The Quick Read: It depends on your appraised value, your current payoff, and the program’s leverage cap, and usually the check is a good deal smaller than the equity you think you have. The cap applies to the whole new loan, not to the cash. Your old mortgage, any other liens, and any financed costs come out first, and what remains is yours. Programs that look like cash-out tools, such as the FHA Streamline and VA streamline refinance, return almost nothing, so they cannot fund a down payment.
The Formula in One Line
The cash you receive equals the appraised value times the program’s maximum LTV, minus your current first mortgage payoff, minus any other liens, minus costs you roll into the loan.
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.
Four inputs drive it:
- Appraised value. This is the lender’s number, not your estimate. A low appraisal shrinks the check even if your own figure was higher.
- The leverage cap. For a conventional cash-out on a one-unit primary residence, it is 80% of value. It is 75% on two- to four-unit primary residences, second homes, and investment property.
- Payoff and liens. Your existing first mortgage, plus any HELOC or second lien being paid off, comes out of the new loan first.
- Financed costs. Anything rolled into the balance reduces the cash dollar for dollar.
Across the wholesale programs Lendmire places consumer loans with, this is the same arithmetic on every file. Only the cap changes. To see how those caps differ, visit Lendmire’s cash-out refinance programs page.
What the Check Looks Like at Different Balances
The check is about 80% of value minus your balance and costs, so a smaller balance means a much bigger check. Here is the gross cash before costs, shown as a percentage of the home’s appraised value, on a one-unit primary residence.
| Current balance (% of value) | Gross cash at 80% cap | Gross cash at 75% cap |
|---|---|---|
| 30% | 50% of value | 45% of value |
| 50% | 30% of value | 25% of value |
| 70% | 10% of value | 5% of value |
| 80% or more | Nothing | Nothing |
Two lessons come out of that table. First, owning 40% of your home does not mean getting 40% back. At an 80% cap you would get 20% of value before costs. Second, a borrower who bought recently with a small down payment often has little to cash out, even after prices rise.
Costs reduce every row. Origination and third-party charges rolled into the loan shrink the check.
Does the 80% Cap Apply Everywhere?
No. Conventional loans on a one-unit primary residence cap at 80% of value, and the cap drops to 75% for two- to four-unit primary residences, second homes, and investment property. Occupancy sets the leverage, and the Fannie Mae Eligibility Matrix lists the limits by occupancy and unit count.
Other lanes work differently:
- FHA. HUD limits an FHA cash-out to 80% of Adjusted Value. Mortgagee Letter 2019-11 cut the cap from 85% to 80%, so older articles quoting 85% are out of date.
- VA. A VA cash-out is a separate product from the VA streamline refinance. It can pay off liens of any type and put cash in your hand.
- Texas homestead. The state constitution caps a cash-out on a homestead (a Section 50(a)(6) loan) at 80% of the home’s value.
- A wholesale no-MI lane. One lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence, a conforming balance, and its own six months of seasoning. It is not written in Texas. Treat it as an exception to the 80% rule and ask whether your file fits it. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Lenders also read the cap against your credit and ratios. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, and the total ratio ceiling is 50%. All of this is subject to lender guidelines and full file review.
Which Loans Cannot Fund a Purchase
If you are holding an FHA or VA loan and hoping a streamline will free up cash, it will not. These products exist to lower a payment or change a term, not to pull equity.
- FHA Streamline. It refinances an existing FHA loan with limited credit review and a net tangible benefit test. Cash back is limited to minor closing adjustments.
- VA IRRRL. It refinances only the existing VA loan. The program carries a 0.5% funding fee unless you are exempt, with no VA appraisal required. Cash from a VA loan needs the separate cash-out product described in the VA Lenders Handbook.
- Conventional limited cash-out. This is a rate-and-term transaction. The most you can take is a token amount. Fannie Mae sets it at the lesser of 2% of the new loan or $2,000. Agencies revise these figures, so your loan officer confirms the current one.
The practical rule: if the goal is a down payment, you need a true cash-out loan. Anything else returns pocket change.
What That Cash Buys
The cash covers a down payment, not a whole house, and the target property’s use sets the size of the down payment. The leverage limits for the purchase itself are in the parameters below, shown as a share of the purchase price.
| Property you are buying | Typical max LTV | Down payment |
|---|---|---|
| Primary residence, first-time-buyer program | 97% | 3% |
| Primary residence, standard | 95% | 5% |
| Two- to four-unit primary residence | 95% | 5% |
| Second home | 90% | 10% |
Investment purchases sit lower still: 85% LTV on one unit and 75% on two to four units. Treat those as reference points. They are subject to lender guidelines and your full file.
Closing costs and reserves on the new house sit on top of the down payment, and the cash-out check has to cover them as well. A refinance check that exactly matches your down payment leaves nothing for the rest.
Eligibility Clocks That Catch Buyers Off Guard
You cannot cash out the day after you buy. Conventional cash-out loans carry seasoning rules:
- Six months on title. Freddie Mac’s Guide §4301.5 requires at least one borrower to have been on title six months before the note date. Named exceptions apply, including delayed financing, inheritance, and legal awards.
- A 12-month-old first mortgage. The first mortgage being paid off must be at least 12 months old, counted note date to note date.
- Delayed financing. If you bought a home with cash within the last six months, you can refinance it without waiting. The new loan is capped at your documented investment plus financed closing costs, and it still prices as a cash-out.
- Homes owned free and clear. A new loan on a home with no lien counts as cash-out, not as a rate-and-term refinance.
If you are close to a clock, ask your loan officer to map the dates before you apply. Learning that you are four weeks short after you have signed a purchase contract is expensive.
Qualifying for Two Houses
The refinance has to qualify at full underwriting, and then the purchase does too. Lenders re-qualify you on a larger payment for the home you already own. The purchase lender then adds that new payment to your ratios, along with the payment on the house you are buying.
Expect these steps:
1. Full documentation. Credit, income, and assets are reviewed, and the automated finding governs most files.
2. Ratios. A total ratio ceiling of 50% applies on the wholesale conventional programs. Manually underwritten loans are held to 36% or 45%, with reserve and score factors from the Eligibility Matrix.
3. Reserves. The matrix applies reserve requirements to cash-out refinances on automated Fannie Mae files where the DTI is above 45%.
4. Source of funds. Fannie Mae’s guidance on depository accounts says large deposits on a purchase must be documented. Cash from your refinance is documented by the closing statement.
A point many borrowers miss: whether refinance proceeds count as reserves on the next purchase is a lender-by-lender question. Ask the loan officer directly.
Buy First or Refinance First?
Refinancing first is usually cleaner, because you walk into the purchase with the cash in hand and a settled payment. Buying first with a bridge or equity line works when the timing is tight, but it adds a second layer of debt and a second set of closing costs.
Whichever order you choose, sequence it around the cancel window. On a refinance of the home you live in, you generally have until midnight of the third business day to cancel. That window must pass before funds are released. Do not schedule the purchase closing so tightly that funding timing breaks the contract.
Occupancy matters here too. A cash-out on a primary residence carries the highest conventional cap. If you move out and rent the old house first, you move into the 75% lane. Do the refinance while the home is still your primary residence.
Cash-Out Refinance vs. the Alternatives
A cash-out refinance replaces your first mortgage. Other tools leave it in place.
| Option | What it does to your first mortgage | Best fit |
|---|---|---|
| Cash-out refinance | Replaces it with a larger loan | Your current loan is not cheaper to keep |
| Home equity line (HELOC) | Leaves it in place; adds a second lien | You want flexible borrowing and keep your loan |
| Home equity loan | Leaves it in place; adds a fixed second lien | You need one lump sum |
| Bridge loan | Leaves it in place; adds short-term debt | Timing gap between purchase and sale |
The comparison turns on whether your current loan is worth keeping. If it is not, a cash-out refinance can fix the loan and raise the cash in one step. Keep in mind that a cash-out loan can lengthen the payoff time and raise the monthly payment.
Should You Do It? A Short Checklist
A cash-out refinance for a second purchase tends to make sense when most of these are true:
- Your balance sits well below the cap, so the check is large relative to your costs.
- The home is your primary residence, so you get the highest leverage.
- You clear the six-month and 12-month clocks.
- Your ratios hold after both payments are counted.
- You can carry the new payment if the second property sits empty for a stretch.
It tends not to make sense when the check barely covers the down payment, or when the refinance would swap a loan you like for a larger one just to unlock a few percent of value. Run a stress test: what if the new house needs repairs, or values soften after you borrow up to the cap? Two housing payments leave less room for surprises than one.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Cash-out refinance: A new, larger mortgage that pays off the old one and gives you the difference as cash.
Limited cash-out refinance: A rate-and-term refinance that returns only a token amount of cash.
Seasoning: The minimum time you must have owned the home or held the loan before a cash-out is allowed.
Delayed financing: A cash-out exception that lets a recent cash buyer borrow against the new purchase.
Right of rescission: The cancel window on a refinance of your primary residence.
Frequently Asked Questions
Can I take out 100% of my equity?
No. The program cap limits the new loan, so some equity always stays in the home. At an 80% cap on a one-unit primary residence, you keep at least 20% of value as equity before any costs. A wholesale no-MI lane reaches 89.99% LTV for qualifying primary residences, but it still leaves equity in place. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Is the cash enough to buy a house outright?
Rarely. A cash-out refinance usually funds a down payment, not a full purchase. How large a check you get depends on how small your balance is relative to value. If your balance is low, the check can be sizable, but you still carry the new mortgage payment.
Can I use an FHA Streamline or VA IRRRL to get cash for a down payment?
No. HUD limits an FHA Streamline to minor closing adjustments, and the IRRRL refinances only the existing VA loan. To pull cash from either type of loan, you would need a full FHA or VA cash-out, which uses a lower leverage cap and a full appraisal.
Does it matter if I bought my current home recently?
Yes. Conventional cash-out loans carry seasoning rules: a borrower on title for six months and a first mortgage at least 12 months old, with exceptions for delayed financing, inheritance, and legal awards. If you recently paid cash for the home, delayed financing may let you refinance sooner.
Do closing costs come out of the cash I receive?
Yes, when you finance them. Costs rolled into the new loan reduce your net check. Costs you pay at closing leave the loan amount alone, but they still reduce what you have to spend. Your Loan Estimate shows the costs on your file.
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. 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
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.
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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. Fannie Mae Eligibility Matrix
2. HUD Mortgagee Letter 2019-11
3. VA Lenders Handbook, Chapter 6
5. Fannie Mae B3-4.2-02 Depository Accounts
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 Retitle an Inherited 2-4 Unit for a Cash-Out Refinance · How Much a Cash-Out Refinance Lends Versus a Personal Loan · How Much Closing Costs Take From Your Cash-Out Refinance Proceeds
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.