The 80% LTV Line: How Loan-to-Value Tiers Change Your Cash-Out Refinance Rate in 2026
FACT-CHECKEDFACT-CHECKEDConventional cash-out refinance pricing moves in steps tied to your loan-to-value ratio, and each step reprices your entire loan. I'll walk through Freddie Mac's published fee grid, run a $400,000 example across the 70%, 75%, and 80% lines, and show you how to find the few thousand dollars that cost the most to borrow.
Key Takeaways
- Freddie Mac prices a cash-out refinance in LTV bands, and the fee for your band applies to the whole loan.
- At a 740 to 759 score, the fee steps from 1.000% at 70% LTV to 1.625% at 75% and 2.375% at 80%.
- On a $400,000 home, the last $20,000 of cash from 75% to 80% LTV costs $2,725 in fees, or $136.25 per $1,000.
- A lower credit score makes every step steeper, so the 680 to 699 row pays $168.75 per $1,000 on that same slice.
- Before you lock, ask for a second quote sized one LTV tier down and compare the two Loan Estimates side by side.
Cash-Out Pricing Moves in Steps
In our business, the rate you see on a cash-out refinance quote is built in layers. There's a base price that tracks the bond market, and then there's a stack of adjustments on top for the specific risk characteristics of your loan: the loan purpose, your credit score, your loan-to-value ratio, and whether the property is your primary residence or a rental, to name a few. Fannie Mae calls those adjustments loan-level price adjustments, or LLPAs. Freddie Mac calls them credit fees in price. Two vocabularies for the same idea, and both flow straight through to what you pay.
The adjustment I want to spend this article on is the loan-to-value fee on a cash-out refinance, because it behaves like a staircase rather than a ramp. When the Federal Housing Finance Agency reworked the pricing framework for Fannie Mae and Freddie Mac, it directed them to build three separate base grids by loan purpose: one for purchases, one for rate-and-term refinances, and one for cash-out refinances. That decision matters to you because a cash-out loan gets its own grid, with its own LTV columns and its own fee levels, and those levels jump at fixed breakpoints instead of sliding smoothly as your LTV rises.
I've spent my career in capital markets, where these grids get applied to a great many loans. The pattern I'd want a friend to understand before signing a cash-out quote is this: the fee for whichever LTV band your loan lands in gets charged on the whole loan amount, and the bands have hard edges. Borrow one dollar over a breakpoint and the entire loan reprices at the next band's fee. The rest is arithmetic, and I'll show all of it.
What Freddie Mac's Grid Says at Each LTV Line
Freddie Mac publishes its credit fees in an exhibit to its Single-Family Seller/Servicer Guide, and the cash-out refinance grid inside it is laid out with credit score rows and LTV columns. Four LTV columns carry a price for a standard conventional cash-out: 60% and under, above 60% through 70%, above 70% through 75%, and above 75% through 80%. Past 80%, every cell in the cash-out grid reads "Not Eligible." The Guide's cash-out chapter governs the maximum LTV, and the fee grid confirms it in print: on a standard conventional cash-out refinance, 80% is the last column with a number in it.
Take a credit score in the 740 to 759 range, which Freddie Mac labels by Indicator Score. The credit fee in price runs 0.375% of the loan amount at 60% LTV or below, 1.000% in the 60% to 70% band, 1.625% in the 70% to 75% band, and 2.375% in the 75% to 80% band. Read those left to right and watch the spacing. The step from 60% to 70% adds 0.625 percentage points, 70% to 75% adds another 0.625, and 75% to 80% adds 0.750. The top stair is the tallest one, and it covers the narrowest slice of LTV.
Now drop to the 680 to 699 row. The same four columns read 0.625%, 2.000%, 2.875%, and 3.750%. The step from 60% to 70% adds 1.375 percentage points, and each of the next two steps adds 0.875. Every band costs more than it does in the 740 to 759 row, and the gap between the two rows widens as LTV climbs: 0.250 points apart at 60% and under, 1.000 apart at 70%, 1.250 apart at 75%, and 1.375 apart at 80%.
I'm quoting Freddie Mac's grid because it's the one I can lay out for you column by column from the published exhibit. Fannie Mae publishes its own matrix for cash-out refinances inside the same FHFA-directed, loan-purpose-first framework, and your lender may deliver your loan to either company. Your loan officer can tell you which grid your quote is built on.
The Fee Applies to Every Dollar of the New Loan
The mechanism that turns those percentages into a cliff is how the fee gets assessed. Income tax works in brackets, where only the dollars above a threshold get taxed at the higher rate. Cash-out credit fees work on the whole loan. If your loan lands in the 75% to 80% band with a 740 to 759 score, 2.375% is multiplied by the full loan amount, including every dollar that would've been priced at 1.625% or 1.000% had you stopped lower.
Simply stated, the fee equals the band percentage times the total loan amount, and the band percentage is chosen by where the last dollar lands. One dollar over a breakpoint changes the multiplier on every other dollar. If you've ever watched a spreadsheet cell flip because one input crossed a threshold, you already understand the shape of this.
The reason it's built this way comes from how the loan looks from the other side of the table. An investor buying a pool of mortgages is pricing whole assets, and the LTV on each one describes how much equity sits between the loan balance and a loss if the loan ever goes bad. Less equity means a thinner cushion, which raises the expected loss on a default, which raises the fee the guarantor charges to stand behind the loan, and that fee gets spread across every dollar being guaranteed. After years in capital markets, the one constant I can point to is that the market prices a 76% LTV loan as a 76% LTV loan, all of it, and every dollar carries that price.
Everything here describes conventional loans priced on the agency grids. FHA and VA cash-out refinances have their own maximum LTVs and pricing, so the 80% ceiling and the fee steps in this article don't describe those programs.
The $400,000 Worked Example
Let's put illustrative numbers on a $400,000 appraised value. Three loan amounts sit exactly on three breakpoints: $280,000 is 70% LTV, $300,000 is 75%, and $320,000 is 80%. Each step up adds $20,000 to your loan and, before closing costs, $20,000 to the cash you walk away with. Using the Freddie Mac fees above, the one-time credit fee in price at each line works out as follows.
| Loan amount and LTV | Fee at a 740 to 759 score | Fee at a 680 to 699 score |
|---|---|---|
| $280,000 (70% LTV) | 1.000%, or $2,800 | 2.000%, or $5,600 |
| $300,000 (75% LTV) | 1.625%, or $4,875 | 2.875%, or $8,625 |
| $320,000 (80% LTV) | 2.375%, or $7,600 | 3.750%, or $12,000 |
Now look at what each extra $20,000 costs in fees. At a 740 to 759 score, going from $280,000 to $300,000 raises the fee from $2,800 to $4,875, a difference of $2,075, or $103.75 for every $1,000 of additional cash. Going from $300,000 to $320,000 raises it from $4,875 to $7,600, a difference of $2,725, or $136.25 per $1,000. At a 680 to 699 score, the same two steps cost $3,025 and $3,375, which works out to $151.25 and $168.75 per $1,000.
Compare that with the step below the table. From $240,000 at 60% LTV up to $280,000 at 70% is a $40,000 increase, and at 740 to 759 the fee rises from $900 to $2,800, which is $47.50 per $1,000. So the fee per $1,000 of extra cash generally rises with every band you climb, and the top band is the steepest. To put the top step in perspective, the $2,725 fee on the final $20,000 is a one-time charge equal to 13.6% of the extra cash you're taking, and at 680 to 699 the $3,375 fee is 16.9% of it.
Those are fees, and I'm careful to call them that. Whether they show up as cash at closing, as a higher note rate, or as a mix of the two depends on how your lender prices the loan, and I'll get to that next. If they get rolled into the loan balance, you also pay interest on them for as long as you hold the loan. I'd rather you see the fee in points first, and I'd want anyone at AmeriSave to show it to you that way before translating it into rate.
How the Fee Shows Up on Your Loan Estimate
A credit fee in price is expressed the same way discount points are, as a percentage of the loan amount. The CFPB defines one point as 1% of the loan, so a 2.375% fee on a $320,000 loan is 2.375 points, or $7,600. The Loan Estimate has no line labeled LLPA or credit fee. Lenders fold the fee into the price they quote, and you'll experience it in one of a few ways: as points in the origination charges section of your Loan Estimate, as a higher interest rate than you'd get one tier down, or as some blend of the two.
The CFPB is also direct that there's no standard relationship between a point paid and the rate reduction it buys. The trade varies by lender, by loan type, and by market conditions on the day you lock. So I can hand you the fee in points and dollars with confidence, because that's what the grid publishes, but I can't hand you a universal rule that says 2.375 points equals some fixed number of basis points in rate. If a loan officer tells you the higher LTV costs about an eighth in rate, that's their pricing engine's translation on that day, and it may be a fair one, but ask to see it in points too so you can compare the whole fee.
The Loan Estimate itself is your comparison tool. The CFPB requires lenders to deliver it within three business days of your application, on a standardized three-page form, precisely so you can lay two loans side by side. Two Loan Estimates on the same home, one sized at $320,000 and one at $300,000, will show you the fee difference line by line. Remember that figures on a Loan Estimate can change when there's a valid change in circumstances, such as an appraised value that comes in lower than expected.
Finding Your Own Breakpoint
You can do this math at your own kitchen table before you talk to a lender. Start with a realistic estimate of your home's value, then multiply it by each band ceiling: 60%, 70%, 75%, and 80%. Those four results are the largest loan amounts that fit inside each band. On a $400,000 value they're $240,000, $280,000, $300,000, and $320,000. Next, write down the loan amount you actually want, which is your current payoff plus the cash you need plus any closing costs you're rolling in. Find the breakpoint just below that number. The distance between the two is the most expensive slice of your loan.
Say the math says you want $305,000 on that $400,000 home, and your score is in the 740 to 759 row. At $305,000 you're at 76.25% LTV, inside the 75% to 80% band, so the fee is 2.375% of $305,000, or $7,243.75. Trim the loan to $300,000 and the fee drops to $4,875. That last $5,000 of cash cost you $2,368.75 in credit fee, which is $473.75 for every $1,000, or a one-time charge equal to 47% of the money you took. At a 680 to 699 score the same $5,000 costs $2,812.50, or $562.50 per $1,000. That's what I mean by the cheapest $5,000 you can leave on the table.
There's a second reason to leave a little room. LTV is your loan divided by the appraised value, and the appraisal is the one input you don't control. If you size the loan at exactly $300,000 expecting a $400,000 value and the appraisal comes back at $395,000, your LTV is 75.95%, and the whole loan just moved up a band. Sizing at $296,000 against that same $395,000 appraisal keeps you at 74.94% and inside the 70% to 75% column. I've been in the same center-hall colonial in the Philadelphia suburbs for 12 years, and I still wouldn't bet a pricing tier on what an online estimate says it's worth. A cash-out refinance calculator will do the division for you, but you have to bring the breakpoints to it yourself.
I've done a paver patio and a fair amount of home improvement in that house over the years, so I understand the pull of taking the extra $20,000 while the loan is open. The question the grid forces is whether that $20,000 is worth the $2,725 in fees from the example above, and only you can answer it. What you can do before deciding is ask your AmeriSave loan officer to price the same file at both amounts, so the answer comes from two Loan Estimates rather than a guess.
Lower Score, Steeper Steps
Everything above gets sharper as credit score falls. The 680 to 699 row pays more than the 740 to 759 row in every LTV column, and the gap between the two rows widens as LTV climbs, as the grid section showed. The two inputs differ in how much of them you control. You control LTV completely at the moment you choose a loan amount, and you control your score only over time. That asymmetry is why I'd put LTV first for anyone with a score in the 600s who asks how to get a better cash-out price. Paying down a card balance before you apply may or may not move you up a score row before closing. Sizing the loan at $300,000 instead of $305,000 moves you down a column today, and the grid tells you exactly what that's worth.
With 40% equity behind a loan, the market treats it as low risk almost regardless of score, and as the cushion thins the score carries more and more of the price. A lower score and a high LTV together are the most expensive combination on the grid. That's why trimming LTV does the most good for exactly the people who have the least room to move their score quickly.
Credit score and debt-to-income requirements for a cash-out refinance vary by lender, and lenders, AmeriSave included, can layer their own requirements on top of the agency grid. Treat the two rows in this article as illustrations of the shape rather than a promise of which row you'll land in.
The Decision Rule: Get the Quote One Tier Down Before You Sign
My rule is simple, and it costs you nothing beyond an email or a phone call. Before you sign a Loan Estimate on a cash-out refinance, ask your loan officer to re-run the same loan at the breakpoint just below your requested amount and send you that second Loan Estimate. Then compare the two on three things: the points or origination charges, the interest rate, and the cash to you at closing. If the smaller loan shows a lower rate, fewer points, or both, you've found your cliff, and you can decide with open eyes whether the extra cash is worth the extra fee.
The CFPB built the Loan Estimate to be comparable across lenders and scenarios, which is why every lender uses the same form. It hasn't written a rule that entitles you to a second estimate at a lower loan amount. Pricing a second scenario is a routine request for any loan officer, though, and at AmeriSave it's one I'd want every cash-out applicant to make. Ask for it in writing, and ask before you lock, because changing the loan amount after a lock is a change to the terms of the loan, and that can affect pricing.
When the two estimates come back, a few questions are worth asking out loud:
- What's my exact LTV on each one, and which band on the grid does each fall in?
- Is the fee difference showing up in points, in rate, or in both?
- If the appraisal comes in a few thousand dollars low, which band do I land in?
- What does the extra cash actually buy me, and is there a cheaper way to get it?
That last question is yours to answer. The CFPB has published research on how people who take cash out use it to pay down non-mortgage balances, and that's the use where the math can still favor stepping up a tier. If the last $20,000 is retiring a balance that costs you more than the fee and rate on that slice combined, stepping up can make sense, and if it's a cushion you might not spend, the grid is telling you to leave it in the house. When you need every dollar of the $320,000 regardless, you'll at least know the top step cost $2,725 in this example, and you'll have chosen it with the number in front of you.
Three lenders is plenty to shop for a cash-out refinance, and I'd spend the energy on getting the same two tiers priced at each one rather than collecting a tenth quote. The agency grid sits underneath every conventional quote you'll get, so the breakpoint is there at each lender.
The Bottom Line
Cash-out refinance pricing on a conventional loan is a staircase built from LTV bands, and the fee for your band is charged on every dollar of the new loan. On Freddie Mac's published grid, a 740 to 759 score pays 1.000% at 70% LTV, 1.625% at 75%, and 2.375% at 80%, and a 680 to 699 score pays 2.000%, 2.875%, and 3.750% at the same lines. On a $400,000 home, that makes the last $20,000 from 75% to 80% cost $2,725 or $3,375 in fees, and a loan sized just $5,000 over a breakpoint can cost $2,368.75 for that slice alone.
All of it is printed in an exhibit anyone can read, and it's the same math your lender's pricing engine runs when it builds your quote. That's why my advice is the same for anyone weighing a cash-out: figure out your breakpoints from a conservative value estimate, ask your AmeriSave loan officer for the quote one tier down, and decide with both Loan Estimates in front of you. Whatever amount you settle on after that, you'll have chosen it knowing what the last piece of the cash costs, and by and large that's the number that decides whether the extra cash was worth taking.
Freddie Mac. Single-Family Seller/Servicer Guide Exhibit 19, Credit Fees.
Freddie Mac. Cash-Out Refinance Mortgages.
Federal Housing Finance Agency. FHFA Announces Updates to the Enterprises' Single-Family Pricing Framework.
Consumer Financial Protection Bureau. How Should I Use Lender Credits and Points (Also Called Discount Points)?
Consumer Financial Protection Bureau. What Is a Loan Estimate?
Consumer Financial Protection Bureau. Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances.
Joe brings extensive capital markets expertise to AmeriSave, specializing in pricing analysis, secondary markets, and risk oversight. He holds a B.S. in Finance from Saint Joseph's University's Haub School of Business and has managed billions of dollars in interest rate risk throughout his career with NewRez, GMAC, and Allied Mortgage Group. Based in Schwenksville, PA, he translates high-level risk and pricing mechanics into protections that benefit everyday borrowers.
Frequently Asked Questions
Yes, in most cases, because the agency credit fee for a cash-out refinance steps down at each LTV band, and lenders pass that pricing through as points, rate, or a mix of the two. On Freddie Mac's published grid, a 740 to 759 score pays 2.375% of the loan amount in the 75% to 80% band, 1.625% in the 70% to 75% band, and 1.000% in the 60% to 70% band. Moving down a band lowers the fee on the whole loan. How much of that shows up as a lower interest rate rather than lower points depends on your lender's pricing, since the CFPB notes there's no standard trade between points and rate. Ask for both numbers.
Yes. Under the standard conventional cash-out grid, 80% is the highest LTV with a price on it, and every column above 80% reads Not Eligible. There's no 85% tier to compare against on a standard conventional cash-out refinance, so the real question becomes whether to borrow all the way to 80% or stop at 75% or 70%, where the fee for the whole loan is lower. Some government-backed programs have their own, different maximum LTVs and their own pricing, and they sit outside the conventional grid discussed here. If you're being offered a cash-out above 80% LTV, ask which program it falls under and how it's priced.
An LLPA, or loan-level price adjustment, is Fannie Mae's term for an upfront fee added to a loan's price based on risk factors such as loan purpose, credit score, and loan-to-value ratio. Freddie Mac calls the same idea a credit fee in price and publishes it in an exhibit to its Seller/Servicer Guide. Both sit inside a pricing framework the FHFA directed, which uses separate base grids for purchase, rate-and-term refinance, and cash-out refinance loans. The fee is expressed as a percentage of the loan amount, so 2.375% on $320,000 is $7,600, and lenders build it into the points and rate they quote you.
No. The credit fee for whichever LTV band your loan lands in applies to the entire loan amount, which is what makes the breakpoints behave like cliffs. Income tax brackets tax only the dollars above a threshold at the higher rate, and cash-out pricing works differently. On a $400,000 home with a 740 to 759 score, a $300,000 loan at 75% LTV carries a 1.625% fee, or $4,875, while a $305,000 loan at 76.25% LTV carries 2.375% on all $305,000, or $7,243.75. That $5,000 of extra cash raised the fee by $2,368.75, because every dollar of the loan was repriced at the higher band.
Yes, when borrowing less moves your loan into a lower LTV band. Trimming from $320,000 to $300,000 on a $400,000 home moves the loan from 80% to 75% LTV, and on Freddie Mac's grid that drops the fee from 2.375% to 1.625% at a 740 to 759 score, reducing the credit fee by $2,725 in that example. Trimming a loan that stays inside the same band lowers the dollar fee only in proportion to the smaller balance, since the percentage doesn't change. The lever works at the edges, so find the breakpoint just below your requested amount and price the loan on both sides of it before you lock.
Divide the new loan amount by the appraised value of your home, then multiply by 100 to get a percentage. A $300,000 loan on a $400,000 appraisal is 75% LTV. The new loan amount includes your current mortgage payoff, the cash you're taking, and any closing costs you roll in, so build the number from those pieces rather than from the cash alone. The appraisal is the input you can't control, so run the math again at a value a little below your estimate to see whether a modest shortfall would push you over a breakpoint. If it would, sizing the loan a few thousand dollars lower keeps you in the cheaper band.