Cash-Out Refinance in Tennessee: How Much You Can Take Out
Conventional, FHA and VA cash-out limits and waiting periods, what it costs, a Robertson County example, and when a HELOC fits better.
Quick answer
A cash-out refinance replaces your mortgage with a larger one and pays you the difference in cash at closing. In Tennessee, conventional and FHA cash-out loans generally go up to 80% of your home’s appraised value, and VA rules allow up to 100% for eligible veterans.
You pay closing costs again and the new loan carries a new rate on the whole balance, so it’s worth comparing against a HELOC or home equity loan.
Rules on this page were verified against Fannie Mae, HUD, VA and IRS sources on October 27, 2026. Program terms and eligibility are subject to Fannie Mae, Freddie Mac, FHA, VA and lender guidelines and may change.
At a glance: cash-out refinancing in Tennessee
- How much: up to 80% of value on conventional and FHA; up to 100% on VA (lenders may cap lower)
- Waiting periods: 6 months on title and a 12-month-old first mortgage (conventional); 12 months in the home (FHA)
- Costs: commonly about 3%–6% of the loan, per Freddie Mac, plus the VA funding fee or FHA mortgage insurance
- Uses: home improvements, debt payoff, tuition, buying out a co-owner
- Alternatives: HELOC or home equity loan, which keep your current first mortgage
- Taxes: interest on the cash is deductible only if it improves the home
How does a cash-out refinance work?
You take out a new first mortgage for more than you owe. The new loan pays off your current mortgage and closing costs, and the rest comes to you as cash, usually wired a few days after you sign. Because it’s a refinance of your home, federal law gives you a three-business-day right to cancel before the money is released.
The cash-out refinance is one of three ways we refinance. A rate and term refinance changes only the rate or term, with no cash out. Debt consolidation is a cash-out refinance where the cash pays off other debts at closing. See all of them on the refinance page.
How much cash can you take out?
Lenders cap the new loan at a percentage of the appraised value (the loan-to-value ratio, or LTV). Your cash is roughly that maximum, minus what you owe, minus closing costs you roll in:
| Loan type | Maximum loan (primary home) | Before you can cash out | Other rules |
|---|---|---|---|
| Conventional | 80% of value (1 unit); 75% for 2–4 units | At least one borrower on title 6 months; the first mortgage being paid off at least 12 months old | Mortgage insurance not required at 80% or below |
| FHA | 80% of value | Owned and lived in the home 12 months; 12 months of on-time payments | Upfront and annual FHA mortgage insurance |
| VA | Up to 100% of value; many lenders cap at 90% | If the current loan is VA: 210 days from the first payment and 6 payments made | VA funding fee 2.15% first use, 3.3% after, unless exempt; net tangible benefit test |
| USDA | USDA guaranteed loans don’t allow cash-out refinancing. A USDA owner would refinance into a conventional, FHA or VA cash-out loan. | ||
Sources: Fannie Mae Selling Guide B2-1.3-03 and Eligibility Matrix; HUD Handbook 4000.1; 38 CFR 36.4306; VA funding fee, checked October 27, 2026. Lenders can set lower limits and higher credit requirements. Program terms and eligibility are subject to agency and lender guidelines and may change.
What does a cash-out refinance look like on a $400,000 home in Robertson County?
Say your home appraises at $400,000 and you owe $220,000:
| Item | Conventional or FHA (80%) | VA at a 90% lender cap |
|---|---|---|
| Appraised value | $400,000 | $400,000 |
| Maximum new loan | $320,000 | $360,000 |
| Current mortgage payoff | $220,000 | $220,000 |
| Available before closing costs | $100,000 | $140,000 |
| Equity left in the home | $80,000 (20%) | $40,000 (10%) |
Illustrative example only. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Closing costs, prepaid taxes and insurance, the VA funding fee and FHA mortgage insurance are not shown and reduce the cash you receive. Program terms and eligibility are subject to agency and lender guidelines and may change.
To try your own numbers, including the property tax for a specific Tennessee address, use the Tennessee mortgage calculator.
What can you use cash-out money for?
Anything legal. The most common uses I see:
- Home improvements: a new roof, an addition, a kitchen. These are also the uses that can keep the interest tax-deductible (below).
- Paying off high-interest debt: credit cards, personal loans, medical bills. When the debts are paid directly at closing, it’s a debt consolidation refinance.
- Buying out a co-owner, for example after a divorce or an inheritance. Fannie Mae waives the 6-month title wait when the home was inherited or awarded in a divorce.
- Tuition, a down payment on a second property, or an emergency fund.
Turning unsecured debt into mortgage debt puts your home on the line if you fall behind, and spreading a credit card balance over 30 years can cost more in total interest even at a lower rate. I’ll show you the total cost over the time you plan to keep the loan before you decide.
What does a cash-out refinance cost?
Refinance closing costs commonly run about 3%–6% of the loan amount, according to Freddie Mac: appraisal, title insurance, lender fees, recording and prepaid escrow. On top of that:
- VA: a funding fee of 2.15% of the loan (first use) or 3.3% (after first use), waived for veterans receiving VA disability compensation.
- FHA: upfront mortgage insurance of 1.75% of the loan plus an annual premium, per HUD.
- Conventional: lenders add pricing adjustments for cash-out loans, so the rate is often higher than on a rate and term refinance of the same size.
Most of these can be paid from the loan, which reduces the cash you take home. Program terms are subject to agency and lender guidelines and may change.
Cash-out refinance vs. HELOC or home equity loan: which fits?
| Feature | Cash-out refinance | HELOC or home equity loan |
|---|---|---|
| Your current first mortgage | Replaced by the new loan | Stays in place; the new loan sits behind it |
| Rate | One rate on the whole balance, often fixed | HELOCs are usually variable; home equity loans are usually fixed |
| Closing costs | Full refinance costs | Often lower, sometimes paid by the lender |
| Typical fit | Your current rate is near or above today’s rates, or you need a large amount | Your current rate is well below today’s rates, or you need a smaller amount |
| Where to get it | Through Valor Mortgage | A bank or credit union (Valor doesn’t offer HELOCs) |
If your current mortgage has a low rate, refinancing the whole balance just to get a smaller amount of cash can cost more than it’s worth. In that case I’ll tell you, and point you to a local bank or credit union for a HELOC. See what a HELOC is.
Is cash-out refinance interest tax-deductible?
Only partly, in most cases. Under IRS Publication 936, mortgage interest is deductible on debt used to buy, build or substantially improve the home that secures it. The part of the loan that replaced your old mortgage keeps that status; cash used for a kitchen remodel or an addition can qualify; cash used to pay off credit cards or a car doesn’t. You also have to itemize. Ask your tax preparer how it applies to you.
What do you need to qualify?
- Equity: enough that the new loan stays within the limits above after the appraisal.
- Credit: lenders set their own minimums, and cash-out loans are priced more strictly than rate and term refinances.
- Income and debt-to-income ratio: documented like a purchase loan (pay stubs, W-2s or tax returns).
- Appraisal: required on cash-out loans; the value sets your maximum.
- Waiting periods: the conventional, FHA and VA timelines in the table above.
Cash-out refinance FAQ
How much equity do you need for a cash-out refinance in Tennessee?
Conventional and FHA cash-out loans generally leave you at least 20% equity, because the new loan is capped at 80% of the appraised value. VA rules allow up to 100%, but many lenders cap VA cash-out at 90%. Program terms are subject to agency and lender guidelines and may change.
How soon can you do a cash-out refinance after buying?
Conventional: at least six months on title, and the mortgage being paid off must be at least 12 months old. FHA: 12 months owning and living in the home. Refinancing a VA loan: 210 days after the first payment and six payments made. Program terms are subject to agency and lender guidelines and may change.
Can you do a cash-out refinance on a USDA loan?
Not with USDA. USDA guaranteed refinances don’t allow cash out. If you have a USDA loan and enough equity, you can refinance into a conventional, FHA or VA cash-out loan instead. Program terms and eligibility are subject to agency and lender guidelines and may change.
Is a cash-out refinance better than a HELOC?
It depends on your current rate and how much you need. A cash-out refinance replaces your whole mortgage, so it tends to fit when your rate is near today’s or you need a large amount. A HELOC keeps a low-rate first mortgage in place. Valor doesn’t offer HELOCs; banks and credit unions do.
Is the cash from a refinance taxable income?
No. Cash-out proceeds are loan money, not income, so they aren’t taxed. Interest on the cash portion is deductible only if the money buys, builds or substantially improves the home, per IRS Publication 936. Ask your tax preparer how this applies to you.
How long does a cash-out refinance take?
It depends mostly on how quickly the appraisal is completed and how fast your income and asset documents come in, since a cash-out loan is fully underwritten like a purchase. After you sign, the money is released once the three-business-day right to cancel ends. Underwriting and appraisal times are not guaranteed.
Where these figures come from
| Figure | Source | As of |
|---|---|---|
| Conventional 6-month title and 12-month loan age rules | Fannie Mae Selling Guide B2-1.3-03 | Checked Oct 27, 2026 |
| Conventional 80% / 75% maximum LTV | Fannie Mae Eligibility Matrix | Current matrix |
| FHA 80% LTV, 12-month occupancy and payment history, MIP | HUD Handbook 4000.1 | Current handbook |
| VA 100% maximum, seasoning, net tangible benefit | 38 CFR 36.4306; VA cash-out refinance | Checked Oct 27, 2026 |
| VA funding fee 2.15% / 3.3% | VA, Funding fee and closing costs | Checked Oct 27, 2026 |
| Refinance costs 3%–6% | Freddie Mac, Costs of refinancing | Retrieved Oct 26, 2026 |
| Three-day right to cancel | Regulation Z §1026.23 | Retrieved Oct 26, 2026 |
| Interest deductibility | IRS Publication 936 | Current edition |
Related guides
- Refinancing with Valor Mortgage: rate and term, cash-out and debt consolidation.
- Rate and term refinance and debt consolidation.
- What is a mortgage refinance?
- What is a HELOC?
- Davidson County and metro buyers can work with me as a mortgage broker in Nashville.
- About Christopher Armantrout, the licensed originator who wrote this page.
Call me at (615) 671-9178. I’ll estimate how much cash you can take out, compare it with a HELOC from your bank, and show you the total cost before anything is pulled.
If it’s after hours, grab a time on my calendar, or start an application and I’ll review it and reach out with a plan.
Valor Mortgage, LLC · Christopher Armantrout, Mortgage Loan Originator, NMLS #1210804 · Valor Mortgage, LLC is powered by Encore Lending Group, LLC, NMLS #1249911 · Licensed in Tennessee · Equal Housing Opportunity
724 S Main St, Springfield, TN 37172 · (615) 671-9178 · christopher@valor.mortgage · NMLS Consumer Access
The dollar figures on this page are illustrative examples for general information only and are not an offer, a rate quote, or a commitment to lend. Actual interest rates and APRs vary based on loan program, borrower qualifications, property, market conditions and other factors. Program fees, limits and terms are set by the agencies named above and change without notice; all loans are subject to credit approval, income verification and property appraisal. Not all applicants will qualify.