Cash-out refinance limits (2026)
Freddie Mac's maximum LTV requirements (checked October 2, 2026) for cash-out refinance mortgages, fixed-rate and ARM:
| Property | Maximum LTV |
|---|---|
| 1-unit primary residence | 80% |
| 2- to 4-unit primary residence | 75% |
| Second home | 75% |
| 1-unit investment property | 75% |
| 2- to 4-unit investment property | 70% |
Fannie Mae's Selling Guide B2-1.3-03 (section dated December 10, 2025) adds timing rules: the first mortgage being paid off must be at least 12 months old, and a borrower must have been on title for at least six months, with listed exceptions. VA cash-out loans carry a funding fee of 2.15% (first use) or 3.3% (after first use) under VA.gov's chart.
How the cash-out is calculated
The current payment and interest use the same formula on your payoff, current rate and years left. "Extra interest" is the new loan's lifetime interest minus what you'd still pay on the old loan: it shows the full cost of moving the whole balance to the new rate and term, not only the cost of the cash.
Worked example
A $500,000 home with an 80% limit allows a $400,000 loan. After the $250,000 payoff and $8,000 of financed costs, up to $142,000 is available. Taking $75,000 makes a $333,000 loan (66.6% LTV). At 7% for 30 years the payment is $2,215.46, against $1,319.59 today on a 4% loan with 25 years left: $895.87 more a month.
How this calculator works, in plain language
Lenders will only lend up to a set share of your home's value. The calculator works out that ceiling, takes away what you already owe and any costs you add to the loan, and tells you how much cash is left to take. It then sizes the new loan for the cash you asked for (or the most allowed), works out the new monthly payment, and compares it with the payment and interest still left on your current mortgage, so you can see what the cash really costs.
Cash-out refinance by scenario
Six homes at an 80% maximum LTV, a new 30-year loan at an example 7%, $8,000 of closing costs rolled in and a current 4% loan with 25 years left. Rates are examples, not quotes.
| Scenario | Max cash | Cash taken | New loan | LTV | New P&I | Payment change |
|---|---|---|---|---|---|---|
| $400k home, owe $200k, want $50k | $112,000 | $50,000 | $258,000 | 64.5% | $1,716.48 | $660.81 |
| $500k home, owe $250k, want $75k | $142,000 | $75,000 | $333,000 | 66.6% | $2,215.46 | $895.87 |
| $500k home, owe $300k, want $100k | $92,000 | $92,000 | $400,000 | 80% | $2,661.21 | $1,077.70 |
| $600k home, owe $350k, want $100k | $122,000 | $100,000 | $458,000 | 76.3% | $3,047.09 | $1,199.66 |
| $350k home, owe $260k, want $30k | $12,000 | $12,000 | $280,000 | 80% | $1,862.85 | $490.47 |
| $750k home, owe $400k, want $150k | $192,000 | $150,000 | $558,000 | 74.4% | $3,712.39 | $1,601.04 |
Two rows hit the limit: the $500,000 home owing $300,000 can release only $92,000, and the $350,000 home owing $260,000 only $12,000. With that little equity a HELOC or personal loan may be the only way to borrow the rest.
Common cash-out refinance mistakes
- Looking only at the cash. The new rate applies to the whole balance. Swapping a 4% loan for 7% on $250,000 costs more than the cash itself.
- Forgetting financed costs eat into the limit. Every dollar of costs rolled in is a dollar less of cash at the same LTV.
- Restarting a 30-year clock. Refinancing 25 remaining years into 30 lowers the payment but adds five years of interest. Try a 20-year term above.
- Using an online value estimate. The lender's appraisal sets the value; a lower appraisal shrinks the cash.
- Ignoring the HELOC option. If your current rate is low, keeping it and adding a HELOC is often cheaper.
This is an estimate for planning, not a loan offer. Your lender's Loan Estimate is final.