The Quick Read: A cash-out refinance replaces your mortgage with a bigger one and hands you the difference in cash. On a conventional one-unit primary residence, your total loans can reach 80% of the home’s appraised value. You qualify by clearing three tests: your equity must fit under that cap, your loan and title must be old enough, and your credit and income must pass review. All figures are subject to lender guidelines and full file review.
Key Takeaways
- LTV (loan-to-value) is your loan balance divided by your home’s appraised value. On a conventional cash-out, the ceiling is 80% on a one-unit primary residence and 75% on two- to four-unit primary residences.
- The cap covers all liens combined. It is not the amount of cash you receive.
- Seasoning has two parts: the first mortgage being paid off must be at least 12 months old, and you must have been on title for 6 months.
- The appraisal sets the math. A lower value shrinks both the cap and your cash.
- One wholesale lane reaches 89.99% LTV with no mortgage insurance, under tight conditions covered below, including its own six months of seasoning. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What “Maximum LTV” Means on a Cash-Out
Maximum LTV is the highest share of your home’s value that all your loans together can reach after closing. The lender divides the new first mortgage, plus any second liens that stay in place, by the appraised value. The result must sit at or under the cap for your occupancy and unit count.
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.
Here is where people trip up. The cap is a ceiling, not a payout. Your old mortgage gets paid off first. Closing costs come next. Whatever room is left under the cap is the most cash you can take.
Think of it as a bucket. The cap is the rim. Your payoff and costs fill most of it. The cash is what you can pour in before it spills.
Across the wholesale programs Lendmire places files with, occupancy and unit count decide the ceiling. Lendmire’s cash-out refinance programs page lays out the options side by side.
The Ceilings by Property and Program
| Property | Conventional cash-out ceiling |
|---|---|
| One-unit primary residence | 80% LTV |
| Two- to four-unit primary residence | 75% LTV |
| Second home | 75% LTV |
| Investment property | 75% LTV |
| Texas homestead (state constitution) | 80% of value |
| Wholesale no-MI lane, one-unit primary residence | Up to 89.99% LTV |
Occupancy sets the leverage, so a second home or rental sits at a lower cap than the home you live in. This article stays with the home you live in.
The Fannie Mae Eligibility Matrix governs these limits by transaction, occupancy and unit count. A rate-and-term refinance pays off your existing mortgage and takes only incidental cash, so it carries different leverage, and that is why you may see other numbers quoted elsewhere. Cash-out figures only compare with other cash-out figures.
Texas has its own rule. 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 lane below is not written there.
The Wholesale Lane Above 80%
Conventional loans above 80% LTV normally carry mortgage insurance. The wholesale no-mortgage-insurance lane is the one exception on a cash-out. It reaches 89.99% LTV, and the conditions are tight:
- A 680 credit score.
- A total debt ratio of no more than 50%.
- A 30-year fixed rate.
- A primary residence.
- A conforming loan balance, meaning it sits at or under the conforming loan limit.
- Its own six months of seasoning. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Miss any one condition and the loan drops back to the standard 80% ceiling. Texas homestead loans also fall outside this lane.
The Two Clocks: Title and Loan Age
You can have plenty of equity and still be too early. Conventional cash-out carries two waiting periods, and the Fannie Mae Selling Guide spells out both.
1. Time on title. At least one borrower must have been on title for 6 months before the new loan funds.
2. Age of the loan you’re paying off. If the first mortgage is being paid off, it must be at least 12 months old, counted from its note date to the new loan’s note date.
The second clock catches people. A refinance creates a new note, and the new note’s age is what counts. If you refinanced recently, the 12 months may restart.
There are exceptions. Delayed financing covers someone who bought with cash and wants to pull money out soon after. It follows cash-out leverage and pricing, with documentation required. Inheritance and legal awards are seasoning exceptions in the guides as well. Co-owner buyouts and certain renovation or construction-conversion loans also get relief, per a Freddie Mac bulletin attachment.
What the Lender Checks: Credit, Ratios and Reserves
Across the wholesale conventional programs, the decision score starts at 620. The automated finding governs most files, and the total debt ratio tops out at 50%. Manually underwritten loans use tighter ratios of 36% or 45%, with reserve and score factors from the Eligibility Matrix. On an adjustable rate under manual underwriting, the score floor is 640.
Fannie Mae also requires six months of reserves when an automated file shows a debt ratio above 45%. Reserves are the savings you’d have left after closing.
Credit events carry waiting periods set by the agencies. These are four years from a Chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Documented extenuating circumstances can shorten them.
Occupancy matters too. For a primary residence, the lender confirms you live there. Freddie Mac requires all borrowers to occupy it, per Guide section 4301.5.
How the Math Plays Out: A Worked Example
Run the numbers on a modeled home. These are assumptions, not market data. Call the appraised value 100 units. Say your payoff is 55% of value, and you finance costs equal to 3% of value. The cap is 80%.
- Cap: 80% of value.
- Payoff: 55%.
- Financed costs: 3%.
- Room left for cash: 22% of value.
Now suppose the appraisal lands 5% lower. The home is worth 95 units, so the cap drops to 76 units. Your payoff and financed costs still total 58 units. Cash falls to 18 units, which is about a fifth less than before.
A low appraisal does damage in two ways. The cap shrinks, and the payoff doesn’t. If the shortfall is big enough, the deal no longer makes sense.
You have four fixes:
- Take a smaller cash-out.
- Pay costs out of pocket instead of financing them.
- Pay down the balance first.
- Wait for the value to recover.
The Application, Step by Step
Prep matters more than most borrowers expect. A file that gets restructured mid-stream is a file that stalls.
1. Check your clocks. Confirm your title date and the note date on your current mortgage.
2. Estimate your equity. Use the 80% cap and your current payoff, then subtract about what costs will run.
3. Gather documents. Expect pay stubs, tax returns or other income proof, bank statements, your current mortgage statement, and proof of homeowners insurance.
4. Pick a loan officer and compare. Ask for a Loan Estimate, the standard form that itemizes costs. Compare full terms, not a single headline number.
5. Lock in the appraisal. The appraiser’s value is the denominator in every calculation.
6. Clear underwriting. Credit, income, ratios and reserves go through review. Title work confirms your seasoning dates.
7. Review the Closing Disclosure. It shows final costs and your cash to close or cash back. Check it against the Loan Estimate.
Closing costs are often due, as the CFPB notes. They reduce your net cash. Some borrowers finance them. Others pay them from savings to protect room under the cap.
When the Rule Bends: Edge Cases
Second liens and HELOCs. Paying off a second lien that wasn’t used to buy or improve the home can change how the loan is classified. A purchase-money second lien paid off in a refinance is treated differently from a HELOC you drew on for other uses. Ask your loan officer how yours is classified before you apply.
Free-and-clear homes. A new loan on a home with no mortgage counts as cash-out, per Freddie Mac.
Co-owner buyouts. Under a written agreement, buying out a co-owner is a limited cash-out transaction at both agencies. It doesn’t use the cash-out ceiling.
A co-borrower who doesn’t live there. On a primary residence, Freddie Mac requires all borrowers to occupy the home. This can force a restructure, so raise it up front.
Government loans. The FHA Streamline and the VA IRRRL are rate-reduction tools for existing government loans. They don’t provide cash.
VA cash-outs come in two types, per VA Circular 26-19-05. Type I stays at or below the payoff of the loan being refinanced. Type II exceeds it. Every VA cash-out must pass a net tangible benefit test, meaning the loan must clearly help you. Many lenders set their own VA limits lower than VA’s ceiling.
FHA cash-out is for a principal residence only. Its limits and requirements differ from conventional, so ask for the current FHA figures when you compare.
Jumbo balances. Above the conforming limit, jumbo lanes take over with their own score and leverage rules. Ask your loan officer for current limits.
What a Bigger Loan Does to You
A cash-out replaces your balance with a larger one. That can raise your monthly payment and stretch your payoff, as the CFPB’s housing equity guide notes. Your equity cushion also thins. The cap means you must keep a minimum stake in the home after closing.
Compare it with other options. A HELOC or home equity loan leaves your first mortgage alone, and each option can cost more or less depending on terms. If your current first mortgage is one you’d like to keep, a second-lien option may fit better. If you’d refinance anyway, the cash-out might make sense.
Be honest about the use of funds. Paying off cards only helps if the balances stay paid off.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
LTV (loan-to-value): Your loan balance divided by your home’s appraised value.
CLTV (combined loan-to-value): All loans on the home added together, divided by value.
Seasoning: The waiting period that proves you’ve owned the home or held the loan long enough.
Limited cash-out (rate-and-term) refinance: A refinance that pays off your mortgage and costs, with only small cash back.
Delayed financing: A cash-out exception for a home bought with cash.
Net tangible benefit: A test that the new loan clearly improves your situation.
Your Next Step
Check your dates first, then your equity. If both fit, compare programs on the same home value so the numbers line up. 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.
Frequently Asked Questions
Can I borrow the full 80%?
No. The 80% is the ceiling for all your loans combined. Your payoff and costs come out first, and your cash is what remains.
How soon after buying can I do a cash-out?
Conventional rules require 6 months on title. If you paid cash, delayed financing may allow a cash-out sooner, subject to documentation and cash-out leverage. Other exceptions exist for inheritance and legal awards.
Does a recent refinance block a cash-out?
A recent refinance can block a cash-out. The loan being paid off must be at least 12 months old, note date to note date. A recent refinance creates a new note, which can restart that clock. Some exceptions apply, so confirm with your loan officer.
Can I go above 80% LTV?
In one case. A wholesale lane reaches 89.99% with no mortgage insurance, but it requires a 680 score, a 50% ratio or lower, a 30-year fixed rate, a primary residence, a conforming balance and its own six months of seasoning. Texas homesteads are capped at 80% and are not eligible. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
What if the appraisal comes in low?
Your cap shrinks, and your cash drops with it. You can take a smaller amount, pay costs out of pocket, pay down the balance, or wait. A 5% lower value can cut cash by about a fifth in a typical example like the one above.
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. Fannie Mae Selling Guide B2-1.3-03
3. Freddie Mac bulletin attachment
4. Freddie Mac Guide section 4301.5
5. CFPB: What Other Types of Loans Are Similar to a HELOC
7. CFPB older Americans housing guide
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 a Cash-Out Refinance Works for a Big Expense · How a No-Cost Cash-Out Refinance Works · How the Cash-Back Line Works on a Cash-Out Refinance
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.