Cash-Out Refinance Requirements: LTV, Credit and Seasoning
A cash-out refinance replaces your mortgage with a larger one and pays you the difference. The new loan is secured by your home, so if you cannot repay you could lose it. How much cash you can take, and whether you qualify at all, depends mostly on the loan program: conventional loans sold to Fannie Mae, FHA loans, and VA loans each publish their own limits. This page lists those published rules, with the date and document for each, and shows what they mean on one example home.
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Key takeaways
- Conventional (Fannie Mae) and FHA cash-out loans are capped at 80% of the home's value. VA allows up to 100% of the reasonable value, per 38 CFR 36.4306, though state law can set a lower limit (Texas caps homestead home equity debt at 80% of value).
- Fannie Mae requires the mortgage being paid off to be "at least 12 months old" and a borrower on title for at least six months.
- VA loans being refinanced must reach the later of 210 days from the first payment and the sixth monthly payment.
- Lenders can set stricter rules than these programs, so a published maximum is not a promise that any lender will approve you.
What are the rules by loan type?
| Requirement | Conventional (Fannie Mae) | FHA | VA |
|---|---|---|---|
| Maximum loan-to-value, one-unit principal residence | 80% LTV, CLTV and HCLTV (Eligibility Matrix) | 80% LTV and 80% CLTV of the Adjusted Value (Mortgagee Letter 2019-11) | Up to 100% of the reasonable value (38 CFR 36.4306) |
| Seasoning of the loan being paid off | Existing first mortgage "must be at least 12 months old," note date to note date (B2-1.3-03) | Every mortgage payment made within the month due for the past 12 months, or since the loan began if that was less than 12 months ago, and at least six months of payments on the current loan (HUD Handbook 4000.1) | When the loan being refinanced is a VA loan: later of 210 days from the first payment and the date of the sixth monthly payment |
| Time on title or occupancy | At least one borrower on title at least six months, with exceptions such as inheritance and delayed financing (B2-1.3-03) | Owned and occupied as your principal residence for the 12 months before the FHA case number is assigned (HUD Handbook 4000.1). Inherited homes are exempt unless rented out, in which case 12 months of occupancy are needed (FHA Resource Center) | Must meet VA occupancy rules; ask the lender |
| Credit score | Manual underwriting (Eligibility Matrix): with DTI up to 36%, 680 above 75% LTV and 660 at 75% or less with no reserves, or 660 and 640 with 6 months of reserves; with DTI up to 45%, 700 above 75% LTV and 680 at 75% or less, with 2 months of reserves. DU: no minimum score required (B3-5.1-01 (04/22/2026)) | Set by FHA rules and lender overlays | Set by the lender; VA requires a net tangible benefit test |
| Debt-to-income | DU loans with DTI over 45% need six months of reserves (B2-1.3-03) | Set by FHA underwriting rules | Set by VA underwriting rules and the lender |
| Property listed for sale | Must be off the market on or before the new loan disburses (B2-1.3-03) | Ask the lender | Ask the lender |
| Other test | Cash-out pricing applies (higher price adjustments) | Combined debt cannot exceed FHA's mortgage limit for your county or metro area (the Nationwide Mortgage Limit) | New loan must be "in the financial interest of the borrower" |
A note on credit scores. Fannie Mae's Selling Guide B3-5.1-01 (04/22/2026) says: "A minimum credit score is not required for DU loan casefiles." The 620 minimum for DU loans was removed with Announcement SEL-2025-09, issued November 5, 2025. That changes Fannie Mae's published floor for automated underwriting, not your lender's. Many lenders keep their own minimums, and the price adjustment for a cash-out loan rises steeply as scores fall: at 75.01% to 80% LTV it is 1.375% of the loan for a 780 or higher score and 5.125% for a 640 to 659 score. Whether you will qualify depends on the lender.
State law can be stricter. In Texas, a home equity loan on a homestead may not, together with all other debt secured by the home, "exceed 80 percent of the fair market value of the homestead" (Texas Constitution, Article XVI, Section 50(a)(6)(B)). A cash-out refinance of a Texas homestead is generally subject to that section, so the VA 100% cap in the table does not reach a Texas homestead cash-out loan made under it. Ask a Texas lender which rules apply to your loan.
FHA set its 80% limit in Mortgagee Letter 2019-11, effective for case numbers assigned on or after September 1, 2019, citing research that "a significant increase in foreclosures may have been the result of a high number of cash-out refinances completed prior to the collapse of the housing market."
How much cash could you take? A worked example
This is an illustration of the published caps, not an approval estimate.
Assumptions. Appraised value $400,000. Current mortgage balance $250,000. No other liens. Closing costs are not deducted below; they reduce the cash you actually receive.
| Program | Maximum new loan | Minus current balance | Cash before closing costs |
|---|---|---|---|
| Conventional (80%) | $320,000 | $250,000 | $70,000 |
| FHA (80% of Adjusted Value) | $320,000 | $250,000 | $70,000 |
| VA (100%) | $400,000 | $250,000 | $150,000 |
Figure: Bars are drawn to scale against the $400,000 value. Closing costs, any VA funding fee and lender overlays are not included.
Three things shrink the real number:
- Closing costs. Refinance costs vary by lender and loan size, and your Loan Estimate lists them. For scale, the CFPB found that median total loan costs on 2022 home purchase loans were $5,954. Costs you finance come out of the same cap.
- Other liens count. A HELOC or second mortgage is part of the combined loan-to-value. Fannie Mae's cap applies to LTV, CLTV and HCLTV alike.
- The VA funding fee. 38 CFR 36.4306 lets it be included in the loan, "except that any portion of the funding fee that would cause the new loan amount to exceed 100 percent of the reasonable value of the property must be paid in cash at the loan closing."
Borrowing up to the cap also leaves no cushion if home prices fall. The CFPB's research office notes that most recent cash-out refinances have loan-to-value ratios below 80%, "requiring a 20 percent or more drop in house prices to be underwater." At 100% LTV, any drop in price puts you underwater.
What else do lenders check?
- The appraisal. The caps are applied to the appraised value (for FHA, the Adjusted Value), not to your estimate.
- Income and DTI. The new, larger payment counts in your debt-to-income ratio. Work out yours with the DTI calculator.
- Pricing. Fannie Mae's price adjustments are higher for cash-out loans than for refinances that take no cash. The effect on your rate is shown in cash-out vs rate-and-term refinance.
- Whether it pays. Divide closing costs by any monthly savings to see how long it takes to recover them in the refinance break-even calculator. VA uses a related test for some refinances: when a VA loan is refinanced and the new loan does not exceed the payoff amount, 38 CFR 36.4306 requires fees and costs to be "scheduled to be recouped on or before the date that is 36 months after the date of loan issuance."
If your current mortgage rate is lower than today's rates, compare a second lien before replacing the whole loan: see HELOC vs cash-out refinance.
Right to cancel
A cash-out refinance of your principal dwelling can be rescinded until midnight of the third business day after closing, delivery of the rescission notice, or delivery of all material disclosures, whichever is last (12 CFR 1026.23). Business days for this purpose include Saturdays (12 CFR 1026.2(a)(6)). If the lender that originally made your current loan, or a lender that later merged with or acquired that lender, refinances it, only the new money is rescindable, per Regulation Z's official interpretation of 1026.23(f); with any other lender, including one that bought or services your loan, the whole refinance is rescindable.
Who the refinance link on this page is for
The refinance request link below goes to a refinance matching offer that looks for homeowners refinancing a loan over $150,000, with a loan-to-value under 90% and good or excellent credit. It does not cover mobile homes, and it is not available for homes in Indiana, Kentucky, New York or Ohio. A VA cash-out loan above 90% LTV, like the VA row in our example, falls outside it. If your home is in one of those four states, the link is replaced with a link to our home equity guides.
Before you apply: a cash-out refinance is secured by your home. If you cannot repay, you could lose your home. No lender can promise approval, a rate, or a cash amount. Loans Generator may be paid through an affiliate network when you click or submit a request through the link below; this does not change what we report.
Our link is not offered for homes in Indiana, Kentucky, New York or Ohio. Choose your state to see the link.
Common questions
What is the maximum LTV for a cash-out refinance?
80% for a conventional loan on a one-unit principal residence sold to Fannie Mae, 80% for FHA, and up to 100% for VA, though state law can set a lower limit (a Texas homestead is capped at 80% under the Texas Constitution, Article XVI, Section 50(a)(6)(B)). Lenders can set lower limits.
How long do I have to own my home before a cash-out refinance?
For a conventional loan sold to Fannie Mae, at least one borrower must have been on title for six months, and the mortgage being paid off must be at least 12 months old. For FHA, you must have owned and lived in the home as your principal residence for the 12 months before the case number is assigned. For a VA loan refinancing a VA loan, the later of 210 days from the first payment and the sixth payment.
What credit score do I need?
There is no single answer. For manually underwritten cash-out loans on a one-unit principal residence, Fannie Mae's Eligibility Matrix sets minimums from 640 to 700 depending on LTV, DTI and reserves, and its Selling Guide no longer requires a minimum score for DU loans (the 620 reference was removed). Lenders set their own floors and price lower scores higher.
Can I do a cash-out refinance on a rental property?
Fannie Mae's Eligibility Matrix has separate, lower limits for second homes and investment properties, and its price adjustments are higher for both. This page covers principal residences.
Does a cash-out refinance put my home at risk?
Yes. The new loan is secured by your home. The CFPB's 2022 mortgage market report noted cash-out refinances "can increase the risk of foreclosure as they typically have higher interest rates, higher monthly payments, and higher balances than other refinances."
Sources
- Fannie Mae, Selling Guide B2-1.3-03, Cash-Out Refinance Transactions (12/10/2025), accessed October 26, 2026.
- Fannie Mae, Eligibility Matrix, accessed October 26, 2026.
- Fannie Mae, Selling Guide B3-5.1-01, General Requirements for Credit Scores (04/22/2026), accessed October 26, 2026.
- Fannie Mae, Loan-Level Price Adjustment Matrix, updated September 30, 2026, accessed October 26, 2026.
- U.S. Department of Housing and Urban Development, Mortgagee Letter 2019-11 (August 1, 2019), accessed October 26, 2026.
- HUD FHA Resource Center, inherited and gifted property refinance answer (publication date August 12, 2026), accessed October 26, 2026.
- U.S. Department of Housing and Urban Development, Single Family Housing Policy Handbook 4000.1, section II.A.8.d.v, Cash-Out Refinances (update published August 12, 2026), accessed October 26, 2026.
- 38 CFR 36.4306, Refinancing of mortgage or other lien indebtedness, via eCFR, accessed October 26, 2026.
- Consumer Financial Protection Bureau, "CFPB Mortgage Report Finds Jumps in Closing Costs and Denials for Insufficient Income, Growing Proportion of Cash-Out Refinances", accessed October 26, 2026.
- Consumer Financial Protection Bureau, Office of Research, "Data Point: 2022 Mortgage Market Activity and Trends" (September 2023), accessed October 26, 2026.
- Consumer Financial Protection Bureau, Office of Research blog, "A look at cash-out refinance mortgages and their borrowers between 2013 to 2023", accessed October 26, 2026.
- Consumer Financial Protection Bureau, Regulation Z, 12 CFR 1026.2(a)(6) and 12 CFR 1026.23 with official interpretation, accessed October 26, 2026.
- Texas Constitution, Article XVI, Section 50(a)(6), Texas Legislature, accessed October 26, 2026.
- Fannie Mae, “Loan-Level Price Adjustment Matrix (updated September 30, 2026)”
- U.S. Department of Housing and Urban Development, “Mortgagee Letter 2019-11, Maximum Loan-To-Value and Combined Loan-To-Value Percentages for Cash-out Refinance Mortgages (August 1, 2019)”
- U.S. Department of Housing and Urban Development, FHA Resource Center, “Can I refinance into an FHA loan on a property that I acquired through an inheritance, gift, or obtained through a non-monetary transaction? (publication date 8/12/2026)”
- Consumer Financial Protection Bureau, “Office of Research blog: A look at cash-out refinance mortgages and their borrowers between 2013 to 2023”
- Consumer Financial Protection Bureau, “Regulation Z, 12 CFR 1026.23 Right of rescission”
- Consumer Financial Protection Bureau, “Regulation Z, 12 CFR 1026.2(a)(6) Business day”
Loans Generator is not a lender or mortgage broker. No lender can guarantee approval, a loan amount, a rate or a payment. Program rules cited here were checked on October 26, 2026 and change without notice; lenders may apply stricter rules. Availability and terms vary by lender and by state. This page is general information, not legal, tax, or financial advice.