Cash-out refinance: how much you can take, and how long you have to wait
Two separate things decide whether a cash-out refinance is possible: the LTV ceiling, which caps how much you can take, and the seasoning rules, which decide whether you can do it yet. The ceilings are easy to look up. The seasoning rules are where deals die — and where a surprising amount of published guidance, including some lender guidelines, is simply wrong. Here are both, current for 2026, with the source for every number.
The ceilings.
On a conventional cash-out refinance, Fannie Mae and Freddie Mac land on exactly the same numbers — which is unusual enough to be worth saying, because it means there’s no shopping your way to a higher conventional ceiling. In Texas the ceiling is lower still, and constitutional rather than contractual — Section 50(a)(6) and what it actually caps.
| Occupancy and units | Conventional max LTV |
|---|---|
| Primary residence, 1 unit | 80% |
| Primary residence, 2–4 units | 75% |
| Second home | 75% |
| Investment property, 1 unit | 75% |
| Investment property, 2–4 units | 70% |
The government programs are their own story:
| Program | Who qualifies | Max LTV |
|---|---|---|
| FHA | Owner-occupied principal residence only — no second homes, no rentals | 80% |
| VA | Eligible veterans, primary residence | Up to 100%* |
FHA’s 80% applies to both LTV and CLTV, and it’s measured against “Adjusted Value” rather than a straight appraised value. It came down from 85% back in 2019 and hasn’t moved since.
*VA is the one worth understanding properly. VA itself will not guaranty a cash-out loan where the loan-to-value exceeds 100% of reasonable value, and a financed funding fee counts toward that. But VA setting the outer boundary doesn’t mean lenders go there — most stop at 90% on their own initiative. That gap between what VA permits and what any given lender will actually do is real money for a veteran, and it’s exactly the sort of thing worth having someone shop for you.
The ceiling isn’t the only cap. If your new loan amount would push past the conforming limit for your county, the LTV table stops being the binding constraint and loan size takes over. The 2026 conforming and FHA loan limits are on their own page, kept current and cited.
The 12-month rule, measured note date to note date.
On a conventional cash-out refinance, if you’re paying off an existing first mortgage, that first mortgage has to be at least 12 months old. Both agencies require it. And the measurement is the part people get wrong: it runs from the note date of the existing loan to the note date of the new loan. Not from your closing date, not from your first payment, and not from how many payments you’ve made.
What that means in practice
You refinanced on August 15, 2025
That note date starts the clock. It doesn’t matter that you’ve made a year’s worth of payments by the following summer, or that your equity has grown.
Rates drop and you want cash out in June 2026
You can’t. The new note would be dated before the anniversary.
The earliest a conventional cash-out refinance could generally be noted is August 15, 2026 — the one-year anniversary of the note you’re paying off.
Four distinctions that matter
- It doesn’t matter what the existing loan was. Purchase money or a prior refinance, the first lien being paid off has to be 12 months seasoned either way. This is the one that surprises people: refinance today, and you generally cannot come back for conventional cash out a few months later against that new first mortgage.
- Rate-and-term refinances aren’t subject to it. A limited cash-out or “no cash-out” refinance is a different transaction with different rules. Freddie is explicit about this: a first mortgage that was used to acquire the property can be refinanced rate-and-term at any age, and a first mortgage that was itself a refinance needs only a 30-day gap.
- Subordinate liens don’t have to be seasoned. Fannie’s 12-month requirement expressly does not apply to subordinate liens being paid off in the transaction, so a newer HELOC or second mortgage can generally be retired. What the second’s proceeds were originally used for, though, is what determines whether the whole transaction gets classified as limited cash-out or cash-out — and that classification changes your ceiling and your pricing.
- Buying out a co-owner is an exception. Fannie waives the 12 months “when buying out a co-owner pursuant to a legal agreement.” Note the precise wording: the exception is tied to a legal agreement, not to the word divorce. Freddie handles the same situation through its special purpose cash-out refinance, which sits on its own exception list and lets the first mortgage be paid off regardless of age.
Freddie’s exceptions are not Fannie’s
Worth knowing if a deal is close to the line, because the two agencies carve out different things. Freddie also waives the 12 months when the first lien being paid off is itself a HELOC, when the loan is a construction-to-permanent or renovation mortgage, and when the purpose is converting a manufactured home to real property. If a file fails at one agency, it isn’t automatically dead at the other.
Six months on title is a separate test — and both have to pass.
People collapse these two rules into one. They’re independent, and they’re cumulative. Alongside the 12-month note-date rule, at least one borrower has to have been on title for six months — Fannie measures that to the disbursement date, Freddie to the note date. You can satisfy one clock and still fail the other.
Time the property was held in your own LLC or in an eligible revocable trust generally counts toward those six months. And the waiting period disappears entirely if you acquired the property by inheritance or were legally awarded it — through a divorce, a separation, or the dissolution of a domestic partnership.
Delayed financing: what it actually is
If you bought a house for cash and want to pull that cash back out quickly, delayed financing is the route. It is an exception to the six-month ownership requirement — and it’s worth being precise about that, because it’s often described as a way around the 12-month rule. It isn’t. It doesn’t need to be: you paid cash, so there’s no first mortgage sitting there needing to be seasoned.
The conditions are strict. The original purchase has to have been arm’s length, documented by a settlement statement showing no mortgage financing was used. Title has to come back clean with no existing liens. The source of the purchase funds has to be fully documented. And the new loan generally can’t exceed what you actually put in — your documented investment, less any gift funds. If you borrowed the purchase money from somewhere else, the proceeds have to go back to paying that off.
Free and clear still counts as cash-out. If you own the home outright and put a new mortgage on it, that’s a cash-out refinance by definition and it carries the cash-out ceilings and pricing — even though there’s no old loan being paid off and nothing to season.
One more that’s easy to trip over: if the house has been listed for sale, the listing has to come off the market before the new loan disburses. That one has ended more than one late-stage file.
FHA counts differently — and one widely repeated rule isn’t real.
FHA doesn’t use a note-date test at all. Its clock runs to the case number assignment date, and it measures something different: you must have owned and occupied the home as your principal residence for the 12 months before that date. Owned isn’t enough on its own. Lenders document it with utility bills.
- Payment history. All payments on all of your mortgages must have been made within the month due for the previous 12 months, or since you got them if that’s shorter. That’s a stricter standard than “no 30-day lates” — a payment made inside the grace period but in the following calendar month can fail it. And it looks at every mortgage you have, not just the one on the subject property.
- Six months of payments. If the property has a mortgage, there must be at least six months of payments on the current loan. A property owned free and clear can be refinanced cash-out with no payment history to show.
- Principal residence only. No second homes, no investment properties. This is a hard line, not an overlay.
- Inheritance. An heir doesn’t have to wait out an occupancy period — unless the property was rented at some point since the inheritance, in which case the 12-month occupancy clock applies from the point they move in.
- After a forbearance. You must have completed the plan and then made at least 12 consecutive payments within the month due before FHA cash-out is available again.
The 210-day myth
You will find lender guidelines, rate-sheet matrices and a great deal of published guidance stating that an FHA cash-out refinance requires 210 days to have passed since the closing of the loan being refinanced. HUD does not impose that on cash-out refinances. The 210-day test appears in Handbook 4000.1 under Streamline refinances, and nowhere in the cash-out section.
Where it shows up on a cash-out file, it’s a lender overlay — sometimes deliberate, often just copied across from the streamline block. That distinction is worth real money if you’re a month or two from a deal working. If someone tells you FHA requires 210 days for cash out, ask them to show you where in the handbook.
VA’s seasoning test only applies if you already have a VA loan.
VA’s rule is the 210-day one that FHA gets blamed for. A VA cash-out loan can’t be guaranteed until the later of 210 days from the date of your first monthly payment and the date the sixth monthly payment is made.
But read the rest of the sentence, because it’s the part that changes outcomes: that requirement applies only when the loan being refinanced is itself VA-guaranteed. If you’re refinancing a conventional, FHA or USDA loan into a VA cash-out, there is no VA loan to season and the 210-day test simply doesn’t reach you. Veterans get told to wait when they don’t have to.
Type I and Type II
VA sorts cash-out loans into two buckets, and the labels are less exotic than they sound. Type I means the new loan, including the funding fee, doesn’t exceed the payoff of the loan being refinanced. Type II means it does. Type I carries an additional discipline: every fee and cost has to be scheduled to be recouped within 36 months of closing. That recoupment test is a genuine consumer protection and it kills marginal refinances on purpose.
Where these rules stop applying: non-QM and portfolio.
Everything above describes agency and government lending. Non-QM and portfolio programs write their own rules, because nobody is delivering the loan to Fannie, Freddie, FHA or VA. In practice that often means seasoning requirements are shorter or absent altogether — a number of investors will do cash-out with little or no seasoning on the loan being paid off, and DSCR programs commonly take a view on the property’s cash flow rather than on how long you’ve held the note.
This is one of the legitimate reasons non-QM exists, and it’s the honest answer when an agency file fails on timing alone. It is not a free lunch: you pay for the flexibility in rate, and sometimes in points, reserves or a prepayment penalty. Guidelines also vary meaningfully from investor to investor and move more often than agency rules do, so nobody should quote you a non-QM seasoning rule as though it were a published standard — including me. The right move is to price the actual scenario.
If you’re somewhere in this territory, what non-QM actually means is the place to start, and DSCR investor loans covers the rental-property path.
Texas is its own world. Home equity lending in Texas is governed by the state constitution rather than by agency guidelines alone — with its own hard ceiling, fee cap, cooling-off period, and a once-a-year limit. If the property is in Texas, none of the general framework above is the whole answer. Ask me and I’ll walk you through the Texas rules specifically.
Why the timing rules push so many people toward a second lien.
Look at what the seasoning rules actually do. They tell a borrower who refinanced ten months ago to wait. They tell an FHA borrower who bought eight months ago to wait. They tell a veteran with a two-month-old VA loan to wait. In every one of those cases a HELOC or a second mortgage is available now, because subordinate liens carry none of this.
That’s before you get to the cost argument, which usually points the same direction: taking equity out by resetting a low first mortgage re-prices every dollar you already owe. I’ve laid that math out in full in cash-out refinance vs. HELOC, including the case where the higher-rate HELOC is the cheaper answer by several hundred dollars a month.
Compare the true cost either way
The blended-rate calculator takes your current first mortgage, a current or proposed second, and any other debts — and returns the real weighted cost of borrowing for each path.
Open the blended-rate calculator →Send me the note date and I’ll tell you exactly when you’re eligible.
Most of the time this takes one look. If the timing doesn’t work for an agency cash-out, I’ll tell you what does — a second lien now, a portfolio option, or simply a date to circle on the calendar.
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Send my scenario →Verified July 2026 against primary sources: conventional LTV ceilings and the 12-month note-date rule from the Fannie Mae Eligibility Matrix (effective April 1, 2026) and Selling Guide B2-1.3-03, and the Freddie Mac Single-Family Seller/Servicer Guide Sections 4301.4, 4301.5 and 4301.6; FHA requirements from HUD Handbook 4000.1 Section II.A.8.d and Mortgagee Letter 2019-11; VA seasoning, Type I and Type II definitions and the 36-month recoupment test from 38 CFR 36.4306. Agency guidelines change; individual lenders may impose stricter overlays than the rules described here, and non-QM and portfolio guidelines vary by investor. Nothing here is a commitment to lend. Forest Hills Mortgage · Matt Mergo · NMLS #563819. Equal Housing Opportunity.