The Quick Read: A cash-out refinance can fund the down payment on your next home before the old one sells, but only if you qualify for it. The program rules come from Fannie Mae and Freddie Mac, not from any one provider. What changes from lender to lender is overlays, pricing, and how well they handle a file with two homes. The best program for your situation depends on your equity, your credit, and how two housing payments look on paper.
What Does “Top Provider” Really Mean Here?
There is no single ranked list of winners, and any list claiming one should make you cautious. The cash-out rules are set by the loan program, and a lender cannot rewrite them. Lendmire is a mortgage broker, so it does not rank lenders. It places files with wholesale lenders and matches your scenario to the program that fits.
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: 7.18% as of November 5, 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.
When you compare lenders, look for a few traits. Can they handle a purchase and a refinance on the same timeline? Do they know how to count a home you still own? Will they review your file against more than one program? Those traits matter more than a brand name.
Which Loans Can Raise Cash for a Down Payment?
Only a true cash-out refinance puts usable money in your hands. This is the biggest misconception in this space. Several products sound similar but are built to change your loan, not to pull out equity.
| Product | Cash for a down payment? | What it is for |
|---|---|---|
| Cash-out refinance | Yes | Turning equity into cash |
| Rate-and-term (limited cash-out) | No, only incidental cash | Replacing a loan, paying costs |
| FHA Streamline | No | Existing FHA loan, no appraisal |
| VA IRRRL | No | Existing VA loan, lower-cost swap |
Freddie Mac’s Guide describes a cash-out refinance as a mortgage with no restriction on how you use the proceeds. So a down payment on the next home is a permitted use. Whether you qualify is a separate question.
The limited version is different. Across the wholesale programs Lendmire places files with, a refinance reaches 95% LTV on a one-unit principal residence. LTV, or loan-to-value, is the loan balance divided by the home’s value. That loan pays off the existing first mortgage, the closing costs, and a purchase-money second lien. Cash back is incidental only. Fannie Mae’s cap is the lesser of 2% of the new loan amount or $2,000. Freddie Mac’s cap is the greater of 1% of the new loan amount or $2,000. That is not a down payment. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
The FHA Streamline and the VA IRRRL are even narrower. Both are streamlines for loans you already hold. Neither is a way to raise cash.
How Is a Cash-Out Refinance Underwritten, Step by Step?
Underwriting is the lender’s review of your credit, income, assets, and the property. For a cash-out, the steps run in a set order. Here is how a file moves.
1. Pick the product by purpose. If you want cash, you need a cash-out. Everything else changes the rate or term.
2. Check the clocks. Fannie Mae requires the first mortgage you are paying off to be at least 12 months old, measured note date to note date. The Fannie Mae Selling Guide sets that rule. A borrower must also have been on title for six months, with exceptions. A recent refinance creates a new note, which can restart the 12-month clock.
3. Order the appraisal. The appraised value sets the maximum loan. The new loan must pay off the old mortgage, other liens, and financed costs before any cash reaches you.
4. Underwriting review. The lender looks at credit, income, reserves, and your debt-to-income ratio, or DTI. Cash-out loans are priced higher than rate-and-term loans.
5. Disclosures. You receive a Loan Estimate and later a Closing Disclosure that itemize the costs.
6. Closing and funding. The refinance has to close and fund before the cash exists for your next purchase.
Step six is the sequencing risk. If the refinance slips, your offer on the new home can slip with it. Build that into your plan before you write an offer.
How Much Cash Can You Actually Take?
The answer is often less than a homeowner first assumes. On a conventional cash-out, the leverage cap is 80% LTV on a one-unit principal residence. It is 75% on two- to four-unit principal residences and on second homes. That cap covers the whole new loan, not the cash. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Picture a home worth a given amount with a mortgage balance sitting at 50% of that value. The new loan can reach 80%, so the gap is 30 points of value. Closing costs and any other liens come out of that gap first. What remains is your cash.
One wholesale lane goes further. It reaches 89.99% LTV with no mortgage insurance at a 680 score and a 50% ratio, on a thirty-year fixed, principal residence, conforming balance. It carries its own six months of seasoning. It is the one exception to the usual mortgage-insurance rule, and it is not written in Texas. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Outside that lane, mortgage insurance is required above 80% LTV on the agency path. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is a program-sheet range, not a quote. The borrower can request cancellation at 80% of the original value, and the servicer must end it automatically at 78%. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Texas has its own rule. A cash-out on a Texas homestead, a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution.
What Do Lenders Look For?
Equity alone does not decide approval. The wholesale conventional programs start at a 620 decision score, and 640 on an adjustable rate under manual underwriting. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans run at 36% or 45%, depending on the reserves and score factors in the eligibility matrix.
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.
Reserves matter here more than in a plain refinance. Reserves are money left in the bank after closing. A lender who sees two mortgages coming wants to see a cushion.
How Does the Old Home Count Against You?
If you keep the old home after buying the new one, the lender counts its payment in your qualifying debts. Fannie Mae calls it a “departing residence.”
The rules are strict. Under Fannie Mae’s departing-residence policy, a lease cannot be used to qualify. If a net rental figure comes out positive, it may offset that property’s housing payment. It cannot be added to your income. Ask your loan officer how reserves and rental treatment apply if you will be a new landlord.
If the old home is under contract to sell, the picture changes. Lenders treat a signed sale contract and a closing date differently from a hope. Document the sale as soon as you have it.
Occupancy also shapes the plan. A cash-out is written on a primary residence, a second home, or an investment property, and occupancy sets the leverage. If you plan to keep the old home after you move, tell your loan officer early, so the refinance is structured for the occupancy it will have and the leverage is set to match.
Where Does the General Rule Break?
A few exceptions are worth knowing.
- Delayed financing. If you paid cash for a home within the past six months, you can still do a cash-out. It is priced as cash-out. It does not help someone who bought with a loan.
- Free-and-clear homes. A new loan on a home with no mortgage is still a cash-out under both agencies.
- Co-owner buyouts. Buying out a co-owner under a written agreement is a limited cash-out transaction at both agencies.
- Seasoning exceptions. Delayed financing, inheritance, and legal-award cases carry their own seasoning treatment.
- State rules. Some states, Texas most visibly, add their own cash-out rules.
What Are the Alternatives?
A cash-out is not the only bridge. A HELOC or home equity loan leaves your existing first mortgage in place. The CFPB notes that a cash-out refinance replaces your mortgage with a bigger one, and that it can cost more or less than a HELOC depending on terms. A sale contingency or gift funds are other routes.
| Option | Keeps your first mortgage? | Main tradeoff |
|---|---|---|
| Cash-out refinance | No, replaced | New, larger balance and a reset term |
| HELOC | Yes | Second lien, variable terms |
| Home equity loan | Yes | Second lien, fixed amount |
| Sale contingency | Yes | Weaker offer to the seller |
| Gift funds | Yes | Depends on family help |
A broker can run several of these against your file. The right answer depends on what your current loan looks like.
What Does This Do to Your Budget?
It enlarges the balance on the old home and usually resets the term. Added to the new home’s payment, two housing payments can strain your DTI. The CFPB reports that cash-out refinances typically carry higher payments and balances than other refinances. Closing costs are paid on the larger amount and can be built into the balance.
Be wary of “no-cost” marketing. The costs are still there. They are built into the rate or added to the balance.
Plan for the worst case: the old home sits on the market. Can you carry both loans for a stretch? If the answer is no, a cash-out may be the wrong tool.
Key Terms Defined
Cash-out refinance: A new mortgage that replaces your old one and hands you the difference in cash.
Seasoning: The waiting period a loan or ownership must age before it qualifies for a new transaction.
Departing residence: The home you are leaving but still own when you apply for the next loan.
Debt-to-income ratio (DTI): Your monthly debt payments divided by your monthly gross income.
Limited cash-out refinance: A refinance that replaces your loan and costs, with only incidental cash back.
Is This Plan Right for You?
Run through these questions before you commit:
- Do you have enough equity to reach cash after payoff and costs?
- Is your first mortgage at least 12 months old, and have you been on title for six months?
- Can your DTI absorb both homes if the old one is slow to sell?
- Will the refinance close and fund before your purchase needs the cash?
- Does your credit meet the program floor?
If most answers are yes, the plan is workable. Lendmire’s cash-out refinance programs page lays out the loan options. If you are comparing routes, Lendmire’s piece Best Cash-Out Refinance Program to Buy Another Home Before Selling the First covers a related path.
Frequently Asked Questions
Can a cash-out refinance fund a down payment before I sell my current home?
Yes, if you qualify. Freddie Mac’s Guide places no restriction on how you use cash-out proceeds. The harder part is qualifying with two housing payments and timing the refinance to fund before the purchase.
Will an FHA Streamline or VA IRRRL give me cash?
No. Both are streamlines for loans you already hold, and neither raises cash. For usable equity you need a true cash-out refinance, which requires an appraisal.
Does 80% LTV mean I get 80% of my equity in cash?
No. The cap applies to the whole new loan. Payoff of the old mortgage, other liens, and costs come out first. What is left is your cash. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Can I cash out right after I refinanced?
Often not. Fannie Mae requires the first mortgage being paid off to be at least 12 months old, measured note date to note date. A recent refinance can restart that clock.
Can rent from my old home help me qualify?
Only in a limited way. Fannie Mae does not allow a lease to qualify a departing residence. A positive net rental figure can offset that home’s payment but cannot be added to your income.
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. All 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 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.
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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. Freddie Mac Guide Section 4301.5
2. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
3. Fannie Mae UAD 3.6 Policy, Departing Residence
4. CFPB, What other types of loans are similar to a HELOC
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: How to Plan and Use a Cash-Out Refinance to Access Cash From Home Equity · How to Pay Out an Ex Without Selling Using a Cash-Out Refinance · Cash-Out Refinance vs Selling for an Owner Who Already Listed
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
Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.