Cash-Out Mortgage Guidelines On Home Loan Programs


This BLOG On Cash-Out Mortgage Guidelines On Home Loan Programs Was PUBLISHED On September 25th, 2020

Cash-Out Mortgage Guidelines
Gustan Cho Associates

The real estate market is hot everywhere in the United States.

In this blog, we will cover cash-out mortgage guidelines on government and conventional loans. We will also cover cash-out mortgage guidelines on non-qm loans.

Cash-Out Mortgage On Loan Programs

To be eligible to do a cash-out mortgage, homeowners need to have equity in their homes.

  • Cash-Out Mortgage Guidelines allows a certain amount of loan to value
  • Homeowners can use their cash-out proceeds from their refinance for whatever purpose they like. Proceeds are tax-free

Homeowners do not have to pay any taxes on the proceeds they get from their refinance mortgages.

Alex Carlucci is a senior vice president at Gustan Cho Associates and one of the top refinance loan officers at Gustan Cho Associates Mortgage Group. Here is how Alex Carlucci explains Cash-Out Mortgage Guidelines:

A cash-out refinance is one in which a homeowner replaces their mortgage with a bigger one. The difference between what is owed and what is borrowed goes back to the homeowner in cash. As an example, a homeowner owes $175,000 on a home, and refinance their mortgage for a new loan amount of $200,000. This would be a cash-out refinance, netting the homeowner $25,000 of their home’s equity, less closing costs. Generally, homeowners will do a cash-out refinance to tap into home equity without having to sell their home. They accomplish the same purpose as home equity loans, but cash-out refinances are different. A home equity loan is separate financing on top of your first mortgage. That’s why these loans are often called second mortgages. A cash-out “refi”, though, replaces your first mortgage entirely.

Benefits Of Cash-Out Mortgage Refinancing

Homeowners can use proceeds from their refinance on whatever purpose they deem fit. Here are common uses most homeowners use proceeds from the refinance:

  • To consolidate debts
  • For improving their homes and/or renovations
  • Long overdue vacation and/or travel
  • Educational expenses for their children or themselves
  • Child and/or Senior Care
  • Investments such as investments in securities or to purchase other real estates
  • Retirement
  • Big-ticket purchases such as buying a new car, boat, RV

Cash needed for a wedding, funeral, graduation, or other special events.

Cash-Out Loan To Value Guidelines

what are Cash-Out Mortgage Guidelines On Loan To Value

The number of cash homeowners can take out is dependent on the loan to value of the home.

  • The maximum loan to value on FHA Loans is 85% LTV
  • In order to do a cash-out refinance on FHA Loans, homeowners need to have owned the home for at least 12 months
  • Maximum FHA Loan Limits is capped at $314,827 in most areas
  • High-cost areas have higher FHA Loan Limits
  • VA allows 100% LTV on cash-out refinance on single-family homes
  • THE maximum VA Loan Limit is $484,350. In high-cost areas, high balance VA Loan Limit is usually capped at $726,525
  • USDA does not allow cash-out refinance
  • Fannie Mae and Freddie Mac allow up to 80% LTV cash-out refinance on single-family homes
  • Jumbo Loans will allow up to 70% to 80% on cash-out refinances dependent on the dollar size
  • NON-QM Loans allow up to 80% LTV

For more information and qualifying for a cash-out refinance mortgage, please contact us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at We are available 7 days a week, evenings, weekends, and holidays. We are direct lenders with no overlays on government and conventional loans. We are also non-QM mortgage experts.

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