The Quick Read: The maximum loan-to-value (LTV) on a conventional cash-out refinance is 80% on a one-unit principal residence and 75% on two- to four-unit homes, second homes and investment property, subject to lender guidelines. That cap limits the whole new loan, not the cash you receive. Your cash is the cap amount minus your payoffs and any financed costs. Program, occupancy and unit count all move the number.
LTV is the new loan balance divided by the home’s appraised value. A cash-out refinance replaces your current mortgage with a bigger one and pays you the difference. The cap decides how big that new loan can be.
This page walks through the mechanics, from the cap to the cash. It then covers the edge cases and what the decision looks like in practice.
Key Terms Defined
LTV (loan-to-value): the loan balance divided by the home’s appraised value, shown as a percentage.
CLTV (combined loan-to-value): all liens on the home added together, divided by the appraised value.
Seasoning: the waiting period a lender requires before you can cash out, counted from when you bought or last refinanced.
Limited cash-out refinance: a “rate-and-term” refinance. It pays off your first mortgage and costs, with only incidental cash back.
Appraised value: the value a licensed appraiser assigns. The cap applies to this number, not your own estimate.
Net tangible benefit: a test on government streamline loans. The refinance must leave you measurably better off.
What Does Max LTV Mean on a Cash-Out?
Max LTV is the highest percentage of your home’s appraised value that the new loan, plus any other liens, can reach. On a conventional cash-out, that is 80% for a one-unit principal residence. It is 75% for two- to four-unit principal residences, second homes and investment property. These figures are subject to lender guidelines and full file review.
Fannie Mae publishes these ceilings in its Eligibility Matrix. The matrix lists one maximum for LTV, CLTV and HCLTV together. So a second lien or HELOC that stays in place counts toward the cap. Hold that thought, because it trips up a lot of owners.
The cap exists for one reason: the lender wants you to keep equity in the home. The remaining 20% to 25% is your cushion if values dip.
How Do You Turn the Cap Into Cash?
Cash available equals the cap, applied to appraised value, minus everything the new loan must pay off. Start with value times the cap. Subtract your first mortgage payoff. Subtract any other lien being paid. Subtract closing costs and prepaids if you finance them. What is left is your cash.
Here is the pattern with percentages instead of dollars. Say your home appraises at its full value. The cap is 80%. Your first mortgage balance is 50% of value. A HELOC you will pay off is 5%. Financed costs run about 2%.
| Step | Math (as % of value) | Result |
|---|---|---|
| Cap on new loan | 80% | 80% |
| Minus first mortgage | 80% − 50% | 30% |
| Minus HELOC payoff | 30% − 5% | 25% |
| Minus financed costs | 25% − 2% | 23% |
Your cash is roughly 23% of the home’s value. The same file on a two-unit home with a 75% cap would leave about 18%. Same house, same debts, less cash. That is why occupancy and unit count matter so much.
The 80% figure is not “80% of your value in cash.” It is the ceiling on the entire loan. Most owners who feel shortchanged made this mistake.
Why Does the Cap Differ From File to File?
The cap changes with property use, unit count and program. Across the wholesale programs Lendmire, a mortgage broker licensed for consumer lending in 16 states, places files with, the pattern is consistent. Owner-occupied one-unit homes get the highest conventional cash-out leverage. Everything else steps down.
| Situation | Conventional cash-out cap |
|---|---|
| One-unit principal residence | 80% |
| Two- to four-unit principal residence | 75% |
| Second home | 75% |
| Investment property | 75% |
Compare the cash-out lane with a limited cash-out refinance. On a one-unit principal residence it reaches 95% LTV, and 97% where the existing loan is agency-owned and a first-time-buyer program allows it. Mortgage insurance applies above 80%. The leverage is higher because you take out no meaningful cash. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. Texas homestead cash-outs are capped at the agency figure by the state constitution, so that lane is not written there. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Some lenders set tighter caps than the agency baseline. Some set a higher credit floor. Those are lender overlays, and they explain why two lenders can quote different numbers on the same home.
Which Seasoning Rules Apply Before You Can Cash Out?
Two clocks apply. The first mortgage being paid off must be at least 12 months old, counted note date to note date. At least one borrower must have been on title for six months. Both come from Fannie Mae’s cash-out refinance rules, and the lane described above applies its own six months of seasoning.
The 12-month first-mortgage rule took effect for note dates on or after April 1, 2023, per Fannie Mae’s update. So the idea that you can cash out right after buying is mostly a myth.
There are named exceptions:
- Delayed financing: if you bought with cash, you may recover that cash with documented funds.
- Inheritance and legal awards: ownership timing can work differently.
- Co-owner buyouts: the 12-month first-mortgage rule does not apply when buying out a co-owner under a legal agreement.
- Listed homes: a property that was listed for sale must be off the market by disbursement.
How Is a Cash-Out File Underwritten, Step by Step?
The lender classifies the loan, checks seasoning, orders an appraisal, applies the cap, then underwrites you. That order matters because each step can change the next.
1. Classification. Taking more than incidental cash back, or paying off non-purchase debt, moves a file into the cash-out lane.
2. Seasoning check. The title and first-mortgage clocks above.
3. Appraisal. Conventional cash-out needs a new appraisal. The cap applies to that value.
4. Cap applied. Value times the cap, minus payoffs and financed costs.
5. Underwriting. Credit, income, debt-to-income (DTI) and reserves. The conventional wholesale programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Fannie Mae’s rules add six months of reserves when DTI on an automated file runs above 45%.
6. Disclosures. Your Loan Estimate shows estimated closing costs and cash to close. Compare it line by line against any other offer.
7. Closing and disbursement.
Each lender’s guidelines and a full file review decide the outcome. Nothing here is a commitment to lend.
In practice, the files that stall are not the ones with a low score. They are the ones where the borrower forgot a HELOC, or the appraisal came in under their estimate.
What Happens if the Appraisal Comes In Low?
A low appraisal shrinks the dollar ceiling, because the cap is a percentage of appraised value. Take an 80% cap on a one-unit home. If the appraisal is 5% below what you expected, your maximum new loan drops by 4% of your expected value. Your payoffs do not move. So your cash drops by that same 4%.
In the earlier example, 23% of value in cash becomes about 19%. A thin file can drop to zero. This is why owners with little room under the cap should treat any estimate as a range.
Where Does the General Rule Break?
The 80% rule bends on occupancy, unit count, property type and loan program. These are the named edge cases worth knowing.
- Manufactured housing: Fannie Mae caps cash-out far lower than site-built homes, at 65% on a principal residence per the matrix. Its manufactured housing product matrix also has eligibility limits, such as for single-width homes, so confirm eligibility before you plan around a cash-out.
- Free-and-clear homes: a new first mortgage on a home with no lien still counts as cash-out.
- Student-loan cash-out: a named Fannie Mae variation can waive pricing adjustments when proceeds pay off eligible student loans.
- FHA owners: the FHA Streamline is not a cash-out product. Per HUD, the loan must already be FHA-insured and current, must show a net tangible benefit, and cannot return more than $500 in cash. FHA does not allow closing costs to be rolled into the new streamline amount. A true FHA cash-out is a separate, appraisal-based loan with its own, lower leverage cap.
- VA owners: a VA cash-out is limited to the home’s VA-determined reasonable value, and the funding fee counts toward that limit, per the VA lender pamphlet. The IRRRL, VA’s streamline, takes no appraisal and gives no cash. It carries a 0.5% funding fee unless exempt, and seasoning of the later of 210 days and 6 payments.
- Jumbo loans: above the conforming limit, jumbo lanes take over. They carry a 660 decision score and leverage to 90% on the programs for purchase and rate-and-term. Cash-out caps on jumbo files differ by lender, so ask early. Lendmire’s piece Cash-Out Refinance for High-Balance Owners Checking Max LTV goes deeper on that lane.
Some owners also hear that a second home or rental can be cashed out. It can, but occupancy sets the leverage, and the cap steps down to 75% as shown above.
What About Mortgage Insurance on a Cash-Out?
At conventional cash-out caps of 80% or 75%, mortgage insurance does not come into play, since it applies above 80% LTV. That is one reason the cap sits where it does. The wholesale 89.99% lane described earlier is the exception that reaches higher without it. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
On the rate-and-term side, where leverage runs higher, insurance matters. You can ask to cancel it at 80% of the original value, with good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. Published typical annual premiums run from 0.58% to 1.86% of the balance. That is a range, never a quote.
How Do You Check the Current Max LTV?
Check the current figure by confirming the program, the occupancy and unit count, and the source that governs. Caps change, and old web pages linger. A repeatable method beats trusting a number you saw once.
1. Name your exact scenario. Property use, unit count, and whether it is conventional, FHA or VA.
2. Go to the primary source. For conventional loans, use the current Fannie Mae matrix. It is dated, and it replaces older versions. For government loans, use HUD and VA.
3. Ask the broker which lenders overlay the cap. A lender may sit below the agency baseline.
4. Ask what counts toward the cap. HELOCs and other subordinate liens that stay in place count in the combined ratio.
5. Get the number in writing. The Loan Estimate shows your actual cash to close.
6. Re-verify before you rely on it. Old FHA and conventional pages still quote outdated figures.
Lendmire’s cash-out refinance programs page shows the lanes available through its wholesale lenders. Your file still needs a full review.
When the Cap Leaves You No Room
If your balance is already near the cap, cash-out may not produce cash. In that case, compare a few paths. Each has a different combined-LTV logic.
| Option | What happens to your first mortgage | How the cap applies |
|---|---|---|
| Cash-out refinance | Replaced by a larger loan | One cap on the whole new loan |
| Second lien or HELOC | Stays in place | Combined ratio counts both liens |
| Limited cash-out refinance | Replaced, small cash back | Higher leverage, little cash |
| Wait | Unchanged | Equity grows as you pay down or values rise |
The CFPB notes a cash-out may cost more or less than a HELOC, depending on terms, and recommends comparing offers in its HELOC alternatives guidance. A cash-out replaces your current rate and terms entirely. A second lien leaves them alone. If your current first mortgage terms are strong, that difference matters a lot.
What Does the Decision Look Like in Practice?
The decision comes down to four questions. Can you reach the cash you need under the cap? Are the costs worth it? Will the new payment and term fit your budget? And is the debt you are consolidating worth turning into debt secured by your home?
The CFPB reports that paying off other bills or debts was the most common reason borrowers took cash out, with home repairs second, per its cash-out credit report. Credit scores improved at first, then slipped, though they stayed above pre-refinance levels.
The tradeoff is real. The CFPB’s using-home-equity guide notes that your payment may rise because the loan is larger, and that payoff time may stretch. Lenders typically want you to keep 10% to 20% equity. Converting credit card debt into debt secured by your home also raises the stakes if you fall behind.
Closing costs are real too. The cash you receive is net of fees and prepaids that you finance. Compare the Loan Estimate before you commit.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Mistakes
- Treating the cap as the cash. The cap limits the whole loan.
- Using your own value estimate. The appraisal governs.
- Forgetting the HELOC. It counts toward the combined ratio.
- Assuming a streamline gives cash. FHA’s caps cash at $500, and the VA IRRRL gives none.
- Trusting an old page. Verify against the agency source.
- Ignoring the clocks. Title and first-mortgage seasoning can block an otherwise strong file.
For a conventional-loan walkthrough of the same ceiling, see Lendmire’s explainer Conventional Cash-Out Refinance for Owners Checking the Max LTV.
Frequently Asked Questions
How much equity do I have to leave in my home?
On a conventional one-unit principal residence, at least 20%, since the cap is 80%. On two- to four-unit homes, second homes and investment property, at least 25%. The CFPB also notes lenders typically want you to keep 10% to 20% equity across home equity products. Lender guidelines and file review decide your exact figure.
Is the max LTV the same at every lender?
No. The agency baseline sets the ceiling, but lenders can apply overlays that sit lower or require a higher credit score. A wholesale broker can compare lenders against your scenario, but the cap on your file is only confirmed after full review.
Does my HELOC count toward the cap?
Yes, if it stays in place. Fannie Mae’s cap applies as a combined ratio, so any subordinate lien reduces your available room. Paying it off through the refinance removes it from the combined ratio, but the payoff comes out of your cash.
Can I cash out right after I buy?
Usually not. You need six months on title and a first mortgage that is at least 12 months old. Delayed financing is a named exception for cash purchases with documented funds.
What if my appraisal comes in low?
The cap applies to the appraised value, so a lower appraisal lowers the maximum loan and shrinks your cash by the same amount. Your payoffs stay the same. Run a lower-value scenario before you decide whether the refinance still makes sense.
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.
For current guidelines and terms, see Lendmire’s refinance programs page.
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 update on cash-out refinance eligibility
6. CFPB Ask: HELOC alternatives
7. CFPB: Cash-out refinance borrowers and credit scores
8. CFPB, Using Home Equity 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: Cash-Out Refinance for Second Home Owners Needing Cash · Cash-Out Refinance for Owners of Two Homes: How Many Properties Qualify · Cash-Out Refinance for Homeowners Who Cashed Out Before
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
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.