The Quick Read: Mortgage insurance follows leverage and loan program, and the condo does not change that rule. On a conventional cash-out, the loan is generally capped at 80% of value on a one-unit primary residence, so a cash-out that stays at or under that cap usually carries no private mortgage insurance. What the condo adds is a second approval: the building has to pass project review. One wholesale lane reaches 89.99% LTV with no mortgage insurance, subject to lender guidelines and full file review.
What Mortgage Insurance Does on a Cash-Out
Mortgage insurance protects the lender, not you. The federal consumer-finance regulator says private mortgage insurance (PMI) is arranged by the lender and provided by private insurers. If you fall behind, you can still lose the home.
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.
The Fannie Mae Selling Guide sets the charter rule. A conventional first mortgage above 80% LTV needs mortgage insurance on the portion above 80%, with one exception: the wholesale no-MI cash-out lane, covered below. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Why a Cash-Out Usually Avoids It
A true cash-out has a lower leverage cap than a rate-and-term refinance. On a one-unit primary residence, conventional cash-out tops out at 80% LTV. Stay at or under that and the 80% trigger is never crossed. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Rate-and-term is where mortgage insurance shows up. A limited cash-out on a one-unit primary residence can go to 95% LTV, and above 80% mortgage insurance applies, with the wholesale no-MI cash-out lane as the one exception. Many homeowners mix the two products up. Keeping them straight answers most of the question.
| Refinance type | Primary residence leverage | Mortgage insurance |
|---|---|---|
| Conventional cash-out | 80% LTV (one unit) | Usually none at or under 80% |
| Rate-and-term | 95% LTV (one unit) | Required above 80% |
| Wholesale no-MI cash-out lane | Up to 89.99% LTV | None, with its own conditions |
Does the Condo Change the Math?
No. A condo unit is a one-unit property, and the leverage number is the same as for a house. The difference is that the building gets its own test. Fannie Mae’s Lender Letter LL-2026-03 says the project must not have an “Unavailable” status in Condo Project Manager. It must also meet the Selling Guide’s property and flood insurance requirements.
So a condo borrower faces two approvals, one for you and one for the building. Here is the catch: a project can fail review even when your credit and equity are fine.
Two details trip people up:
- The project review waiver applies to agency-owned loans in limited cash-out refinances. It does not help a true cash-out.
- Condo hotels, houseboat projects and timeshares are excluded project types, per Fannie Mae’s RefiNow fact sheet.
How the Loan Is Underwritten, Step by Step
1. Classify the refinance. If only the first mortgage, closing costs and a purchase-money second lien are paid off, with incidental cash back, it is a limited cash-out. Take more cash than the agency tolerance, or pay off a non-purchase-money second lien, and it becomes a true cash-out.
2. Check seasoning. The first mortgage being paid off must be at least 12 months old, note date to note date. A borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist.
3. Appraise the unit. LTV is the new loan divided by appraised value. A low appraisal can push the ratio over 80% and change the whole outcome. An appraisal reconsideration with recent in-building sales is the usual fix.
4. Review the project. The lender checks the building’s status, its insurance and its condition. This runs alongside your own file, not behind it.
5. Test credit and ratios. The wholesale conventional programs start at a 620 decision score, and the automated finding governs most files. The total ratio ceiling is 50%. Manually underwritten loans use 36% or 45% with reserve and score factors.
6. Price mortgage insurance, if it applies. The agencies set minimum coverage by LTV band and term. The insurer sets the premium from credit score and LTV. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is the sheet’s range, not a quote.
7. Read the disclosures. The monthly premium appears on the Loan Estimate and Closing Disclosure, in the Projected Payments section on page 1. Compare it between quotes.
The No-MI Lane Above 80%
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score and a 50% ratio on a thirty-year fixed. It is for a primary residence at a conforming balance, with its own six months of seasoning. It is the one exception to the eighty-percent rule, and a condo that passes project review can qualify under it, subject to lender guidelines.
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 this lane is not written there.
Lendmire’s cash-out refinance programs page lays out how these leverage lanes compare. Lendmire is a mortgage broker licensed for consumer lending in 16 states, and it arranges these loans through wholesale lenders.
Where the General Rule Breaks
Financed mortgage insurance. Some programs let you roll the premium into the loan. On conventional loans the financed premium counts toward LTV. On high-balance loans, the Selling Guide requires mortgage insurance above 80%, and the gross LTV after financing cannot exceed 95%.
Jumbo loans. Above the conforming limit, the jumbo lanes take over. They run on a 660 decision score, leverage to 90% and loans to $5,000,000, with a 50% ratio ceiling on the fixed lanes. Mortgage insurance rules differ from the agency path.
FHA. FHA charges mortgage insurance regardless of equity, and the cash-out cap is 80% LTV. An FHA-to-FHA refinance starts a new premium schedule. Those premiums follow the FHA schedule, not the conventional cancellation rules covered earlier. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
VA. VA loans carry no monthly mortgage insurance but have a one-time funding fee. The condo must be VA-approved. Confirm current terms with the VA.
Streamlines. The FHA Streamline and VA IRRRL are for existing government loans and do not allow cash out. They are not options for a cash-out on a condo.
Second home or investment condo. Occupancy sets the leverage. A cash-out on a second home or investment property runs at 75%, which lowers the odds that mortgage insurance ever comes into play.
What It Looks Like in Practice
Picture a homeowner with a condo they live in, where the new loan comes in at 78% of appraised value. No mortgage insurance applies. Now picture the same borrower after a low appraisal pushes the ratio to 82%. They face three choices: take less cash to get back under 80%, pay the insurance, or ask whether the no-MI lane fits.
Taking less cash often wins. Reducing the amount borrowed by a few percentage points can drop the premium entirely. Closing costs and any financed premium also eat into usable equity, so run the final loan amount, not the starting one.
A quick checklist for your decision:
- Is the new loan at or under 80% of appraised value?
- Is the building in good standing for project review?
- Does the file qualify for the no-MI lane (680 score, primary residence, conforming balance)?
- Does the monthly premium on the Loan Estimate change the payoff?
Getting Mortgage Insurance Removed Later
Under the Homeowners Protection Act, a borrower with a good payment history and no subordinate liens can request PMI cancellation at 80% of the original value. The servicer must terminate it automatically at 78% if you are current. CFPB Bulletin 2015-03 confirms the 80% request test uses original value, not current value, and the law covers loans made on or after July 29, 1999.
Rising property values do not trigger automatic termination. Early removal on value gains is a servicer process, not an automatic right.
Key Terms Defined
LTV (loan-to-value): The new loan balance divided by the appraised value of the unit.
PMI (private mortgage insurance): Insurance on a conventional loan that protects the lender when LTV is above 80%.
Limited cash-out refinance: A refinance that pays off the existing mortgage and costs with only incidental cash back.
Project review: The lender’s check of the condo building’s status, insurance and condition.
Seasoning: The minimum time the existing loan and your ownership must have been in place.
Frequently Asked Questions
Does a condo cash-out refinance always need mortgage insurance?
No. At or under 80% LTV on a conventional cash-out, there is usually none. Above that, mortgage insurance applies on the agency path, with the wholesale no-MI lane as the exception.
Is the HOA’s insurance the same as mortgage insurance?
No. The building’s master and flood insurance are tested separately under the Selling Guide. Mortgage insurance protects the lender on your loan and has nothing to do with the association’s policy.
Does a condo have a lower cash-out limit than a house?
No, the leverage cap is the same for a one-unit primary residence. The difference is that the building must also pass project review.
Can I roll mortgage insurance into the new loan?
Sometimes. A financed premium counts toward LTV on conventional loans, and on high-balance loans the gross LTV after financing cannot exceed 95%. It also reduces the cash you can take out.
Will a low appraisal change the mortgage insurance outcome?
A low appraisal can change it, because a lower value raises the LTV, and crossing 80% can bring in mortgage insurance. Taking less cash, or submitting an appraisal reconsideration with in-building sales, are the usual responses.
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. All 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.
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. CFPB
3. Fannie Mae Lender Letter LL-2026-03
5. Fannie Mae Selling Guide B5-1-02, High-Balance Mortgage Insurance
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Cash-Out Refinance Requirements With a Loss on Your Return · Best Cash-Out Refinance Program on a Condo · Cash-Out Refinance Requirements When You Are Relocating
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
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.