The Quick Read: The cash you can pull from your home depends on four things. They are the appraised value, the program’s loan-to-value cap, the payoff of what you owe now plus closing costs, and whether the loan counts as limited or full cash-out. A partner who signed the note but is not on the title does not raise that ceiling. That person mainly affects whether you qualify at all.
Key Takeaways
- The ceiling is value times the program’s cap. Existing liens and costs come out of it. What is left is your cash.
- Adding a note-only partner does not add a dollar of cash. It changes eligibility, occupancy tests and income.
- A small appraisal miss shrinks the cash by a bigger share than it shrinks the value.
- Streamline-type refinances on existing FHA and VA loans give you little or no cash back.
- That partner stays liable for the debt without owning the home. Treat that as a real risk.
What Does “Note-Only” Mean?
A note-only partner is a spouse, partner or family member who signed the promissory note and owes the debt. That person is not on the deed. Signing the note creates liability. Holding title creates ownership. They are two separate things.
Some searches mean the reverse: on title, off the note. That case comes up later. Others mean something different again: a partner you owe money to, who holds a note against you. That one gets its own short section near the end.
Here is how the two roles compare.
| Factor | Note-only partner | On-title owner |
|---|---|---|
| Owes the debt | Yes | Only if also on the note |
| Owns the home | No | Yes |
| Signs the note | Yes | Yes, if a borrower |
| Signs the lien document | Usually not | Yes |
| Raises the cash ceiling | No | No |
The last row is the one people miss. More names on the loan do not mean more cash. The home’s value and the program’s cap set the ceiling.
Key Terms Defined
Promissory note: The signed promise to repay the loan. Everyone on it is personally responsible for the debt.
Title: The legal record of who owns the home.
Loan-to-value (LTV): The loan amount divided by the home’s appraised value, shown as a percentage.
Limited cash-out refinance: A refinance that pays off your existing first mortgage and closing costs, with only a small amount of cash back.
Full cash-out refinance: A refinance that lets you take real cash beyond your payoff and costs, within the program’s LTV cap.
Seasoning: The waiting period a lender wants before you can refinance, such as how long you have owned the home.
Payoff statement: A lender’s written figure for what it takes to clear a loan on a given day.
Reachable equity: The part of your equity a program lets you borrow against. It is smaller than your total equity.
How Is the Cash Amount Set?
Cash released equals the new maximum loan, minus every payoff, minus closing costs and prepaid items. No partner appears in that sentence. The formula runs in plain steps:
1. Start with the appraised value. A new appraisal drives everything else.
2. Apply the LTV cap. On a conventional cash-out refinance of a one-unit principal residence, the cap is 80%. On two- to four-unit principal residences, it is 75%.
3. Subtract what you owe. That means your current first mortgage and any other lien the lender requires paid off.
4. Subtract costs and prepaids. Closing costs and items like escrow deposits come out of the cash.
5. What remains is your cash. The closing disclosure shows the final number.
Three numbers matter, and people blur them together. There is your total equity. There is the reachable part of it under the cap. And there is the amount you actually need, such as a buyout. The cash only works when the middle number covers the third.
Brokers see the same trap often. A homeowner counts total equity, subtracts the payoff, and expects the whole difference. The cap and the costs cut that figure down first. Lendmire’s cash-out refinance programs page lays out how the options differ by occupancy and loan type.
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio, a thirty-year fixed rate, a primary residence and a conforming balance. It has its own six months of seasoning. It is the exception, not the baseline, and it is not written in Texas. A cash-out on a Texas homestead is capped by the state constitution at the agency figure. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Limited or Full Cash-Out: Why the Label Matters
The classification changes how much cash you can take. Under Fannie Mae’s limited cash-out guidelines, the loan pays off the first mortgage and costs. Cash back is capped at a small amount. Fannie Mae changed that cash-back test in a recent announcement, and older web articles still show the old rule.
A full cash-out loan has no such cash-back cap. It comes with the lower LTV limit and a longer seasoning list. Under Fannie Mae’s full cash-out rules, at least one borrower must have been on title for six months. The guide also requires the first mortgage being paid off to be at least 12 months old, counted from note date to note date. A home that was listed for sale must come off the market by closing.
A true refinance reaches higher leverage: up to 95% LTV on a one-unit principal residence, and 97% in certain first-time-buyer cases. It pays off the existing first mortgage, closing costs and a purchase-money second lien. Money that goes beyond that, such as a buyout, usually pushes the file into full cash-out. The lender makes that call, and it sets which cap applies.
How Is the Note-Only Partner Underwritten?
Underwriting tests the partner’s role in a set order. The lender decides who must be on title, who is on the old note, who will be on the new note, and whose income and debts count. Here is the sequence.
Step 1: Classify the loan. The lender decides limited or full cash-out first. Everything else follows.
Step 2: Test ownership. Fannie Mae’s limited cash-out guide asks that at least one borrower on the new loan be on title at application. It lists documented exceptions. One is a borrower who is obligated on the loan being paid off but is not on title. That is the closest match to a note-only partner. Lenders read the exact wording, and some add their own rules.
Step 3: Test occupancy. Freddie Mac’s cash-out section requires all borrowers to occupy the property on a primary-residence cash-out. A partner who signs the note but lives elsewhere can break that test. Other guidelines and some lenders handle non-occupant borrowers differently. Ask early.
Step 4: Appraise. The new value sets the ceiling. A cash-out needs a fresh appraisal.
Step 5: Count income and debts. Anyone whose income or assets are used to qualify must sign the note. A partner who signs only to help you qualify is being counted. Their debts and income enter the ratios. Higher ratios can trigger extra reserves, and the agencies set those thresholds.
Step 6: Gather documents. Expect payoff statements, a title report, the signed note and a lien document signed by everyone with an ownership interest. Add an occupancy certification and any paperwork for a title exception.
Step 7: Close. Whatever the closing disclosure shows after payoffs and costs is your cash.
Most conventional programs start at a 620 decision score. The automated finding governs most files, with a 50% ceiling on the total ratio. Manually underwritten loans run tighter. Everything here is subject to lender guidelines and full file review.
A Worked Example in Percentages
These are modeled assumptions, not market facts. Say the home appraises at 100 units of value. The cap is 80%. Your existing loan payoff is 55 units, and costs and prepaids come to 3 units. All figures are shown as a percentage of the expected value.
| Scenario | Max loan | Payoff + costs | Cash | Need | Result |
|---|---|---|---|---|---|
| Clears with cushion | 80% | 58% | 22% | 15% | 7% left over |
| Tight | 80% | 58% | 22% | 21% | 1% left over |
| Short | 80% | 58% | 22% | 30% | 8% short |
| Appraisal miss (value 95) | 76% | 58% | 18% | 21% | 3% short |
Look at the last row. A 5% miss in value cut the cash from 22 to 18, a drop of about 18%. The payoff and costs did not move, so the whole miss landed on your cash. That is why you should never promise a partner a firm number before the appraisal comes back.
Where the General Rule Breaks
On title, off the note. This is the reverse case. Secondary commentary says the agencies count only debts a borrower is personally liable for, and they do not follow community-property rules for debts. Treat that as a general pattern. Lenders can add overlays.
Divorce or separation. Fannie Mae waives the title-time rules when a court or settlement awards the property. All parties must sign a written agreement on the transfer and on what happens to the refinance proceeds.
Inheritance and trusts. Both appear as ownership exceptions under Fannie Mae’s rules.
LLC title. Fannie Mae and Freddie Mac have rules that can count LLC holding time toward the six-month test. Ownership must move out of the LLC and into the individual borrower at closing.
Streamline and IRRRL. These are not cash products. The FHA Streamline caps cash at a token amount, bars rolling closing costs into the loan, and requires that the loan being refinanced already be FHA-insured. The VA IRRRL generally gives no cash back, and the same parties generally must stay obligated. A note-only partner’s equity cannot come out through either product. For a VA loan, VA’s pamphlet sets cash-out at no more than 100% of reasonable value, and many lenders set lower limits.
FHA cash-out. FHA’s handbook says all occupying and non-occupying borrowers must take title. An FHA note-only partner therefore needs separate handling. Many lenders add their own limits for non-occupant co-borrowers on government-backed cash-outs.
Disaster areas. Fannie Mae has limited cash-out flexibilities for FEMA disaster areas. They are narrow.
What If the Cash Falls Short?
You have options. Each has a cost.
| Option | Upside | Downside |
|---|---|---|
| Add your own cash at closing | Clears the need in full | Uses savings |
| Pay part now, part later | Smaller payoff at closing | Leaves a balance outstanding |
| Wait for value or seasoning | May raise the ceiling or open a lane | No guarantee, and costs of waiting |
| Renegotiate the amount owed | Fits what the file allows | Needs the other party’s agreement |
| Take a new note back | Spreads the payment | A second lien changes your position |
That last row deserves a pause. If a partner takes a new note secured by your home, that lien sits behind your new first mortgage. It can also complicate a later refinance. The stronger play is often the cleaner one: pay what the cash covers and settle the rest in writing.
If You Owe the Partner Money Instead
Another reading of this topic is that the partner holds a note against you. That person is a creditor, not a co-borrower. The refinance then works as a payoff. Cash released must exceed the note balance, and the payoff is followed by a written or recorded release. Lendmire’s separate piece Can a Cash-Out Refinance Pay Off a Partner Who Only Holds a Note? covers that case.
Whether the note is secured matters. A secured note has a recorded lien, and the closing must clear it. An unsecured note has no lien but still counts as debt. In both cases, get a payoff statement and written confirmation that the claim ends.
What the Decision Looks Like in Practice
Start with the facts, not the hope. Pull the current payoff on your loan. Ask the partner whether they still occupy the home. Find out how long the existing loan has been in place and how long you have held title. Those four facts tell you whether you are looking at a full or limited cash-out, and which seasoning rules apply.
Then run the formula with the cap and a conservative value. Add a cushion for a lower appraisal. If the cash only works at the best-case number, the plan is fragile.
Last, weigh the cost of the move. A larger balance on a new loan usually raises the payment and can reset the term. Moving credit card debt into your mortgage turns unsecured debt into debt secured by your home. That is a real tradeoff. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
Does a refinance release my partner from the old loan?
It ends the old loan when the old lender is paid off and releases the lien. Whether your partner is on the new note is a separate choice. If they sign, they are liable again. Ask for written confirmation of any release.
Can a note-only partner be on the new loan?
Sometimes. Fannie Mae’s guide lists an exception for a borrower obligated on the old loan but not on title. Occupancy rules differ by program. Lenders also add their own rules.
Does adding a partner increase the cash I can take?
No. The appraised value and the program cap set the ceiling. A partner adds income, debts and risk, not cash.
Does the deed matter?
Yes. Ownership interest generally means signing the note, signing the lien document and taking title. Being on the note alone does not make someone an owner.
What happens if the appraisal comes in low?
The cash shrinks faster than the value. Payoffs and costs stay fixed, so the full miss hits your cash.
Next Steps
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. Lendmire is a mortgage broker and arranges these loans through wholesale lenders. 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, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
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 B2-1.3-02, Limited Cash-Out Refinance Transactions
3. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
4. Freddie Mac Guide Section 4301.5
5. HUD FHA Streamline Refinance
This article is part of Lendmire’s Refinance series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Cash-Out Refinance vs Selling When a Partner Is on Title · How Much a Duplex Cash-Out Releases When Scaling to More Doors · How Much a Cash-Out Refinance Releases When Scaling to Ten Doors
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.