The Quick Read: The best provider for you depends on your situation, not on a ranking. A conventional cash-out refinance on a home you own can fund a second-property down payment. Occupancy, equity, credit, and the new payment on your home decide how much cash you can reach. FHA and VA streamlines cannot do this job, because they give you no meaningful cash.
A provider that fits a borrower with strong equity and a clean credit file may be wrong for someone self-employed or sitting on a recent purchase. So instead of a list of names, this article shows what decides the outcome, so you can match your file to the right program. Lendmire is a broker that shops several wholesale lenders, and that matching is the work it does.
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.
What Is a Cash-Out Refinance, Really?
A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference in cash. The Consumer Financial Protection Bureau describes it exactly that way, and adds that you often pay closing costs on the whole new loan.
That separates it from a home equity loan or a HELOC (a home equity line of credit). Those products leave your first mortgage in place and add a second loan on top. A cash-out refinance wipes the first loan out and starts over.
Here is the part that matters for your goal. The cash is yours to spend. Fannie Mae’s older guide language allowed cash-out equity to be taken “for any purpose,” and a down payment on another property is a common one. The catch is that the second property is a separate loan with its own underwriting. Cash from the first loan does not guarantee approval on the second.
How Does the Strategy Work, Step by Step?
The sequence is refinance first, purchase second. Your equity comes out of the home you own, lands in your account, and then serves as down payment funds on the next purchase. Two separate loans, two separate reviews, and the first has to be finished before the second can close.
1. Pick the equity source. Usually it is your primary home. Across the wholesale programs Lendmire places files with, a conventional cash-out can be written on a primary residence, a second home, or an investment property, and occupancy sets the leverage.
2. Check the two clocks. The first mortgage you are paying off must be at least 12 months old, measured from the old note date to the new note date, per the Fannie Mae Selling Guide. A borrower generally also needs to have been on title for 6 months.
3. Appraisal. The appraised value drives loan-to-value (LTV), the loan amount as a percentage of the home’s value. LTV caps the loan, so it caps your cash.
4. Underwriting. The new, larger payment goes into your debt-to-income ratio, which compares your monthly debts to your monthly income. The federal consumer-finance regulator notes your payment may rise because you are replacing your loan with a bigger one.
5. Qualify for the second property separately. The purchase lender looks at your income, credit, reserves, and the new payment on the home you already own.
6. Sequence the closings. The cash-out must close and fund before the purchase closes. The purchase lender will want to see where the down payment money came from, so keep the refinance paperwork together.
Skip the shortcut of assuming the first loan settles the second. It doesn’t.
How Much Equity Can You Actually Reach?
Leverage depends on the property you are cashing out. Conventional cash-out on a one-unit principal residence runs up to 80% LTV. On two- to four-unit principal residences, second homes, and investment property, it runs up to 75%. These are program figures that vary by lender and file, and they are subject to full review.
There is one wholesale exception worth knowing. A lane exists that reaches 89.99% LTV with no mortgage insurance. It needs a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence, and a conforming balance. It carries its own six months of seasoning. It is not written in Texas. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Texas has its own wrinkle. 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.
Think backward from your target. Say you want a 25% down payment on a second property. Work out that number first, then add reserves and closing costs on both loans. Size the cash-out to cover all of it, then check whether your home’s equity can support that LTV. If it can’t, the plan needs a smaller purchase or a different source of funds. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Which Refinance Types Cannot Fund a Down Payment?
Streamlines and limited cash-out loans cannot do this. They exist to change the loan, not to hand you cash.
| Option | Cash to you? | Works for a down payment? |
|---|---|---|
| Conventional cash-out | Yes, up to LTV cap | Yes |
| Limited cash-out (rate-and-term) | Incidental only | No |
| FHA Streamline | Capped at $500 | No |
| VA IRRRL | None | No |
| HELOC / home equity loan | Yes, as a second loan | Yes, different structure |
A rate-and-term refinance pays off the existing first mortgage and closing costs, with only small incidental cash back. Fannie Mae’s limit is the lesser of 2% of the new loan amount or $2,000. Take too much cash and the loan is reclassified as cash-out, per Fannie Mae’s limited cash-out rule.
HUD states that cash above $500 cannot come out through an FHA Streamline. The VA’s IRRRL is a “VA to VA” loan with no cash to the borrower, per VA home loan information.
FHA and VA Cash-Out: What Changes?
Both government programs are tied to the home you live in. VA says its cash-out loan requires a Certificate of Eligibility and that you will live in the home you are refinancing. Borrowers also go through a private lender, not through VA directly.
FHA cash-out follows a similar owner-occupancy logic. So if the home you want to cash out is a second home or rental, the government path is closed and conventional is the route.
If you hold an existing FHA or VA loan, that doesn’t make the streamline useless. It just solves a different problem, like lowering the cost of the loan you have. For purchase money, you would be looking at a full cash-out instead.
Where the General Rule Breaks
Most of the rules above have exceptions. Here are the ones that come up on real files.
- Recent purchase, paid in cash. Delayed financing lets a cash buyer refinance within six months of purchase. The new loan is capped at your documented investment plus closing costs, prepaids, and points on the new loan. Cash-out pricing still applies. It generally does not help a loan-funded purchase.
- Inheritance or legal award. The six-month wait for a borrower to be on title has exceptions for inheritances and legal awards. Confirm the current wording on your file.
- Special-purpose loans. Some loan types, such as construction conversion and renovation mortgages, can sit outside the 12-month seasoning rule for the first mortgage. Ask your broker whether yours qualifies.
- Co-borrowers. On a primary-residence cash-out at Freddie Mac, all borrowers must occupy the home.
- Lender overlays. A lender can be stricter than agency rules. Some set higher credit floors or lower leverage. That is why the same file can get different answers from different lenders.
What Will the Purchase Lender Check?
Your second-property loan gets its own scrutiny, and the cash-out makes it harder in three ways.
First, your new payment on the refinanced home counts against you. The loan is bigger, so the payment is, too.
Second, the property count matters. Fannie Mae limits borrowers to 10 financed properties when the subject is a second home or investment property under its automated system. It counts properties, not mortgages. Reserves requirements rise as the count does.
Third, the use of the property changes the leverage. On purchases, second homes run up to 90% LTV. Investment property runs to 85% on one unit and 75% on two to four units. A principal residence runs 95%, or 97% for qualifying first-time buyers. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A second home generally means one unit, personal use for part of the year, and no rental income counted toward qualifying. That makes the debt-to-income hurdle tougher. A two-unit property used as a second home is generally treated as an investment property.
Credit and ratio floors matter, too. The wholesale conventional programs start at a 620 decision score, with a total ratio ceiling of 50% on most automated files. Manually underwritten loans run tighter, at 36% or 45%. All of this is subject to lender guidelines and full file review.
What Does It Cost You?
A cash-out refinance replaces the entire mortgage, so closing costs apply to the whole new loan, not just the cash. You also take on a larger payment on your home, plus a payment, taxes, insurance, and upkeep on the second property.
Mortgage insurance is required above 80% LTV on the agency path (Fannie Mae and Freddie Mac), except in the wholesale no-MI cash-out lane described earlier. It can be cancelled on request at 80% of original value with good payment history, no subordinate liens, and no decline in value. It must end automatically at 78%. Typical annual premiums on a conventional loan run from 0.58% to 1.86% of the balance, a range taken from Lendmire’s conventional program sheet rather than a quote.
Be wary of the phrase “no-cost” refinance. HUD notes these work by charging a higher rate. The costs are still there, built into the rate or the balance.
How much equity you keep depends on the lane and the occupancy of the property. A conventional cash-out is capped at 80% LTV on a one-unit principal residence and 75% on two- to four-unit principal residences, second homes, and investment property. The wholesale no-MI lane reaches 89.99% LTV under its own conditions. Whatever the lane, your home secures the bigger loan. That is the real risk: you are betting your primary residence on the second purchase.
Cash-Out, HELOC, or Home Equity Loan?
A HELOC or home equity loan leaves your first mortgage alone. That matters if your current loan is one you would hate to give up.
This one is a genuine judgment call. If your current first mortgage is one you want to keep, a second-lien product protects it. If you would be refinancing anyway, a cash-out folds everything into one loan. The right answer depends on your current loan, your equity, and how much cash you need.
How Do You Find the Right Provider?
Start with what you need: the cash amount, the property type, your credit profile, and how you document income. Then match that to the lenders that write it.
A broker shops several wholesale lenders and matches your scenario to the program. Lendmire’s cash-out refinance programs page lays out the options. A broker is paid by the lender or by the borrower, and the compensation is disclosed on your Loan Estimate. Compare the full terms there, not just one number.
Key Terms Defined
LTV (loan-to-value): the loan amount divided by the home’s appraised value, shown as a percentage.
Seasoning: the waiting period a loan or ownership must meet before a refinance qualifies.
Delayed financing: a cash-out option for buyers who paid cash and want to borrow against the home soon after.
Debt-to-income ratio: your monthly debts divided by your monthly income.
Limited cash-out refinance: a refinance that pays off the old loan and costs, with only small cash back.
Financed property: a home with a mortgage on it, counted toward agency property limits.
Frequently Asked Questions
Can I use cash-out refinance money as a down payment on a second home?
Yes, once the cash-out has closed and funded. The second home is a separate loan with its own underwriting, and the lender will want to document where the funds came from. Your new, larger payment on the refinanced home counts when you qualify for the purchase.
Can an FHA Streamline or VA IRRRL fund a down payment?
No. HUD caps cash through the FHA Streamline at $500, and the VA’s IRRRL gives no cash. Both are built to improve an existing loan. A cash-out refinance is the structure that sends equity to you.
How long do I have to own my home before cashing out?
On conventional loans, the first mortgage being paid off must be at least 12 months old, and a borrower generally needs 6 months on title. Delayed financing, inheritance, and legal awards are exceptions. Lender overlays can add conditions.
Does a second home or a rental change the rules?
Yes, occupancy sets the leverage. Second homes run to 90% LTV on a purchase, and investment property is lower, with tighter limits on multi-unit homes. Rental income from a second home generally cannot be used to qualify.
What is the biggest risk?
Your home secures a larger loan, and you carry two properties’ costs at once. The CFPB notes a cash-out may extend your payoff time and raise your monthly payment. Run the combined budget before you commit.
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. 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.
For current guidelines and terms, see Lendmire’s refinance programs page.
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. Consumer Financial Protection Bureau
2. Fannie Mae Selling Guide B2-1.3-03
3. Fannie Mae Selling Guide B2-1.3-02
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Primary Home vs Second Home Cash-Out Refinance and the Funding Wait · How to Qualify and Apply for a Cash-Out Refinance After Taking the Property Off the Market
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.