The Quick Read: The maximum loan-to-value ratio (LTV) caps your new first mortgage as a percentage of your home’s appraised value. On a conventional cash-out refinance, the cap is 80% for a one-unit home you live in. It drops to 75% for two- to four-unit homes, second homes and investment property. Your cash is whatever room is left under the cap after payoffs and costs, and passing the cap test does not guarantee approval.
The Short List
- The cap applies to the whole new loan, not just the cash you take out.
- Two clocks apply: 12 months on the loan you’re paying off, and 6 months on title.
- The appraisal sets the value in the formula, so a low appraisal shrinks your cash.
- A second lien that stays open counts against you. One you pay off drops out.
- Credit, income, reserves and documents decide whether you reach the cap at all.
What Does “Maximum LTV” Mean on a Cash-Out Refinance?
Maximum LTV is the largest new first mortgage a lender will write, expressed as a share of appraised value. The formula is simple: appraised value times the cap equals the largest new loan. Subtract what you owe, plus costs, and what remains is your cash.
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: 7.32% as of October 22, 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 the part people miss. The cap limits the total balance. It does not limit the cash.
Think of it as a ceiling on the room. Your existing payoff is furniture already in the room. Closing costs take up more space. Whatever floor space is left is what you can pull out.
One more piece of vocabulary. A cash-out refinance replaces your current first mortgage with a new, larger one and hands you the difference. That is different from a home equity loan, which adds a second loan and leaves your first mortgage alone. Many borrowers compare the two, and the underwriting is not the same.
What Are the Maximum LTV Limits by Property Type?
On conventional loans, occupancy and unit count set the ceiling. Across the wholesale programs we place files with, the picture looks like this:
| Property | Cash-out max LTV | Rate-and-term max LTV |
|---|---|---|
| One-unit principal residence | 80% | 95% (97% on some programs) |
| Two- to four-unit principal residence | 75% | Program-specific |
| Second home | 75% | Program-specific |
| Investment property | 75% | Program-specific |
The “rate-and-term” column is the contrast case. A limited cash-out, or rate-and-term, refinance pays off your existing first mortgage and closing costs, with only incidental cash back. It can reach much higher leverage because you are not extracting equity. The 97% figure applies where the existing loan is agency-owned and a first-time-buyer program allows it. Mortgage insurance applies above 80%.
Fannie Mae’s Eligibility Matrix lists these cash-out ceilings by occupancy and unit count.
Most homeowners reading this live in the house, so 80% is the number that matters. For any other occupancy, the answer is one sentence: the property’s use decides the leverage, and the cap is lower.
There is one exception worth knowing. A wholesale lane we use reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% total ratio, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. It is narrow, subject to lender guidelines and full file review, and not a commitment to lend. Most borrowers still land at the 80% cap.
You can also see how these loans are set up on Lendmire’s cash-out refinance programs page.
How Is a Cash-Out Refinance Underwritten, Step by Step?
The lender walks through the same sequence on nearly every file. Here is how it plays out.
Step 1: Classify the loan. The lender decides whether you are doing a rate-and-term or a cash-out refinance. Cash beyond a small incidental amount tips it into cash-out. So does a new loan on a home you own free and clear.
Step 2: Check the clocks. The first mortgage you are paying off must be at least 12 months old, measured from its note date to the new note date. At least one borrower must also have been on title for 6 months. Fannie Mae’s Selling Guide states both tests. The 12-month note-age rule came through a Fannie Mae announcement on note dates starting in April of 2023.
Those are separate tests, and plenty of equity does not fix a loan that is too young.
Step 3: Order the appraisal. A new appraisal sets the value. This is the “V” in LTV, and it controls everything after it.
Step 4: Count every lien. The lender tests the first mortgage by itself, and also combined with any second lien that remains. A HELOC that stays open raises your combined ratio. A second lien you pay off at closing drops out of the math.
Step 5: Qualify the borrower. Credit, income, employment, assets and reserves all get reviewed. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run tighter, at 36% or 45%.
Step 6: Price and disclose. Pricing reflects your credit score and your LTV, and higher leverage costs more. You then receive a Loan Estimate and, later, a Closing Disclosure. Read both against each other.
How Much Cash Can You Actually Take Out?
You can take out the cap, minus everything else that comes out of the same room. Run the numbers on a modeled home with these assumed inputs: a one-unit principal residence, an 80% cap, and an existing mortgage equal to 60% of the appraised value.
- Maximum new loan: 80% of value.
- Existing payoff: 60% of value.
- Room left before costs: 20% of value.
- Closing costs and prepaids then reduce that 20% further.
That is the forward calculation. Here is the reverse, which most borrowers never see. Say you want 15% of value in cash. At an 80% cap, your payoff plus costs must stay at or below 65% of value. If they run higher, you either take less cash or wait until you owe less.
A second lien changes the picture. Suppose the same home carries a HELOC equal to 10% of value, and it stays open. The combined test then counts 70% of value before the new loan is even sized. Paying it off with the refinance clears it from the math, but it uses part of your room.
The new loan also pays for its own costs when you choose to roll them in. The CFPB’s research on cash-out refinances notes that proceeds often cover closing costs like origination, appraisal and title charges. So the cash that reaches your hands is smaller than the headline cap suggests.
What If the Appraisal Comes In Low?
A low appraisal shrinks the cap in dollars and your cash with it. The effect is larger than most people expect, because the cap is a percentage of the lower value.
Here is a modeled sensitivity. Assume you expected your home to appraise at 100 and your payoff is 60. The cap stays at 80%.
| Appraised value | Max new loan | Room above 60 payoff |
|---|---|---|
| 100 (as expected) | 80 | 20 |
| 95 (5% lower) | 76 | 16 |
| 90 (10% lower) | 72 | 12 |
A 5% miss on value cuts your room by a fifth. A 10% miss cuts it by 40%. Your payoff did not move, so the whole loss lands on your cash.
If it happens to you, you have a few real choices. You can take less cash. You can pay down the existing balance to fit the cap. You can ask the lender to review the appraisal if you have solid evidence of errors. Or you can pause the refinance.
What Documents Does a Cash-Out Refinance Need?
Expect to document four things: who you are, what you earn, what you own, and what you owe. The table maps each item to what it proves.
| Document | What it proves |
|---|---|
| Pay stubs, traditional personal-income documentation | Income and employment stability |
| Bank and asset statements | Reserves and any funds you bring |
| Mortgage payoff statement | The exact balance being replaced |
| Statements for any lien being paid off | That the second lien is cleared at closing |
| Title evidence | How long you have been on title |
| Homeowners insurance | That the property is protected |
| Government ID and credit authorization | Identity and credit history |
Self-employed borrowers add business income documents the lender requests, usually covering a longer stretch of history. The lender decides how many periods it needs. Borrowers with a more complicated file tend to get requests for explanation letters, so answer those completely.
The sequence matters in practice. Income and asset documents come first, because they drive qualification. Payoff and title documents come as the loan takes shape. Insurance usually arrives close to the end. Handing over the whole package early keeps the file from stalling on a missing page.
What Are the Waiting Periods and Exceptions?
The 12-month and 6-month clocks have exceptions for real-life situations. They are narrower than people hope, so check yours against the list.
- Delayed financing: A buyer who paid all cash can take cash-out treatment inside the six-month window. The purchase generally has to be an arm’s-length transaction. The lender also looks at how the purchase was funded.
- Inheritance: No six-month wait applies when the lender documents that you inherited the property.
- Legal award: The same goes for a home awarded through a divorce, separation or dissolution of a domestic partnership.
- Buying out a co-owner: Under a legal agreement, this can also avoid the wait.
- Home listed for sale: It must come off the market on or before the disbursement date.
The Selling Guide section on cash-out refinances covers each of these. Exact conditions vary by lender and are subject to full file review.
Where Does the General Rule Break?
The 80% number is the rule for a one-unit home you live in. These are the cases where it does not hold.
Texas homesteads. The state constitution caps a cash-out on a Texas homestead at the agency figure. The higher-LTV wholesale lane is not written there.
FHA. FHA cash-out has its own ceiling. A homeowner with an FHA loan who wants cash is looking at a different set of limits than the conventional ones above.
VA. VA’s cash-out ceiling is the highest of the major programs, but individual lenders set tighter limits. You must hold a Certificate of Eligibility and live in the home, per VA’s cash-out loan page.
Streamlines. The FHA Streamline and the VA IRRRL are for people who already have an FHA or VA loan. They lower the cost of the loan you have. They do not pull equity out. FHA Streamline skips the appraisal and uses limited credit review. The IRRRL charges a 0.5% funding fee unless you are exempt, skips a VA appraisal, and requires a net tangible benefit. A seasoning rule applies: the later of 210 days and 6 payments.
Large loans. Above the conforming limit, the jumbo lanes take over. They run a 660 decision score, leverage up to 90%, loans up to $5,000,000 and a 50% ratio ceiling on the fixed lanes. Those are the lanes’ own terms, and cash-out limits within them vary by lender.
A lien left in place. If a PACE loan or another lien stays open, it can make the file ineligible or push the combined ratio over the limit. Ask early what must be paid off.
Key Terms Defined
LTV (loan-to-value): The new first mortgage divided by the home’s appraised value.
CLTV (combined LTV): All loans secured by the home, added together and divided by appraised value.
Seasoning: The waiting period before a loan or a title qualifies, such as 12 months on a loan or 6 months on title.
Delayed financing: An exception that lets an all-cash buyer refinance into cash-out treatment before the six months pass.
Mortgage insurance: Coverage that protects the lender when your LTV is above 80%. You can ask to cancel it at 80% of original value, and the servicer must end it automatically at 78%.
Rate-and-term refinance: A refinance that pays off your existing loan and costs, with only incidental cash back.
What Does the Decision Look Like in Practice?
Most borrowers face one of two decisions. Either they want cash and have the room under 80%, or they are close and have to choose between a smaller amount and a longer wait.
If you have the room, the real question is cost. A cash-out refinance replaces your whole first mortgage. That means the new loan’s terms apply to every dollar you owe, not only the cash you take. The CFPB’s research cautions that cash-out can replace a lower-rate loan with a higher-rate one. It also warns that rolling unsecured debt into your mortgage puts the home behind that debt. A larger balance generally means a larger payment, even if other terms improve.
Compare the loan you have to the loan you would get. Compare the cash to the cost. And ask whether a refinance or keeping your loan would serve you better.
If you are close to the cap, look at the other levers. Paying down a second lien changes the combined ratio. Waiting out a seasoning clock can open the door. If you have an FHA or VA loan and only want a cheaper payment, a streamline avoids the appraisal question altogether.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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
What is the maximum LTV for a cash-out refinance on my primary home?
On a conventional loan, it is 80% for a one-unit principal residence and 75% for two- to four-unit homes. That limit applies to the total new loan. A narrow wholesale lane reaches 89.99% with no mortgage insurance for borrowers with a 680 score and a 50% ratio on a thirty-year fixed, conforming, primary residence. Everything is subject to lender guidelines and full file review.
Does the LTV cap tell me how much cash I will get?
No. The cap is the largest new loan, not the cash. Your cash is the cap minus your payoff, any liens paid off and your closing costs. A lower appraisal reduces it further.
Can I do a cash-out refinance on a home I just bought?
Usually not right away. A borrower needs to be on title for 6 months, and the loan being paid off must be 12 months old. Delayed financing, inheritance and legal-award exceptions can change that, depending on your facts and the lender.
Can I use an FHA Streamline or VA IRRRL to get cash out?
No. Both are for lowering the cost of an existing FHA or VA loan, and neither pulls equity. If you want cash, you would look at a cash-out refinance under the rules for your program.
Does a second mortgage or HELOC affect my maximum LTV?
Yes. A lien that stays open counts toward your combined ratio. A lien you pay off with the refinance drops out, but it uses some of your room under the cap.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Eligibility Matrix
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Fannie Mae Capital Markets announcement on cash-out refinance eligibility
4. CFPB research on cash-out refinances and non-mortgage debt
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 Refinance Out of an ARM Payment Higher Than It Should Be · How to Refinance on Retirement and Asset Income · Refinance vs Assumption or a Release of Liability for a Co-Borrower
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.