The Quick Read: Your current balance sets the floor under the new loan, and the lender’s loan-to-value cap sets the ceiling. The new loan must pay off your old first mortgage and any other liens you want gone. Whatever room is left between the floor and the ceiling, minus closing costs, is the cash you can take. On a one-unit primary home, that ceiling is typically 80% of the appraised value, so the cap covers the whole new loan, not just the cash.
Key Takeaways
- The cap applies to the total new loan, balance included. It is not a percentage of your equity.
- Cash to you = maximum loan minus payoff, minus other liens paid, minus financed costs.
- A lower appraisal shrinks the maximum loan, and your cash shrinks with it.
- A second mortgage that stays in place uses up room under the cap.
- The county conforming loan limit is a second ceiling, and the lower of the two governs.
What Is a Conventional Cash-Out Refinance?
A conventional cash-out refinance is a new mortgage that replaces your current one and puts extra money in your hands. Lendmire arranges these through wholesale lenders, and the program mechanics below are the ones that decide most files. You can see the broader program on Lendmire’s cash-out refinance programs page.
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: 7.40% as of October 15, 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.
Per the Fannie Mae Selling Guide, the new loan pays off the existing mortgages on the property, or it is a new loan on a home with no lien. It can also cover closing costs and prepaid items. You can take the equity out for any purpose.
For more on how the old loan disappears, see Lendmire’s piece How a Conventional Cash-Out Refinance Replaces Your Current Mortgage.
How Does Your Balance Set the Maximum Loan?
Your balance is the first thing the new loan has to cover. The lender gets a payoff figure for your first mortgage, adds any other liens being cleared, and adds the costs you want rolled in. That total is the floor.
The ceiling comes from the appraisal. On a refinance, the lender divides the loan by the current appraised value. Your purchase price does not matter here. Maximum new loan = appraised value × the LTV cap.
On a one-unit primary residence, the cash-out cap is typically 80%. Two- to four-unit primary homes sit at 75%. The Fannie Mae Eligibility Matrix publishes the full grid by occupancy and unit count. Subject to lender guidelines and full file review, those are the caps most files run into.
Here is the picture in percentages. These are modeled assumptions, not market data. Everything is a share of the appraised value:
| Line | Share of appraised value |
|---|---|
| Existing first mortgage payoff | 60% |
| Closing costs and prepaids rolled in (modeled) | 2% |
| Maximum new loan at an 80% cap | 80% |
| Cash left for you | 18% |
Notice what happened. The owner has 40% equity, but only 18% comes out as cash. The cap measures the whole loan. Many people expect 80% of their home’s value in cash.
What If You Work Backward From the Cash You Want?
Start with the cash goal and add your payoff and costs. Divide that total by the LTV cap. The result is the minimum appraised value you need.
Using the same modeled numbers, say your payoff plus costs plus cash goal equals 76 points on a 100-point value scale. Divide 76 by 0.80 and you need an appraisal of at least 95 points. If the home appraises below that, the cash goal does not fit.
This is why a low appraisal hurts one-for-one. Cut the value from 100 to 95, and the maximum loan at 80% drops from 80 to 76. The payoff and costs did not move. Cash falls from 18 to 14. Nothing in the loan changed except the denominator.
Two Ceilings, One Loan
Two ceilings apply to every conventional loan, and the lower one wins. The first is the value-based cap above. The second is the county conforming loan limit. The federal housing finance agency sets that limit each year, and it varies by county and by number of units.
For most homeowners, the value cap binds first. The county limit starts to matter when the balance is large and the home is expensive. Picture a homeowner with a big balance who wants only a modest amount of cash. The new loan is balance plus cash plus costs, and that sum can cross the county limit. Past that line, the loan moves into jumbo territory with a different set of rules. A small cash request can still trip the limit.
Financed closing costs make it worse. Every cost you roll in raises the loan amount and counts toward LTV. That uses headroom under both ceilings.
What Shrinks Your Number?
Four things cut into the cash. Most borrowers see them only at the end, so run them early.
Financed costs. Costs rolled into the loan reduce the cash dollar for dollar. They also raise the LTV.
Second liens that stay. The lender adds up your first mortgage, any drawn HELOC balance and any closed-end second. That total is the combined LTV, or CLTV, and the Fannie Mae CLTV rules say any subordinate lien that remains counts against the cap. If a second lien is not on your credit report, the lender still has to document it. If you pay the second off at closing, it comes out of your cash instead.
A lower appraisal. The appraised value is the denominator. When it comes in low, the maximum loan falls with it.
Pricing and credit. Cash-out loans carry price adjustments based on credit score, loan purpose, occupancy and unit count. Your score and ratios also have to fit the program. Across the wholesale programs Lendmire places files with, the conventional floor starts at a 620 decision score, and the automated finding sets most of the rest, with a total ratio ceiling of 50%. These figures are subject to lender guidelines.
Does the Property Type Change the Cap?
Yes. Occupancy and unit count move the cap more than any other factor.
| Property | Typical cash-out LTV cap |
|---|---|
| One-unit primary residence | 80% |
| Two- to four-unit primary residence | 75% |
| Second home | 75% |
| Investment property | 75% |
That is the full extent of this article’s rental talk: occupancy decides the leverage. Fannie Mae’s manufactured housing matrix also treats single-width manufactured homes as ineligible for cash-out. Multi-width homes get lower caps than site-built homes, so ask early if that is your property.
Cash-Out vs. Limited Cash-Out: Know the Difference
A cash-out refinance and a rate-and-term refinance are different transactions with different caps. Mixing them up leads to wrong math.
| Factor | Cash-out | Rate-and-term (limited cash-out) |
|---|---|---|
| Cap, one-unit primary | 80% | 95% |
| What the loan pays off | First mortgage, other liens, costs | First mortgage, costs, purchase-money second |
| Cash back | Any amount that fits under the cap | Only incidental cash |
| Mortgage insurance | Generally not at 80% or below | Required above 80% LTV |
Rate-and-term refinances reach higher leverage because they take no meaningful equity out. If you want money in hand, you are in the cash-out column.
There is one other lane worth knowing. A wholesale program reaches 89.99% LTV with no mortgage insurance on a primary residence. It needs a 680 score, a 50% ratio ceiling, a thirty-year fixed loan, a conforming balance and its own six months of seasoning. It is not written on a Texas homestead, where the state constitution caps cash-out at the agency figure. Eligibility is subject to lender guidelines and full file review.
Where the General Rule Breaks
The balance-and-cap math holds in most files. A few situations bend it.
Homes with no mortgage. A new loan on a free-and-clear home counts as cash-out. With no balance to pay off, the whole loan, less costs, is cash.
Recent cash purchases. If you bought with cash, a delayed financing exception can let you borrow against the home without waiting out the usual seasoning. The Fannie Mae guide requires an arm’s-length purchase and documented sources for the purchase funds.
Delinquent taxes. Real estate taxes more than 60 days past due can be rolled into the new loan. The lender then sets up an escrow account, subject to applicable law.
Certain loans do not count as cash-out. Examples include loans with a temporary rate buydown and loans that pay off an installment land contract. Confirm the current list with your loan officer.
Renovation loans. Programs like HomeStyle Refresh cover purchase or limited cash-out refinances with renovation funds, not full cash-out.
Seasoning: When Can You Cash Out?
Seasoning is the waiting period before a loan or ownership qualifies. For a conventional cash-out, the first mortgage being paid off must be at least 12 months old, counted note date to note date. At least one borrower must also have been on title for six months. Exceptions exist for delayed financing, inheritance and legal awards.
This also answers the repeat-borrower question. Refinance once, and the new loan starts its own 12-month clock. The room under the cap resets with the new balance and value, but you cannot draw again right away.
What Does the Decision Look Like in Practice?
Run this check before you apply:
1. Estimate your home’s value honestly, then shave it by about 5% to test a lower appraisal.
2. Multiply the lower value by the cap (80% for a one-unit primary home).
3. Subtract your first-mortgage payoff and any liens you will clear.
4. Subtract the costs you plan to finance.
5. If anything remains, that is your rough cash. If nothing remains, wait or look at other tools.
Then ask the harder question: is the cash worth re-pricing the whole loan? The new terms apply to the entire new balance, not only the cash piece. A 30-year term also means the balance falls more slowly, per the CFPB’s home equity guide. If you already hold a strong first mortgage, leaving it alone and using a second lien may fit better.
Also remember you are giving up equity. The Federal Reserve notes you own less of your home after taking cash out, and it takes time to rebuild.
One rule belongs here. On a primary home, you have a right to cancel a refinance. Per the CFPB, the three-business-day clock starts only after you sign, receive the accurate Truth in Lending disclosure and receive two copies of the notice of right to rescind. Cancellation must be in writing.
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): The new loan amount divided by the home’s appraised value.
CLTV (combined loan-to-value): All liens on the home added together, divided by the appraised value.
Seasoning: The waiting period a loan or ownership must meet before you can cash out.
Payoff: The amount needed to clear a loan and release its lien.
Rate-and-term refinance: A refinance that changes your loan terms and gives back only incidental cash.
Frequently Asked Questions
Can I borrow 80% of my home’s value in cash?
No. The 80% cap applies to the whole new loan, and your existing balance sits inside it. The cash is what remains after payoff, other liens and financed costs. Program caps are subject to lender guidelines and full file review.
What happens if my appraisal comes in low?
Your maximum loan drops with it. The cap is a percentage of the appraised value, so a lower value lowers the ceiling while your payoff stays the same. The cash shrinks by the full difference.
Does a HELOC or second mortgage reduce my cash?
Yes, if it stays in place. A drawn HELOC balance or closed-end second counts toward combined LTV and uses room under the cap. If you pay it off at closing, the payoff comes out of your proceeds instead.
Can a large balance push me into a jumbo loan?
It can. Balance plus cash plus financed costs can cross your county’s conforming limit, even when the cash request is small.
Is a small cash-out worth it?
Often not. Every closing cost reduces your cash, and the whole balance is re-priced under new terms. A small amount of cash may fit better in a second lien, depending on the terms of your current first mortgage.
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. For your own numbers on your home, request a scenario review with Lendmire.
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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References
1. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. Fannie Mae Selling Guide B2-1.2-02, Combined Loan-to-Value (CLTV) Ratios
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Does a Conventional Cash-Out Refinance Increase Your Mortgage Balance? · Does a Conventional Cash-Out Refinance Raise Your Mortgage Payment? · Is an Appraisal Required for a Conventional Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.