The Quick Read: It depends on the appraised value, the leverage cap for how the home is used, and what has to be paid off first. The new loan is capped at a percentage of value. Your cash is that loan minus the old mortgage payoff, any liens that must be cleared, and closing costs rolled in. Moving can change the answer because occupancy sets the cap, and the timing of the move against the refinance can decide whether you qualify at all.
- The cap is a percentage of the home’s value, not of your equity.
- Payoffs and financed closing costs come out of the same capped loan.
- Seasoning clocks (age of the current loan, time on title) can block a refinance before the math starts.
- Doing the refinance before the move is generally the cleaner path, subject to lender guidelines.
What Is the Formula for Cash Out?
The formula has four steps. Appraised value times the leverage cap gives the maximum new loan. Subtract the payoff of the existing first mortgage. Subtract any second lien or HELOC that must be cleared. Subtract closing costs, points and prepaids if they are rolled into the loan. What remains is your gross cash. Nothing in the agency guides sets a fixed dollar amount.
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.
For a conventional cash-out on a one-unit principal residence, the cap is 80% of value, subject to lender guidelines and full file review. On two- to four-unit principal residences, second homes and investment property, the cap is 75%. Occupancy sets the leverage, which is why a move matters.
Say a home is worth 100 units of value and the first mortgage payoff is 55% of that. At an 80% cap, the new loan can reach 80%, so roughly 25 points of value are available before costs and any other liens. Costs financed into the loan shrink that remainder. A second lien left in place shrinks it too, because the combined loan-to-value counts every lien. Fannie Mae’s Eligibility Matrix tracks LTV, CLTV and HCLTV separately for exactly that reason.
That last point is an easy one to miss. Borrowers often count only the first mortgage, then find a HELOC cutting the cash.
Gross Cash Versus Net Cash
Gross cash is the capped loan minus payoffs. Net cash is what lands in your account after costs and prepaids. They are not the same number.
| Line item | Effect on cash |
|---|---|
| Appraised value × leverage cap | Sets the maximum new loan |
| Existing first mortgage payoff | Subtracted |
| Second lien or HELOC payoff | Subtracted if it must be cleared |
| Liens left in place | Count toward the cap, reduce room |
| Financed closing costs, points, prepaids | Subtracted from the same capped loan |
| Costs paid out of pocket | Do not reduce the loan, but reduce your net |
The CFPB’s guide to the Loan Estimate and Closing Disclosure separates Total Closing Costs, Closing Costs Financed and Estimated Cash to Close. Read all three lines. The CFPB’s research on cash-out refinances notes that closing costs can be substantial, covering origination, appraisal, title and other fees, and that paying the new loan’s own closing costs was the third most frequent use of cash-out money. A “no-cost” offer does not remove them. The costs are built into the rate or the balance.
The old servicer refunds the old escrow account separately. That check is not part of the cash-out figure.
Does Relocating Change the Number?
Yes, in three ways: classification, leverage and eligibility. The standard cash-out lanes are written around a home you live in, so the timing of your move relative to the application matters.
| Situation | Classification | Cash effect |
|---|---|---|
| Still living there | Principal residence | 80% cap on one unit, 75% on two to four |
| About to move, keeping the home | Classification depends on how the lender treats the occupancy once you move | Depends on the final classification: 80% if it stays a principal residence, 75% if it is written as a second home |
| Already moved | Second home or investment property | 75% cap, and occupancy-based programs may not apply |
Occupancy rules also differ by program. Freddie Mac Bulletin 2023-24 requires all borrowers to occupy the home on a cash-out refinance secured by a primary residence, effective for settlement dates on or after March 6, 2024. A co-borrower who does not live in the home no longer fits that path. FHA and VA cash-out are built around a principal residence, and VA’s occupancy details are best confirmed with a lender. VA.gov notes the loan runs through a private lender, requires a Certificate of Eligibility, and warns about misleading refinance offers.
The practical message: if eligibility allows, do the cash-out before the move and before the home becomes a rental. That is not a promise that it works for every borrower. The underwriter will ask about occupancy plans, and the answers have to match the file.
Two Clocks That Can Stop the Refinance
Conventional cash-out has two seasoning tests. The first mortgage being paid off must be at least 12 months old, measured from the existing note date to the new note date. At least one borrower must also have been on title for 6 months. The Fannie Mae Selling Guide on cash-out refinances sets out the first-mortgage test and its exceptions. Freddie Mac’s Guide §4301.5 carries the six-month ownership requirement.
Exceptions exist: delayed financing for cash purchases, inheritance, legal awards, subordinate liens being paid off, and buying out a co-owner under a written agreement. Appreciation does not shorten either clock. The rules are about time, not value.
Conventional cash-out is capped at 80% of value on a one-unit principal residence, and mortgage insurance is required above 80% except in one case. That case is a wholesale lane that reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio on a thirty-year fixed, primary residence, conforming balance. It carries its own six months of seasoning. In Texas, a cash-out on a homestead (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution, and that wholesale lane is not written there. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
For a mover, the calendar is the real constraint. Bought the home within the last year? Check both clocks before you list the house or sign a lease on the next one.
Misconceptions That Shrink the Check
“80% means I get 80% of my equity.” The cap is 80% of appraised value. Existing balances and liens come out first.
“Paying off my second lien keeps this a small transaction.” A second lien that was not used to buy or build the home makes the refinance a full cash-out, not a limited one.
“A home with no mortgage isn’t cash-out.” A new loan on a free-and-clear home is still cash-out.
“Moving out doesn’t matter.” Occupancy sets the cap and, on some programs, eligibility.
“A streamline gives me cash.” Streamlines are for existing government loans and carry essentially no cash back. They are a different lane.
Limited Cash-Out and the Streamlines
If the goal is a better loan, not cash, the rate-and-term lane applies. It runs to 95% LTV on a one-unit principal residence, subject to lender guidelines. It pays off the first mortgage, closing costs and a purchase-money second lien, with only incidental cash back. Fannie Mae’s incidental cap is the lesser of 2% of the new loan or $2,000. Freddie Mac’s is the greater of 1% of the new loan or $2,000. Fannie Mae’s limited cash-out section has the cash-back rules.
Above 80% LTV on the agency path, mortgage insurance is required, except in the wholesale no-MI cash-out lane described above. It cancels on request at 80% of original value with good payment history, no subordinate liens and no decline in value, and ends automatically at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is a program-sheet range, not a quote. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The FHA Streamline and VA IRRRL apply only to existing FHA and VA loans. FHA Streamline skips the appraisal and limits credit review but requires a net tangible benefit. The VA IRRRL carries a 0.5% funding fee unless exempt, no VA appraisal, a net tangible benefit test and seasoning of the later of 210 days and 6 payments.
Using the Cash for the Next Home
Cash-out proceeds are paid at closing, so they can serve as a down payment on the next purchase only if the refinance is done first. Two cautions.
A larger balance means a larger payment, and that payment counts in your ratios when you qualify for the next home. The wholesale conventional programs start at a 620 decision score, with the automated finding governing most files and a total ratio ceiling of 50%, subject to lender guidelines. A new payment on the old home plus a new payment on the next one has to fit.
Second, a lender asks about your intent to occupy. Keeping the old home as a rental after a cash-out on a primary residence is a conversation to have with the loan officer before application, not after.
Refinance, Sell, or Something Else?
If the cash-out amount is too small, the options narrow:
- Sell. Sale proceeds are not capped by an LTV percentage.
- Home equity line. A second lien leaves the first mortgage untouched, which helps if the current loan is one you want to keep.
- Limited cash-out. Lower leverage needs, but only incidental cash back.
- Wait. If a seasoning clock is the obstacle, time solves it.
Break-even matters if you may sell soon. Closing costs on a refinance take time to earn back. If the sale is close, the costs may never be recouped, and the cash you pull out gets repaid at the sale anyway.
Lendmire’s cash-out refinance programs page lays out the conventional, FHA and VA lanes the brokerage places.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the home’s appraised value.
CLTV / HCLTV: Combined loan-to-value counts all liens; HCLTV also counts the full HELOC limit.
Seasoning: The minimum time a loan or ownership must exist before a refinance is allowed.
Note date: The date on the signed promissory note, used to measure loan age.
Cash-out refinance: A new mortgage larger than the payoff and costs, with the difference paid to you.
Limited cash-out refinance: A refinance that pays off the loan and costs, with only incidental cash back.
Delayed financing: An exception allowing cash-out soon after a cash purchase, with source of funds documented.
Frequently Asked Questions
Can I take out all of my equity?
No. The cap is 80% of value on a one-unit principal residence and 75% on two- to four-unit principal residences, second homes and investment property, subject to lender guidelines. Existing liens and financed costs sit inside that cap, so some equity always stays in the home.
Is the amount different if I have already moved out?
Usually, yes. Once the home is a second home or rental, the conventional cap is 75%, and programs written for a principal residence may no longer fit. Freddie Mac’s primary-residence cash-out also requires every borrower to occupy the home.
Do I need to wait before refinancing a recently bought home?
Often. The conventional path wants the loan being paid off to be at least 12 months old and a borrower on title for 6 months. Exceptions cover delayed financing, inheritance, legal awards and co-owner buyouts.
Does a VA move change anything?
VA cash-out requires a Certificate of Eligibility and runs through a private lender, with credit and income standards. Occupancy and funding-fee details should be confirmed with a lender before you plan around them.
Can I use the cash for a down payment on the next home?
Yes, if the refinance closes first and the larger balance still fits your ratios on the next purchase. Roll-in costs lower the net, so look at Estimated Cash to Close, not the loan amount.
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 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.
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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. CFPB’s guide to the Loan Estimate and Closing Disclosure
3. CFPB’s research on cash-out refinances
4. Freddie Mac Bulletin 2023-24
5. VA.gov
6. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
8. Fannie Mae Selling Guide B2-1.3-02, Limited Cash-Out Refinance Transactions
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 Cash Comes Out of a Cash-Out Refinance When the 30-Year Clock Restarts? · How Much Closing Costs Take From Your Cash-Out Refinance Proceeds
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.