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
12months
Fannie Mae: existing first mortgage at least
Fannie Mae Selling Guide B2-1.3-03 · Dec 10, 2025
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
| 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 or 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. The cash-out refinance guide and cash-out vs HELOC compare the options.
Sources
- Fannie Mae Eligibility Matrix — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence (Apr 1, 2026)
- Freddie Mac My Home — Typical refinance closing costs, low end (share of loan principal) (Oct 28, 2026)
- HUD Mortgagee Letter 2019-11 — FHA cash-out refinance maximum loan-to-value (Aug 1, 2019)
- 38 CFR 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 — Fannie Mae cash-out: existing first mortgage must be at least (Dec 10, 2025)
- CFPB — Right to cancel a refinance or home equity loan on your principal home (Aug 8, 2024)
- VA: Cash-out refinance loan
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.