The Quick Read: Which provider ends your mortgage insurance depends on your situation, not on a ranking. Mortgage insurance ends when the new loan lands at or below 80% of the home’s appraised value, or through a wholesale no-mortgage-insurance cash-out lane that reaches higher leverage. A mortgage broker that shops several wholesale lenders can match your file to the program that fits. Which lenders write a given file depends on your property, credit, leverage and documentation.
Key Terms Defined
Cash-out refinance: A new first mortgage that pays off the old one and gives you part of your equity as cash.
Limited cash-out (rate-and-term) refinance: A new first mortgage that pays off the old loan and closing costs, with only a small, capped amount of cash back.
PMI: Private mortgage insurance, charged on conventional loans above 80% loan-to-value.
MIP: The mortgage insurance premium that comes with FHA loans, governed by HUD rules instead of the conventional rules.
LTV: Loan-to-value, the new loan amount divided by the appraised value.
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.
Does a Cash-Out Refinance Actually Remove Mortgage Insurance?
It can, but only when the numbers allow. A new conventional loan is underwritten on a fresh appraisal. If the new balance (payoff, financed closing costs and cash out) sits at or below 80% of that value, mortgage insurance is generally not required. If it lands above 80%, the insurance stays, unless the file fits the wholesale no-mortgage-insurance cash-out lane described below.
Here is the tension. Cash-out adds to your balance. The same equity that lets you pull cash also fills the room that would have kept you under 80%. On a one-unit primary residence, conventional cash-out tops out at 80% LTV. That means a cash-out loan on a conventional path lands at or near the line by design, with little room for financed closing costs. Every dollar of cash you take is a dollar of headroom you give up. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Picture a homeowner who bought with 5% down and now has substantial equity after appreciation. A full refinance at 80% or less could end the insurance. But if that homeowner also wants a large amount of cash, the combined loan may push past 80%, and the insurance question comes back.
Check the Cheaper Route First
A refinance is not always the first tool. For conventional PMI, the CFPB explains that you can ask your servicer to cancel once the scheduled balance reaches 80% of the home’s original value. The request must be in writing. You may need to certify there are no junior liens, and the servicer may ask for evidence, such as an appraisal, that the value hasn’t fallen below the original.
Under the Homeowners Protection Act, the servicer must end it automatically at 78% of the original value. Cancellation at 80% generally requires a good payment history.
So the order of questions is simple:
1. What kind of mortgage insurance do you carry?
2. Can you cancel it by request or automatically?
3. Only then: does a refinance beat waiting?
If cancellation is close, a refinance with closing costs may cost more than the insurance you’d save. If you also want cash, the math changes. That’s when a cash-out refinance starts to earn its place.
How the Loan Is Underwritten, Step by Step
Across the wholesale programs Lendmire places files with, the process follows a steady sequence. For borrowers who want to see what’s available, Lendmire’s cash-out refinance programs page lays out the options.
Step 1: Identify the insurance type. Conventional PMI, FHA MIP and the VA funding fee are three different things. Only the first is the target of this article.
Step 2: Estimate the new LTV. Add the payoff, any financed closing costs and the cash you want. Divide by a realistic value. That number drives whether insurance applies.
Step 3: Test the ceiling for your occupancy. Conventional cash-out is 80% on a one-unit principal residence. It is 75% on two- to four-unit principal residences, second homes and investment property. The Fannie Mae Eligibility Matrix sets these ceilings by occupancy and unit count.
Step 4: Check seasoning. The first mortgage being paid off must be at least 12 months old, measured note date to note date, and a borrower must have been on title for 6 months. Delayed financing, inheritance and legal-award exceptions exist.
Step 5: Underwrite the borrower. The wholesale conventional programs start at a 620 decision score. The automated finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45% ratios with the reserve and score factors in the Eligibility Matrix. Agency waiting periods follow credit events: four years from a chapter 7 discharge, seven from a foreclosure, and four from a short sale or deed-in-lieu, shorter with documented extenuating circumstances.
Step 6: Appraise. Conventional cash-out needs an appraisal. That value sets your LTV, and a low appraisal can undo the plan.
Step 7: Review and close. You receive a Loan Estimate and a Closing Disclosure. The old loan is paid off and any cash comes to you after costs.
All of these figures are subject to lender guidelines and full file review. None is a commitment to lend.
The Exception: The Wholesale No-Mortgage-Insurance Lane
Mortgage insurance is required above 80% LTV on the Fannie Mae and Freddie Mac path, with one exception worth knowing: a wholesale no-mortgage-insurance cash-out lane. That lane reaches 89.99% LTV with no mortgage insurance, which is higher than the 80% cap on standard conventional cash-out. It requires a 680 score and a 50% ratio on a thirty-year fixed rate, on a primary residence with a conforming balance. It carries its own six months of seasoning. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Why this matters: it breaks the usual tradeoff. A homeowner who wants cash and wants no insurance doesn’t have to stay below 80%. Instead of giving up cash or accepting a monthly premium, this lane lets leverage run higher without the insurance line.
Two caveats. The lane is narrow: fixed rate, primary residence, conforming balance, higher score floor. And it is not written in Texas, where a cash-out on a homestead (a Section 50(a)(6) loan) is capped at 80% of the home’s value by the state constitution.
For comparison, Lendmire’s conventional program sheet lists typical annual mortgage insurance premiums of 0.58% to 1.86% of the balance, depending on the file. That range is the program sheet’s figure, not a quote. Ending the insurance removes that cost, but a bigger loan balance adds its own. Compare the two on your own file.
Which Route Fits Which Homeowner?
| Your situation | Likely route |
|---|---|
| Near 80% on original value, no cash needed | Request PMI cancellation |
| Value has risen, no cash needed | Rate-and-term refinance or reappraisal |
| Want cash, plenty of equity | Conventional cash-out at or below 80% |
| Want cash, equity thinner, strong file | Wholesale no-MI lane, if eligible |
| Existing FHA loan | Conventional refinance, not a streamline |
| Existing VA loan | Different lane, no monthly MI |
A broker that shops multiple wholesale lenders matches your scenario to the program. No single provider is right for everyone, and the lenders that write a given file depend on its property type, credit, leverage need and documentation.
Where the General Rule Breaks
FHA to conventional. This is the main way to leave FHA mortgage insurance behind. FHA is outside the Homeowners Protection Act, which the CFPB’s examination procedures confirm does not cover insurance under the National Housing Act. Cancellation follows HUD’s own rules. An FHA Streamline keeps you inside the FHA system. The existing loan must be FHA-insured and current, and the refinance must show a net tangible benefit. Because it stays FHA, premiums still apply. To leave them behind, you need a conventional loan and enough equity to meet the LTV test.
Older FHA loans. Older FHA loans may follow different cancellation rules from newer ones. Ask your servicer which rules apply to your loan before assuming a refinance is needed.
VA loans. A VA loan has a one-time funding fee, not monthly mortgage insurance. A VA IRRRL (0.5% funding fee unless exempt, no VA appraisal, net tangible benefit, seasoning of the later of 210 days and 6 payments) does not “drop MI.” It’s a different lane, and it doesn’t give cash out.
Free-and-clear homes. A new loan on a home with no mortgage is treated as cash-out.
Co-owner buyouts. Buying out a co-owner under a written agreement is treated as limited cash-out at both agencies.
Lender-paid insurance. With lender-paid mortgage insurance, there is no monthly line item, but the cost is typically built into the loan terms, and cancellation rights differ. It can look like the insurance is gone when the cost has just moved.
Value shortfalls. If the appraisal comes in low, LTV rises and the insurance outcome can flip. Build in a cushion.
Second homes and rentals. Occupancy sets the leverage. One-unit primary residences reach 80%; second homes and investment property are capped at 75% on cash-out.
When Cash-Out Is the Wrong Tool
If your only goal is dropping the insurance, cash-out is often more than you need. Taking cash raises the balance, and a lower insurance cost can be offset by a larger loan.
A limited cash-out (rate-and-term) refinance may fit better. It pays off the existing first mortgage, the closing costs and a purchase-money second lien, with only incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan amount or $2,000. Freddie Mac’s is the greater of 1% of the new loan amount or $2,000. Because this loan takes no real cash out, its limit is higher than the cash-out cap: on a one-unit primary residence a rate-and-term refinance reaches 95% LTV, with mortgage insurance above 80% (the wholesale no-mortgage-insurance cash-out lane is the exception). Conventional cash-out can’t reach past 80% in the standard path, and a rate-and-term loan removes insurance only if value has grown enough to put you at 80% or lower. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Other reasons to hold off:
- A cancellation request is close to being available.
- Closing costs outweigh the insurance you would save. Costs on a cash-out typically include origination, appraisal, title and taxes, as CFPB research notes.
- You’d be converting other debts into debt secured by your home. The same research notes this can put the home at risk if payments become unsustainable.
- The new loan restarts the amortization clock, and the 78% and 80% dates run from the new loan.
Questions to Ask a Broker or Lender
- What LTV will my new loan land at, with financed costs included?
- Will this loan carry mortgage insurance, and is it borrower-paid or lender-paid?
- If it’s above 80%, do I fit the wholesale no-mortgage-insurance lane?
- What happens to the outcome if the appraisal comes in lower than I expect?
- Do my seasoning and title dates meet the cash-out rules?
- Would a rate-and-term refinance or a cancellation request get me the same result with less cost?
A broker can run these against several wholesale lenders at once. That’s the practical advantage of the broker model for this goal: the question isn’t which provider is best in general, it’s which program fits your leverage, credit and documentation.
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.
Frequently Asked Questions
Can I take cash out and still end my mortgage insurance?
Yes, if the new loan lands at or below 80% LTV on a one-unit primary residence, or if you fit the wholesale no-mortgage-insurance lane, which reaches 89.99% LTV. That lane requires a 680 score, a 50% ratio, a thirty-year fixed rate, a conforming balance and its own six months of seasoning. Every file is subject to lender guidelines and full review.
Does a cash-out refinance get rid of FHA mortgage insurance?
Only if you refinance into a conventional loan with enough equity. An FHA Streamline stays inside the FHA system, so premiums continue. FHA also sits outside the Homeowners Protection Act, so it doesn’t follow the 78% and 80% conventional rules.
Will financed closing costs eat into my cash-out room?
Yes. Closing costs financed into the loan count toward the LTV ceiling, so they reduce the cash you can take or push you above the line. Because the cap on a one-unit primary residence is 80%, estimating the full balance before you apply matters.
What if my appraisal comes in low?
A lower value raises your LTV. That can cut the cash available, bring mortgage insurance back, or take you out of the no-mortgage-insurance lane. Run the numbers with a cushion rather than at your best-case value.
Is a VA IRRRL a way to drop mortgage insurance?
No. VA loans carry a one-time funding fee, not monthly mortgage insurance, and the IRRRL gives no cash out. It is a different lane for a different goal.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
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.
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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. CFPB: When Can I Remove Private Mortgage Insurance PMI from My Loan
2. Fannie Mae Eligibility Matrix
3. CFPB Homeowners Protection Act examination procedures
5. CFPB cash-out refinance research
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Financed vs Monthly Mortgage Insurance on a Cash-Out Refinance · How to Pay Out an Ex Without Selling Using a Cash-Out Refinance · How to Qualify and Apply for a Cash-Out Refinance in Six Months
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.