The Quick Read: In New York, recording costs add to a conventional cash-out mostly through one item, the mortgage recording tax, and that tax is charged on the full new loan, not just the cash you take out. The tax scales with loan size, steps up at a set loan amount, and can be paid at closing or rolled into the balance. A CEMA can shrink the taxed amount, but it never removes tax on new money.
What Is the Charge, Exactly?
It is a tax, not a lender fee. The state describes the mortgage recording tax as an excise tax on the privilege of recording a mortgage. It is made up of several separate taxes, and the total depends on the county and city where the home sits (NYS Tax Department memo). That memo is old, so use it for structure, not for current numbers.
Lenders cannot waive it. It is collected at recording, and the title company handles the payment.
Two buckets matter on a cash-out file:
| Cost bucket | What it scales with | Does a CEMA help? |
|---|---|---|
| Mortgage recording tax | Principal secured by the new mortgage | Only on already-taxed principal |
| Flat recording and filing charges | Mostly pages and document count | No |
The tax is the big one. The flat charges barely move with loan size. This article focuses on the tax.
How Is the Tax Calculated in New York City?
In the city, the tax follows the principal debt secured by the mortgage. The city’s Department of Finance says residential means one- to three-family homes and individual condos. The city portion is 1.0% under $500,000 and 1.125% at $500,000 or more (NYC Department of Finance).
Stack the state pieces on top and the combined figures are:
- 2.05% on mortgages under $500,000.
- 2.175% on one- to three-family or condo mortgages at $500,000 or more.
- 2.80% on other mortgages at $500,000 or more.
Those totals are the city’s rate plus the state’s stack of taxes: a basic tax, a special additional tax and an additional tax. Treat them as a working guide and confirm the exact total with your closing agent.
You may also see lower borrower-side figures quoted. Those are the combined figure minus a 0.25% piece. According to Cuddy Feder, a New York law firm, the lender pays that special additional tax and the borrower pays the rest. It applies to homes with six or fewer residential units. In some cases that piece can shift to the borrower, so ask how it is split on your file.
One small offset: on a one- or two-family home, the first $10,000 of the mortgage is exempt from one of the additional taxes. It is a small credit on any loan size.
Why the Tax Follows the Whole Loan
A cash-out refinance pays off the existing first mortgage, then lets the borrower take equity out. Everything sits in one new note: the payoff, the cash back, and any closing costs you finance. The tax base is that new note.
Say a homeowner owes 50% of the home’s value and takes a new loan at 75%. The tax applies to the 75% balance, not the 25% of value pulled out. That surprises people. The number to watch is the new loan amount.
Borrowers focus on cash-out dollars. The title quote is driven by the new principal. Ask for the estimate on the full new loan before you pick a cash-out amount.
Where the General Rule Breaks
The base case is a one- to three-family home or condo in the city. Several edge cases change the math.
The $500,000 line. Crossing it moves the city portion from 1.0% to 1.125%. That is a 0.125 percentage point step on the whole loan. A cash-out amount that lands just over the line costs more than the same file just under it. Check where your number lands before you set it.
Co-ops. Individual co-op apartments do not carry the tax. The city says a co-op share loan is not secured by real property, so there is no liability under the mortgage recording tax. Co-op share loans have their own underwriting requirements, though.
Property type. Larger buildings and commercial mortgages face higher tiers. The state’s guidance says the nature of the property when the mortgage is signed decides the tier. In one advisory opinion, three adjacent condo units combined into one apartment stayed on the residential tier (NYS Tax Department advisory opinion).
Outside the city. The state tax applies everywhere, with county or city add-ons where authorized. Rates differ by county. Confirm yours with the county clerk or your title company. Don’t borrow another county’s figure.
Private or family lenders. A lender who is a natural person is exempt from the 0.25% piece. That matters on family loans. It rarely matters on a standard conventional file.
What a CEMA Does (and Doesn’t Do)
A CEMA is a Consolidation, Extension and Modification Agreement. It ties your new loan to your existing mortgage. The goal is to avoid paying the tax a second time on principal that was already taxed.
The mechanics:
1. The old mortgage is assigned to the new lender instead of being paid off and discharged.
2. The old and new loans are consolidated into one lien.
3. Tax is due on the new money above the existing balance.
On a cash-out, the new money is the cash you take plus any closing costs you finance. Those dollars are still taxed. A CEMA reduces the base. It does not erase it.
Three file-level points matter:
- Cooperation. A CEMA needs the current servicer or lender to cooperate. Some don’t. Ask early.
- Paperwork. The new mortgage needs to show it consolidates the old one. A New York Division of Tax Appeals decision describes a refund claim on a refinance where the new mortgage did not indicate it was a consolidation with or extension of the prior mortgage. Clean documents matter.
- Added cost. A CEMA adds attorney and processing work. It pays off when the tax saved exceeds those added costs. That depends on how much of your balance was already taxed.
The break-even is simple in form: tax saved on the old balance minus added CEMA costs. If the result is positive, it helps. If your old balance is small, it may not. Your title company or attorney can run it on your numbers.
Paying in Cash vs. Financing the Tax
Fannie Mae’s cash-out rules allow financing closing costs, points and prepaid items into the new loan (Fannie Mae Selling Guide). So rolling the recording tax in is allowed in principle.
There is a loop to know about. Financing the tax raises the loan amount. A higher loan amount raises the tax. It also raises your loan-to-value.
On a one-unit principal residence, conventional cash-out tops out at 80% LTV. On two- to four-unit principal residences it is 75% (Fannie Mae Eligibility Matrix). Every dollar of tax you finance uses up some of that room, so you get less cash out. These are agency limits, subject to lender guidelines and full file review.
Paying the tax in cash at closing keeps the balance down. It costs you cash up front. Which is better depends on how much cash you want to keep and how long you plan to hold the loan.
Which Rules Frame a Cash-Out File?
Across the wholesale conventional programs, the cash-out envelope is consistent:
- Leverage: 80% LTV on a one-unit principal residence, 75% on two- to four-unit principal residences, second homes and investment property.
- Seasoning: the first mortgage being paid off must be at least 12 months old, note date to note date. A borrower generally needs to be on title for six months, with exceptions for delayed financing, inheritance and legal awards.
- Credit and ratios: the wholesale floor starts at a 620 decision score, with a 50% total ratio ceiling on automated findings. Reserves can apply to cash-out files with higher ratios.
- Wholesale lane: one lane reaches 89.99% LTV with no mortgage insurance at a 680 score and 50% ratio. It requires a thirty-year fixed, primary residence, a conforming balance and its own six months of seasoning.
Mortgage insurance applies above 80% LTV on other programs. On cash-out you generally sit at or under 80%, so it is not the issue here. The tax is.
Cash-Out vs. Rate-and-Term in New York
If you only want to replace your loan and cover costs, a rate-and-term (limited cash-out) refinance may fit better. It pays off the first mortgage, the closing costs and any purchase-money second, with only incidental cash back. Leverage can reach 95% on a one-unit principal residence, and 97% where the existing loan is agency-owned and the first-time-buyer program allows.
The tax still applies to the new loan. A limited cash-out can finance the tax without becoming cash-out, but only if payoff and cash-back facts fit. A financed cost that pushes you past the cash-back limit changes the transaction type. Your lender’s underwriters decide.
The takeaway: the tax follows the new loan in both structures. The choice between them turns on whether you need equity cash.
What Does the Decision Look Like in Practice?
Picture a New York City homeowner in a one-family house with a balance well under half of value. They want cash for a renovation. Here is the order of operations that keeps the file clean:
1. Set the cash need first, then price the new loan size against the $500,000 line.
2. Ask the existing servicer whether it will assign the mortgage for a CEMA.
3. Get the title company’s tax estimate with and without a CEMA.
4. Decide whether to pay the tax in cash or finance it, and check the LTV impact.
5. Compare the Loan Estimate to the title quote before locking the structure.
Where it goes sideways: borrowers pick a cash-out number, then learn the tax pushed the loan over a tier or the LTV cap. The fix is to run the tax before you pick the amount.
If you plan to hold the loan a long time, the one-time tax spreads out. On a short horizon, a full cash-out without a CEMA is harder to justify.
Where Recording Costs Show Up on Your Disclosures
After you apply, you get a Loan Estimate. At closing, you get a Closing Disclosure with final figures. Compare the government-fee sections on both (CFPB Loan Estimate explainer).
The forms have separate lines for “Recording Fees and Other Taxes” and “Transfer Taxes.” Federal rules say a government charge set as a percent of the loan is a transfer tax, not a recording fee (CFPB Regulation Z, section 1026.37). A percent-of-loan New York tax may therefore land on the transfer tax line. Ask the settlement agent which line it appears on. Don’t assume.
Government charges don’t vary by lender. The estimates for them can differ, though. If two Loan Estimates show different tax amounts, the gap is usually in assumptions like CEMA or loan size.
Key Terms Defined
Mortgage recording tax: a state and local tax on the privilege of recording a mortgage, charged on the principal the mortgage secures.
CEMA: an agreement that consolidates your old and new mortgages so tax is due only on the new money.
New money: the part of the new loan above the existing balance, including cash out and financed costs.
Tax base: the loan amount the tax percentage is applied to.
Seasoning: the minimum time a loan or ownership must exist before a cash-out is allowed.
Limited cash-out: a refinance that pays off the loan and costs with only incidental cash back to the borrower.
Frequently Asked Questions
Is the recording tax based on the cash I take out?
No. It is based on the full new mortgage amount unless a CEMA applies. Payoff dollars, cash-out dollars and financed costs all sit in the new note. With a CEMA, tax is due only on the new money.
Does a CEMA make the tax go away?
No. It only avoids a second tax on principal that was already taxed. Cash-out dollars and financed closing costs are new money and still taxed. It also depends on your current servicer cooperating, and it adds legal and processing work.
Do co-op owners pay it?
No. Individual co-op apartments do not carry the tax in New York City, because a share loan is not secured by real property. Co-op loans still have their own underwriting rules, so confirm eligibility with the lender.
Can I roll the tax into the new loan?
Usually yes on a cash-out refinance, since closing costs can be financed. It raises your balance, your LTV and the tax itself. It also uses up room under the 80% cap on a one-unit principal residence. Compare it with paying cash at closing.
Are rates the same across New York State?
No. New York City carries its own tiered figure, and other counties and cities apply their own add-ons on top of the state tax. Ask the county clerk or your title company for the local number rather than relying on a statewide figure.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Start with Lendmire’s cash-out refinance programs, and see how the same tax mechanics play out on a government loan in Lendmire’s piece FHA Cash-Out Mortgage Recording Costs for a New York Homeowner. Program 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 (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program 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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References
1. NYS Tax Department — TSB-M-96(2)R
2. NYC Department of Finance — Statistical Profile of the NYC Mortgage Recording Tax
3. Cuddy & Feder — Who Pays the Mortgage Recording Tax in New York
4. NYS Tax Department — Advisory Opinion TSB-A-14(1)R
5. NYS Division of Tax Appeals — refund claim decision
6. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
7. Fannie Mae Eligibility Matrix
8. CFPB Loan Estimate explainer
9. CFPB Regulation Z, section 1026.37
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Add or Remove a Borrower on a Conventional Cash-Out Refinance · How to Get a Conventional Cash-Out After a Quitclaim From a Parent · How Much a Conventional Cash-Out Lends a First-Time Equity Borrower
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.