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How Much Money Can You take Out of Home With Refinance?

How much money can you take out of your home with a cash out refinance?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

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 home 

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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Current Mortgage Rates as of July 23, 2019
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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

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 85% of the property value for a one-to-four unit principal residence.

Using a higher LTV ratio enables you to take out more money from your property with an FHA cash out refinance. For example, for a $100,000 one unit property, you can take out $85,000 as compared to only $80,000 with a conventional mortgage.

The FHA cash out refinance program also permits a credit score of 580 or even lower in certain circumstances. 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.

%
Current FHA Mortgage Rates as of July 23, 2019
  • Lender
  • APR
  • Loan Type
  • Rate
  • Payment
  • Fees
  • Contact
View All Lenders

%

Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

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

Conventional Mortgage Cash Out Refinance Guidelines: https://www.fanniemae.com/content/eligibility_information/eligibility-matrix.pdf

FHA Cash Out Refinance Guidelines: https://www.hud.gov/sites/documents/4155-1_3_SECB.PDF

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR. More about Harry

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