California loan guide
Cash-Out Refinance in California
A cash-out refinance replaces your current mortgage with a larger new first mortgage and pays the difference to you in cash. Conventional and FHA cash-out loans cap a one-unit principal home at 80% of value; a VA cash-out loan can reach 100% of value, funding fee included, for eligible borrowers.
In this guide
Key numbers
The cash-out limits by program differ more than most borrowers expect:
| Item | Figure | Source |
|---|---|---|
| Conventional cash-out maximum, one-unit principal home | 80% of value | Fannie Mae Selling Guide B2-1.3-03 and Eligibility Matrix |
| FHA cash-out maximum | 80% of adjusted value; combined loans also capped at 80% | HUD Handbook 4000.1, II.A.8.d |
| VA cash-out maximum | 100% of reasonable value, funding fee included | 38 CFR 36.4306 |
| Conventional title seasoning | At least one borrower on title at least 6 months before disbursement, with stated exceptions | Fannie Mae Selling Guide B2-1.3-03 |
| Conventional first-mortgage seasoning | First mortgage being paid off at least 12 months old, note date to note date, with stated exceptions | Fannie Mae Selling Guide B2-1.3-03 |
| VA funding fee, cash-out | 2.15% first use; 3.3% after first use | VA funding fee chart, effective April 7, 2023 |
Last reviewed: October 14, 2026.
Who it fits, and who should look elsewhere
Fits when: the cash has a defined use and amount, the new payment at the full new balance fits the budget with room to spare, and you will hold the loan long enough that the higher total interest is a price you accept for that use. Test the amount first: value × 80% − current payoff − closing costs = cash available on a conventional or FHA loan.
Look elsewhere when: the amount is small enough for a home equity line or loan that leaves the first mortgage untouched, the first mortgage is under 12 months old on a conventional loan, or no borrower has held title for 6 months and no exception applies. A rate-and-term refinance fits when no cash is needed.
Requirements: program rule vs lender overlay
- Program rule — conventional seasoning: at least one borrower must have been on title at least 6 months before disbursement, and the first mortgage being paid off must be at least 12 months old, note date to note date. Exceptions cover property acquired by inheritance, property awarded in a divorce or separation, time held by a borrower-controlled LLC or revocable trust, a co-borrower buyout under a legal agreement (for the 12-month rule), and the delayed financing exception for a recent cash purchase.
- Program rule — conventional reserves trigger: on a DU file with a debt-to-income ratio above 45%, 6 months of reserves are required.
- Program rule — property listed for sale: a home listed for sale must be taken off the market on or before disbursement.
- Program rule — FHA: maximum 80% of adjusted value, and the combined amount of the first mortgage and any subordinate liens is also capped at 80%.
- Program rule — VA: full underwriting and appraisal, current occupancy, and a net tangible benefit finding with a loan comparison and equity estimate given within 3 business days after application and again at closing.
- Lender overlay: a lower LTV cap than the program maximum, a higher score floor, or extra reserves beyond the DU trigger are lender choices. A VA lender cap below 100% is an overlay; the program limit is 100% including the fee.
Real costs
| Cost | Effect |
|---|---|
| Closing costs | Come out of the cash: cash = new loan − payoff − costs. Every $1,000 of costs is $1,000 less in hand at the same loan amount. |
| Cash-out pricing adjustments | Conventional cash-out loans carry loan-level price adjustments by LTV and credit score under Fannie Mae's matrix, on top of base pricing. |
| VA funding fee, if VA | 2.15% or 3.3% of the loan amount. On a $720,000 loan at first use that is $15,480, counted inside the 100% value limit. |
| Higher balance interest | Interest is charged on the full new balance for the full new term. The worked example puts a dollar total on that cost. |
Worked California example: conventional cash-out in Riverside County
Assumed rates used only for arithmetic; not a quote. Home value: $900,000. Maximum conventional loan: $900,000 × 80% = $720,000. Current loan: $480,000 balance, 6.25% rate, 300 months left, payment $3,166.41. Total interest left on the current loan: $3,166.41 × 300 − $480,000 = $469,923.
New loan: $720,000 at an assumed 7% over 360 months. Payment: $4,790.18 — an increase of $4,790.18 − $3,166.41 = $1,623.77 a month. Closing costs: $7,200. Cash in hand: $720,000 − $480,000 − $7,200 = $232,800. Total interest on the new loan if held 360 months: $4,790.18 × 360 − $720,000 = $1,004,464. Extra interest against keeping the current loan to its end: $1,004,464 − $469,923 = $534,541. That $534,541 is the long-run price of $232,800 of cash at the assumed rates if the loan is held to term; paying the new loan down faster cuts it.
California specifics
California adds no state LTV cap, seasoning period, or cash-out tax. The state-level items that change the closing figures are county recording charges and prepaid county property taxes and insurance in escrow, listed on the Closing Disclosure. Seasoning, LTV caps, and benefit tests are agency or federal rules, the same in Riverside County as in any other county, apart from the county conforming limit that decides whether a large cash-out loan is conforming or jumbo.
Process, step by step
- Run the seasoning gates before anything else, in order: at least one borrower on title for 6 months or more, then a first mortgage at least 12 months old measured note date to note date, checking the stated exceptions before treating a shortfall as final. A file that fails seasoning cannot be cured by a higher appraisal.
- Size the request against the value cap next: value multiplied by 80% on a conventional or FHA file, minus payoff and closing costs, gives the largest cash figure the file can produce.
- On application, the Loan Estimate follows inside three business days, and the Closing Disclosure must be delivered at least three business days before signing, leaving a window to audit the cash figure before the signing appointment.
- The appraisal then fixes the value used in the cap division, while underwriting works through income, debts, title, and — on a DU file over the 45% debt-to-income trigger — the 6 months of reserves the program requires.
- At the Closing Disclosure, rebuild the cash line from its parts: new loan amount, minus the payoff, minus every closing cost, equals cash to the borrower; a mismatch in that arithmetic stops the signing.
- Because a cash-out refinance on a principal dwelling pledges the home for new money, signing is followed by a three-business-day pause before funding. Written cancellation delivered by midnight of the third business day — counted from the latest of signing, receipt of the rescission notice, and receipt of all material disclosures — unwinds the loan. A same-creditor refinance with no new money can sit outside the cancellation right, but cash-out proceeds are new money and keep the right. When the pause ends unused, the old loan is paid off and the cash is released by the method shown on the closing statement.
Mistakes and downsides, with numbers
- Applying before seasoning is met. A conventional cash-out at month 8 of the current first mortgage fails the 12-month rule no matter the equity. Waiting is the only cure, outside the stated exceptions.
- Spending the gross figure. At an 80% cap on a $900,000 home, the ceiling is $720,000 — not $720,000 of cash. Payoff and costs come first; the worked example leaves $232,800, not $240,000.
- Ignoring the payment jump. The example payment rises $1,623.77 a month. Debt consolidation that removes card payments must be counted net: add the new payment, subtract only debts actually paid off in full at closing.
- Turning unsecured debt into debt secured by the home. Missed card payments do not put a home at risk; missed mortgage payments do. The larger balance is a first lien on the home.
Questions and answers
How much cash can I take out?
Cash equals the maximum loan for your program minus the payoff and closing costs. On a conventional loan for a one-unit principal home, the maximum loan is 80% of value.
What are the waiting periods for a cash-out refinance?
For a conventional loan, at least one borrower must have held title for at least 6 months before disbursement, and the first mortgage being paid off must be at least 12 months old, note date to note date. Exceptions cover inheritance, a divorce award, certain LLC or trust holding periods, a co-borrower buyout, and delayed financing after a cash purchase.
Can I do a cash-out refinance if I just bought the home for cash?
The delayed financing exception can allow it within the first 6 months if the purchase was arm's length, no mortgage financing was used, funds are documented, and the new loan does not exceed the documented purchase investment plus financing of closing costs, subject to the cash-out LTV cap.
Is VA cash-out really available to 100%?
The program limit is 100% of reasonable value including the funding fee. Many lenders set a lower cap as an overlay, so a 90% quote is a lender limit, not the VA limit.
When do I receive the cash?
Cash is disbursed at funding, after the rescission period expires on a principal dwelling. Signing day is not funding day on a refinance.
What if my home was listed for sale?
A conventional cash-out loan requires the home to be taken off the market on or before disbursement. A current listing blocks funding until that condition is met.
Sources
- Fannie Mae Selling Guide B2-1.3-03, Cash-Out Refinance Transactions — https://selling-guide.fanniemae.com/sel/b2-1.3-03/cash-out-refinance-transactions — dated December 10, 2025; fetched October 14, 2026.
- HUD Handbook 4000.1, II.A.8.d — fetched October 14, 2026.
- 38 CFR 36.4306 — fetched October 14, 2026.
- VA, Funding fee and closing costs — rates effective April 7, 2023; fetched October 14, 2026.
- 12 CFR 1026.23, Right of rescission — fetched October 14, 2026.
- CFPB, Closing Disclosure timing — fetched October 14, 2026.
