Cash Out Refinance: Access Your Home Equity Without Adding Another Loan

For a conventional cash-out refinance on a one-unit primary residence, the new mortgage typically cannot exceed 80% of the home’s appraised value, leaving at least 20% equity in the property.

Maximum loan-to-value limits are generally:

• Primary residence, one unit: 80%
• Primary residence, two to four units: 75%
• Second home: 75%
• Investment property, one unit: 75%
• Investment property, two to four units: 70%

Many lenders look for a credit score of approximately 620 or higher, although the actual requirement depends on the loan program, equity position and lender guidelines.

Better credit can also help borrowers qualify for stronger pricing.

Upto 45% but automated underwriting may permit higher ratios depending on credit, equity, reserves and the overall application.

For Fannie Mae loans, borrowers with a DTI above 45% must have six months of reserves.

Under current Fannie Mae rules:

• At least one borrower generally must have been on the property title for six months.

 

• When an existing first mortgage is being paid off, that mortgage generally must be at least 12 months old.

Exceptions may apply for inherited properties, divorce-related transfers, co-owner buyouts and qualifying delayed-financing transactions.