Cash-Out Refinance in Florida: How Much Equity You Need

A cash-out refinance replaces your current mortgage with a new, larger one, and you pocket the difference in cash. It is a common way to pay off higher-rate debt, cover a renovation, or handle a big expense using equity you already have. But you cannot borrow against all of your equity. Every loan program sets a limit on how much of the home's value your new loan can reach, and that limit is what actually decides how much cash you can get.

What loan-to-value means

Loan-to-value, or LTV, is your new loan amount divided by the home's appraised value. If your home appraises at $400,000 and your new loan would be $320,000, that loan is at 80% LTV. The lower the LTV, the more equity you are leaving in the house.

Cash-out refinances are measured against an LTV cap, not a dollar amount, because home values vary too much for a flat number to make sense. The cap is really an equity floor stated backwards: an 80% LTV cap means at least 20% of the home's value has to stay as equity after your cash-out.

The cap depends on your loan type

• Conventional (Fannie Mae): cash-out refinancing on a primary residence, one-unit home, tops out at 80% LTV, per Fannie Mae's Eligibility Matrix. That means at least 20% equity has to remain in the home after the new loan closes.
• FHA: cash-out refinances are also limited to 80% LTV, per HUD Mortgagee Letter 2019-11. Same 20% equity floor as conventional.
• VA: VA cash-out loans can go up to 100% of the home's appraised value under VA rules, per VA Circular 26-19-05 and 38 CFR 36.4306. That is meaningfully more room than conventional or FHA. In practice, many individual lenders set their own cap lower than 100%, so the number you actually get approved for depends on the lender, not just the VA rule. Confirm the real limit with your lender at application, not from the VA maximum alone.

A quick example

Say your home appraises at $400,000 and you owe $250,000 on your current mortgage. On a conventional cash-out refinance capped at 80% LTV, your new loan could go up to $320,000 (80% of $400,000). Subtract the $250,000 payoff and you are left with roughly $70,000 available, before closing costs and any lender fees come out of that number.

Run the same home through an FHA cash-out and you land in the same place, since FHA uses the same 80% cap. Run it through VA and the ceiling moves up toward the full appraised value, though your actual approved amount still depends on your lender's own limit.

Why the equity floor exists

The equity you leave in the home is a cushion, for you and for the lender. If home values dip after you refinance, that cushion is what keeps you from owing more than the house is worth. It is the same reason a purchase loan asks for a down payment: some amount of your own stake in the property, rather than the lender's, sitting between you and being underwater on the loan.

Before you apply, know two numbers

You need your current payoff balance, which your servicer can give you exactly, and a realistic sense of your home's current value, which an appraisal during the refinance process will confirm. Zillow-style estimates are a starting point, not the number underwriting will use. Until you have both numbers, any cash-out figure is a guess.

Find out your real number

Your available cash depends on your specific loan type, your current balance, and what your home appraises for today, not a rule of thumb. North Florida Mortgage brokers across multiple wholesale lenders, so we can also tell you where a lender's own cap differs from the program maximum.

Call North Florida Mortgage at 904-389-4635. We will walk through your numbers and tell you what a cash-out refinance would actually put in your pocket.