How much money can you take out of your home with a cash out refinance?
The answer to your question depends on several factors including the property type, the number of units in the property and your current mortgage balance. We outline the guidelines for how much money you can take out of a property with a cash out refinance below.
If the property is your principal residence -- the home you live in most of the time -- you can take out 80% of the property value for a one unit property. For example, if the property is valued at $100,000, you can take out up to $80,000 with a cash out refinance.
Please note that you are required to pay off any existing mortgages or liens on the property before you receive any proceeds from the loan. So in the example above, if you have a $50,000 mortgage balance, you could personally take out $30,000 with a cash out refinance. If you own the property free and clear, you can receive all of the mortgage proceeds after paying closing costs.
Use our CASH OUT REFINANCE CALCULATOR to determine how much money you can take out of your homeÂ
For a two-to-four unit principal residence, the maximum loan-to-value (LTV) ratio is 75%, which means you can take out up to 75% of the property value. If the property is a second home or vacation home, the maximum LTV ratio is also 75%. For example, if the property is valued at $100,000, you can take out up to $75,000 with a cash out refinance.
If the property is a single unit investment or rental property that is not your primary residence, the maximum LTV ratio is 75% and for a two-to-four unit investment property the maximum ratio is 70%. For example, if the property is valued at $100,000, you can take out up to $70,000 with a cash out refinance.
The table below shows refinance rates and fees for leading lenders near you. We recommend that you contact multiple lenders to find the best cash out refinance terms.
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Please note that the maximum cash out guidelines outlined above apply to conventional loans. The FHA cash out refinance program enables you to take out 80% of the property value for a one-to-four unit principal residence. While the maximum LTV ratio for a one unit property is the same for both a conventional and FHA cash out refinance, you can take out more proceeds with an FHA refinance on a two-to-four unit property, as long as you live in the property.
The FHA cash out refinance program also permits a credit score of 580 or lower in certain circumstances, which is less than the score required to qualify for a conventional refinance. FHA mortgage rates also tend to be less than conventional mortgage rates, which reduces your interest cost.
Review our FHA Cash Out Refinance Guide
The downsides to an FHA cash out refinance are that you are required to pay an upfront and monthly mortgage insurance premium (MIP) which increase your closing costs and monthly payment. Additionally, the program only applies to owner occupied properties and investment properties are not eligible.
The table below shows top FHA lenders in your area. We advise you to compare lenders to find the lowest mortgage rate and costs for an FHA cash out refinance.
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Finally, to take the most money out of your property possible, you must qualify for the mortgage based on your debt-to-income ratio, credit score, employment history, financial reserves and other factors. Just because you are eligible to access a certain amount of proceeds from your home, does not automatically mean you qualify for that loan amount. You must demonstrate that you can afford the mortgage payment and repay the loan based on your personal financial information, credit history and lender qualification guidelines.
Use ourMORTGAGE QUALIFICATION CALCULATORto determine the mortgage you can afford
Sources
"B2-1.3-03, Cash-Out Refinance Transactions."  Selling Guide: Fannie Mae Single Family. Fannie Mae, July 3 2019. Web.
"II.A.8.d.v. Cash-Out Refinances." FHA Single Family Housing Policy Handbook 4000.1. Federal Housing Administration, January 2 2020. Web.
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