The Quick Read: A high-cost closing state adds roughly half a percent of the new loan amount in state taxes on the mortgage, and that amount comes out of the cash you net. FHA’s loan-to-value ceiling does not change by state. The extra cost comes from state taxes charged on the whole new loan, not just the cash you take out. A bigger loan means a bigger tax bill.
Key Takeaways
- FHA cash-out refinances reach 80% of the home’s adjusted value, in every state.
- Florida charges two mortgage taxes that many states do not. Together they equal about 0.55% of the new loan.
- Those taxes follow the size of the whole new note, not the size of your cash-out.
- Closing costs, the financed upfront premium and the payoff all come out of the 80% cap before you see any cash.
- Small cash-outs carry a heavier tax load per dollar of cash than large ones.
What Does “High-Cost Closing State” Actually Mean?
A “high-cost closing state” is one where state or local charges on the mortgage itself push closing costs above what national calculators show. The label depends on what you measure, so rankings disagree. The measuring base matters more than the rank.
Some rankings count purchases, which include deed transfer taxes. Others count refinances. Some include state taxes; others leave them out. Some show dollars; others show a percent of the loan. Florida can look cheap on one list and expensive on another for exactly these reasons.
For a refinance, the question is narrow. Does the state tax the new mortgage, and on what base? Florida does, and the base is the full new loan amount. That is why Florida is a useful example, and why this article treats it as an illustration rather than a national norm. Mortgage-specific taxes vary by state, and plenty of states charge little or nothing on a refinance.
How Does an FHA Cash-Out Work Before State Taxes Enter?
An FHA cash-out refinance replaces your current mortgage with a new, larger FHA loan and hands you the difference in cash. Across the wholesale programs Lendmire places files with, the FHA cash-out reaches 80% LTV on a home you have owned and occupied for 12 months before the case number is assigned. The cap sits at 80% because HUD Mortgagee Letter 2019-11 cut the limit from 85% to 80% of adjusted value. HUD Handbook 4000.1 carries the same change. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
The cap covers the whole new loan. That includes the financed upfront mortgage insurance premium, which is 1.75% of the base loan and normally rolled into the balance. It also includes any other lien that stays on the home, since every remaining lien counts toward the combined limit.
Here is the part people miss. Hitting 80% does not mean you receive 80% minus your balance in cash. The loan has to pay for several things first:
1. The payoff of your existing mortgage.
2. Closing costs and prepaid items, such as the first escrow deposits.
3. The financed upfront premium.
4. State taxes on the new mortgage, where they apply.
Whatever is left under the cap is your cash. Florida’s taxes sit in item 4, so they shrink the leftover.
The 80% cap also means 20% equity must stay in the home. Eligibility rules apply on top of that. The home must be your principal residence, and a non-occupant co-borrower is not an option on a cash-out. Second homes and rentals do not fit this program. Occupancy decides the leverage, and a different loan type applies to those properties.
What Does Florida Add on Top?
Florida adds two taxes on the mortgage itself. Together they come to about 0.55% of the loan amount. That figure is arithmetic on the two rates below, not a quote.
| Charge | Base | Who pays |
|---|---|---|
| Documentary stamp tax | $0.35 per $100 of debt secured | Closing cost on the borrower’s disclosures |
| Nonrecurring intangible tax | 2 mills per dollar of obligations secured | Lender is taxpayer, may pass to borrower |
Documentary stamp tax. The Florida Department of Revenue’s documentary stamp guide sets the mortgage rate at $0.35 per $100, or portion thereof, on the amount of indebtedness secured. That DOR form is older, so confirm the current rate on the Department’s site. There is one edge case worth knowing. A cap of $2,450 applies to notes and unsecured obligations. It does not apply to a mortgage recorded on real property. A cash-out mortgage has no such ceiling, so the tax keeps rising with the loan.
Nonrecurring intangible tax. Florida Statutes section 199.133 imposes a one-time tax of 2 mills on each dollar of obligations secured by a mortgage on Florida real property. The Department of Revenue says the lender is the legal taxpayer but may pass the tax to the borrower. It is paid when the mortgage is recorded, and it is capped at the fair market value of the Florida property securing the debt. Florida will not record or enforce the mortgage until the tax is paid.
So the tax is a state charge, not a lender fee. People often assume it is the lender’s cost. It is not. In practice it lands in the closing costs on your disclosures.
Why Do the Taxes Follow the Whole Loan?
Both taxes are based on the amount of debt secured by the new mortgage. They are not based on the cash you pull out. A refinance replaces the old note, so the new note is taxed in full, even though most of it just pays off the old one.
That mechanism has two consequences.
First, a larger loan carries a proportionally larger tax. Double the new loan amount and you roughly double the state taxes.
Second, the tax load per dollar of cash is heavier on a small cash-out. Say two homeowners have the same home value and the same existing balance. One takes a small amount of cash and the other takes a lot. Their new loans differ only by the cash portion, so their state taxes differ only slightly. But the first owner gets far less cash to absorb the same cost. The tax is close to a fixed hit relative to cash, so thin cash-outs feel it most.
This is a point national calculators miss. Many treat closing costs as one generic percentage and never separate the state-driven piece.
Worked Example: Where the Cap Goes
Run this as arithmetic with modeled percentages, not as a quote. Assume a home with an adjusted value of 100 units. The 80% cap sets the maximum new loan at 80 units.
Now suppose the existing mortgage balance is 50 units. Out of the 80 units, the loan must cover:
- The 50-unit payoff.
- The financed upfront premium, 1.75% of the base loan, which is a little over 1 unit.
- The Florida taxes, about 0.55% of the new loan, which is under half a unit.
- Other closing costs and prepaids, which vary by file.
Cash to you is what remains of the 30 units of room after those items. The Florida taxes take a bite, but they are small beside the payoff and the premium. The honest read: Florida’s taxes add a modest but real cost. They are not the largest line on the file. Treat them as one of several items that stack up against the cap.
The same scenario in a state with no mortgage tax would leave you slightly more cash. That difference is the Florida-driven delta, and it is roughly half a percent of the new loan. Everything else in the file is identical.
Financing the Costs or Paying Cash
You can handle closing costs two ways. Roll them into the loan, or pay them out of pocket at closing.
Rolling costs into the new loan lowers the cash due at closing. The CFPB notes that doing so adds interest cost over time. On an FHA cash-out there is a second effect. Financed costs count inside the 80% cap, so every unit you roll in is a unit that cannot become cash. Paying costs from your own funds leaves more room under the cap for cash-out, but it takes money from you at the table.
Neither choice is universally better. It depends on how much cash you need and how much you want to bring. What matters is seeing both versions on paper before you commit.
Where the General Rule Breaks
A few edge cases change the picture. Name them early on a file and you avoid surprises.
- Remaining liens. A second mortgage or HELOC that stays in place counts toward the combined limit. It does not add room under the cap. It uses room up.
- Lines of credit. Under the Department of Revenue’s rule, the intangible tax on a mortgage securing a line of credit is paid on the full line, and later draws add no new tax. That matters if a subordinate lien stays on the home.
- Credit for earlier taxes. Florida Statutes include a section covering refinancing, but treatment depends on how the transaction is documented. Do not assume you get a credit for taxes paid on the old mortgage. Ask the closing agent how it applies to your file.
- Upfront premium credit. A partial credit toward the new premium may exist for an FHA-to-FHA refinance within a limited window. It is a credit, not a cash refund. A conventional-to-FHA refinance does not get it. Confirm the details with your lender.
- Streamline and rate-and-term loans. These are different products with different rules. The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review, and the cash-out cap does not apply to it.
- Other states. Mortgage-specific taxes vary by state. Florida illustrates the mechanism. Your state may add less, more, or nothing.
Miami-Dade comes up often because its deed tax differs from the rest of the state. That difference applies to deeds. A refinance usually has no deed, and the mortgage doc stamp is $0.35 per $100 statewide. For a refinance, the county distinction rarely matters.
What Else Drives Your Net Cash?
The state taxes are one input. These decide the outcome together:
- The appraised value, which sets the ceiling.
- Your payoff balance.
- The 80% cap.
- The base loan plus the financed premium.
- State tax on the new loan amount.
- Other closing costs and prepaids.
- Whether other liens remain.
Beyond the cap, the file still has to qualify. Ratios on FHA files start at a 31/43 pair of housing and total debt with no compensating factors. Documented compensating factors can reach 40/50 at the top tier, and the automated finding governs most files. The program starts at a 580 decision score across the wholesale lenders Lendmire works with, subject to lender guidelines and full file review. Some lenders set a higher floor. Annual mortgage insurance is collected monthly and depends on term, loan amount and LTV. On a thirty-year loan above 90% LTV it lasts for the term. At or below 90% it ends after eleven years.
Annual premiums changed in 2023, and HUD’s announcement has the full table by LTV and loan amount. Read it for the mechanics. Do not read it as a price quote.
How to Check the Numbers Before You Commit
Ask for a Loan Estimate and read it line by line. The CFPB’s Loan Estimate explainer describes where closing costs and estimated cash to close appear. Here is a short checklist.
1. Ask the lender to itemize the government taxes separately from lender and title charges.
2. Confirm which taxes are being passed to you and which the lender absorbs.
3. Check that the financed premium and any rolled-in costs fit inside the 80% cap.
4. Ask what stays on the home, and whether any lien reduces your room.
5. When the Closing Disclosure arrives, compare it to the latest Loan Estimate, as the CFPB advises.
Do not use a purchase-cost rule of thumb. The 2% to 5% planning range you see online is for purchases. Refinance costs are different, and the Florida taxes make them different in a specific way. Plan from your itemized estimate, not a general percentage.
Key Terms Defined
Cash-out refinance: A refinance where the new loan is larger than the old one and you take the difference in cash.
Adjusted value: The appraised value figure the lender uses to apply the loan-to-value cap.
Upfront mortgage insurance premium: A one-time FHA premium of 1.75% of the base loan, normally financed into the balance.
Documentary stamp tax: A Florida tax on the amount of debt a recorded mortgage secures.
Nonrecurring intangible tax: A one-time Florida tax on obligations secured by a mortgage on Florida real property.
Combined loan-to-value (CLTV): The total of all liens on the home divided by its value.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
How much do Florida’s mortgage taxes add to an FHA cash-out?
About 0.55% of the new loan amount. That is the documentary stamp tax of $0.35 per $100 plus the 2-mill intangible tax, added together. The figure scales with the whole loan, so a larger new loan means a larger tax. Confirm current rates with your closing agent.
Does Florida change the FHA loan-to-value limit?
No. The cash-out ceiling is 80% of adjusted value in every state. Florida changes the closing costs, not the cap. Those costs sit inside the loan or come from your pocket, so they affect how much cash is left.
Are the intangible tax and doc stamps lender fees?
No. They are state taxes. The lender is the legal taxpayer for the intangible tax but can pass it to the borrower. Both show up in the government-tax lines of your disclosures.
Is there a cap on Florida doc stamps for a cash-out?
Not on a recorded mortgage. The $2,450 cap applies to notes and unsecured obligations. A mortgage on real property is taxed on the full amount secured.
Does a second mortgage or HELOC give me more room?
No. A lien that stays on the home counts toward the combined limit and uses up room under the 80% cap. Plan for it before you assume a cash figure.
Next Step
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. The FHA cash-out refinance program is a good place to start. Lendmire is a mortgage broker, not a lender. Every program figure is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s FHA loan programs page.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD Mortgagee Letter 2019-11
2. HUD Handbook 4000.1 Update 7.5
3. Florida Department of Revenue, documentary stamp tax guide
5. Florida Department of Revenue, nonrecurring intangible tax
6. CFPB Closing Disclosure explainer
8. CFPB’s Loan Estimate explainer
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much Payment an FHA Cash-Out Frees on Your Existing FHA Loan · How Much Insurance an FHA Cash-Out Adds for High-DTI Debt Consolidation · How Much Debt an FHA Cash-Out Clears Before a High DTI Stops It
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.