Equity, and how far a lender goes against it
A cash-out refinance replaces your mortgage with a larger one and pays you the difference. The size of that difference has a hard ceiling, and the ceiling is a percentage of appraised value.
| Loan | Ceiling on a cash-out |
|---|---|
| Conventional, one unit | 80% of value, after 12 months of ownership |
| FHA | 80% of value, after 12 months |
| VA | 100% of value per VA; lenders commonly cap around 90% |
The conventional and FHA figures are agency rules. The VA number is two different things stacked: VA’s own limit and each lender’s policy on top of it, which is why the 90% figure is described as typical practice and not as a rule (valoannetwork.com, July 2026). VA also charges a funding fee on a cash-out, 2.15% on a first use and 3.30% after, with the usual exemptions.
The arithmetic is short. On a house that appraises at $700,000, which is what the Kennett Square area’s July 2026 sold median came to, 80% is $560,000. Owe $400,000 and the gap before closing costs is $160,000.
The appraisal is the whole conversation
Nothing above happens until an appraiser has been through the house, and on a cash-out the appraisal is the single number that decides the outcome. You pay for it, you do not get to choose the result, and a valuation that lands low ends the discussion for a while.
So do the unglamorous preparation. Write down the improvements with dates and costs: the roof, the replaced heater, the new drain field, the kitchen. Photograph the outbuildings. If the property has acreage, have the deed acreage and the parcel number ready, because a farmette appraises differently from a house on half an acre and the comparable sales are further away and harder to find. Expect the report to take longer here than it does in a subdivision.
What the money goes into around here
The uses that come up on this side of the county are practical ones. A barn that needs a roof, or a run-in shed and fencing on a place that came with four acres and no infrastructure. A septic system at the end of its life, which the Chester County Health Department permits, tests with a soil probe and a percolation test, and holds to a replacement-area policy that keeps a reserve absorption area preserved. Kennett, Pennsbury and London Grove townships all require proof that the tank has been pumped within the last three years, so a system that has been quietly failing tends to announce itself on a schedule.
Connecting to public sewer where it exists is its own line item; Kennett Township posts a connection fee of $7,316 per equivalent dwelling unit. And in the older boroughs, a lot of cash-out money goes into pre-1940 stock: Coatesville’s historic district alone holds 457 contributing buildings, most of them put up between 1850 and 1924, and the mechanical systems in those houses have been replaced more than once already.
When the work is going into the house
If the money is for the house itself, ask about a renovation loan on the same call. FHA’s 203(k), Fannie Mae’s HomeStyle and Freddie Mac’s CHOICERenovation all lend against what the property will be worth once the work is finished, which puts a different number in front of you when today’s equity is thin. They come with a scope of work, a contractor and draw inspections, so they take longer to set up and they answer a different question.
One call covers both. A licensed Pennsylvania lender who does renovation files as well as refinances prices the two routes against the same appraisal assumptions, and you pick from two real figures.
The liens that come due, and the costs
Two Chester County-specific things belong in the payoff math before anything else. The Housing Partnership of Chester County’s first-time buyer second mortgage, up to $40,000 at 0% with no monthly payments, comes due when the home is sold, transferred or refinanced. PHFA’s K-DATE second, 8% of price or value on loans of $150,000 or less and 5% above, is due on sale, refinance or payoff. Neither prevents a cash-out. Both come off the top of the cash you were expecting, and finding that out from a title search three weeks in is a bad way to find it out.
On costs, the good news is short: Pennsylvania charges realty transfer tax on a deed, and a mortgage is not a taxable document, so a refinance of any kind owes none of the 2% a purchase pays in most of this county. What remains is the appraisal, recording fees, title work priced off a statewide manual, and the lender’s own charges. Ask for a written estimate and read the payoff line.