The Quick Read: Usually, yes. A revocable living trust does not by itself block an FHA cash-out refinance, and neither does an expensive location. Three tests decide it: whether the trust is an eligible type, whether you meet the ownership and occupancy tests, and whether the new loan fits under the county limit and the 80% loan-to-value cap.
That is the whole answer in a paragraph. The rest of this page covers the mechanics, the places where files stall, and how to decide whether the loan is worth doing.
Key Terms Defined
Seven terms come up repeatedly. Here they are once, in plain words.
- Cash-out refinance: a new, larger mortgage that pays off your old one and hands you the difference in cash.
- Loan-to-value (LTV): the new loan balance divided by the appraised value of the home.
- Revocable living trust: a trust you can change or cancel while you are alive. You usually serve as trustee and beneficiary.
- Trustee: the person with legal authority to manage the trust’s property, including signing a mortgage.
- Vesting: how title is held. It might read as your name alone, or as you as trustee of your trust.
- Certification of trust: a short document that proves the trust exists and names who has authority to sign.
- Seasoning: a required waiting period, such as how long you have owned and lived in the home.
Does FHA Allow a Cash-Out on a Trust-Held Home?
Yes, in the common case. Across the wholesale programs Lendmire places FHA files with, a revocable living trust where the borrower is the trustee and beneficiary is a routine structure. The trust is one more document to review. It is not a disqualifier.
What the lender really checks is that the person asking for the cash has the legal power to pledge the home. A trust that names you as trustee, with power to mortgage the property, answers that question.
Think of the trust as paperwork around the home. The FHA tests still apply to the home and to you. Those tests are ownership, occupancy, payment history, credit, debt ratios, and value.
This is the program Lendmire arranges: the FHA cash-out refinance program. Lendmire is a mortgage broker. It compares wholesale lenders and does not lend or approve anything itself. Every figure on this page is subject to lender guidelines and a full file review, and nothing here is a commitment to lend.
Which Trusts Qualify?
Revocable trusts are the accepted type. Irrevocable trusts are a hard sell. If you cannot change or cancel the trust, the lender has a harder time confirming you control the property.
| Trust situation | How it usually plays | What the lender wants |
|---|---|---|
| Revocable, you are trustee and beneficiary | Commonly workable | Certification of trust, matching vesting |
| Revocable, co-trustees such as spouses | Commonly workable | Every required trustee signs |
| Revocable, trustee is not the occupant | Needs a closer look | Lender and title review |
| Irrevocable | Generally difficult | Counsel and lender confirmation first |
Lenders set their own comfort levels on irrevocable trusts. If your home sits in an irrevocable trust, ask a lender and your estate attorney before you spend money on an appraisal. A deed out of the trust is sometimes discussed as a workaround. It has side effects, covered below.
One more point. The trust-eligibility details live in HUD’s rulebook for lenders, and individual wholesale lenders add their own preferences. So the lender’s answer on your specific trust is the one that counts.
Who Needs to Be on the Loan, the Title and the Trust?
At least one borrower on the loan must hold title and live in the home as a principal residence. That person is typically the trustee and beneficiary of the trust.
Here is how common setups play out:
- Married couple, joint trust. Both spouses are usually trustees. Both usually sign. The occupancy and ownership tests only need one of you to meet them.
- Single owner, own trust. You sign as trustee.
- Parent’s trust, adult child living in the home. This is where files get complicated. The question becomes who owns the home, who has signing authority, and who actually lives there. Bring this to a loan officer before applying.
- Non-occupant co-borrower. On a purchase, FHA lets a relative who will not live there help you qualify. A cash-out is different. Under HUD Handbook 4000.1, income from a non-occupant co-borrower cannot be used to qualify for a cash-out. Adding a parent’s income will not fix a tight file.
- Accessory dwelling unit. If your one-unit home has a rentable ADU, that rent cannot count as income for the cash-out. Confirm the current wording with your lender.
What Is the Ownership and Occupancy Test, and Does Trust Time Count?
You must have owned and lived in the home as your principal residence for 12 months before the lender requests the case number. That is the FHA cash-out standard across the programs Lendmire works with. Lenders typically want proof, such as employment records or utility bills showing you lived there.
Payment history matters too. Your mortgage payments should be current and on time in the period leading up to the loan. A home you recently bought and moved into will not pass.
What about time in the trust? This is the question most pages skip. If you moved your own home into your own revocable trust, the practical view is that you still own and occupy it. But HUD’s handbook does not clearly spell out how trust time is counted. Ask the lender how it reads a recent deed into the trust. Do not assume.
Compare conventional loans, where the rule is written down. The Fannie Mae Selling Guide counts time held by a revocable trust toward its six-month ownership requirement if you are the trust’s primary beneficiary. It also requires the existing first mortgage to be at least 12 months old. That is Fannie Mae policy, not an FHA rule. Do not carry it over.
Inherited homes. HUD waives the 12-month occupancy period for an inherited property if you never treated it as an investment. If you rent it out after inheriting, you must then live in it for 12 months. A home that landed in a trust through inheritance may fit this exception. Ask the lender to review it.
Cash-out is for the home you live in. Second homes and rentals do not qualify for FHA cash-out. One sentence settles that: occupancy decides the leverage.
“High-Cost State” Is the Wrong Frame (It’s the County)
FHA does not set loan limits by state. It sets them by county or metro area, and they reset each calendar year. A home in an expensive state can sit in a county with a limit near the floor. A home in a modest state can sit in a high-cost county.
HUD publishes the current numbers in its Mortgagee Letter 2025-23, and the letter points to a county limit lookup. Limits rise with the number of units, so an owner-occupied two- to four-unit home gets a higher cap. Alaska, Hawaii and a few territories carry a higher ceiling. This page does not quote county dollar figures, because the lookup is the only place they should come from.
Here is the part that matters for a cash-out. The new loan must fit under your county’s limit, and it must also fit under the 80% LTV cap. Two caps, and the lower one wins. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
In expensive areas, home values are also high. So the county limit often bites before the 80% cap does. In some counties the reverse happens, and the cap binds first. Either way, a trust does not change either test.
One more point on “high cost.” A bigger limit does not mean you can borrow more than the cap allows. It only means the county ceiling is less likely to be the problem.
Close in the Trust, or Deed the Home Out First?
Many files close with the home still in the trust. Some lenders or title companies prefer a temporary deed out of the trust into your own name, then a deed back after closing. Both paths exist.
| Factor | Close in the trust | Deed out, then back in |
|---|---|---|
| Paperwork | Trust documents reviewed | Two deeds plus the loan |
| Title work | Vesting must match | Extra recording steps |
| Risk | Fewer moving parts | More chances for a title error |
| When it applies | Eligible revocable trust | Lender or title insists |
Ask early which path your lender uses. If a lender says you must deed out, ask whether another wholesale lender will close it in the trust.
Deeding has side effects in some states, including recording costs and possible transfer or reassessment questions. Those rules differ by state and county, and your title company or attorney can tell you what applies. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What Does the Lender Want to See?
Gather these before you apply:
- The certification of trust, or an abstract of the trust, naming the trustee and the trustee’s powers
- The trust pages that name the settlor and beneficiary, if the title company asks for them
- The current deed showing how title is vested
- Proof of 12 months of occupancy, such as utility bills or employment records
- Your mortgage payment history
- Standard income, asset and credit documents
Then comes an appraisal. A cash-out has no appraisal-free option. The no-appraisal FHA Streamline only refinances an existing FHA loan, and it cannot pull cash.
At closing, the trustee signs. Title insurance must reflect the correct vesting. Afterward, confirm that the lien and the vesting are recorded correctly, and update your homeowner’s insurance so the named insured matches how title is held.
What Does the Credit Side Look Like?
Across the wholesale programs Lendmire places FHA files with, the starting point is a decision score of 580. HUD’s own rules reach lower, but those programs do not. Some lenders set a higher floor.
Debt ratios start at 31/43. That means housing costs of 31% and total debts of 43% of income, with no extra strengths. Documented compensating factors can stretch that to 40/50 at the top credit tier. Most files are decided by the automated finding, which weighs the whole picture.
Credit events carry HUD’s waiting periods: two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD rules, not a promise by any lender.
What Does the Loan Do to Your Budget?
A cash-out replaces your old mortgage with a bigger one. That means a larger balance and a new term.
FHA also charges mortgage insurance on the new loan. There are two parts. The upfront premium is 1.75% of the base loan and is typically financed into the balance. The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV, it lasts for the whole term. At or below 90%, it ends after eleven years.
Closing costs include lender fees, the appraisal, title insurance and any trust-related title work. Your Loan Estimate itemizes them. Compare it line by line across lenders.
Think about this honestly. If your current loan is on better terms, a cash-out gives up that loan to get the cash. For many homeowners, the equity access is worth it. For others, it is not.
Two Scenarios in Plain Words
Scenario one: the revocable-trust couple. A couple holds their home in a joint revocable trust and has lived there for several years. Their payments are current. The home appraises well. The new loan can go up to 80% of the appraised value, and the existing mortgage is paid off first from that amount. Whatever remains, after costs, is the cash. If that total also fits under the county limit, the deal moves forward on the trust paperwork and the credit review. The trust adds a review step. It does not change the math.
Scenario two: the home is worth more than the limit supports. A homeowner in a very expensive county has a large amount of equity. Eighty percent of the value would exceed the county limit. The county limit caps the loan, and the cash available shrinks, or disappears if the old balance is already near the limit. The trust is irrelevant here. The cap decides.
This second case is common in expensive markets, and it is the point where people look at other products.
When FHA Cash-Out Is Not the Right Fit
Consider other options if any of these apply:
- Your home exceeds the limit. A conventional or jumbo cash-out may reach further. Trust rules differ by program. The Fannie Mae counting rule above is one example.
- You need a smaller amount of cash. A home equity loan or line may leave your first mortgage untouched.
- You live in the home less than 12 months. The test fails, whatever the trust looks like.
- The trust is irrevocable. A lender may decline. Get an answer before spending on an appraisal.
A reverse mortgage, known as HECM, is a separate FHA program with its own trust rules. It is not a cash-out refinance.
Common Mistakes With Trust Homes
Most problems come from a few habits:
- Assuming a trust kills eligibility. It does not, by itself.
- Deeding the home out without asking. You may add costs and title risk for nothing.
- Mixing up Fannie Mae rules with FHA rules. The trust-time credit is a conventional rule.
- Using outdated limits. Many sites still show old figures. Use HUD’s county lookup.
- Expecting the limit to let you borrow more. The 80% cap still applies.
- Leaving the insurance policy unchanged. The named insured should match how title is held.
Frequently Asked Questions
Do I have to take the home out of my living trust before an FHA cash-out?
Often not. Many revocable-trust files close with title still in the trust. Some lenders or title companies ask for a temporary deed out and back. Ask each lender how it handles trusts before you commit to one.
Will an expensive state give me a higher FHA loan limit?
Not automatically. FHA limits follow the county or metro area, not the state. Some counties in costly states sit near the floor. Check your county in HUD’s lookup, then remember the 80% LTV cap applies on top of it. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Does time in the trust count toward the 12-month rule?
It depends on how the lender reads it. If you own and live in the home, funding your own revocable trust is typically not treated as a break in ownership. HUD’s handbook does not clearly spell this out, so confirm with the lender. Conventional loans have a written rule, but that is Fannie Mae’s, not FHA’s.
Can an irrevocable trust get an FHA cash-out?
It is generally difficult. Lenders want to see that you control the property. Talk to a lender and an estate attorney before you pay for an appraisal or a deed change.
Can I use rent from an ADU or a co-borrower’s income?
No for both, on a cash-out. ADU rent cannot count as income, and a non-occupant co-borrower’s income cannot be used to qualify. Plan your file on income you earn and the home you live in.
What to Do Next
Start with three checks. Confirm your trust type. Confirm you pass the 12-month ownership and occupancy test. Pull your county’s limit and compare it with 80% of your home’s likely value.
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.
For your own numbers, request a scenario review with Lendmire.
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.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Selling Guide B2-1.3-03
2. HUD Mortgagee Letter 2025-23
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: FHA Cash-Out vs Conventional for Debt Consolidation With High DTI · Can You Get an FHA Cash-Out After a Conventional Denial? · Can You Get an FHA Cash-Out Refinance With a Living Trust?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.