Cash-Out Refinance Requirements: Credit Score, LTV Limits, Seasoning and DTI
Cash-out refinance requirements at a glance
| Requirement | Conventional | FHA | VA |
|---|---|---|---|
| Max LTV (primary home) | 80% for a 1-unit home | 80% | Commonly up to 90% with the lenders we work with |
| Credit score | Set by lender; often low-to-mid 600s or higher | Set by lender; often lower than conventional | No VA minimum; set by lender |
| Ownership / seasoning | 6 months on title; existing first mortgage at least 12 months old | Generally 12 months owned and occupied | Seasoning rules apply when refinancing an existing VA loan |
| Mortgage insurance | None at 80% LTV or less | Upfront and annual premiums | None; funding fee unless exempt |
| Who can use it | Primary, second home or investment (lower LTV) | Primary residence only | Eligible veterans, primary residence |
These are general guidelines. Individual lenders may be stricter, and programs change, so confirm current terms with a licensed loan officer.
1. Equity and loan-to-value (LTV) limits
Equity is the most important cash-out refinance requirement. Your new loan, including the cash you take out and any financed costs, has to stay under the program's maximum loan-to-value ratio.
How it works: multiply your home's appraised value by the maximum LTV, then subtract what you owe. The difference, less closing costs, is roughly the most cash you can take.
| Example (illustrative) | Conventional 80% | VA 90% |
|---|---|---|
| Home value | $400,000 | $400,000 |
| Maximum new loan | $320,000 | $360,000 |
| Current balance | $220,000 | $220,000 |
| Cash before costs | $100,000 | $140,000 |
Run your own numbers with our cash-out refinance calculator.
Conventional cash-out LTV limits by property type
Fannie Mae's eligibility matrix sets lower maximums for riskier properties. In general:
- Primary residence, 1 unit: 80%
- Primary residence, 2 to 4 units: 75%
- Second home: 75%
- Investment property, 1 unit: 75%
- Investment property, 2 to 4 units: 70%
For rentals, also see investment property cash-out refinance, including DSCR options.
2. Credit score requirements
Minimum credit scores for a cash-out refinance are set by the loan program and by each lender:
- Conventional: many lenders look for scores in the low-to-mid 600s or higher, and pricing improves with higher scores and lower LTVs.
- FHA: often more flexible on credit than conventional, though lenders set their own minimums.
- VA: the VA sets no minimum; many lenders look for around 620, and some go lower.
We generally work with homeowners whose scores are around 600 or higher. Scores just under a lender's cutoff can sometimes be improved quickly by paying down revolving balances before applying.
Cash-out refinance with a 600 credit score
A 600 score can qualify with some FHA and VA lenders, usually with lower LTV, steady income and a reasonable debt-to-income ratio. Conventional options at 600 are more limited.
Cash-out refinance with a 620 credit score
A 620 score opens more options across conventional, FHA and VA lenders. Expect pricing to be better at lower LTVs, so taking a little less cash can sometimes improve your rate.
3. Seasoning and ownership requirements
Seasoning rules set how long you must own the home, or how old your current loan must be, before you can take cash out.
- Conventional (Fannie Mae): at least one borrower must have been on title for at least six months before the new loan closes, and an existing first mortgage being paid off must be at least 12 months old, measured note date to note date. There are limited exceptions, such as inherited property and "delayed financing" after an all-cash purchase.
- FHA: generally requires you to have owned and lived in the home as your primary residence for the 12 months before the refinance, with a record of on-time mortgage payments.
- VA: when you're refinancing an existing VA loan, the VA requires a waiting period measured from your first payment. Your lender will confirm the date you're eligible.
See Fannie Mae's cash-out refinance guidelines for the full conventional rules.
4. Debt-to-income (DTI) requirements
Lenders compare your total monthly debts, including the new mortgage payment, with your gross monthly income. Common limits:
- Conventional: often up to about 45%, and in some cases up to 50% with strong credit and reserves. Under Fannie Mae's automated underwriting, a DTI above 45% on a cash-out refinance requires six months of reserves.
- FHA: limits depend on automated underwriting results and compensating factors.
- VA: a 41% guideline combined with the VA's residual income test.
If you're taking cash out to pay off credit cards or other debts, those payments can drop out of the calculation when they're paid at closing, which often lowers your DTI. Our debt consolidation guide shows how that works.
5. Income and employment verification
You'll need to show stable income, usually with a two-year history. W-2 employees typically provide pay stubs and W-2s. Self-employed borrowers usually provide two years of tax returns, or can look at a bank statement loan, which uses deposits instead of tax returns. Retirement, Social Security, pension and VA disability income can count too.
6. Appraisal requirements
Most cash-out refinances require an appraisal to confirm your home's value, since the value determines how much cash you can take. Some conventional loans may qualify for an appraisal waiver based on automated underwriting, but that isn't guaranteed. VA and FHA cash-out refinances require their own appraisals.
7. Closing costs and reserves
A cash-out refinance is a new first mortgage, so you'll pay closing costs, often in the range of 2% to 5% of the loan amount, depending on the lender, loan size and location. They can usually be paid from the cash-out proceeds. Some programs also require reserves, meaning money left in savings after closing, especially at higher DTIs or on investment properties. Your Loan Estimate lists every cost so you can compare lenders.
Documents you'll need
- Recent pay stubs and two years of W-2s (or tax returns if self-employed)
- Two months of bank and investment statements
- Your current mortgage statement
- Homeowners insurance declarations page
- Property tax information
- HOA information, if applicable
- Photo ID
- For VA loans: your Certificate of Eligibility
When a cash-out refinance may not be the best fit
If your current mortgage rate is well below today's rates, replacing it with a new, higher-rate loan can cost more over time than borrowing only the amount you need with a HELOC or home equity loan. Compare both before deciding; our cash-out refinance vs HELOC guide walks through the math.
How to check whether you qualify
- Estimate your equity: home value times the maximum LTV, minus what you owe.
- Check your options in about 60 seconds with no impact on your credit.
- Talk to a licensed loan officer who can compare conventional, FHA and VA cash-out options across multiple lenders.
- Compare Loan Estimates before you choose.
FHA and VA cash-out details
FHA cash-out refinance
FHA cash-out refinances are limited to owner-occupied primary residences and generally allow up to 80% of the appraised value. HUD's handbook generally requires that you've owned and lived in the home for the previous 12 months, with on-time mortgage payments. FHA loans carry an upfront mortgage insurance premium and annual premiums, which add to the cost compared with a conventional loan at the same loan-to-value. FHA can still be a good fit when your credit is in the 600s and a conventional lender's pricing is higher.
VA cash-out refinance
For eligible veterans, a VA cash-out refinance can replace any existing loan (VA, conventional or FHA) and commonly allows borrowing up to 90% of value with the lenders we work with. The VA funding fee applies unless you're exempt, and the VA's residual income test is part of approval. It can also remove monthly mortgage insurance when you're refinancing out of a conventional or FHA loan. See VA cash-out refinance.
Tips to meet cash-out refinance requirements
- Take a little less cash if you're near an LTV limit or pricing tier; it can improve both approval odds and rate.
- Pay down revolving balances before applying to lift your score.
- Document home improvements you've made, which can support the appraisal.
- Pay off debts at closing to lower your debt-to-income ratio.
- Keep reserves in easy-to-verify accounts.
- Compare lenders: overlays, pricing and appraisal waiver eligibility differ.
What lenders look at beyond the minimums
Meeting every minimum doesn't guarantee approval. Underwriters look at the whole file, and a few things often decide borderline cases: how long you've been in your job, whether your income is rising or falling, how much you'll have left in savings after closing, and why you're taking cash out. A strong area can offset a weaker one. For example, lower LTV or healthy reserves can help a borrower with a credit score near a lender's cutoff.
Frequently asked questions
How much equity do I need for a cash-out refinance?
Enough to stay under the program's maximum LTV after the cash out. For a conventional loan on a one-unit primary home, that usually means keeping at least 20% equity.
What credit score do I need for a cash-out refinance?
It depends on the program and lender. Many conventional lenders look for the low-to-mid 600s or higher; FHA and VA lenders are often more flexible.
How soon can I do a cash-out refinance after buying?
For conventional loans, generally six months on title and a first mortgage at least 12 months old, with exceptions. FHA generally requires 12 months of ownership and occupancy.
What is the maximum LTV for a cash-out refinance?
Usually 80% for a conventional or FHA cash-out on a primary home. VA cash-out loans commonly allow up to 90% with the lenders we work with.
Can I do a cash-out refinance on a rental property?
Yes, typically at a lower LTV (often 75% for one unit and 70% for 2 to 4 units on conventional loans). DSCR loans are another option.
Do I need an appraisal for a cash-out refinance?
Usually yes. Some conventional loans may qualify for an appraisal waiver, but it isn't guaranteed.
Can I use cash-out funds for anything?
Generally yes: home improvements, debt payoff, tuition or other expenses. Your lender may ask about the purpose.
Does a cash-out refinance hurt my credit?
Applying involves a hard inquiry and a new loan, which can lower your score slightly at first. Paying off high-balance credit cards with the proceeds may improve it over time.
Are closing costs higher on a cash-out refinance?
Costs are similar to other refinances, but pricing adjustments for cash-out loans can make the rate slightly higher than a rate-and-term refinance.
Can I do a cash-out refinance if I'm self-employed?
Yes. You can qualify with tax returns, or look at bank statement programs that use deposits instead.
Related guides and tools
Sources
- Fannie Mae Selling Guide: B2-1.3-03, Cash-Out Refinance Transactions
- Fannie Mae: Eligibility Matrix
- U.S. Department of Housing and Urban Development: FHA Single Family Housing Policy Handbook 4000.1
- U.S. Department of Veterans Affairs: Cash-out refinance loan
- Consumer Financial Protection Bureau: Loan Estimate explainer