For most Phoenix homeowners, a cash-out refinance has to leave about 20% equity in the home after the new loan funds, which means the new loan usually tops out near 80% of the appraised value. Eligible veterans can often go higher with a VA loan, and second homes and rentals are held to tighter limits.
The math in one minute
Take the appraised value, multiply by the maximum loan-to-value for your loan type, and subtract what you owe.
- Home appraises at $500,000.
- 80% of that is $400,000. That is the largest new loan.
- You owe $280,000 on the current mortgage.
- $400,000 minus $280,000 leaves $120,000 before costs.
Closing costs, prepaid interest and the new escrow account come out of that figure, so the wire you receive is smaller than the headline number. If you want to run your own figures first, use the cash-out refinance calculator.
How the limit changes by loan type
These are the published starting points. Individual lenders and investors can be tighter, and the agencies change them, so treat this as a map and confirm the current number before you plan around it.
- Conventional. Fannie Mae and Freddie Mac publish their cash-out limits in their selling guides. For a single-family primary residence the figure has long been 80% of value. Second homes and investment properties are lower, and two to four unit properties are lower again.
- FHA. HUD sets the FHA cash-out limit in Handbook 4000.1, also at 80% of value, and expects the home to have been your primary residence for the past year with the mortgage paid on time.
- VA. The VA itself permits a cash-out refinance up to the full appraised value for eligible veterans. Many lenders stop short of that, commonly at 90%. A VA funding fee applies unless you are exempt. See The VA Funding Fee Explained.
- Jumbo and non-QM. There is no single rulebook. Each investor sets its own limit, and the allowed percentage usually steps down as the loan amount goes up.
Equity is only the first test
Having the equity gets you in the door. The file still has to qualify.
- Credit. Cash-out is priced and underwritten more conservatively than a purchase or a simple rate-and-term refinance. A stronger score opens more room.
- Debt-to-income. The new, larger payment has to fit. If the cash is paying off other debts at closing, those payments can come out of the calculation. See Debt-to-Income Ratio Explained.
- Time in the home and on the loan. The agencies want some history before you pull equity. Fannie Mae, for example, generally looks for you to have been on title for six months and for the mortgage being paid off to be a year old. If you paid cash for the home recently, a different rule may help you. See Cash Offer, Then Delayed Financing.
- Payment history. Late mortgage payments in the past year are the fastest way to lose a cash-out approval.
- Occupancy. How you use the property drives both the limit and the price. Be accurate about it.
The appraisal sets the number
The value that counts is the appraiser's, not an online estimate and not what a neighbor says they sold for. In Phoenix that cuts both ways. A remodeled kitchen, a newer roof or a paid-off solar system can help. Deferred maintenance, an unpermitted addition or leased solar with a lien on title can hurt or stall the file.
Before the appraiser visits:
- List the improvements you made, with dates and rough costs.
- Have permits handy for additions, conversions and pools.
- Fix the small visible things: peeling paint, a broken window, a leaking faucet.
- If you know of strong recent sales nearby, hand the list to your loan officer, not the appraiser.
More in How a Home Appraisal Works.
What comes out of your cash
Plan for these before you commit the money to a contractor or a payoff.
- The payoff on your current loan, which includes interest through the day it is paid, so it is higher than the balance on your statement.
- Lender, title and escrow fees. See Arizona Closing Costs: Who Pays What.
- Prepaid interest and the first year of homeowners insurance if it is due.
- The opening deposit for your new escrow account. Your old servicer refunds the old escrow balance after payoff, usually a few weeks later.
On a primary residence there is also a three business day right to cancel after you sign, so the funds are released after that window closes, not on signing day.
When the 80% line is the wrong question
A cash-out refinance replaces your entire first mortgage. If the rate on that mortgage is well below what the market offers today, you would be repricing the whole balance to reach the equity. In that case a second lien is often the better tool, because it leaves the first mortgage alone. Compare the two in Cash-Out Refinance vs HELOC, and run the payback math in When Should I Refinance?.
Special cases
- Self-employed. Tax returns that show low net income do not have to end the conversation. See Self-Employed Cash-Out Refinance.
- Rental properties. Investors can often qualify on the property's rent instead of personal income. See DSCR Cash-Out Refinance.
- Recently listed homes. A home that was on the market recently may need to come off for a period before a cash-out is allowed.
How to get your real number
- Pull your current payoff estimate from your servicer.
- Decide how much cash you need, not how much you can get.
- Ask for a side-by-side: cash-out refinance against a second lien, with the fees and the total monthly outlay for each.
- Order the appraisal only after the rest of the file looks workable.
Why ask me
- I answer the question before I sell you anything. If renting, waiting or a different program is the better move, I will say so.
- Real numbers, not a calculator guess. I price your actual scenario, side by side, with the fees on the page.
- Every program under one roof. Conventional, FHA, VA, jumbo, and non-QM options like bank statement, DSCR and asset-based loans, so the program fits you instead of the other way around.
- You talk to the principal. Ricky Khamis is President of EPiQ Lending, NMLS #173141, lending in Arizona since 1999 and a 2025 Presidents Club Winner at CMG Home Loans. Direct line: (480) 999-9842.
EPiQ Lending is NMLS #1936984, at 7975 N. Hayden Road, Suite A-101 in Scottsdale. Verify all of it before you trust any of it: Ricky's EPiQ Lending profile, the Scottsdale branch, and the license itself at NMLS Consumer Access. Hold every lender to that standard, including us.
More plain-English answers in the Mortgage Education library.
Equal Housing Opportunity. This is general information, not a commitment to lend or an offer to extend credit. Program guidelines, eligibility requirements and documentation standards vary by investor and change over time. Rates, terms and program guidelines change and depend on credit approval, property appraisal and other qualifying factors. Not all applicants will qualify. This is not legal or tax advice; consult a qualified professional about your own situation.
Find out what your blended rate actually is
A refinance is shopped against the mortgage rate and decided by the blended rate across everything you owe. Tell me what is on the house and what you want gone, and I will run both.
Looking at a specific home? Send me the address and I will run the numbers: rickykhamis.com/analyze
