The Quick Read: No provider can promise to remove your mortgage insurance. The loan structure decides it. A new conventional loan pays off the old one, so the old insurance ends. The new loan avoids insurance only if it stays at or under 80% of the home’s value, or fits the one wholesale no-insurance lane described below. The best provider for your situation depends on your equity, credit, property and the kind of insurance you have now.
Key Takeaways
- Paying off your old loan ends its mortgage insurance. Your new loan’s leverage decides whether new insurance appears.
- Conventional cash-out tops out at 80% of value on a one-unit primary home. A wholesale lane reaches 89.99% with no insurance for qualifying borrowers.
- No single lender is “top” for everyone. Fit depends on your credit, equity, property type and documentation.
- Conventional insurance may come off without a refinance. FHA insurance usually does not.
What a Cash-Out Refinance Does to Mortgage Insurance
A cash-out refinance replaces your current first mortgage with a larger one and hands you the difference in cash. Mortgage insurance protects the lender if you default. You pay for it, but the lender is the one covered.
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.
Insurance is tied to a specific loan. When that loan is paid off at closing, its insurance stops. That part is simple.
The catch is the new loan. On the agency (Fannie Mae and Freddie Mac) path, mortgage insurance is required above 80% loan-to-value (LTV), the loan amount divided by the home’s appraised value, except in the wholesale no-insurance cash-out lane described later. Above that line, insurance returns on a bigger balance.
Think of it as a leverage budget. Your home’s value sets the ceiling. Your payoff, closing costs and cash out all draw from it.
How Lenders Underwrite This Loan, Step by Step
Across the wholesale programs Lendmire places files with, the sequence is consistent. Each step can change the outcome.
1. Identify your current insurance. Conventional private mortgage insurance (PMI), FHA mortgage insurance premium (MIP) and the VA funding fee work differently. The type tells you what a refinance can and cannot fix.
2. Order an appraisal. On a cash-out, the new appraised value is the denominator in the LTV math. A low appraisal shrinks the loan you can get and can bring insurance back.
3. Add up the new loan. The new balance covers your payoff, any financed closing costs and the cash you take. Divide by value. A conventional cash-out tops out at 80% LTV on a one-unit primary home. On two- to four-unit primary residences, second homes and investment property, the cap is 75%. Occupancy sets the leverage. The wholesale no-insurance lane, which reaches 89.99% on a primary residence, is the separate exception covered elsewhere in this article.
4. Check seasoning. Seasoning is a required waiting period. The mortgage being paid off must be at least 12 months old, counted note date to note date. You must also have been on title for at least six months. Exceptions exist for delayed financing, inheritance and legal awards. Freddie Mac’s guide states the six-month title requirement.
5. Underwrite the borrower. The lender looks at credit score, debt-to-income ratio, assets and income documents. 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% ceilings, with reserve and score factors from the Eligibility Matrix.
6. Close and pay off. The old loan is paid off and its insurance ends. All figures here are subject to lender guidelines and full file review. Nothing is a commitment to lend.
Lendmire’s cash-out refinance programs page lays out how these programs fit together.
A Leverage Example in Percentages
Say a home is worth 100 units, and you owe 60% of it. That is your current balance.
You want cash, and you want no insurance. A conventional one-unit primary-home cash-out can go to 80%. The new loan has to cover the 60 you owe and the closing costs you roll in. Whatever remains under 80 is your room for cash.
If closing costs take 3 points of that room, you have roughly 17 points left. Appraise at 5% lower and the same loan is a higher share of value. The room shrinks.
Now say you owe 78% and want any cash at all. The agency cash-out ceiling blocks you. At 80%, you have almost no room after costs. A cash-out is the wrong tool here. A smaller refinance, or waiting, may serve you better.
The Structures: Where Each Path Leads
| Your situation | Path | What happens to insurance |
|---|---|---|
| Conventional PMI, need cash | Conventional cash-out | Ends if new LTV is 80% or less |
| Conventional PMI, want cash and more leverage | Wholesale no-insurance lane | No insurance up to 89.99% LTV if you qualify |
| Conventional PMI, no cash needed | Limited cash-out (rate-and-term) | Returns above 80% LTV |
| FHA loan | Refinance out of FHA | Old MIP ends, new loan follows its own rules |
| VA loan | VA IRRRL or VA cash-out | No monthly insurance, funding fee applies |
The wholesale no-insurance lane
One wholesale lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio ceiling, a thirty-year fixed rate, a primary residence and a conforming loan balance. The lane has its own six months of seasoning, which replaces the general 12-month age requirement for the mortgage being paid off in a conventional cash-out. This is the one exception to the 80% rule. It is not written in Texas. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Limited cash-out
A limited cash-out refinance, also called rate-and-term, pays off your first mortgage, closing costs and any purchase-money second lien. You get only incidental cash back. Fannie Mae allows the lesser of 2% of the new loan amount or $2,000, while Freddie Mac allows the greater of 1% of the new loan amount or $2,000. On a one-unit primary home, leverage reaches 95%, and 97% where the existing loan is agency-owned and the first-time-buyer program allows it. Fannie Mae’s limited cash-out rules limit the 95.01–97% tier to fixed-rate loans.
Mortgage insurance applies above 80% on that loan, except in the wholesale no-insurance lane described above. A limited cash-out removes the old insurance only if the new LTV lands at or under 80%. If you do not need cash, it may suit you better than a full cash-out. That is a judgment call that depends on your file.
Not Every Insurance Is Removed the Same Way
Conventional PMI can end without a refinance. You may request cancellation when your balance is scheduled to reach 80% of the home’s original value, with good payment history, no subordinate liens and no decline in value. The servicer must end it automatically at 78%. The CFPB explains both thresholds. Because PMI is an ongoing premium, waiting for it to end has a real carrying cost.
FHA mortgage insurance is stickier. On loans with case numbers assigned on or after June 3, 2013, an origination LTV above 90% means annual MIP lasts for the loan term or 30 years, whichever comes first. At 90% or below, it lasts 11 years. HUD says borrowers cannot cancel early by prepaying principal. For a low-down-payment FHA loan from that era, refinancing out of FHA is the realistic way to end MIP early. Older FHA loans may drop it at 78% without a refinance.
VA loans have no monthly mortgage insurance. They carry a one-time funding fee unless you are exempt. The VA IRRRL carries a 0.5% funding fee unless exempt, with no VA appraisal and seasoning of the later of 210 days and six payments. The cash-out version costs more, and more on repeat use.
Where the General Rule Breaks
The IRRRL is not an exit from FHA. It refinances an existing VA loan only. Moving from FHA to VA means a VA cash-out.
An FHA Streamline keeps FHA insurance. It replaces an FHA loan with another FHA loan. It needs no appraisal and only a limited credit review, but you must show a net tangible benefit.
Equity on paper is not enough. Seasoning, credit, ratios and reserves can disqualify a borrower with plenty of equity. Waiting periods after credit events are agency rules: 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.
Above the conforming limit, jumbo lanes take over. They use a 660 decision score, leverage to 90%, loans to $5,000,000 and a 50% ratio ceiling on the fixed lanes. The no-insurance lane above does not apply to jumbo balances.
Texas is different. A cash-out on a homestead, called a Section 50(a)(6) loan, is capped at 80% of the home’s value by the state constitution. The wholesale no-insurance lane is not written there.
A low appraisal changes everything. Value is the denominator. A modest miss can erase the room you counted on.
Provider Types: How to Think About “Top”
You will see roundups ranking the “best” cash-out lenders. No ranking can know your credit, equity, property or documents. A lender that fits one borrower may not write your file at all.
Lendmire is a mortgage broker. It does not lend. It works with a network of wholesale cash-out refinance lenders and matches your scenario to the program that fits. The lenders that write this depend on your property type, credit profile, leverage need and documentation.
| Provider model | Typical strength | Typical limit |
|---|---|---|
| Single-lender retail | One point of contact | One set of guidelines |
| Broker with wholesale network | Multiple programs shopped to one file | Fit depends on the match |
| Credit union or local bank | Relationship, sometimes portfolio products | Narrower program menu |
None of these is better in the abstract. What matters is whether a program exists for your numbers.
Questions to Ask Any Provider
Use these on any provider, including a broker. They test insurance outcomes, not generic marketing.
- At what loan-to-value will my new loan land after closing costs and cash out?
- Does that figure trigger mortgage insurance, and if so, how does it cancel?
- Is there a no-insurance program I could qualify for, and what does it require?
- How does the appraisal affect my loan amount if value comes in lower?
- Will you give me the Loan Estimate and let me compare the full terms?
Your Loan Estimate and Closing Disclosure show the costs. Compare them line by line. A broker’s compensation is disclosed there too.
When Cash-Out Is the Wrong Tool
Run a break-even check before you commit. Compare what you save by ending insurance against what you pay to refinance. Closing costs, a new appraisal, cash-out pricing adjustments and a larger balance all count.
Waiting is free. If your conventional PMI is close to its 80% or 78% date, cancellation costs nothing. Pay-down may beat a refinance.
Cash-out is also wrong when you owe too much to leave room after costs, or when you would trade a long-standing loan for a bigger one only to feel the cash. Taking cash out reduces equity and raises your balance. Ending insurance lowers your monthly cost, but a larger balance or a different rate can offset it. Run the net monthly cost on the actual Loan Estimate.
What to Prepare
Lenders typically ask for:
- Recent pay stubs and tax documents, or other income documentation
- Bank and asset statements for reserves
- Your current mortgage statement showing the insurance
- Homeowners insurance details
- Proof of how long you have been on title
If you are weighing an FHA exit, bring your original case number date. It tells you which MIP rules apply.
Key Terms Defined
Loan-to-value (LTV): The loan amount divided by the home’s appraised value, shown as a percentage.
Cash-out refinance: A new, larger first mortgage that pays off the old one and gives you the difference in cash.
Private mortgage insurance (PMI): Insurance on a conventional loan that protects the lender when your down payment is under 20%.
Mortgage insurance premium (MIP): FHA’s version of mortgage insurance, with its own duration rules.
Seasoning: A required waiting period, such as time on title or the age of the loan being paid off.
Limited cash-out refinance: A refinance that pays off the first mortgage and costs, with only small incidental cash back.
Frequently Asked Questions
Does a cash-out refinance automatically remove mortgage insurance?
No. It ends the old loan’s insurance because that loan is paid off. The new loan carries insurance if it lands above 80% LTV on the agency path. The wholesale no-insurance lane, up to 89.99% LTV, is the exception for qualifying borrowers. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Can I remove PMI without refinancing?
Often, yes. On a conventional loan you may request cancellation at 80% of original value, and the servicer must end it automatically at 78%. You may need to show good payment history and no subordinate liens. Your servicer can tell you the dates.
Will refinancing out of an FHA loan end my mortgage insurance?
It depends on the new loan. The FHA loan is paid off, so its MIP ends. If you move into a conventional cash-out loan, leverage tops out at 80% of value on a one-unit primary home, so no new insurance applies at or under that level. Above 80%, new insurance applies unless you qualify for the wholesale no-insurance lane, which reaches 89.99% LTV. An FHA Streamline would keep FHA insurance in place.
How long must I own the home before a cash-out refinance?
At least one borrower typically needs to be on title for six months, and the mortgage being paid off must be at least 12 months old. Delayed financing, inheritance and legal-award exceptions exist. Subject to lender guidelines.
Is there a single best lender for this?
No. The right program depends on your equity, credit, property type and documents. A broker that shops multiple wholesale lenders can match your file to a program that fits. 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. For deeper reading, see Lendmire’s piece Best Cash-Out Refinance Program When Refinancing Could Remove Existing Mortgage Insurance.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s refinance programs page.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. 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 B2-1.3-02, Limited Cash-Out Refinance Transactions
3. CFPB: When Can I Remove Private Mortgage Insurance PMI from My Loan
4. HUD: How long is MIP collected for case numbers assigned on or after June 3, 2013
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 Qualify and Apply for a Cash-Out Refinance Leaving the Second Mortgage in Place · How to Qualify and Apply for a Cash-Out Refinance on Your Home · Cash-Out Refinance vs Home Equity Loan With Mortgage Protection Insurance in Place
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.