How soon can you refinance a mortgage after buying a home? Under Fannie Mae’s Selling Guide, that depends on the kind of refinance. For a cash-out refinance, an existing first mortgage being paid off has to be at least 12 months old, note date to note date. And at least one borrower has to have been on title for at least six months before the new loan is paid out.
For a limited cash-out refinance, the guide’s rule is that at least one borrower on the new loan is on title at the time of the initial application. A lender can add its own requirements, and other loan programs set their own rules.
So the kind of refinance decides which dates matter. Know your note date and the date you went on title, and you’ll know when a conversation with a loan officer can start.
What Are the Two Kinds of Refinance in Fannie Mae’s Guide?
Fannie Mae’s Selling Guide is written for lenders that sell conventional loans to Fannie Mae. It treats a limited cash-out refinance and a cash-out refinance as separate transactions with separate rules. A limited cash-out refinance, sometimes called a rate-and-term refinance, gets a new first mortgage on the same home to pay off the existing first mortgage.
The limited cash-out section caps cash back to the borrower at an amount that, in aggregate, “does not exceed the greater of 1% of the new refinance loan amount or $2,000”. Cash back above that cap falls outside the limited cash-out rules.
The cash-out section sets its own timing rules, and they’re stricter. That’s why the kind of refinance comes first.
How Soon Can You Do a Limited Cash-Out Refinance?
Fannie Mae’s Selling Guide on limited cash-out refinances sets an ownership rule: at least one borrower on the new loan must be on title to the home at the time of the initial application. It’s general information for lenders, not an offer, and a loan officer can say how it applies to a specific loan.
Fannie Mae’s guide says it directly: “At least one borrower on the new loan must be an owner (on title) of the subject property at the time of the initial application.”
The guide allows exceptions. The lender has to document that the borrower inherited the property or was legally awarded it.
A lender can also set its own requirements on top of the guide’s. So ask a loan officer before you assume you can apply, or that you have to wait.
How Soon Can You Do a Cash-Out Refinance?
Fannie Mae’s Selling Guide on cash-out refinances sets two dates. If an existing first mortgage is being paid off, it has to be at least 12 months old. And at least one borrower must have been on title for at least six months before the new loan is paid out.
The cash-out section says an existing first mortgage being paid off through the transaction “must be at least 12 months old at the time of refinance”. The guide measures that from the note date of the existing loan to the note date of the new loan. It also says the rule doesn’t apply to a subordinate lien, such as a second mortgage, being paid off, or when buying out a co-owner under a legal agreement. Your note date is the date on your mortgage note.
The cash-out section also sets an ownership rule. At least one borrower must have been on title to the property “for at least six months prior to the disbursement date of the new loan”. Disbursement is when the new loan’s money is paid out at closing.
If the mortgage being paid off is the loan you took out to buy the home, the 12-month note-date rule is the later of the two dates to watch.
Are There Exceptions to the Cash-Out Waiting Period?
Fannie Mae’s guide lists exceptions to the six-month time-on-title rule. But it also says the ownership policy applies in addition to the 12-month rule for an existing first mortgage being paid off. So an exception to one date doesn’t remove the other.
One exception is spelled out in Fannie Mae’s guide: “There is no waiting period if the lender documents that the borrower acquired the property through an inheritance or was legally awarded the property”. Divorce, separation and dissolution of a domestic partnership are the guide’s examples of a legal award.
Buyers who paid cash for the home have a separate path in the cash-out section, which is where delayed financing after a cash purchase comes in.
Does Listing Your Home for Sale Affect a Refinance?
Yes, the listing matters. Fannie Mae’s guide addresses this in both refinance sections: a home that was listed for sale must have been taken off the market on or before the day the new loan is paid out. So a homeowner weighing both has a choice to make first.
The cash-out section says: “Properties that were listed for sale must have been taken off the market on or before the disbursement date of the new mortgage loan.” The limited cash-out section carries the same requirement.
Do Other Kinds of Loans Follow the Same Rules?
Fannie Mae’s Selling Guide covers conventional loans sold to Fannie Mae, and that’s the limit of its reach. FHA, VA and other loan programs set their own refinance rules, and a lender can layer on more. So the answer for your loan depends on what kind of loan you have.
Your closing documents or your servicer can tell you what kind of loan you have. Take that to a loan officer and ask which rules apply.
Where Your Own Dates Fit In
The rules turn on dates you can look up: the note date on your current mortgage, the date you went on title, and, if it applies, the day a listing came down. Bring those to a loan officer with what you want the refinance to do, instead of guessing.
Fellowship’s refinance page describes the range of options this way: “From cash-out refinances to rate adjustments, choose what best suits your financial landscape.” It also says: “We can evaluate and explain your unique financial situation to help determine whether a refinance might be the right solution for you.”
Timing is only one part of the picture, which is why a refinance means qualifying all over again.
Frequently Asked Questions About Refinance Timing
How soon can you refinance a mortgage after buying a home?
It depends on the kind of refinance. Under Fannie Mae’s guide, a cash-out refinance has a 12-month rule for an existing first mortgage being paid off, plus a six-month time-on-title rule. A limited cash-out refinance requires a borrower on title at the initial application. Other programs and lenders can differ.
How soon can you do a cash-out refinance?
Fannie Mae’s guide sets two dates. An existing first mortgage being paid off has to be at least 12 months old, counted note date to note date. And at least one borrower has to have been on title for at least six months before the new loan is paid out.
Is there a waiting period for a rate-and-term refinance?
Fannie Mae’s guide calls that a limited cash-out refinance, and its rule is about ownership: at least one borrower on the new loan is on title at the time of the initial application. A lender can add requirements, so ask a loan officer about your loan.
How are the 12 months counted?
From the note date of the existing loan to the note date of the new loan. The note date is the date on your mortgage note, and your closing documents show it. If you’re not sure of yours, a loan officer can go through your dates with you.
What if you inherited the home?
Under the cash-out section, there’s no waiting period for time on title when the lender documents that the borrower inherited the property or was legally awarded it. The 12-month rule for an existing first mortgage being paid off is a separate requirement with its own exceptions, so one exception doesn’t clear both dates.
Can you refinance while your home is listed for sale?
Fannie Mae’s guide requires a property that was listed for sale to have been taken off the market on or before the day the new loan is paid out. So a live listing and a refinance don’t sit together at the finish line.
Questions to Bring to Your Loan Officer
The timing rules are simpler to plan around when you ask before you apply. Pull your dates, write down what you want the refinance to do, and bring both instead of guesses. The answers turn on your loan, not on a general rule.
- Which kind of refinance fits what I want, a limited cash-out or a cash-out refinance?
- Which dates apply to my loan, and is my current mortgage old enough?
- Does my kind of loan have its own timing rules, and does the lender add any?
- What should I gather before I apply?
When you have your dates in hand, you can talk with a Fellowship loan officer about your refinance.
