Cash-Out Refinance LTV Requirements
Loan-to-value (LTV) requirements are stricter for cash-out refinancing than rate-and-term refinance. Here’s what you need to qualify.
TL;DR: Conventional cash-out refinance requires 80% LTV max, FHA allows 85%, and VA allows 90%. Calculate your maximum cash-out: (Home Value × Max LTV) - Current Mortgage - Closing Costs. If your LTV is too high, consider a HELOC instead.
Maximum LTV by Loan Type
| Loan Type | Max LTV | Min Credit Score | Reserve Requirements |
|---|---|---|---|
| Conventional | 80% | 680-700 | 2-6 months |
| FHA | 85% | 580-600 | 0-3 months |
| VA | 90% | 620 | 0-2 months |
| USDA | Not eligible for cash-out | - | - |
Conventional Cash-Out (Fannie/Freddie)
Requirements:
- Max LTV: 80%
- Min credit score: 680 (most lenders), 700 for best rates
- DTI max: 43-50%
- Reserves: 2-6 months of payments (varies by LTV/credit)
Example:
- Home value: $400,000
- Max loan: $320,000 (80% LTV)
- If current mortgage is $280,000
- Max cash-out: $40,000
Exceptions: Some lenders go to 85% LTV with:
- Higher credit score (720+)
- More reserves (6+ months)
- Strong DTI (<40%)
FHA Cash-Out
Requirements:
- Max LTV: 85%
- Min credit score: 580 (some lenders 600)
- DTI max: 43-50%
- MIP required: 1.75% upfront + annual 0.45-1.05%
Example:
- Home value: $400,000
- Max loan: $340,000 (85% LTV)
- If current mortgage is $280,000
- Max cash-out: $60,000
Trade-off: Higher LTV allowed but mortgage insurance is expensive.
VA Cash-Out
Requirements:
- Max LTV: 90% (technically 100%, but most limit to 90%)
- Min credit score: 620 (some lenders 640)
- Funding fee: 2.15-3.3% (can be rolled into loan)
- DTI max: 41-50%
Example:
- Home value: $400,000
- Max loan: $360,000 (90% LTV)
- If current mortgage is $280,000
- Max cash-out: $80,000
Benefit: Highest LTV allowed, no PMI.
Calculate Your Maximum Cash-Out
Formula: (Home Value × Max LTV) - Current Mortgage - Closing Costs
Example (Conventional):
- Home: $400,000
- Max 80% LTV: $320,000
- Current mortgage: $250,000
- Available before costs: $70,000
- Net cash-out after $12k costs: ~$58,000
Our Calculator Shows Your LTV
We display:
- Current LTV
- After-cash-out LTV
- Which loan types you qualify for
- Risk assessment
What If LTV Is Too High?
If you’re over the max LTV for cash-out refinance:
Option 1: Wait and Build Equity
- Pay down principal
- Wait for home appreciation
- Re-apply in 6-12 months
Option 2: Use HELOC Instead
- HELOCs often go to 85% CLTV
- Lower closing costs
- Second lien doesn’t affect first mortgage
Option 3: Smaller Cash-Out
- Borrow less to stay under LTV limit
- Combine HELOC for remainder
LTV vs. CLTV
- LTV: Loan-to-value (first lien only)
- CLTV: Combined loan-to-value (all liens)
Cash-out refinance only has first lien, so LTV = CLTV. HELOC has first + second, so CLTV matters more.
Frequently Asked Questions
What is the maximum LTV for cash-out refinance?
Conventional loans allow 80% LTV, FHA allows 85%, and VA allows up to 90%. These limits are stricter than rate-and-term refinancing because cash-out increases lender risk.
How do I calculate my maximum cash-out amount?
Use this formula: (Home Value × Max LTV) - Current Mortgage - Closing Costs. For example, on a $400,000 home at 80% LTV with a $250,000 mortgage and $12,000 closing costs: ($400,000 × 0.80) - $250,000 - $12,000 = $58,000 net cash-out.
What if my LTV is too high for cash-out refinance?
Consider a HELOC, which often allows up to 85% CLTV. Or wait to build equity through principal payments and home appreciation. You could also borrow a smaller amount to stay under the LTV limit.