Conventional and refinance · Educational guide

Conventional Cash-Out Refinance Guide

How Fannie Mae and Freddie Mac cash-out refinances work: loan-to-value limits, seasoning, occupancy and pricing.

  • Cites official sources
  • No forms, no tracking
  • Not a lender

What makes it conventional

A conventional loan is not insured by a government agency. Most follow Fannie Mae or Freddie Mac guidelines and stay within the FHFA conforming loan limit.

Key rules

  • Maximum LTV: lower for cash-out than for purchases, and lower again for second homes, investment properties and multi-unit homes.
  • Seasoning: a minimum period of ownership on title, and on the existing first lien, before a cash-out refinance.
  • Mortgage insurance: the cash-out maximum LTV generally keeps these loans below the level where PMI is needed.
  • Credit and income are fully underwritten.

Pricing

Fannie Mae and Freddie Mac apply loan-level price adjustments for cash-out based on credit score and LTV. Your lender’s quote reflects these.

Appraisal alternatives

Some loans qualify for a value acceptance (appraisal waiver) or alternative valuation, determined by the automated underwriting system.

Official sources: Fannie Mae Single-Family and Freddie Mac Single-Family.

Keep reading

This page is general education. Program rules change; confirm current requirements with the official sources linked here and with a licensed lender.