# Cash-out refinance

> A cash-out refinance replaces your mortgage with a bigger loan and pays you the difference in cash. Maximum loan-to-value by loan type, with an example.

URL: https://mail.mortgage-math-us.com/glossary/cash-out-refinance/  
Last reviewed: 2026-10-29 · By the MortgageMath US Editorial team

## Quick answer

**A cash-out refinance** replaces your mortgage with a larger new first mortgage and pays you the difference, minus closing costs, in cash. How much you can take depends on the loan type’s maximum loan-to-value ratio — 80% for a Fannie Mae loan on a one-unit primary home.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Fannie Mae maximum LTV, one-unit primary home | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 |
| FHA maximum LTV | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 |
| VA maximum LTV (lenders may set lower) | 100% | [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) | Oct 22, 2026 |
| Fannie Mae: existing first mortgage at least | 12 months | [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) | Dec 10, 2025 |

## Example

> **Worked example: A $400,000 home with $220,000 owed**
>
> At 80% LTV the new loan can be $320,000. That pays off the old mortgage and leaves $100,000; after closing costs of about $9,600 at 3%, you’d receive roughly $90,400.

## Limits by loan type

*Maximum cash-out LTV, one-unit primary home*

| Loan | Maximum LTV |
|---|---|
| Fannie Mae conventional | 80% |
| FHA | 80% |
| VA | 100%, though many lenders set their own lower cap |

Fannie Mae also requires the existing first mortgage to be at least 12 months old. A VA cash-out loan can replace a non-VA mortgage.

## What you trade

The whole balance gets the new rate, so a cash-out refinance can cost more than a [HELOC](https://mail.mortgage-math-us.com/glossary/heloc/) or [home equity loan](https://mail.mortgage-math-us.com/glossary/home-equity-loan/) when your current rate is low. On your main home you can still cancel within 3 business days of closing under the [right of rescission](https://mail.mortgage-math-us.com/glossary/right-of-rescission/). The [cash-out refinance guide](https://mail.mortgage-math-us.com/refinancing/cash-out-refinance/) and [cash-out vs HELOC](https://mail.mortgage-math-us.com/home-equity/cash-out-vs-heloc/) compare the options.

## Sources

- [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026)
- [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026)
- [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019)
- [38 CFR 36.4306](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306) — VA refinance (including cash-out) maximum loan-to-value allowed by VA (Oct 22, 2026)
- [Fannie Mae Selling Guide B2-1.3-03](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions) — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025)
- [CFPB](https://www.consumerfinance.gov/ask-cfpb/can-i-change-my-mind-after-i-sign-the-loan-closing-documents-for-my-second-mortgage-or-refinance-what-is-the-right-of-rescission-en-186/) — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024)
- [Fannie Mae Selling Guide B2-1.3-03: Cash-out refinance transactions](https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions)
- [VA: Cash-out refinance loan](https://www.va.gov/housing-assistance/home-loans/loan-types/cash-out-loan/)

_General information, not financial advice._