The Quick Read: Usually yes. A co-trustee does not block a conventional cash-out refinance on a home you live in that sits in a revocable living trust. The trust has to meet the agency rules for trust loans, and the loan still has to meet the normal cash-out rules. The co-trustee mainly changes who must sign and whether the trustees have the power to borrow. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
What Does a Co-Trustee Change About a Cash-Out Loan?
A co-trustee changes the signing table, not the loan program. The lender still underwrites you as the borrower. The co-trustee is a second person with legal authority over the trust’s property, and the lender needs proof that the trustees can pledge the home as collateral.
A co-trustee is a person or institution that shares the job of managing a trust. By default, co-trustees act together. The trust document can change that, for example by letting either trustee sign alone. State trust law also plays a part, so the document and your trust attorney matter here.
Here is what stays the same. Across the wholesale programs we place conventional files with, the standard cash-out on a one-unit principal residence tops out at 80% loan-to-value (LTV). LTV is the loan amount divided by the home’s value. One narrower wholesale lane goes higher on a primary residence, and it is covered below. Two- to four-unit principal residences, second homes and investment properties top out at 75%. The trust does not change those limits.
If you want the program overview, Lendmire’s cash-out refinance programs page lays out how the conventional lane works for homeowners.
Who Is the Borrower and Who Just Signs?
The borrower is the person who qualifies. The trust itself never does. Fannie Mae’s Selling Guide accepts a living revocable trust for all transaction types, cash-out included. It requires at least one person who created the trust to be underwritten as a borrower.
That person is the settlor, sometimes called the grantor. Their income, assets and credit decide the file. Under the same guide, other settlors may also be co-borrowers if their credit is used to qualify.
A co-trustee who is not a settlor and not a credit applicant is a different role. That person is not underwritten. They still sign the note as a trustee, using a prescribed signature block. Fannie Mae’s signature rules for trust mortgages say so directly. Freddie Mac’s Exhibit 9A also shows a separate trustee signature block, one that can be used by a trustee who is also an underwritten settlor.
| Co-trustee type | Underwritten? | Signs? |
|---|---|---|
| Settlor-trustee (you) | Yes, as borrower | Yes |
| Spouse who is also a settlor | If credit is used | Yes |
| Adult child, not a settlor | No | Yes, as trustee |
| Institutional trustee | No | Yes, as trustee |
One caution. This is how the agency guides read. Individual lenders may add their own overlays, so confirm your lender’s version early.
Which Co-Trustees Are Allowed?
Almost anyone, with one condition. The guide says the trustees must include the person who created the trust (or at least one of them, if there are two or more) or an institutional trustee. So a co-trustee can be a spouse, a sibling, an adult child or a bank.
Picture three common setups:
- Spouses as co-trustees. Both usually created the trust. At least one is underwritten, and both sign. This is the easy case.
- Parent and adult child. The parent is the settlor and borrower. The child signs as trustee only. Allowed, so long as the parent also serves as a trustee.
- Parent and a bank as co-trustee. An institutional trustee counts, if it customarily performs trust functions and is authorized to act as trustee in the state.
The case that fails is a trust where no settlor serves as trustee and no institution does. That falls outside the standard path. So does an irrevocable trust. Fannie Mae’s general rule is that it accepts individuals as borrowers, with revocable living trusts as a listed exception, as its borrower eligibility rules explain.
What Must the Trust Document Say?
The trust must give the trustees power to mortgage the home. That is the core requirement. The trust must also be revocable, meaning the creator can change or cancel it during their lifetime. And it must have been created by one or more individuals who are its primary beneficiaries.
A clause that turns the trust irrevocable when a settlor dies does not break eligibility, per the same Selling Guide section. That surprises people who have been told otherwise.
Lenders look at the document, or a certification of trust, for four things:
1. Who the trustees are.
2. Whether the trustees must act jointly or may act alone.
3. Whether the trust grants borrowing and mortgage powers.
4. Whether the trust is revocable and who the settlors are.
The joint-versus-alone point is the one that trips people up. If the document requires both trustees, both sign. If it lets either act alone, the lender still decides how it wants the signatures handled. Expect it to ask for ID from each trustee.
How Cash-Out Rules Apply to a Trust-Held Home
The cash-out rules do not bend for a trust. Everything else on the file runs the ordinary way. In the wholesale programs we use, the first mortgage being paid off must be at least 12 months old, counted from note date to note date. You must also have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
Time in the trust can help. Fannie Mae’s cash-out refinance rules let time held by a living revocable trust count toward the six-month ownership requirement when you are the trust’s primary beneficiary. If you moved the home into the trust last year, that does not reset the clock in that case.
There is also a separate wholesale lane that reaches 89.99% LTV with no mortgage insurance. It is the exception to the 80% standard above, not the norm. It requires a 680 score, a 50% ratio and a thirty-year fixed loan on a primary residence at a conforming balance. It carries its own six months of seasoning. Whether a trust-held home fits that lane depends on the lender’s own overlays, so ask before you assume.
Credit works the usual way too. Wholesale conventional programs start at a 620 decision score, and the automated finding governs most files with a total ratio ceiling of 50%. In Texas, a cash-out on the homestead is capped by the state constitution at the agency figure, and the 89.99% lane is not written there.
The appraisal is the standard one for an owner-occupied cash-out. The property type and the LTV decide the outcome, not the trust.
One honest flag. Using cash-out money raises a fiduciary question when a co-trustee is not a beneficiary. Whether that matters depends on state law and your trust document. Ask your trust attorney. That is legal advice, and a broker cannot give it.
What Happens at Closing?
Every trustee who signs the note must be at the table, or sign in a way the title company accepts. A co-trustee who is not a borrower still signs the note and security documents in a trustee capacity. Title must be vested in the trustees, or in the trustees and you jointly, or in the trustees of more than one revocable trust.
Plan for three practical things:
- Documents. Expect to provide a trust certification or the full trust, plus ID for each trustee.
- Title. The title company will want clean vesting with no trust-related exceptions. That is the usual practice, so check it with your title agent.
- Availability. A co-trustee who is out of town or slow to respond is the most common source of delay. Line up signatures early. Remote or mobile notary options exist, but your lender and title company have to approve the method.
You do not have to take the home out of the trust. That is one of the real advantages of the trust path. You skip the retitling, and the title problems that can come with it.
When Something Goes Wrong
Three problems show up most often.
A co-trustee is unavailable. If the document requires joint action, the loan waits. A co-trustee who is traveling can often sign remotely. One who cannot be reached may force a trust amendment or a court step. Both are attorney work.
Co-trustees disagree. A trust that needs two signatures gives either one a veto. If they will not agree to borrow against the home, the loan stalls. A broker cannot fix a family dispute. The earlier you learn about it, the better.
A co-trustee is incapacitated. The trust document usually says what happens next, often by naming a successor trustee. The lender will want proof of that change in authority before it moves ahead.
All three share one lesson. Get the signing question answered before you pay for an appraisal.
Revocable, Irrevocable and Land Trusts
Only revocable living trusts follow the standard path. An irrevocable trust is a different structure, and the standard guide does not cover it. A land trust is separate too. Freddie Mac’s land trust section requires that all beneficiaries be individuals and the trustee be a corporation or financial institution. Fannie Mae allows land trusts only in states where the beneficiary is an individual, on a negotiated basis. Neither looks like a family living trust with a co-trustee.
If your home is held in anything other than a revocable living trust, tell your loan officer at the start. It changes which lenders can even look at the file.
What About Later Transfers?
A transfer of a beneficial interest in the trust to a relative of the settlor is exempt from the due-on-sale clause. That is a servicing rule. Fannie Mae’s Servicing Guide section on allowable exemptions covers it. In plain words, passing an interest in the trust to a family member does not, by itself, let the servicer call the loan due.
Key Terms Defined
Settlor: The person who creates the trust and puts the home in it. Also called the grantor or trustor.
Co-trustee: A second person or institution who shares control of the trust with the first trustee.
Revocable living trust: A trust you create during your lifetime and can change or cancel at any time.
Cash-out refinance: A new, larger first mortgage that pays off the old one and gives you the difference in cash.
Seasoning: The minimum time you have owned the home or held the loan before a cash-out refinance is allowed.
Loan-to-value (LTV): The loan amount as a percentage of the home’s value.
Your Pre-Application Checklist
Before you apply, get answers to these:
1. Is the trust revocable, and are you a settlor and a trustee?
2. Does the document give the trustees power to borrow against the home?
3. Must the trustees act together, or can one sign alone?
4. Is each co-trustee reachable and willing to sign?
5. Is title currently vested in the trustees?
6. How long has the home been in your name or the trust, and how old is the current mortgage?
Take the first four to your trust attorney. Take the last two to your loan officer.
Frequently Asked Questions
Do both co-trustees have to sign?
Usually, yes, if the trust requires joint action or if the lender asks for it. Each trustee who is not both a settlor and a credit applicant signs the note in a trustee capacity. Whether one trustee can sign alone depends on what the trust document says and on state law.
Does a co-trustee have to be on the loan?
No. A co-trustee who is not a settlor and not applying for credit is not underwritten. That person signs as a trustee and does not need to qualify. At least one settlor must be a borrower, and that person’s income, assets and credit are what get reviewed.
Can my adult child be my co-trustee on a cash-out refinance?
Yes, as long as you, the settlor, also serve as a trustee. Your child signs the note as a trustee and is not underwritten. Some lenders add overlays, so confirm before you apply.
Does time in the trust count toward the six-month ownership rule?
Under Fannie Mae’s rules, yes, when you are the trust’s primary beneficiary. Time the trust held the home can count toward the six months. That language comes from the Fannie Mae Selling Guide, so ask your lender whether its program counts trust time the same way on your file.
Will a trust change my loan amount or cost?
Not under the agency guides. Leverage limits and mortgage insurance rules follow the borrower and the property, and the agency guides do not add a trust surcharge. Lenders price loans on their own terms, so compare your Loan Estimates side by side.
The Next Step
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. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s conventional loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Fannie Mae Selling Guide B2-2-05, Inter Vivos Revocable Trusts
2. Fannie Mae Selling Guide E-2-04, Signature Requirements for Trust Mortgages
3. Freddie Mac Guide Exhibit 9A
4. Fannie Mae Selling Guide B2-2-01 General Borrower Eligibility
5. Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions
6. Freddie Mac Guide Section 5103.6 Land Trust
7. Fannie Mae Servicing Guide D1-4.1-02
This article is part of Lendmire’s Conventional Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Can You Get a Conventional Cash-Out on a Rural Home With Acreage? · Can a Lock-in Homeowner Get a Conventional Cash-Out on a Fourplex? · Can You Get a Conventional Cash-Out on a Duplex You Live In?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.