal required for a cash-out refinance?
Usually, yes. The appraised value sets the cap, so the lender needs a reliable one. Rules differ by program and lender, and a few programs allow alternatives in limited cases. Plan on an appraisal, and plan for the possibility that it comes in below your estimate.
Do I have to use my current lender?
No. You can refinance with any lender that offers the program you want. A mortgage broker such as Lendmire can compare programs from several wholesale lenders. Whoever you use, compare the Loan Estimates line by line, not just the cash amount.
What happens to the cash if I owe a second mortgage?
It depends on whether you pay it off. If you do, the payoff comes out of your proceeds. If you keep it, the new first loan must fit under the combined limits the lender allows, and the second-lien holder must agree to stay in place. Either way, your net cash shrinks.
Will my monthly payment go up?
Usually, since the loan balance grows. The size of the change depends on how much you borrow, the term and the terms you get. A cash-out can also lengthen how long you take to pay off the home. Compare your Loan Estimate to your current payment before you decide.
Your Next Step
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. Nothing here is a commitment to lend. Eligibility depends on your credit, income, property and the lender’s full file review.
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. VA.gov, Cash-out refinance loan
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. CFPB, Using home equity to meet financial needs
7. CFPB cash-out newsroom release
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Online Value Estimate vs Appraisal for a Cash-Out Refinance Limit · How to Pay Out an Ex Without Selling Using a Cash-Out Refinance · How Much Cash Comes Out of a Cash-Out Refinance When the 30-Year Clock Restarts?
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.