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Limited cash-out refinance: what it means

A limited cash-out refinance is Fannie Mae's name for a new loan on the same home that pays off your current first mortgage. It can be used to change the interest rate, the term or both.

In Spanish it is

Refinanciamiento con retiro limitado

Also written as: limited cash-out refinance transaction · limited cash-out refi

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Verified on October 17, 2026

2 official sources

See the whole dictionary

The full explanation

The new loan may include closing costs, points and prepaid items, but it can give you only a small amount of cash, with a cap Fannie Mae sets. It can also pay off an installment land contract signed long enough ago. If you want to take out more money, it is a cash-out refinance, with different rules.

An example

Alma has a mortgage with a high rate. She does a limited cash-out refinance to lower the rate and rolls the closing costs into the new loan; at closing she gets only a little cash.

You will see it in…

The Loan Estimate for a refinance
The loan application, where the loan purpose is marked
The Closing Disclosure, with any cash you receive

Words that go with it

You will rarely see this word alone. These are the ones that show up with it on the same papers.

Still confused by a paper?

A HUD-approved housing counselor can walk you through it. Agencies usually charge little or nothing, many work in Spanish, and they do not sell you anything.

What a housing counselor does See free help

Official sources

We sum up what these official sources say, in plain words. We add no rules they do not state; when a rule changes, the definition and its date change.

1. Fannie Mae · Selling Guide B2-1.3-02: Limited Cash-Out Refinance Transactions (external site) · in English · Verified on October 17, 2026
2. Fannie Mae · Selling Guide B2-1.3-03: Cash-Out Refinance Transactions (external site) · in English · Verified on October 17, 2026