The Quick Read: Usually, yes, if five things line up. You have been on title for at least six months, and the mortgage being paid off is at least 12 months old. Everyone on the loan lives in the home. The new loan stays at or under 80% of the appraised value on a one-unit home (75% on two to four units). Credit, debt-to-income and the appraisal then pass a full file review. Exceptions exist for the first two clocks, and they are covered below.
Does Your Home Pass? The Five-Test Checklist
A primary home passes when it clears five tests: occupancy, leverage, loan age, time on title, and credit with debt-to-income. Miss one and you usually have a fix. Here is the whole picture in one place, so you can find your weak spot before you apply.
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.
| Test | What the lender checks | If you miss it |
|---|---|---|
| Occupancy | Every borrower lives there | Restructure who is on the loan |
| Leverage | New loan vs. appraised value | Borrow less, or wait for equity |
| Loan age | Existing first mortgage is 12+ months old | Wait, or ask about exceptions |
| Title time | A borrower on title for 6+ months | Wait, or check the exceptions |
| Credit and ratios | Score and debt-to-income | Pay down debt, then reapply |
Two terms to pin down first. A cash-out refinance replaces your current first mortgage with a new, larger one and hands you the difference in cash. LTV (loan-to-value) is the new loan divided by the home’s appraised value. Everything below hangs on those two ideas.
Across the wholesale programs Lendmire places consumer files with, these five tests are where nearly every conventional cash-out file is won or lost. The details of each follow, and the cash-out refinance programs page covers how the product fits together.
What Counts as a Cash-Out Refinance?
A cash-out refinance is a new first mortgage that pays off the old one with no restriction on how you use the extra money. Fannie Mae’s Selling Guide describes it as a new first mortgage on the same property, and says equity can be taken out for any purpose. A new mortgage on a home you own free and clear counts too.
It is not the same as a rate-and-term refinance. That product, which the agencies call “limited cash-out,” pays off your existing loan and closing costs with only incidental cash back. It also allows much higher leverage: 95% LTV on a one-unit primary home in the programs Lendmire works with. The moment you take meaningful cash, you cross into cash-out territory. Caps tighten and pricing adjustments typically apply.
It is also not a HELOC. A home equity line leaves your first mortgage alone. A cash-out refinance replaces it, so the new terms apply to the entire balance, not just the cash portion. That matters for your monthly budget.
How Much Can You Borrow? The 80% and 75% Caps
On a primary home, the new loan can reach 80% of the appraised value for a one-unit property and 75% for a two- to four-unit property. Fannie Mae’s Eligibility Matrix shows both figures, and Freddie Mac’s guide matches them. These are subject to lender guidelines and full file review.
Here is the misconception that trips people up. The 80% is the cap on the total new loan. It is not the cash you receive. Your old payoff, closing costs, and any liens you pay off come out of that number first. What is left is your cash.
Picture a one-unit home with a mortgage already near 60% of its value. The 80% cap leaves room for roughly 20 points of value, but fees, prepaid items and any second lien shrink what lands in your hands. Run that math with your own appraisal in mind, not your Zestimate.
Combined balances count too. If you have a HELOC or other second lien, the cap applies to the combined picture, though a subordinate lien can be paid off through the refinance.
For the unit-count wrinkle, Lendmire’s piece Conventional Cash-Out Refinance Requirements on a 2-4 Unit Primary Home goes deeper.
One more lane worth knowing. One wholesale option reaches 89.99% LTV with no mortgage insurance, but only at a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming balance. It carries its own six months of seasoning. It is not written in Texas, where the state constitution caps a homestead cash-out at the agency figure. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Two Seasoning Clocks
Seasoning is the waiting period a lender wants before you can refinance. For a conventional cash-out there are two separate clocks, and the later one governs.
Clock one: time on title. At least one borrower must have been on title for six months. Fannie Mae measures this before the new loan disburses. Freddie Mac measures it before the note date, per its Guide Section 4301.5.
Clock two: age of the loan you are paying off. The existing first mortgage must be at least 12 months old, counted from its note date to the new loan’s note date. A note date is the day you signed the mortgage note. The 12-month rule comes from agency investor policy, not a federal law.
Here is how that plays out. Say you bought a home 14 months ago and refinanced it 7 months ago. You pass the title clock easily. You fail the loan-age clock, because the loan you would be paying off is only 7 months old. You wait five more months. Many people check only the purchase date and get surprised.
The Exceptions
The clocks bend in a few documented cases:
- Delayed financing. If you bought the home with cash within the past six months, you can take cash out once the lender documents an arm’s-length purchase and the other listed requirements. The purpose is to let cash buyers recover their money.
- Inherited homes. No six-month wait if the lender documents the inheritance.
- Legal awards. A home awarded in a divorce, separation or dissolution of a domestic partnership is also exempt from the six-month wait.
- LLC or trust history. Time held by a borrower-controlled LLC can count toward the six months, but title must move to you personally to close. Time in a revocable trust counts when you are the primary beneficiary.
- Leasehold and co-ops. Freddie Mac counts six months as lessee on the ground lease, or six months holding the co-op shares.
The exceptions apply to the title clock and the 12-month rule in different ways, so a lender needs to review your specific paperwork.
Occupancy: Does Your Home Count as Primary?
A home counts as primary when you live in it as your main residence, and on a cash-out, every borrower on the loan must occupy it. Freddie Mac’s Bulletin 2023-24 states this for primary-residence cash-out loans. Occupancy also decides your leverage: the same house as a second home or rental carries a lower cap, and Lendmire’s program parameters set a 75% LTV there. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Occupancy is the test every other explainer buries in one line, so here is what it means in practice.
You certify it. At application, you state that you will live in the home as your primary residence. The lender may ask for supporting proof, such as a driver’s license, utility bills, or tax records showing the address. You are signing a statement, and a false one can have serious consequences.
A co-borrower who lives elsewhere is a problem. If your parent, partner or friend is on the loan but does not live in the home, Freddie Mac’s rule points to a restructure. One option is to remove that person from the loan and qualify on your own income. Another is to confirm with the lender how they treat non-occupant borrowers, since the agencies’ wording differs and lenders review both.
Planning to move soon? Intent matters. If you already know you will move out and rent the home, a primary-residence cash-out is the wrong product. The honest path is to tell your loan officer the plan and let them show you the investment-property leverage limits instead.
A rented room or a unit in a duplex? A two- to four-unit home you live in is still a primary residence, but the cap drops to 75% LTV. A single-family home with a roommate is typically still one unit.
A home office? Using part of the house for work does not change its primary status.
This is a close call for some borrowers, and the stronger move is usually to ask early. A loan officer can tell you in a short conversation whether your living arrangement fits.
Credit, Debt-to-Income and Reserves
Credit and ratios decide whether a home that passes the structural tests actually gets approved. In the wholesale conventional programs Lendmire works with, the starting point is a 620 decision score, and the automated underwriting finding governs most files. The total debt-to-income ceiling on an automated file is 50%.
Debt-to-income (DTI) is your total monthly debts divided by your gross monthly income. Manually underwritten loans use tighter ratios, 36% or 45%, depending on the score and reserve factors in the Eligibility Matrix. Fannie Mae’s matrix also triggers minimum reserves on cash-out files when DTI runs above 45%. Reserves are savings left after closing, usually counted in months of housing payments.
Credit events carry waiting periods set by the agencies: 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.
Some lenders set higher score floors than the agency minimum. That is why the same borrower can get different answers from two lenders. A broker can place the file with a lender whose guidelines fit.
What Cash Out Does to Your Budget
A cash-out refinance resets the whole mortgage, so the new terms apply to the entire balance. The CFPB’s research on cash-out borrowers found a typical cash-out loan had a longer term and a larger monthly payment than the mortgage it replaced. That is arithmetic, not a warning. A bigger balance over a new term usually costs more each month.
Other costs to weigh:
- Closing costs. They can be financed into the new loan, which raises the balance. Your Loan Estimate shows the estimated costs and cash to close.
- Price adjustments. Both agencies charge extra loan-level costs on many cash-out loans, and these show up as a higher rate or upfront cost. Fannie Mae waives its cash-out adjustment when proceeds pay off eligible student loans.
- Mortgage insurance. It is required above 80% LTV and cancels at 80% of original value on request. It terminates automatically at 78%. Because the standard cash-out cap is 80%, many cash-out loans never carry it.
- Prepayment penalty. The CFPB explains that a penalty typically applies if you pay off the whole balance within a set period, usually three or five years. Check your existing loan, and check the Loan Estimate for the new one.
The risk deserves plain language. Using cash to pay off credit cards converts unsecured debt into debt secured by your home. The CFPB’s paydown research notes that this can put the home at risk of foreclosure if payments become unsustainable. Missing a card payment is unlikely to cost you your house. Missing a mortgage payment can. Cards also tend to refill.
Property Types and Edge Cases
Most one-unit homes sail through the property test. A few types need a closer look.
| Situation | What changes |
|---|---|
| Free and clear home | A new loan still counts as cash-out |
| Condo | Project review applies in addition to your own file |
| 2-4 unit primary | Cap drops to 75% LTV |
| Manufactured home | Single-width units limited to purchase and limited cash-out |
| Delinquent property taxes | Can be paid at closing; an escrow account is typically required |
Fannie Mae’s matrix restricts single-width manufactured homes to purchase and limited cash-out refinances. Treat that as a signal to ask about your exact home type before you spend money on an appraisal.
Loan size matters as well. Cash-out loans must fit under the conforming loan limit to be sold to the agencies. The FHFA announces that limit each year, and it varies by county. Above it, jumbo programs take over, with their own rules.
What If Your Home Doesn’t Pass?
Most misses are fixable. Match the fix to the test you failed.
- Failed seasoning: wait it out, or ask whether delayed financing, inheritance or a legal award applies to you.
- Failed leverage: borrow less, or accept that you do not have enough equity yet. A smaller cash request can still work.
- Failed occupancy: remove the non-occupant from the loan, or recognize the home is not a primary residence for this purpose.
- Failed credit or DTI: pay down balances, let a recent credit event age, and reapply.
- Wrong product entirely: if you only want a lower payment or a shorter term, a rate-and-term refinance allows up to 95% LTV on a one-unit primary home with only incidental cash back. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Government streamlines are another route if your current loan is FHA or VA. FHA Streamline needs no appraisal and only limited credit review, with a net tangible benefit. VA IRRRL carries a 0.5% funding fee unless exempt, with no VA appraisal and seasoning of the later of 210 days and six payments. Neither delivers meaningful cash out. If you want cash and you are not eligible conventionally, a lender can review the other programs with you.
For more on how the cap translates to actual dollars you can pull, see Lendmire’s article How Much a Conventional Cash-Out Refinance Lends on a Primary Home.
Key Terms Defined
Cash-out refinance: a new first mortgage that pays off the old one and gives you the difference in cash.
LTV (loan-to-value): the new loan amount divided by the home’s appraised value.
Seasoning: the waiting period a lender requires, here time on title and the age of your current loan.
Note date: the day you signed the mortgage note.
Delayed financing: an exception letting a recent all-cash buyer take cash out within six months of purchase.
DTI (debt-to-income): your monthly debts divided by gross monthly income.
Frequently Asked Questions
Can I do a cash-out refinance if I bought my home less than a year ago?
Often yes on one clock, no on the other. Six months on title can satisfy the ownership test, but the loan you are paying off must also be 12 months old. If you paid cash, delayed financing may let you borrow against the home within the first six months. A lender reviews the purchase documents to confirm.
Does every borrower on the loan have to live in the home?
On a primary-residence cash-out, Freddie Mac requires all borrowers to occupy it. If a co-borrower lives elsewhere, the usual fix is to restructure the loan so only occupants are on it. Lenders also differ on how they treat non-occupants, so ask before you apply.
Is 80% LTV the amount of cash I can take?
No. The 80% is the cap on the entire new loan on a one-unit primary home. Your current payoff, closing costs and any liens you clear come out first, and the remainder is your cash. Two- to four-unit primaries are capped at 75%. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Does a cash-out refinance work if I own my home free and clear?
Yes, but it is still treated as cash-out. Both Fannie Mae and Freddie Mac classify a new mortgage on a home with no lien that way. The same leverage caps, occupancy rules and price adjustments apply. Six months on title is typically the relevant clock.
Is the one-year waiting period a federal rule?
No. The 12-month and six-month waiting periods come from Fannie Mae and Freddie Mac guidelines, not federal law. That is why exceptions such as inheritance, divorce awards and delayed financing exist. Individual lenders may apply additional guidelines on top.
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. Every program figure here is 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
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see conventional loan programs.
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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 Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
2. Fannie Mae Eligibility Matrix
3. Freddie Mac Guide Section 4301.5
4. Freddie Mac Bulletin 2023-24
5. CFPB, A look at cash-out refinance mortgages and their borrowers
6. CFPB: What Is a Prepayment Penalty
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can a Conventional Cash-Out Refinance Close Without an Appraisal? · How to Refinance a 2-4 Unit Primary Home to Drop PMI · How to Refinance a Conventional Loan on a Condo
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.