The Quick Read: Yes, if you use the new loan to replace your current mortgage and take only a small amount of cash back. Freddie Mac calls this a “no cash-out” refinance. “Limited cash-out” is Fannie Mae’s term for the same idea. You generally qualify when the loan pays off the right debts, you have a documented history with the home or the old loan, and your credit, ratios and equity fit the program. All of this is subject to lender guidelines and full file review.
Same Product, Two Names
Freddie Mac’s Seller/Servicer Guide never uses the phrase “limited cash-out.” Its section on the product is titled “no cash-out” refinance. Consumer materials often treat the two terms as interchangeable, and in practice they are close cousins. Both are rate-and-term refinances: you change the loan’s terms, and you do not tap equity.
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.
Why does the label matter? Because the loan gets sorted into one of two buckets. Land in the “no cash-out” bucket and you can borrow up to a higher percentage of your home’s value. Cross the line into cash-out and the limits tighten. Most of this article is about where that line sits.
You can read the rule itself in Freddie Mac’s Guide section 4301.4. If you want to see how Lendmire, a mortgage broker, thinks about the bigger picture, its cash-out refinance programs page covers the equity-tapping side.
What Does the New Loan Have to Pay Off?
The new loan may pay off your existing first mortgage, your closing costs, and certain junior liens. That is the whole list for ordinary files. Anything beyond it either has to stay within the small cash-back allowance or turns the deal into a cash-out refinance.
Per Freddie Mac’s Guide, the allowed uses include:
- Paying off the first mortgage.
- Paying off or paying down a second lien that was used in its entirety to buy the home.
- Paying related closing costs.
- Paying off a land contract that meets the Guide’s rules, including being signed at least 12 months before application.
Closing costs, financing costs and prepaids can generally be rolled into the new balance. That lowers the cash you bring to closing. It also raises the loan amount, so you pay interest on those costs for as long as you keep the loan. Rolling costs in is a trade, not a discount.
The Second-Mortgage Test
Here is where most borrowers get tripped up. A second mortgage or HELOC can be paid off in a no cash-out refinance only if every dollar of it went toward buying the home. The file has to document that.
Say you bought a house with a first mortgage and a smaller second loan from the seller. Folding both into one new loan fits the rule. Now say you opened a HELOC three years later and spent it on a kitchen and a car. Paying that off with the new loan changes the classification. The refinance becomes a cash-out refinance.
A simple self-check:
1. Pull the paperwork on each lien.
2. Ask what the money was used for.
3. If it was purchase money, it can usually roll in.
4. If it paid for anything else, plan for cash-out limits.
One more trap. Past-due property taxes cannot be paid from no cash-out proceeds. The only exception is using the permitted cash-back amount.
How Much Cash Can You Take Back?
“No cash-out” does not mean zero dollars back. Freddie Mac’s Guide allows cash to the borrower of up to the greater of 1% of the new loan or $2,000. For most loans, the 1% figure is the larger one.
If extra proceeds remain beyond that, the lender must shrink the loan amount or apply the excess to principal. Go over the cap and Freddie Mac’s automated underwriting flags the loan as ineligible for this treatment. Think of the allowance as a rounding buffer, not spending money.
Fannie Mae’s cap has changed in recent years. If you are comparing the two agencies, check the current Selling Guide rather than relying on a summary.
The Gates You Have to Clear
Qualifying comes down to a handful of checks. Across the wholesale programs Lendmire arranges conventional loans through, these are the gates a file has to clear.
| Gate | What the lender checks |
|---|---|
| Purpose of the loan | Only allowed payoffs, cash back within the cap |
| Ownership or obligation history | You stayed on title or on the old loan |
| Occupancy | Primary home, second home or other use |
| Credit score | 620 decision score as a wholesale starting point |
| Debt ratios | Up to 50% total ratio on an automated approval |
| Equity | Loan-to-value fits the property type |
| Appraisal | Automated underwriting decides if one is needed |
Programs differ, and these are starting points, not promises.
Ownership and Continuity
Freddie Mac wants to see that the person refinancing has a real connection to the loan or the home. Lender summaries describe two common paths. Either at least one borrower on the new loan was already a borrower on the loan being paid off, or a borrower held title and lived in the home for the most recent 12 months with documented on-time payments. The exact language lives in the Guide’s borrower-requirements section, so confirm the details for your situation.
This matters most when titles change. Adding a new person to the loan, removing an ex-spouse, or refinancing a home you inherited all raise continuity questions. Inheritance and legal awards, such as a divorce decree, have their own exceptions.
Credit and Debt Ratios
The wholesale conventional programs start at a 620 decision score. On an adjustable rate under manual underwriting, the floor is 640. Most files run through automated underwriting, where the automated finding governs and the total debt ratio can go up to 50%. A manually underwritten file is held to tighter ratios, 36% or 45% depending on compensating factors like reserves and score.
Past credit events carry agency waiting periods. They are 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.
Equity and Loan-to-Value
This is the gate that usually decides things. Loan-to-value, or LTV, is your loan balance divided by your home’s value. A lower number means more equity.
On a one-unit primary residence, a rate-and-term refinance can reach 95% LTV. A cash-out refinance on the same home tops out at 80%. That 15-point gap is the practical reason classification matters. You can see the agency’s limits on Freddie Mac’s maximum LTV chart. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Other property types sit lower. Second homes top out at 90% on a purchase. Cash-out on a two- to four-unit primary residence is capped at 75%. Occupancy decides the leverage, so a rental or second home gets tighter limits than the home you live in.
Above 80% LTV, mortgage insurance is required. You can ask to cancel it at 80% of the original value with good payment history, no subordinate liens and no drop in value. The servicer must end it automatically at 78%. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Appraisal
On a no cash-out refinance, automated underwriting decides whether you need a full appraisal or can get a waiver. A cash-out refinance, by contrast, calls for a new appraisal and inspection report. Some property types and situations are not eligible for a waiver, so do not assume you will get one.
Walking Through a Scenario
Picture a homeowner with a single first mortgage and no other liens. The home is a one-unit primary residence. The goal is to change loan terms and cover closing costs.
The new loan pays off the old mortgage. Closing costs are rolled in. A few hundred dollars come back to the borrower, which sits under the 1% allowance. Because nothing else is being paid off, the file stays in the no cash-out bucket. LTV can run up to 95%, and mortgage insurance applies above 80%.
Now change one fact. The same homeowner also has a HELOC that funded a renovation. Paying it off with the new loan moves the file to cash-out. The LTV limit drops to 80%, the appraisal requirement tightens, and the first mortgage must be at least 12 months old. A borrower with, say, 10% equity could qualify in the first version and not in the second. Same house, same person, different category.
Why a Refinance Gets Denied (and the Fix)
- The loan is too young. Cash-out requires the first mortgage to be at least 12 months old, note date to note date. Wait, or restructure.
- A non-purchase lien is in the payoff. Leave it in place, pay it separately, or accept cash-out rules.
- Cash back runs over the cap. Reduce the loan amount or apply the excess to principal.
- Title changed recently. Gather the documents showing continuity: payment history, divorce decree, or inheritance papers.
- Equity is too thin. Compare the 95% and 80% ceilings against your real LTV before applying.
- Credit falls short. Check the score and any recent credit events against the waiting periods above.
Special Situations
Buying out a co-owner. Freddie Mac treats this as special-purpose cash-out, not an ordinary no cash-out refinance. A divorce buyout is the classic example.
Programs with their own rules. Refi Possible, a Freddie Mac option for income-eligible borrowers, has its own requirements. It needs income at or below 80% of area median income and an existing loan owned by Freddie Mac. Renovation and energy-retrofit products also carry their own allowed uses. Energy-retrofit (PACE) loans can be paid off in a no cash-out refinance if specific conditions are met.
Texas. Texas equity loans fall under state rules, with an 80% LTV cap. The wholesale cash-out lane Lendmire uses is not written on Texas homesteads. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Above 95% LTV. A refinance above that level generally requires that the agency already owns your existing loan. Ask your servicer who owns it.
No Cash-Out vs. Cash-Out, Side by Side
| Factor | Limited / no cash-out | Cash-out |
|---|---|---|
| Max LTV, one-unit primary | 95% | 80% |
| Max LTV, 2-4 unit primary | Lower than one-unit | 75% |
| Use of proceeds | Payoffs and costs only | Open |
| Seasoning | Continuity rules | 12 months on first lien, 6 on title |
| Appraisal | Set by automated finding | New appraisal required |
Choose no cash-out when your goal is changing the loan, not raising cash. Choose cash-out when you need money for other uses and have the equity to support the lower ceiling.
What to Gather Before You Apply
- Your most recent mortgage statement and payoff details.
- Documents for any second lien, showing it was purchase money.
- Proof of title and occupancy history.
- Income and asset records, as requested.
- Any divorce decree, inheritance papers or trust documents if title is changing.
After closing on a refinance of your primary home, you generally get until midnight of the third business day to cancel. The CFPB’s right-to-cancel explainer lays out how that clock works. In practice, that means funds are not released the moment you sign.
Key Terms Defined
No cash-out refinance: Freddie Mac’s name for a refinance that replaces your loan and returns only a small allowed amount of cash.
Limited cash-out refinance: Fannie Mae’s name for essentially the same product.
LTV (loan-to-value): Your loan balance as a percentage of the home’s value.
Seasoning: The minimum time you must have held a loan or the title before refinancing.
Purchase-money lien: A loan used entirely to buy the home.
Continuity of obligation: Proof that the person refinancing was already tied to the old loan or the home.
Frequently Asked Questions
Does Freddie Mac actually offer a “limited cash-out” refinance?
Not by that name. Freddie Mac calls it a “no cash-out” refinance, and Fannie Mae uses “limited cash-out.” The rules are similar, but the cash-back caps and some details differ, so check which agency guides your loan.
How much cash can I get back without it counting as cash-out?
Up to the greater of 1% of the new loan or $2,000. For most loan sizes, 1% is the bigger number. Go over it and the loan must shrink, or it is reclassified as cash-out.
Can I roll my HELOC into the new loan?
Only if the HELOC was used entirely to buy the home, and the file documents that. A HELOC used for repairs, debt or other spending changes the loan to cash-out, with an 80% LTV ceiling on a one-unit primary residence. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Do I need a new appraisal?
It depends on the automated underwriting result, which may require an appraisal or offer a waiver. Cash-out refinances, by contrast, call for a new appraisal and inspection report.
What credit score do I need?
The wholesale conventional programs Lendmire works with start at a 620 decision score, with 640 for an adjustable rate under manual underwriting. Some lenders set a higher floor. Final eligibility depends on the lender, the full file and the automated finding, and nothing here is a commitment to lend.
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.
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. Freddie Mac Guide Section 4301.4: “No cash-out” refinance Mortgages
2. Freddie Mac Maximum LTV, TLTV and HTLTV Requirements
3. CFPB Right to Cancel Explainer
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 an Investor Count Rent to Qualify for a Conventional Loan? · Does Fannie Mae Seasoning Apply to a Conventional Cash-Out Refinance? · How Much a Conventional Refinance Saves a Move-Up Buyer
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
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.