The Quick Read: Not exactly. A conventional cash-out refinance requires acceptable credit, not a single “good” score, and there is no one national cutoff. On the wholesale programs Lendmire places files with, the starting point is a 620 decision score, but the automated finding governs most files. Credit, equity, debt ratio, reserves and occupancy are weighed together, and a lower score usually shows up in the cost of the loan even when the file is approved.
What Does “Good Credit” Mean to a Cash-Out Lender?
“Good credit” is three different bars, and borrowers mix them up. The first is minimum eligibility: the lowest score a program will look at. The second is a clean approval: a file the automated system accepts without manual review. The third is best pricing: a score high enough that credit-based adjustments stay small.
Across the wholesale conventional programs we place files with, the minimum is a 620 decision score. For a borrower with several credit scores, the lender works from one decision score, not the best of the bunch. For a fixed-rate loan with a 620 score, eligibility is possible. That says nothing about how the loan will be priced or whether the rest of the file supports it.
Here’s the catch. Meeting the minimum is not the same as qualifying. A 620 with a high debt ratio, thin equity and no reserves is a weak file. A 700 with a low debt ratio and plenty of equity is a strong one. The score is one input.
Some agency rules have also moved. Fannie Mae removed its fixed 620 minimum for loans run through its automated system, Desktop Underwriter, per an Orrick summary of the Selling Guide update. The system now leans on its own broader risk analysis. Freddie Mac’s Guide says a minimum score is not required for “Accept” findings from its automated tool, per Freddie Mac Guide section 5203.2. In practice, lenders and wholesale channels still set their own floors. That is why Lendmire works from the 620 figure on the files it arranges, and why a borrower below it should expect a harder conversation, not an automatic denial.
Why Does Cash-Out Get More Scrutiny Than a Standard Refinance?
Cash-out gets more scrutiny because the borrower is turning equity into debt. The new first mortgage pays off the old one and puts extra cash in the borrower’s hands. The balance goes up and the equity cushion goes down.
That is a different risk from a rate-and-term refinance, where the new loan pays off the existing first mortgage, the closing costs and any purchase-money second lien, with only incidental cash back. So the leverage limits are tighter. On a conventional cash-out, the cap is 80% of the home’s value on a one-unit primary residence. On two- to four-unit principal residences, second homes and investment property, it is 75%. A rate-and-term refinance on a one-unit primary residence can reach 95%.
Those numbers matter for credit. Lower leverage is itself a compensating factor. A borrower who takes out well under the cap, leaving real equity in the home, gives the lender more room on a middling score. A borrower who asks for the maximum leaves none.
Credit research points the same way. Per a law-firm summary of a CFPB study of refinance loans, cash-out borrowers tended to have lower credit scores and lower incomes than non-cash-out borrowers, while loan-to-value and debt-to-income were similar. So cash-out borrowers are not all excellent-credit borrowers. Many are not.
Credit Is One Input, Not the Only One
A cash-out file is a stack of factors, and a strength in one can offset a weakness in another. Here is how the pieces fit.
| Factor | What the lender checks | Why it matters |
|---|---|---|
| Decision score | 620 starting point on wholesale programs | Sets eligibility and affects pricing |
| Equity (LTV) | 80% cap on one-unit primary | Less equity taken means less risk |
| Debt ratio | 50% automated ceiling | Shows the budget can carry the new loan |
| Reserves | Months of payments in the bank | Cushion if income dips |
| Payment history | Recent lates, collections | Recent problems weigh more than old ones |
| Seasoning | 12 months on the loan, 6 on title | Blocks fast flips of equity |
The 50% total ratio ceiling is the automated limit on the wholesale programs. Manually underwritten loans run tighter, at 36% or 45% depending on the file, with the reserve and score factors in the Eligibility Matrix. Manual underwriting also moves the credit floor for an adjustable-rate loan to 640.
On Fannie Mae automated files, a debt ratio above 45% requires six months of reserves, per the Selling Guide section on cash-out refinances. That is a clean example of one factor reaching into another. A borrower with a higher ratio can still work, but the file needs documented cash behind it.
Which Credit Score Does the Lender Use?
The lender uses scores pulled from the credit reporting agencies, and with more than one borrower the file is built around the decision score, not a flattering average. Freddie Mac requires scores from at least two credit reporting agencies for each borrower, per its Guide.
This catches people on joint files. A spouse with a strong score does not rescue a co-borrower with a weak one. If the lower score drives the decision, it drives the pricing too. When a file is close, the practical question is whether the loan works on one borrower alone. Sometimes a refinance in one name works better. Sometimes it does not, because income has to carry the loan.
Also, the pull is a hard inquiry once the borrower is working with a lender. Shopping for the same loan with several lenders in a short window is generally treated as one inquiry by the scoring models, but borrowers should confirm how their lender handles it.
Three Borrower Scenarios
These are modeled, not real files, and none carries a dollar figure.
The strong file. A homeowner with a high score, a low debt ratio and a one-unit primary residence asks for well under the 80% cap. The automated system accepts the file. Credit is not the issue. Seasoning and appraisal are the only real questions.
The middle file. A homeowner has a score in the low 600s, a debt ratio near the top of the automated range and wants the full 80%. Nothing here is disqualifying, and nothing is comfortable. Taking less cash, paying down a card before the credit pull, or adding documented reserves can change how the automated system reads the file. Pricing will reflect the score.
The recently dinged file. A homeowner had a score in the 700s a year ago, then missed two payments and has a new collection. The score now sits in the 620 zone, but the recent lates matter more than the number. Lenders weigh how recent the problem is. A late on the existing mortgage is the most damaging kind. This borrower is often better off waiting and rebuilding than applying now.
What Lenders Look at Beyond the Score
Payment history carries more weight than most borrowers expect. Two borrowers with the same score can look very different: one has a thin file, the other has a clean ten-year record with a single old collection.
After a serious credit event, agency waiting periods apply. The wholesale programs follow the agency rules: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. Those periods can be shorter with documented extenuating circumstances. Fannie Mae’s derogatory credit fact sheet lays out the bankruptcy periods, and borrowers should confirm the current figures against the live Guide. Extenuating circumstances means a nonrecurring event outside the borrower’s control that causes a sudden, major income loss or a large jump in obligations.
A past bankruptcy does not permanently block a cash-out. It starts a clock and requires re-established credit.
Seasoning is the other hard gate, and it runs on two separate clocks. The loan being paid off must be at least 12 months old, measured note date to note date. At least one borrower must also have been on title for six months. Exceptions exist for delayed financing after a cash purchase, inheritance and legal awards. The Fannie Mae Selling Guide also requires that a home listed for sale be taken off the market by the disbursement date.
If Your Credit Isn’t Quite There
Start by checking which wall you are against: the score, the debt ratio, the equity or the seasoning. They have different fixes.
1. Pull your own reports and find the specific damage. A single collection or a high card balance is fixable. A pattern of recent lates is a longer repair.
2. Lower card balances before the lender pulls credit. Utilization moves scores, and the effect can show up after the next reporting cycle. Ask the loan officer about a rapid rescore if a payoff is documented.
3. Take less cash. Dropping below the 80% cap improves the file on several fronts at once.
4. Document reserves. Months of payments in the bank carry weight, especially with a higher debt ratio.
5. Consider whether another product fits better. Compare before choosing.
| Option | What happens to your first mortgage | Credit read |
|---|---|---|
| Cash-out refinance | Replaced by a new, larger loan | Full file review |
| Home equity loan | Stays in place; a second loan is added | Lender-specific |
| HELOC | Stays in place; a credit line is added | Lender-specific |
That structure comes from the CFPB’s research blog on cash-out refinances. If your current loan has terms you want to keep, a second-lien product leaves it alone. If you hold FHA, Lendmire’s piece Does an FHA-to-Conventional Cash-Out Refinance Need Better Credit? covers that move.
Programs with no score floor exist, but they are not cash-out. Fannie Mae’s RefiNow has no minimum credit score and limits cash back to $250 or less. It is a no-cash-out refinance. Do not confuse it with the product here.
The Cost Side of Credit
Credit shapes price even on an approved loan. Fannie Mae assesses loan-level price adjustments based on credit score, loan purpose, occupancy, units and product type, per its LLPA matrix. Cash-out carries its own adjustments. A lower score typically means a higher cost, whether that shows up in the note or in upfront costs. Compare Loan Estimates from more than one lender to see the actual effect.
Mortgage insurance matters too. On the wholesale lane that reaches 89.99% LTV with no mortgage insurance, a 680 score and a 50% ratio are required on a thirty-year fixed, primary residence with a conforming balance, plus six months of seasoning. That lane is a good example of how a higher score opens a different structure. A borrower under 680 does not get it. Texas homestead cash-outs are different: the state constitution caps them at the agency figure, and the wholesale lane is not written there. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
A different risk sits outside the credit file. The CFPB’s research on cash-out refinances notes that moving card or auto debt into a mortgage secured by the home can put the home at risk if payments become unsustainable. Missing a card payment is unlikely to cost you the house. Missing a mortgage payment can.
Common Myths
“You need a 620 for any conventional loan.” Not universally anymore for automated files at the agencies. Many lenders and wholesale channels still hold to 620.
“No minimum means anyone qualifies.” Wrong. The automated system reads the whole file, and lender overlays can add a score requirement.
“Cash-out and limited cash-out are the same.” They are not. Seasoning, leverage and pricing differ.
“The six-month and 12-month rules are one clock.” Two clocks: one on title, one on the loan being paid off.
“A bankruptcy ends this forever.” It starts a waiting period and a re-established-credit test.
Key Terms Defined
Decision score: the single credit score a lender uses to underwrite the file when there is more than one borrower or report.
LTV (loan-to-value): the loan amount divided by the home’s appraised value.
Seasoning: the minimum time a loan or ownership must exist before cash-out is allowed.
Loan-level price adjustment (LLPA): an agency pricing add-on based on credit score, purpose and occupancy.
Reserves: liquid funds left after closing, counted in months of housing payments.
Overlay: a lender rule stricter than the agency’s.
Frequently Asked Questions
Can I get a conventional cash-out refinance with a 620 score?
Possibly. A 620 decision score is the starting point on the wholesale programs Lendmire works with. Eligibility still depends on the full file: equity, debt ratio, reserves, payment history and the property. Pricing will usually reflect a lower score. Subject to lender guidelines and file review.
How much equity do I have to keep?
On a one-unit primary residence, conventional cash-out tops out at 80% of the home’s value, so at least 20% stays in the home. For two- to four-unit principal residences, second homes and investment property, the cap is 75%. Taking less than the cap helps a weaker credit file.
Does a past bankruptcy or foreclosure rule me out?
Not permanently. Agency rules set waiting periods: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu. They can be shorter with documented extenuating circumstances. Credit must also be re-established afterward.
Do I need to own the home for a certain time first?
Yes. The loan being paid off must be at least 12 months old, and at least one borrower must have been on title for six months. Exceptions cover delayed financing after a cash purchase, inheritance and legal awards.
Is a cash-out refinance the only way to tap equity?
No. A home equity loan or HELOC leaves your first mortgage in place and adds a second lien. A cash-out refinance replaces the first mortgage. Which one fits depends on the loan you already have and how your credit looks.
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. See Lendmire’s cash-out refinance programs for the program details. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
For your own numbers, request a scenario review with Lendmire.
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.
For the program’s current guidelines, see conventional loan programs.
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
2. Freddie Mac Guide Section 5203.2, Credit Scores
3. Consumer Finance Monitor (CFPB study summary)
4. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
5. CFPB’s research blog on cash-out refinances
7. LLPA matrix
8. CFPB, cash-out refinances and non-mortgage debt
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: Conventional Cash-Out Refinance Documentation for Each Borrower Type · Can a Condo Owner Get a Conventional Cash-Out Refinance? · Conventional Cash-Out Refinance Requirements for a Condo Building
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.