Tap your home or investment property's equity through Fannie Mae & Freddie Mac conventional financing. The most flexible cash-out path for second homes, investment properties, and non-homestead primaries — with strategic considerations for Texas homestead borrowers.
A conventional cash-out refinance replaces your existing mortgage with a new, larger loan based on Fannie Mae / Freddie Mac guidelines, and you receive the difference as cash at closing. It's the primary equity-access tool for owners of second homes, investment properties, and non-Texas-homestead primary residences — and a viable path for Texas homestead owners willing to follow 50(a)(6) rules.
The math is simple: (New Loan Amount) − (Existing Mortgage Balance + Closing Costs) = Cash to You. The "new loan amount" is capped by program LTV limits — 80% on primary, 75% on second homes and 1-unit investment, 70% on 2–4 unit investment.
Conventional cash-out is favored over FHA cash-out for borrowers with 680+ credit because it avoids lifetime FHA mortgage insurance. For Texas primary homesteads, any cash-out — conventional, FHA, or otherwise — is governed by Article XVI Section 50(a)(6) of the Texas Constitution, which adds an 80% LTV cap, 12-day waiting period, and in-person closing requirement on top of standard conventional rules.
For Texas primary homesteads, a conventional cash-out is automatically a 50(a)(6) constitutional cash-out — strict 80% LTV cap, 12-day cooling-off, mandatory in-person closing at title company, and the property remains "once 50(a)(6), always 50(a)(6)" for future refinances. For second homes, investment properties, or non-Texas residences, none of these restrictions apply — pure conventional rules govern. This page covers both scenarios; see the Texas Rules tab for the homestead-specific framework.
| Feature | Conv Cash-Out | FHA Cash-Out | Texas HELOC | VA Cash-Out |
|---|---|---|---|---|
| Max LTV — Primary | 80% | 80% | 80% (combined) | 90% |
| Available on Investment | Yes (75%) | No | Homestead only | No |
| Available on 2nd Home | Yes (75%) | No | No | No |
| Lifetime MIP/PMI | No (above 80%) | Yes — lifetime FHA MIP | None (line of credit) | No (funding fee only) |
| Min Credit | 620 | 580 | 680 typical | 620 (lender) |
| Disbursement | Lump sum at close | Lump sum at close | Revolving access | Lump sum at close |
| Rate Type | Fixed | Fixed | Variable typically | Fixed |
| TX Homestead Rules | 50(a)(6) applies | 50(a)(6) applies | 50(a)(6) applies | VA exempt |
| Property Type | Max LTV | Min Credit | Reserves | DTI Cap | Seasoning |
|---|---|---|---|---|---|
| Primary Residence (1-unit) | 80% | 620 | 0–2 mo PITIA | 50% | 6 mo ownership |
| Primary Residence (2–4 unit) | 75% | 660 | 2–6 mo PITIA | 50% | 6 mo |
| Second Home (1-unit) | 75% | 660 | 2 mo PITIA each property | 45% | 6 mo |
| Investment Property (1-unit) | 75% | 680 | 6 mo PITIA per property | 45% | 6 mo |
| Investment Property (2–4 unit) | 70% | 700 | 6 mo PITIA each property | 45% | 6 mo |
*Reserves = months of full PITIA payment in liquid/qualifying assets after closing. Lender overlays may impose stricter requirements than baseline Fannie/Freddie guidelines.
| Credit Score | 75% LTV Primary Rate | vs 760+ Base | Monthly P&I on $300K | 30-yr Interest Premium |
|---|---|---|---|---|
| 760+ | 6.625% | Base rate | $1,920/mo | Baseline |
| 740–759 | 6.875% | +0.25% | $1,970/mo | +$18,000 |
| 720–739 | 7.125% | +0.50% | $2,021/mo | +$36,360 |
| 700–719 | 7.375% | +0.75% | $2,072/mo | +$54,720 |
| 680–699 | 7.750% | +1.125% | $2,150/mo | +$82,800 |
| 660–679 | 8.125% | +1.50% | $2,228/mo | +$110,880 |
| 640–659 | 8.625% | +2.00% | $2,335/mo | +$149,400 |
| 620–639 | 9.250% | +2.625% | $2,469/mo | +$197,640 |
*Cash-out pricing carries a 25–50 bp premium over rate/term refi at the same credit/LTV. Rates illustrative for April 2026; investment property pricing typically adds 0.50–0.75% on top of these primary rates.
Fannie Mae and Freddie Mac price cash-out refinances 0.25–0.50% higher than rate/term loans because borrowers using cash-out refinances historically default at slightly higher rates — the equity cushion is intentionally being reduced. Investment-property cash-out adds another 0.50–0.75% on top. Plan accordingly: a cash-out at 75% LTV on an investment property may price 1.0–1.25% above a comparable rate/term refi on a primary residence.
| # Financed Properties | Max LTV (Cash-Out Inv 1-Unit) | Reserves Required | Notes |
|---|---|---|---|
| 1–6 properties | 75% | 6 mo PITIA per property | Standard guidelines |
| 7–10 properties | 70% | 6 mo PITIA each + ovly | Some lenders require add'l docs |
| 10+ properties | DSCR / Non-QM only | Per Non-QM lender | Conventional caps at 10 — see DSCR refi |
*Includes any property where the borrower has personal liability on a mortgage, regardless of ownership entity. Active investors hitting the 10-property cap typically transition to DSCR financing for further acquisitions.
All scenarios use April 2026 illustrative rates. Contact Ethan for current personalized pricing.
740 credit · Single-family rental · Pull equity to fund next acquisition
Texas primary homestead — 50(a)(6) compliant · 720 credit · $58K credit card debt
760 credit · Beach property · Pulling equity for primary residence remodel
50(a)(6) homestead · 750 credit · Kitchen/bath remodel + pool
700 credit · 2-unit purchased + rehabbed · Stabilizing as rental
Small cash needed · High closing costs · Low LTV available
The single biggest cost driver in conventional cash-out (after credit score) is your final LTV after the new loan. Each LTV tier above 60% adds Fannie Mae / Freddie Mac Loan-Level Price Adjustments (LLPAs) that translate directly into rate.
| LTV Tier | LLPA Hit | Approximate Rate Impact | Monthly P&I on $300K | Strategy Note |
|---|---|---|---|---|
| ≤ 60% | +0.375% | +0.10% | $1,920 | Lowest cost — leave equity in place |
| 60.01–70% | +0.625% | +0.15% | $1,940 | Most efficient cash-out tier |
| 70.01–75% | +0.875% | +0.22% | $1,964 | Common tier for investors |
| 75.01–80% | +1.125% | +0.30% | $1,989 | Max LTV for primary — premium pricing |
*LLPAs converted to rate impact at illustrative pricing. Actual conversion varies by lender pricing engine. The closer to max LTV you go, the more you pay in rate forever — sometimes leaving 5% extra equity in place saves $50/month.
| Adjustment | Typical LLPA | Notes |
|---|---|---|
| Investment property (vs primary) | +1.875% to +3.375% | Major hit — varies by LTV tier |
| Cash-out refi (vs purchase) | +0.375% to +1.125% | By LTV tier as above |
| 2-unit property (vs 1-unit) | +1.000% | Stack on top of investment hit |
| 3-4 unit property | +1.000% (most LTVs) | Same as 2-unit at most tiers |
| Total LLPAs (Inv 2-4 Unit Cash-Out @ 70%) | ~3.5–5.0 points | Often makes DSCR more competitive |
For Texas investors holding 2–4 unit rental properties, conventional cash-out LLPAs can stack to 4–5 points (paid as upfront cost or rolled into rate as ~1.5–2.0% rate increase). At that level, a DSCR loan often prices nearly identically — and DSCR doesn't require personal income documentation, fits in LLC vesting, and doesn't count toward the 10-property conventional cap. Always run both side-by-side with Ethan before locking.
Borrowers often default to maximum LTV ("get all my equity out"), but this is rarely optimal. Each LTV tier crossed adds LLPAs that translate to higher rate for the entire 30-year life of the loan.
| Strategy | Cash Pulled | New Rate | Monthly P&I ($400K home, $200K balance) | 30-Yr Interest |
|---|---|---|---|---|
| Stop at 60% LTV | $40,000 | 6.500% | $1,517 | $306,120 |
| Stop at 70% LTV | $80,000 | 6.750% | $1,816 | $373,760 |
| Stop at 75% LTV | $100,000 | 6.875% | $1,971 | $409,560 |
| Max at 80% LTV | $120,000 | 7.125% | $2,156 | $456,160 |
*Pulling the extra $80K from 60% to 80% LTV costs $639/month more for 30 years = $230,040 extra paid. The cash itself only delivered $80K. Effective interest cost on incremental $80K is dramatic. Make sure the use of proceeds justifies it.
| Strategy | Upfront Cost | Rate Impact | Best For |
|---|---|---|---|
| Pay Closing Costs from Cash Pulled | $0 out of pocket (deducted) | Standard rate | Most cash-out scenarios |
| Roll Costs into Loan Amount | $0 out of pocket (added to balance) | Standard rate | When cash needed = max LTV |
| Lender Credits Cover Costs | $0 | +0.25% to +0.50% rate | Plan to refi again in 2–3 yrs |
| Full Out-of-Pocket | $8K–$15K | Lowest available rate | Maximizing long-term cash pulled |
*Calculator does not enforce 50(a)(6) Texas homestead rules — for Texas primary homestead cash-out, additional 80% cap, 12-day waiting period, 2% closing-cost cap, and one-equity-loan-at-a-time rules apply. See Texas Rules tab.
As a NEXA Mortgage broker, Ethan accesses 200+ wholesale lenders simultaneously. Below are the key partners for conventional cash-out refinances across primary, second-home, and investment scenarios.
Cash-out refinances carry the largest retail-to-wholesale spread in the industry because retail banks add maximum margin on equity-access loans. NEXA's wholesale access can save 0.25–0.75% in rate on a cash-out — equivalent to $50–$150/month on a $300,000 loan, or $18,000–$54,000 over the loan's life.
| Factor | NEXA Broker (Ethan) | Big Bank Retail |
|---|---|---|
| Pricing | Wholesale — 0.25–0.75% lower | Retail — full margin |
| Investment property options | All major wholesale lenders | Limited; some banks won't do investor cash-out |
| Second home cash-out | Multiple specialists | Variable bank-by-bank |
| 10-property limit handling | Conv up to 10 + DSCR transition | Often hard cap at 4 properties |
| TX 50(a)(6) expertise | Daily volume — Ethan handles personally | Often pushed to specialty desk |
| Closing speed | 21–28 days standard | 30–45 days standard |
| Personal service | Direct line, Turkish & English | Call center / branch rotation |
If you are doing a cash-out refinance on your Texas primary residence (homestead), the loan is automatically subject to Article XVI Section 50(a)(6) of the Texas Constitution — regardless of whether the underwriting is conventional, FHA, or any other product. Section 50(a)(6) imposes the strictest cash-out rules in the United States. For non-homestead properties (second home, investment, out-of-state), 50(a)(6) does NOT apply and you get pure conventional rules.
If you do a cash-out refinance on your Texas homestead today, that property is permanently flagged as having a 50(a)(6) loan in its history. Every future refinance — even rate/term — must be done as a 50(f)(2) loan, meaning the 80% CLTV cap and 12-day waiting period continue to apply forever, even when no cash is being pulled out. This is a one-way decision. Many borrowers regret a small cash-out years later when they want to refinance up to 95% LTV after home value appreciation. Make sure the use of proceeds is worth this permanent restriction.
A cash-out refinance does not trigger property reassessment in Texas — your appraised value for tax purposes stays governed by your county appraisal district (CAD), not by your refinance appraisal. Your homestead exemption remains in place. Your 10% appraisal cap protections continue. The new escrow account will be set up at closing using current tax bills; expect some adjustment if your current escrow is short or surplus.
| Phase | Standard Conv (Non-Homestead) | TX 50(a)(6) Homestead | Notes |
|---|---|---|---|
| Application to Processing | 1–3 days | 1–3 days | Same start |
| 12-Day Notice Period | Not required | 12 days mandatory | Cannot waive |
| Appraisal | 7–14 days | 7–14 days | Concurrent with 12-day clock |
| Underwriting | 5–10 days | 5–10 days | Concurrent |
| CD Issued to Closing | 3 days (federal) | 3 days (federal) | Same federal rule |
| 3-Day Rescission | 3 business days | 3 business days | Federal right |
| Total: Application to Funded | 21–28 days | 30–40 days | 12-day notice extends timeline |
| Condition | What's Needed | How to Avoid Delay |
|---|---|---|
| Large deposit explanation | Written letter + source docs (gift, sale, etc.) | Document any deposit >50% of monthly income |
| Property tax verification | Current tax bill from county appraisal district | Pull from county website before applying |
| HOA certification | Master insurance + budget + dues confirmation | Get HOA contact info upfront |
| Insurance binder | New policy effective at closing | Notify your agent 14 days before close |
| Reserves verification (investor) | Bank/brokerage statements showing 6 mo PITIA per property | Don't move large amounts during processing |
| 50(a)(6) Texas homestead form | Signed Acknowledgment of Fair Market Value | Review Texas-specific docs with Ethan |
The cost of a cash-out is permanent — you're trading equity for cash plus a higher monthly payment for 30 years. Some uses are clearly worth it; others rarely are. Here's how to think about each.
Pull equity from existing rental at 75% LTV, use as 20–25% down payment on next acquisition. Common BRRRR variant. Works if new property cash flow covers both increased payment on old loan and new loan.
Generally Strong UseCredit cards at 22–28% APR or personal loans at 12–18% APR can be paid off with mortgage rate ~7%. Math works strongly when balances are large ($30K+). But: requires discipline not to re-charge cards after consolidation.
Strong if DisciplinedKitchen remodel ($60–80K), pool ($50–75K), addition ($100K+). Improvements that increase home value can effectively be partial self-financing if value lift covers the equity used. ROI varies by project.
Project-DependentPulling equity for tuition can be cheaper than parent PLUS loans (~9% with origination fees) but loses federal student loan protections (deferment, IDR plans, forgiveness). Generally only when other options exhausted.
Caution RequiredMortgage rate beats most business loan rates and SBA timelines. But: putting your home equity into a single business concentrates risk. SBA 7(a) often a better tool. Generally a last resort, not first.
High-Risk Use"Borrow at 7% to invest at 10%+" is a leveraged equity arbitrage. Mathematically possible but tax-disadvantaged (mortgage interest on cash-out for non-home use is not deductible) and exposes you to market timing risk.
Sophisticated Investors OnlyMajor medical bills or in-home care funding. Often a good use compared to high-interest medical credit cards. Check if HELOC offers better flexibility for irregular drawdowns.
Compare to HELOCPull equity from primary residence to buy land in Fredericksburg, Wimberley, Marble Falls, etc. Land loans typically require 20–30% down at higher rates (8–10%) — using primary mortgage cash-out at 7% can be more efficient.
Cost-Efficient Path| Debt Type | Typical APR | $50K Monthly Pmt (5-yr) | Conv Cash-Out P&I (30-yr @ 7.125%) | Savings |
|---|---|---|---|---|
| Credit Cards | 22–28% | $1,380–$1,500 | $337/mo | $1,000+/mo |
| Personal Loans | 10–18% | $1,062–$1,270 | $337/mo | $725–$933/mo |
| Auto Loans | 6–10% | $967–$1,062 | $337/mo | $630–$725/mo |
| Student Loans (Private) | 7–13% | $990–$1,140 | $337/mo | $650–$800/mo (lose protections) |
| Federal Student Loans | 5–8% | $944–$1,015 | $337/mo | Don't consolidate — lose IDR / PSLF |
*Total interest paid over 30 years on cash-out is much higher than 5-year debt amortization. The decision is about monthly cash flow vs. lifetime cost. If you'll prepay the cash-out aggressively, the math improves significantly.
Vacations, weddings, depreciating purchases (cars/boats), speculative investments (crypto, options), or short-term consumption. The 30-year amortization of cash-out means a $30K vacation today costs ~$72,000 over the loan's life. Match the financing duration to the asset's useful life — a 30-year mortgage to fund a 2-week vacation is structurally backwards.
Ethan provides a free equity-access analysis for Texas homeowners and investors — including TX 50(a)(6) homestead vs. non-homestead pathways. Get the numbers in one call. Turkish & English.
