The Quick Read: The best provider for your remodel depends on your situation, because the program matters more than the company name. A conventional cash-out refinance caps leverage at 80% on a one-unit principal residence, while renovation loans fund the work through a draw process. A mortgage broker can shop several wholesale lenders and match your project to the program that fits. Every figure here is subject to lender guidelines and full file review.
Why “Top Providers” Is the Wrong First Question
Most people searching this want a list of lenders. A list would not help you, so this article skips it. Lendmire is a mortgage broker, not a lender, and it does not rank or recommend individual lenders. The lenders that write these loans differ by property type, credit profile, how much cash you need, and how your documents look.
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.
The program decides your outcome. Two programs at the same lender can produce very different results for a kitchen remodel, and the same program can be handled differently from one lender to the next.
So the useful questions are: which program fits my project, how much cash can I actually reach, and what do I have to prove? The rest of this piece answers those.
What Is a Cash-Out Refinance?
A cash-out refinance replaces your current mortgage with a new, larger one. You keep the difference in cash. Freddie Mac defines it as a mortgage with no specific restrictions on how the proceeds are used. Remodeling is one of many allowed uses.
One point confuses people. A cash-out refinance replaces your whole first mortgage. A home equity loan or HELOC (a revolving line of credit secured by your home) sits on top of the loan you already have, as the CFPB’s research team explains. With a cash-out refinance, your old loan, with its old terms, goes away.
For details on how Lendmire’s side works, see Lendmire’s cash-out refinance programs page.
How the Loan Is Underwritten, Step by Step
Underwriting is the lender’s review of whether you and the property fit the program. Here is the sequence across the wholesale programs Lendmire places files with.
1. Pick the product. Unrestricted cash-out fits a remodel you will pay for yourself. A renovation mortgage fits a project the lender should fund through the loan.
2. Size the loan. The new loan pays off your first mortgage and any second lien you choose to include. Cash to you is what remains under the leverage cap.
3. Order the appraisal. The appraisal sets today’s value. Renovation loans also use an “as-completed” value, meaning what the home should be worth after the work.
4. Check the clocks. Seasoning is the waiting period a lender requires before you can refinance. More on that below.
5. Review credit and income. The lender checks your credit score, income, debts, and reserves.
6. Close. Closing costs apply to the whole new loan, because the entire mortgage is replaced. Your Loan Estimate and Closing Disclosure show them.
The Numbers That Set Your Cash
Leverage is the share of the home’s value the new loan can reach. This is where most remodel plans succeed or fail.
On a conventional cash-out refinance, the cap is 80% LTV (loan-to-value, the loan balance divided by the home’s value) on a one-unit principal residence. Two- to four-unit principal residences, second homes, and investment properties are capped at 75%. Occupancy sets the leverage, so a home you live in gets the higher cap. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Texas works differently for a homestead. The state constitution caps a cash-out on a homestead (a Section 50(a)(6) loan) at 80% of the home’s value.
Outside Texas, one wholesale lane goes further. It reaches 89.99% LTV with no mortgage insurance, but it needs a 680 score, a 50% total debt ratio, a thirty-year fixed rate, a primary residence, and a conforming loan balance. It has its own six-month seasoning, and it is not written in Texas. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Mortgage insurance is the cost of protecting the lender when you borrow a high share of the home’s value. On the agency path (Fannie Mae and Freddie Mac loans) it is required above 80% LTV, except in that wholesale no-mortgage-insurance lane. You can ask to cancel it at 80% of the original value with good payment history, no second liens, and no drop in value. The servicer must end it automatically at 78%. Lendmire’s conventional program sheet lists typical annual premiums of 0.58% to 1.86% of the balance. That is the sheet’s range, not a quote. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
On credit, the wholesale conventional programs start at a 620 decision score. The automated underwriting finding governs most files, with a total ratio ceiling of 50%. Manually underwritten loans use 36% or 45% depending on reserves and score. After a credit event, the agencies set waiting periods: 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.
Cash-out loans also carry extra pricing. Both agencies add a fee tied to credit score and LTV, as Freddie Mac notes. Higher leverage and lower scores cost more.
Seasoning: The Clock That Catches Recent Buyers
Seasoning trips up more remodelers than any other rule. The first mortgage you are paying 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, per Freddie Mac’s guide.
Exceptions exist. Delayed financing covers a cash purchase you want to refinance soon after, with documented source of funds. Inheritance and legal-award exceptions also exist. The six-month title rule has its own carve-outs, so a recent buyer should ask before assuming a wait.
Renovation Mortgages: A Different Tool
If your project is big or the cost is uncertain, a renovation mortgage may beat a lump-sum cash-out. These loans finance the work inside the mortgage and release money as the work is done.
| Program | How funds flow | Notable feature |
|---|---|---|
| Fannie Mae HomeStyle | Custodial account with draws | Purchase or refinance with repairs included |
| Freddie Mac CHOICERenovation | Lender-controlled renovation funds | Can count as “no cash-out” |
| FHA 203(k) | Escrow released on completion | Home must be at least a year old |
HomeStyle. Fannie Mae’s HomeStyle is a conventional first mortgage used instead of a second mortgage, HELOC, or other costlier financing. The lender and borrower sign a Renovation Loan Agreement at closing. Funds go into a custodial account, and the lender manages draws and oversees the work. Eligible projects include kitchen and bathroom updates, additions such as in-law suites, and HVAC replacement.
CHOICERenovation. When proceeds fund only the eligible renovation, Freddie Mac treats the loan as “no cash-out.” That can matter for leverage and pricing.
FHA 203(k). HUD’s 203(k) program insures a purchase or refinance plus rehabilitation of a home at least a year old. Part of the proceeds pays off the existing mortgage. The rest sits in escrow until the work is done. The Limited 203(k) lets borrowers finance up to $75,000 for repairs and upgrades. The Standard version covers major structural work and requires an HUD-approved consultant.
The tradeoff is real. You get one loan and one payment, but you accept draws, inspections, and a contractor schedule the lender oversees.
Which Product Fits Which Situation
| Your situation | Likely fit |
|---|---|
| Plenty of equity, flexible project, want cash in hand | Conventional cash-out |
| Large remodel with uncertain costs | Renovation mortgage |
| Existing low first mortgage you want to keep | HELOC or home equity loan |
| VA-eligible homeowner | VA cash-out |
| Existing FHA or VA loan, no cash needed | Streamline or IRRRL |
A roof, a kitchen, and an addition behave differently. A roof is a known cost and fits a lump sum. A gut remodel or addition has surprises, and draws keep the contractor honest.
The government streamlines do not fund renovations. The FHA Streamline and VA IRRRL refinance an existing FHA or VA loan for a net tangible benefit, with limited review. They are not cash-out products. Pick them when you want a better loan, not project money.
VA cash-out is its own product. It can pay for home improvements, and it can refinance a non-VA loan into a VA-backed loan. It requires a Certificate of Eligibility and is obtained through a private lender, not VA itself. Both VA and FHA cash-out are for primary residences.
Where the General Rule Breaks
Rules have edges. These are the ones that show up in real files.
- Free-and-clear homes. With no mortgage, a refinance still counts as cash-out under Freddie Mac. CHOICERenovation proceeds used only for renovation are the exception.
- Manufactured homes. Freddie Mac says construction-to-permanent and renovation mortgages must not be secured by manufactured homes. Fannie Mae allows HomeStyle on manufactured housing, up to 50% of the as-completed value.
- Energy liens. A property with a PACE assessment (an energy-improvement lien repaid through property taxes) generally needs that obligation paid off with the new loan proceeds.
- Buying out a co-owner. That is a limited cash-out transaction, not a renovation feature.
- Small incidental cash. A rate-and-term refinance allows only small cash back. Fannie Mae’s limit is the lesser of 2% of the new loan or $2,000. Freddie Mac’s is the greater of 1% of the new loan or $2,000.
What It Costs You Beyond the Interest
A cash-out is not free money. Three effects deserve a straight look.
First, your payment may rise and your payoff date may move out. The CFPB’s guidance on using home equity warns that a larger loan can lengthen payoff.
Second, the old loan disappears. If your current first mortgage is a good one, replacing it to fund a remodel may cost more than the project justifies. A HELOC or second loan can leave it intact. Running a break-even comparison before you apply is the honest way to decide.
Third, closing costs hit the entire new balance, not just the cash. That is a meaningful share of the loan. Some marketing promises a “no-cost” refinance, but the costs are built into the rate or the balance. They are never gone.
The CFPB also found that cash-out borrowers saw a quick credit score bump followed by gradual worsening, and credit card balances drifted back toward earlier levels. Using the cash to clear cards without changing spending habits is a common trap.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the home’s value, shown as a percentage.
Seasoning: The waiting period a lender requires before you can refinance or tap equity.
As-completed value: The appraised value of a home assuming the planned renovation is finished.
Mortgage insurance: Coverage that protects the lender when your loan exceeds 80% of the home’s value.
DTI (debt-to-income ratio): Your monthly debts divided by your monthly income.
How a Broker Matches You to a Program
A bank or single lender can show you only its own menu. A broker places files across several wholesale lenders and matches the scenario to the program. Lendmire works with a multi-state network of wholesale cash-out refinance lenders, and consumer lending is licensed in 16 states. Brokers do not lend. The wholesale lender reviews the file and decides.
Come prepared. Have your current mortgage statement, the date you bought or last refinanced, your project scope, and a rough contractor estimate. The more specific the project, the easier it is to choose between lump-sum cash-out and a renovation loan.
Questions worth asking any provider:
- Which program does my project fit, and why?
- Does my seasoning clock allow this loan?
- What is the leverage cap for my occupancy and property type?
- Do I need mortgage insurance, and when does it end?
- How are draws handled if I choose a renovation loan?
- What does the Loan Estimate show for total closing costs?
The best program for your situation depends on your property, credit, leverage need, and documents. A good match beats a good brand.
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 use a cash-out refinance for any renovation?
Yes. A standard cash-out refinance carries no restrictions on how you use the money, so a kitchen, roof, or addition all qualify. The lender does not oversee the work. If you want the lender to fund the project in stages, a renovation mortgage like HomeStyle or 203(k) does that instead.
Does a planned remodel increase how much I can borrow?
Only with a renovation loan. A plain cash-out is based on your home’s current appraised value. HomeStyle and similar programs use an as-completed value, which can reach higher because it counts the finished work. Leverage caps still apply.
Do I have to refinance my first mortgage to fund a remodel?
No. A HELOC or home equity loan sits on top of your current mortgage and leaves it in place. That can make sense if your existing loan is one you want to keep. A cash-out replaces the whole loan.
How long must I own my home before a cash-out?
For conventional loans, at least one borrower must have been on title for six months. If you are paying off a first mortgage, it must be at least 12 months old. Delayed financing and inheritance exceptions can change this.
Can I refinance an FHA or VA loan to get renovation cash?
Not with a Streamline or IRRRL, which are rate-reduction products without cash-out. VA and FHA each have separate cash-out options for primary residences, and FHA 203(k) is built for renovation. All of it is 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.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. 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
2. CFPB Office of Research blog on cash-out refinance borrowers
3. Freddie Mac Cash-Out Refinance product page
5. Fannie Mae HomeStyle Renovation FAQs
7. CFPB Older Americans guide on using home equity
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 for Small Home Improvements · Cash-Out Refinance vs Selling a Second Home for an Owner Needing Cash · Top Cash-Out Refinance Providers for Seniors on a Fixed Retirement Income
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
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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.