The Quick Read: Qualifying works the same way as in any other state, with three added checks: whose debts the lender counts, who signs the lien documents, and how a spouse who is not on the loan is handled. Conventional files usually leave a non-borrowing spouse’s debts out, while FHA and VA files generally count them. A spouse may still need to sign the security instrument without becoming a borrower. Everything below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
What Is a Cash-Out Refinance, and How Is It Different?
A cash-out refinance replaces your current mortgage with a larger one and pays you the difference in cash. A refinance of the limited cash-out kind only pays off the old loan, closing costs and a purchase-money second lien. It allows just a small amount of cash back.
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.
That difference matters. Fannie Mae caps the cash back on a rate-and-term loan at the lesser of 2% of the new loan amount or $2,000. Freddie Mac sets its limit at the greater of 1% of the new loan amount or $2,000. Take more than that, or pay off a non-purchase second lien, and the loan becomes a cash-out. Leverage limits and pricing change with it.
For a conventional cash-out, the limit is generally 80% LTV on a one-unit primary residence and 75% on two- to four-unit homes, second homes and investment property. Occupancy sets the leverage. It does not decide whether you can do the loan. Texas homestead loans have their own constitutional cap, covered below.
Lendmire’s cash-out refinance programs page lays out the loan types Lendmire arranges as a broker through wholesale lenders. Lendmire is licensed for consumer lending in 16 states.
Key Terms Defined
Community property state: A state where most property and debts acquired during marriage belong to both spouses equally. Roughly nine states follow this rule, and Alaska allows couples to opt in.
Non-borrowing spouse: A spouse who is not on the note. They may still be on title or asked to sign the lien.
Security instrument: The mortgage or deed of trust that pledges the home as collateral for the loan.
Seasoning: The minimum time you must have held the loan or the title before a cash-out is allowed.
Delayed financing: An exception that lets a recent cash buyer take cash out before the normal title wait is over.
LTV: The new loan divided by the appraised value, counting all liens.
Which States Are Community Property States?
The VA’s lender training material lists Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin. Alaska is an opt-in state. The document is older, but the list of states changes rarely.
Wisconsin calls its version marital property, and the practical effect is similar for lending. Texas and Louisiana add their own home-equity and civil-law rules. This article stays national, so check your state’s rules with the title company early.
How Do Lenders Underwrite a Cash-Out Refinance?
Lenders review the same core items on every cash-out. In practice they are:
1. Equity. The appraisal sets value, and the cash-out cap applies to all liens combined. A low appraisal can shrink the cash amount.
2. Credit score. Across the wholesale conventional programs we place files with, the floor starts at a 620 decision score. The automated finding governs most files.
3. Debt-to-income ratio. The total ratio ceiling is 50% on most conventional files. Manually underwritten loans run tighter.
4. Seasoning. Under the Fannie Mae Selling Guide, the first mortgage being paid off must be at least 12 months old, measured note date to note date. Freddie Mac’s cash-out section requires at least one borrower to have been on title for 6 months, with listed exceptions.
5. Reserves. Fannie Mae requires 6 months of reserves on automated casefiles when DTI is above 45%.
A recent refinance creates a new note, so the 12-month clock restarts. Files that assume otherwise are the ones that get sent back.
There is also a no-mortgage-insurance lane worth knowing. One wholesale program reaches 89.99% LTV 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 and is not written in Texas. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
What Does Community Property Change?
Three things: whose debts count, who signs, and what happens to a spouse’s credit file. The answer depends on the loan program.
| Loan type | Spouse’s debts counted? | Spouse’s signature? |
|---|---|---|
| Conventional | Generally not if not a borrower; lender overlays possible | Only if state law requires it for a valid lien |
| FHA | Yes, in community property situations, unless state law excludes them | Same rule |
| VA | Yes, even if the veteran wants the loan in their name alone | Same rule |
Conventional
Agency rules generally do not require counting a non-borrowing spouse’s debts. Individual lenders may layer on their own rules, so treat this as a strong tendency, not a promise. When one spouse carries heavy debt, a conventional loan may treat the file more favorably than FHA or VA. That is a conversation to have with a loan officer.
Fannie Mae’s debt rules are in its monthly debt obligations section. The excerpt on non-applicant accounts does not speak to community property directly.
FHA
HUD’s older reference guide required a credit report on a non-purchasing spouse in these states. The spouse’s debts go into the borrower’s ratios unless state law lets them be excluded and the lender documents it. The same page says the spouse’s credit history is not a reason to deny. It exists to establish the borrower’s ratios. If the spouse refuses to authorize the report, the lender cannot establish the liabilities and the loan becomes uninsurable. The current rulebook is HUD Handbook 4000.1, so confirm live text with your loan officer.
FHA cash-out is for owner-occupied principal residences, and a non-occupant co-borrower’s income cannot be used to qualify.
VA
For VA loans in community property states, a spouse’s information may be requested and considered like the borrower’s, even when the spouse is not on the loan. Those debts must be considered even if the veteran wants the loan in their name only. Debts assigned to an ex-spouse by divorce decree generally are not charged to the borrower. For the VA’s own cash-out rules, see Lendmire’s piece How to Qualify and Apply for a VA Cash-Out Refinance Under Type 1 and Type 2 Rules.
Does My Spouse Have to Be on the Loan?
Not necessarily. A lender may require a spouse’s signature on the security instrument when state law makes it necessary to reach the property on default. That is different from making the spouse a borrower.
The spouse can also sign a document stating the signature only grants a security interest and creates no personal liability. Signing the deed of trust is not the same as borrowing.
A signature may also be required if you rely on your spouse’s separate income. If you qualify on your own income and the lender needs the lien to be valid, the signature is the only ask.
How Do I Apply, Step by Step?
1. Pre-screen. Confirm occupancy, how long you have held title, the age of the loan being paid off, and your total liens.
2. Pick the program. Conventional, FHA or VA cash-out. The program decides how a spouse’s debts are handled.
3. Apply and authorize credit. Your credit is pulled. On FHA, expect a request for the non-purchasing spouse’s information. On VA, the lender reviews the spouse’s debts.
4. Gather documents. ID, pay stubs, W-2s and tax returns as the underwriter asks, a payoff statement, insurance and tax information, and marital status and title details.
5. Appraisal. The value sets your LTV and caps the cash.
6. Underwriting. DTI is calculated, with a spouse’s debts added where FHA or VA rules require. Score, DTI and reserves drive the decision.
7. Title review. Title work confirms who holds title. Ask early whether your spouse must sign anything.
8. Closing and funding. Cash is released after closing and any applicable rescission period. Confirm that period with your loan officer.
Because this is a consumer mortgage, you receive a Loan Estimate and a Closing Disclosure along the way.
Where the General Rule Breaks
Texas homestead. A cash-out on a Texas homestead, known as a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The wholesale no-MI lane is not written there.
Divorce. Buying out a co-owner under a written agreement is a limited cash-out at both Fannie Mae and Freddie Mac. The keeping spouse generally has to qualify alone. Debts assigned to the ex-spouse by decree may be excluded on VA files.
Separate property. A home owned before marriage, or received by inheritance, may be separate property. A prenuptial or postnuptial agreement can also change who must sign. Title review settles this, not guesswork.
Spouse unavailable. If a spouse is estranged or will not sign where state law requires it, the lien may not be valid. That can stop the file regardless of your credit.
Recent cash buyers. Under delayed financing, a borrower who bought within the past 6 months may still take cash out if the exception’s conditions are met. Cash-out pricing still applies.
Streamlines. The FHA Streamline and VA IRRRL are no-cash-out products. Neither can put cash in your hand. Moving a non-VA loan into a VA loan is treated as a cash-out.
PACE loans. A PACE lien ahead of your mortgage gets special treatment. See Fannie Mae’s cash-out topic and Freddie Mac §4301.8.
What Delays These Files?
Three things come up again and again. A spouse’s collections or judgments push DTI over the limit on FHA and VA. The title company flags a signature requirement late. Or the borrower assumed leaving the spouse off the loan keeps their debts out. On FHA and VA in these states, it does not.
Plan for the spouse to be available at closing. Early title review prevents most of these problems.
What Does the Decision Look Like?
Picture a married couple where one spouse has a high score and the other carries significant installment debt. Run them as a conventional file and the second spouse’s debts may stay off the ratio. Run the same file through FHA or VA and those debts likely count. That alone can move the cash amount or the program choice.
Next, compare against alternatives. A home equity loan or HELOC adds a second lien and leaves your first mortgage in place. A cash-out replaces everything with one loan. Which is better depends on the loan you now hold and how much cash you need.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
Can I do a cash-out refinance without my spouse?
Often yes, but your spouse may still need to sign the security instrument if state law requires it for a valid lien. That signature does not make them a borrower. On FHA and VA files, their debts may still count against you.
Do my spouse’s debts count if they are not on the loan?
On FHA and VA loans in community property states, generally yes. Conventional agency rules generally do not require it, though a lender may add its own rules.
How long must I own the home or hold the loan?
For a conventional cash-out, the loan being paid off must be at least 12 months old and a borrower generally must be on title for 6 months. Delayed financing and inheritance are among the exceptions.
Can a VA IRRRL or FHA Streamline give me cash?
No. Both are no-cash-out refinances for existing government loans. Cash requires a full cash-out with appraisal and underwriting.
What is the loan-to-value limit on a conventional cash-out?
Generally 80% LTV on a one-unit primary residence and 75% on two- to four-unit homes, second homes and investment property. A Texas homestead is capped at 80% by the state constitution. All figures are subject to lender guidelines and file review.
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.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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
2. Fannie Mae Selling Guide B2-1.3-03
4. Fannie Mae Selling Guide B3-6-05
5. HUD reference guide, non-purchasing spouse
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Approved for a Cash-Out Refinance in a High-Cost State? · Does a Cash-Out Refinance Make Sense to Pay for Home Repairs on a Rural Property? · How to Qualify and Apply for a Cash-Out Refinance Versus Rate-and-Term Refinancing
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.