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.