# Cash-out refinance: how much you can take and what it costs

> How a cash-out refinance works: LTV limits on conventional, FHA and VA loans, a worked example of the cash you can take, the costs, the risks and HELOCs.

URL: https://mail.mortgage-math-us.com/refinancing/cash-out-refinance/  
Last reviewed: 2026-10-28 · By the MortgageMath US Editorial team

## Quick answer

A cash-out refinance replaces your mortgage with a larger one and pays you the difference. Conventional loans cap the new loan at 80% of the home’s value on a one-unit primary home, FHA at 80%, and VA rules allow up to 100%, though lenders may set lower limits. On a $360,000 home with $180,000 owed, an 80% loan frees about **$108,000** before closing costs — but the whole $288,000 is borrowed at the new rate, not just the cash.

## Key facts

| Fact | Value | Source | As of |
|---|---|---|---|
| Conventional limit, one-unit principal residence | 80% | [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) | Apr 1, 2026 |
| FHA cash-out limit | 80% | [HUD Mortgagee Letter 2019-11](https://www.hud.gov/sites/dfiles/OCHCO/documents/19-11ml.pdf) | Aug 1, 2019 |
| VA limit in regulation (lenders may go 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 |
| Conventional: existing loan must be 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 |
| VA funding fee, cash-out, first use | 2.15% | [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) | Apr 7, 2023 |
| Typical refinance costs, low end (Freddie Mac) | 3% | [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) | Oct 28, 2026 |

## How a cash-out refinance works

You apply for a new first mortgage that is larger than what you owe. At closing it pays off the old loan, covers closing costs if you choose, and the rest is paid to you. Your new payment is based on the full new balance, at the new rate, over the new term.

That last point is what separates a cash-out refinance from a [HELOC or home equity loan](https://mail.mortgage-math-us.com/home-equity/cash-out-vs-heloc/), which leave your first mortgage alone and add a second loan on top. If your existing rate is low, a cash-out refinance gives it up.

## Cash-out limits by loan type

*Maximum loan-to-value on a cash-out refinance, by loan type*

| Loan type | Maximum LTV | Other rules |
|---|---:|---|
| Conventional (Fannie Mae), one-unit principal residence | 80% | Existing loan at least 12 months old; a borrower on title for 6 months |
| Conventional, two- to four-unit principal residence | 75% | Same timing rules |
| Conventional, second home | 75% | One unit |
| Conventional, one-unit investment property | 75% | Lower for two to four units |
| FHA | 80% | Upfront MIP of 1.75% plus annual MIP; other rules in HUD Handbook 4000.1 |
| VA | 100% | Certificate of Eligibility; you must live in the home; funding fee 2.15% first use, 3.3% after |

A few details matter more than they look:

- **Conventional loans** measure the 12 months from the old loan’s note date to the new one. A home that was listed for sale must be off the market by the time the new loan funds.
- **FHA** charges mortgage insurance again. At 80% LTV, the annual premium on a 30-year loan up to $726,200 is 0.5% and ends after 11 years, because the loan starts below 90% of value.
- **VA** lets you refinance a non-VA loan into a VA cash-out loan. If the loan you are replacing is VA-backed, VA’s seasoning rule applies: at least 6 monthly payments and 210 days from the first payment due date. Lenders must also show you how much equity the refinance removes. Veterans receiving VA disability compensation generally don’t pay the funding fee.

## How much cash you could get

> **Worked example: $360,000 home (near the US median value), $180,000 owed at an example 4% with 25 years left**
>
> | Step | Amount |
> |---|---:|
> | Largest conventional loan at 80% of value | $288,000 |
> | Minus the balance paid off | −$180,000 |
> | Cash before closing costs | $108,000 |
> | Closing costs at 3% of the new loan | −$8,640 |
> | **Cash in hand if costs come out of the proceeds** | **$99,360** |
> | Old monthly principal and interest | $950 |
> | New 30-year payment at 7.24% | $1,963 |
> 
> The new rate is this week’s Freddie Mac 30-year average; cash-out loans are often priced somewhat higher than rate-and-term refinances. Costs use the low end of Freddie Mac’s 3%–6% range.

The payment more than doubles, and not only because you borrowed more. The $180,000 you already owed moves from 4% to 7.24%, which on its own adds about $5,832 of interest in the first year. Before you compare offers, ask what the cash would cost through a second loan that leaves the first mortgage untouched.

## What it costs

Expect the same closing costs as any refinance — Freddie Mac puts them at 3%–6% of the loan — charged on a larger loan. FHA adds upfront MIP of 1.75%; VA adds a funding fee of 2.15% the first time you use the benefit and 3.3% after that. You will usually need an appraisal, since the home’s value sets the limit; on some conventional loans Fannie Mae’s Desktop Underwriter may offer “value acceptance” in its place. See [refinance closing costs](https://mail.mortgage-math-us.com/refinancing/refinance-closing-costs/) for the line items.

## Risks to weigh

- **You reprice your whole mortgage.** If your current rate is well below today’s, the cash can be very expensive.
- **You restart the clock.** A new 30-year term means paying for longer, and more total interest, unless you pay extra.
- **Less equity, less cushion.** If prices fall, you could owe close to what the home is worth, which makes selling or refinancing harder.
- **Taxes.** Interest on money you spend on anything other than buying, building or substantially improving the home generally isn’t deductible. See [home equity interest and taxes](https://mail.mortgage-math-us.com/home-equity/home-equity-interest-deduction/).

> **Watch out: Turning card debt into mortgage debt**
>
> Paying off credit cards with a cash-out refinance can cut the interest rate, but the debt is now secured by your house and stretched over decades. If you can’t keep up the payments, you can lose the home.

## Cash-out refinance or HELOC?

A HELOC keeps your first mortgage — and its rate — and lets you borrow only what you need, usually at a variable rate. A cash-out refinance can give you one fixed-rate loan and one payment. As a rule of thumb, a cash-out refinance is easier to justify when your current rate is near or above today’s rates, or when you also want to change the term. When your existing rate is low, compare a HELOC or home equity loan first. Our [cash-out refinance vs HELOC](https://mail.mortgage-math-us.com/home-equity/cash-out-vs-heloc/) guide runs the numbers side by side.

## Frequently asked questions

### How much cash can I get from a cash-out refinance?

Generally up to 80% of your home’s value on a conventional loan (80% on FHA), minus what you owe and the closing costs. With a $360,000 home and $180,000 owed, that is about $108,000 before costs and $99,360 after costs of 3%.

### How soon can I do a cash-out refinance?

For a conventional loan sold to Fannie Mae, the loan being paid off must be at least 12 months old, and a borrower must have been on title for 6 months. Refinancing a VA loan requires 6 monthly payments and 210 days from the first payment due date. FHA sets its own rules in HUD Handbook 4000.1.

### Can I get a cash-out refinance with VA if my current loan isn’t VA?

Yes. VA’s cash-out refinance can replace a non-VA loan, as long as you have a Certificate of Eligibility, meet VA’s and the lender’s credit and income standards, and live in the home.

### Do I need an appraisal for a cash-out refinance?

Usually, because the home’s value sets how much you can borrow. VA lenders order one. On some conventional loans, Fannie Mae’s Desktop Underwriter may offer value acceptance instead, in which case no appraisal is required.

### Can I do a cash-out refinance on a rental property?

On a conventional loan, yes, at a lower limit: 75% of value for a one-unit investment property. VA cash-out loans require you to live in the home.

### Is a cash-out refinance better than a HELOC?

It depends mostly on your current rate. A cash-out refinance replaces your whole mortgage at today’s rate; a HELOC adds a second, usually variable-rate loan and leaves your first mortgage alone. If your existing rate is low, a HELOC or home equity loan is often cheaper overall.

## Sources

- [Freddie Mac Primary Mortgage Market Survey](https://www.freddiemac.com/pmms) — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- [Freddie Mac My Home](https://myhome.freddiemac.com/refinancing/costs-of-refinancing) — Typical refinance closing costs, low end (share of loan principal); Typical refinance closing costs, high end (share of loan principal) (Oct 28, 2026)
- [Fannie Mae Eligibility Matrix](https://singlefamily.fanniemae.com/media/20786/display) — Fannie Mae cash-out refinance maximum LTV, one-unit principal residence; Fannie Mae cash-out refinance maximum LTV, two- to four-unit principal residence; Fannie Mae cash-out refinance maximum LTV, second home (Apr 1, 2026)
- [US Census Bureau, American Community Survey 2024 1-year](https://data.census.gov/table/ACSDT1Y2024.B25077?g=010XX00US) — Median value of owner-occupied homes (2024 ACS 1-year)
- [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; Fannie Mae cash-out: at least one borrower on title for at least (Dec 10, 2025)
- [HUD Mortgagee Letter 2023-05](https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-05hsgml.pdf) — FHA upfront mortgage insurance premium; FHA annual MIP is higher on base loans above this amount; FHA annual MIP, 30-year loan, 95% LTV or less (Feb 22, 2023)
- [U.S. Department of Veterans Affairs](https://www.va.gov/housing-assistance/home-loans/funding-fee-and-closing-costs/) — VA funding fee, cash-out refinance, first use; VA funding fee, cash-out refinance, after first use (Apr 7, 2023)
- [38 U.S.C. 3709](https://www.govinfo.gov/link/uscode/38/3709) — VA IRRRL seasoning: consecutive monthly payments made; VA IRRRL seasoning: days after the first payment due date (Oct 28, 2026)
- [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/)
- [38 CFR 36.4306: VA refinancing loans](https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306)
- [Fannie Mae Selling Guide B4-1.4-10: Value acceptance (appraisal waiver)](https://selling-guide.fanniemae.com/sel/b4-1.4-10/value-acceptance-appraisal-waiver)

_General information, not financial advice._