Refinancing · Cash-out
How much equity do you need for a cash-out refinance?
TL;DR: For a conventional cash-out refinance on a single-family home you live in, you generally need to keep at least 20% equity, the home's value minus what you owe, after the refinance. Maximum cash is roughly (home value × 0.80) minus the payoff amounts of loans secured by the home, the balances of any secured loans that will remain, and closing costs. For a HELOC kept open, count the greater of its full credit limit or outstanding balance, without counting both. Your lender must confirm which loans may remain and which borrowing limits apply. Taking cash out increases the loan balance and reduces your equity.
For a conventional cash-out refinance on a 1-unit principal residence, the new loan is generally capped at 80% of the value set by an appraisal, a professional estimate of your home's value. If an appraisal is waived, an accepted property value is used instead; waiver eligibility can require a lower borrowing limit. A 1-unit principal residence is a home with one housing unit that you live in as your main home. The loan first pays off your current mortgage and any other secured loans being paid off. Secured loans or HELOC credit limits that remain also use room under the cap, reducing the cash available after closing costs. Read how a cash-out refinance works for the full process.
There are two calculations: whether the new loan and any retained secured debt fit under the applicable limits, and how much cash remains after loan payoffs and closing costs.
What is the 80% LTV rule?
An 80% cap on loan-to-value (LTV), your loan balance divided by your home's value, means the new loan cannot exceed 80% of the appraised value. The new loan includes the balances being paid off, cash and any financed costs. Any secured loans that remain also count toward the combined borrowing limit; for a HELOC kept open, the greater of its full credit limit or outstanding balance is counted. Flip it around and it's an equity floor: at least 20% of the home's value stays yours.
That equity is still yours. If you sell, any proceeds left after paying the mortgage debt and selling costs come to you. The amount depends on the sale price and what you owe at the time. Keeping equity provides a cushion if home prices fall. It reduces the risk of owing more than the home is worth, but it does not eliminate that risk.
How to calculate your maximum cash-out
Three steps, with your own numbers:
Multiply your home's value by 0.80. Use an estimate for planning. The appraisal or accepted valuation sets the final value; a lower LTV limit may apply if the appraisal is waived.
Subtract all loans secured by the home. Use payoff amounts for loans being paid off and outstanding balances for loans that will remain. For a HELOC kept open, use the greater of its full credit limit or outstanding balance; do not count both. Your lender must confirm which loans may remain and which borrowing limits apply.
Subtract closing costs. Use the costs quoted for your loan. Athena's fee policy covers the lender's work, including underwriting, the lender's review of your finances and property. Your quoted rate also depends on debt-to-income (DTI), your monthly debt payments compared with your monthly income.
No lender fees. Zero points required.* Third-party and prepaid costs (appraisal, credit, title, recording, and interest from closing to your first payment) still apply.
Points are optional upfront charges paid to get a lower interest rate.
*Athena charges no origination, application, processing, underwriting, or rate-lock fee. The rate we quote requires no discount points; you may choose to buy your rate down for an additional charge. You'll still pay third-party and prepaid closing costs — appraisal, credit, title, recording, and interest from closing to your first payment. Your rate depends on credit, loan amount, LTV, DTI, and market conditions at lock.
Third-party and prepaid costs can include appraisal, credit, title, recording, tax service and prepaid interest. Your Loan Estimate itemizes the amounts for your loan.
Three scenarios assuming the current mortgage is the only loan secured by the home (hypothetical example, not an offer or a quote):
| Home value | 80% cap | Current balance | Room under the cap | |
|---|---|---|---|---|
| Plenty of equity | $400,000 | $320,000 | $180,000 | $140,000 |
| Moderate equity | $350,000 | $280,000 | $240,000 | $40,000 |
| Not enough | $300,000 | $240,000 | $250,000 | None — balance already exceeds the cap |
"Room under the cap" is before closing costs, so cash in hand is lower if costs are paid from the proceeds. In the first scenario, a $320,000 loan pays off the $180,000 balance and leaves $140,000 before costs. The mortgage balance increases by $140,000, which must be repaid with interest.
What if you don't have enough equity?
If the current balance is at or above 80% of the home's value, there is no room for cash under this cap. Payments toward the loan balance can reduce it, and a rise in the home's value can increase equity. If the goal is a different rate or loan length, a rate-and-term refinance may allow a higher LTV; any financed costs can still increase the balance and reduce equity.
A second loan adds debt secured by the home and reduces the equity available as a cushion. Athena currently offers conventional rate-and-term and cash-out refinancing, not HELOCs or second mortgages. A home equity line of credit (HELOC) is a credit line secured by the home; a second mortgage is an additional loan secured by a home that already has a mortgage.
Does the appraisal decide everything?
Usually. An appraisal sets the property value used in the borrowing calculation. For some eligible loans, the automated underwriting system accepts a submitted property value instead, and the lender may waive the appraisal. That accepted value is used in the LTV calculation. Waivers can have lower LTV limits; other eligibility requirements also apply.
At an 80% cap, every $1 reduction in value lowers the maximum loan by 80 cents, assuming the balance and costs stay the same. For example, a $10,000 lower appraisal reduces the maximum loan by $8,000. Use the final appraised or accepted value and updated loan figures when comparing the loan.
What about Texas?
Texas cash-out refinancing has an 80% cap on the loan and other debt secured by the home, measured against its fair market value, plus restrictions on fees, timing and future refinances. Athena offers cash-out refinancing in Texas under Article XVI, Section 50(a)(6). For a primary-residence cash-out, you sign the final papers in person at a lender's, attorney's, or title company's office rather than online; disclosures carry the remaining limits and timing. If your current Texas mortgage is a Section 50(a)(6) home-equity loan, refinancing without additional cash does not automatically convert it to a non-home-equity loan. Depending on what the lender offers and your eligibility, you may refinance into another home-equity loan or choose a non-home-equity conversion under Section 50(f)(2). That conversion has its own notice and timing rules and changes some borrower protections.
Frequently asked questions
Can I do a cash-out refinance with 15% equity?
Generally not on a conventional loan — you'd already be above the 80% LTV cap before taking any cash. Rate-and-term refinancing may still be an option.
Does the 80% rule apply everywhere?
It is the general maximum LTV for a conventional cash-out refinance on a 1-unit principal residence. Second homes, rental properties and multi-unit buildings can have different limits, and Texas has its own rules.
How do I find out my home's value?
For planning, use recent comparable sales in your neighborhood rather than a single online estimate. The appraisal ordered during your application, or the accepted value if the appraisal is waived, sets the value used for the loan.
Does checking my options affect my credit?
At Athena, checking your options uses a soft credit pull and does not affect your credit score. If you continue the application, Athena requests a full credit report from one or more consumer reporting agencies. This is a hard inquiry and may affect your credit.
Consumer reporting agencies are companies that collect credit information and provide credit reports.
Is it bad to use all my available equity?
The cap leaves at least 20% equity at the appraised value. Keeping less equity means a smaller cushion against a fall in home value and a larger loan to repay.
How much equity will I have left afterward?
At least 20% of the appraised value if you borrow the maximum under the cap, and more if you borrow less. Subtract the new mortgage balance and the outstanding balances of any other loans still secured by the home from the appraised value to calculate the equity remaining.
Want to check your options? See your cash-out options at athenamoney.co.
Related reading
Read how refinancing a mortgage works and when refinancing is worth it, or explore Athena's refinancing overview.
About this article
Written by Pete Amstutz, President and Co-Founder (NMLS ID: 2771958)
Published August 27, 2026
Updated September 28, 2026
Sources:
- Athena, refinancing overview, for product and application information.
- Athena, pricing information, for the fee policy and closing-cost context.
- Your Loan Estimate and Closing Disclosure, for your loan's costs and terms.
- Athena, licensing information, and NMLS Consumer Access, Athena company record, for lender identification and licensing.
- Athena, original article, published August 27, 2026.
- Texas Constitution, Article XVI, Section 50, for the cash-out legal reference.
NMLS #2771910. Equal Housing Lender.