The Quick Read: No. The size of your old conventional loan does not raise what FHA will lend. An FHA cash-out refinance has to fit under the FHA limit for your county and unit count. It also has to fit under 80% of your home’s appraised value, and the lower of the two wins. Only the financed upfront premium can sit on top of the county limit.
Why Doesn’t the Old Loan’s Size Matter?
The FHA program does not care what kind of loan you are paying off. A conventional first mortgage can be refinanced into an FHA cash-out loan. But the new loan is a brand-new FHA mortgage, and it has to meet FHA’s own limits on its own terms.
Think of the old loan as a payoff figure, not a target. Lenders do not ask “how big was the conventional loan?” They ask “how much is owed, and does the new FHA loan fit under both caps?”
Here is where borrowers get tripped up. A conventional loan can be larger than the FHA limit in your county. Conventional loans above the conforming limit exist; they are called jumbo loans. If your payoff is above the FHA county limit, an FHA loan cannot cover it. FHA does not stretch to match.
In files Lendmire’s brokers arrange, this is the first thing checked. Before anyone talks about cash in hand, someone compares the payoff to the county limit. If the payoff already uses up the cap, the conversation changes. If it leaves room, the next question is how much equity the 80% test allows.
Lendmire’s FHA cash-out refinance program is built around that two-cap test. Program details remain subject to lender guidelines and full file review.
The Two Caps, and Which One Wins
Every FHA cash-out refinance runs through two separate tests. You take the lower result.
- The value cap. The new loan, plus any other liens, cannot exceed 80% of your home’s adjusted value. Adjusted value is the appraised value after FHA’s adjustments. This is the loan-to-value limit for FHA cash-out.
- The dollar cap. The base loan amount cannot exceed the FHA county limit for your property’s county and number of units. The base amount is the loan before the upfront premium is added.
Many people assume one number controls everything. Not so. In some places the 80% test is the tighter one. In others, the dollar limit is.
| Situation | Which cap usually binds | What it means for cash |
|---|---|---|
| Lower-cost county, modest home value | The 80% value test | Equity limits you before the dollar cap does |
| High-cost county, high home value | The county dollar limit | Plenty of equity, but the loan size is capped |
| Large existing balance, any county | Either one | Payoff eats into both caps, leaving less cash |
| Two- to four-unit home | Usually a higher dollar cap | Check the limit for your exact unit count |
Both caps shrink as your payoff grows. A big payoff on a modest-value home leaves almost nothing. A small payoff on a home with solid equity leaves room.
If you are moving off a conventional loan and want the LTV side explained in more detail, Lendmire has a piece FHA Cash-Out LTV Limit When Moving From a Conventional Loan.
For context on how leverage differs by purpose: on a purchase, FHA reaches 96.5% financing with a 3.5% minimum investment at a decision score of 580 or higher. A cash-out refinance on a home you have owned and occupied for 12 months before the case number tops out at 80%. FHA rate-and-term refinances, which take no cash out, reach 97.75% on a principal residence occupied for the previous twelve months. All of it is subject to lender guidelines. The county limit applies to each of them.
How Do You Look Up Your County Limit?
Use the official tool. Do not trust a number you saw in a forum or an old article, because the limits change every year.
1. Open HUD’s FHA Mortgage Limits lookup. 2. Set the limit type to “FHA Forward.” The CFPB’s guidance on county limits points you to the same setting. 3. Choose the current calendar year. 4. Pick your state and county. 5. Read the figure for your unit count: one, two, three or four.
HUD’s annual limits letter explains that limits are set by metropolitan area and county. HUD sets a floor and a ceiling. Many counties fall at the floor, and some fall in between. A few high-cost areas reach the ceiling. Special higher limits apply in Alaska, Guam, Hawaii and the Virgin Islands.
This is why no national number answers your question. Your county sets your cap.
Where the Upfront Premium Fits
The upfront premium is the one piece that can go above the county limit. It is the single exception.
FHA charges an upfront mortgage insurance premium of 1.75% of the base loan, and it can be financed into the loan. HUD’s historical guidance says the maximum mortgage may not exceed the limit “except by the amount of any new” upfront premium. HUD’s older handbook section on mortgage limits says so directly. HUD’s own limits tool also separates the mortgage amount with and without the financed premium, for the same reason. Because that handbook language is older, confirm the current wording with your lender.
In plain terms, the order of operations looks like this:
1. Find the lower of the 80% value cap and the county limit. That sets the base loan.
2. Add the financed upfront premium on top.
3. Subtract your payoff and closing costs from the base amount.
4. What is left is the cash you could receive.
The premium does not count against the county limit, but it does raise your balance. So you are paying interest on it. If your base loan is sitting right at the cap, the premium rides on top without breaking the rule.
There is also an annual premium. It runs between 0.15% and 0.75% of the balance, depending on the loan term, the loan amount and the LTV. On a thirty-year loan above 90% LTV, it lasts for the full term. At or below 90% LTV, it ends after eleven years. A cash-out loan capped at 80% falls into the second group. These are program facts, not prices. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Lendmire also has a piece How Much the Upfront Premium Cuts an FHA Cash-Out at the County Limit.
What If Your Conventional Balance Is Already Over the Limit?
Then FHA cash-out is not available for that loan. This is the main break in the “just refinance it into FHA” assumption.
No rule says this in a single sentence. It follows from the limits. If your payoff alone is above the county limit, the base FHA loan cannot cover it, and there is no room for cash.
You still have choices. Each one has trade-offs.
| Option | What changes | Trade-off |
|---|---|---|
| Keep the conventional loan | No new first mortgage | You skip the cash-out |
| Conventional cash-out refinance | Different limit and different rules | Mortgage insurance and credit rules differ |
| Jumbo cash-out refinance | Covers balances above conforming limits | Often stricter credit and reserve rules |
| Second lien or home equity line | Leaves the first loan alone | Adds a second payment and a second lien |
Which one fits depends on your credit, your equity, your balance and your goal. Some lenders set a higher credit floor or tighter debt ratios than the program minimums. The right choice is rarely the same for two households.
One line to keep in mind: if you turn other debts into mortgage debt secured by your home, the home is at risk if payments become unsustainable. The CFPB’s research on cash-out refinances makes that point. A cash-out refinance can solve a problem. It can also move one.
Edge Cases That Change the Answer
A few situations bend the basic rule. Most come up in real files.
- Other liens on the home. A second mortgage or home equity line counts too. The first mortgage plus any other liens must fit under the 80% combined test. The combined amount must also respect the dollar limit. Confirm how your lender treats them.
- Unit count. Limits rise for two-, three- and four-unit homes. You must live in one of the units.
- Occupancy. FHA cash-out is for a principal residence only. A second home does not qualify. Occupancy decides the leverage, and for cash-out it is the 80% cap on the home you live in.
- Ownership history. The program generally wants the home owned and occupied for 12 months before the case number. Check your lender’s timeline.
- A no-cash-out refinance. FHA rate-and-term refinances have a higher LTV cap, but the same county limit still applies.
- Credit events. HUD sets waiting periods after certain events. Two years after a Chapter 7 discharge and three years after a foreclosure are HUD’s rules, not any lender’s promise.
- Hawaii Homelands. The 80% policy does not apply to Section 247 Hawaiian Homelands mortgages, per HUD’s cash-out letter.
Which Year’s Limit Applies?
The date that matters is the day your FHA case number is assigned, not the day you apply or close. The annual HUD letter says limits apply to case numbers assigned on or after the effective date. HUD normally publishes new limits in early December for the following January 1.
That timing matters in two cases.
- Close to the turn of the year. A case number assigned before the reset uses the old limit. One assigned after uses the new limit. If you are near the edge of the cap, ask your loan officer which applies.
- Rising limits. Limits usually go up when home prices rise. A figure you saw last year may be out of date.
So when someone quotes a limit to you, ask which year it is from. A stale number can cost you real cash on the table.
What It Means for Your Budget
The two caps decide how much equity you can pull out. A county at the floor with a large conventional payoff may leave little room.
Then there are the costs.
- Mortgage insurance. Financing the upfront premium raises your balance. A higher balance means a higher monthly payment, and the annual premium adds to it.
- Closing costs. These can include origination fees, appraisal fees, title insurance and taxes, according to the CFPB. They come out of the cash you receive or get added to the balance.
- “No-cost” refinances. The costs do not disappear. They are built into the interest rate or the loan balance.
- Cash to close. Your Loan Estimate shows what you must bring or what you will receive. Lenders also want to see where any funds came from.
A cash-out refinance replaces your old loan. You may lose a good existing term to get cash. That is the real cost to weigh, along with the premium and the closing costs.
Common Mistakes
- Assuming FHA will match your old loan. It will not. The base amount is held to the FHA limit.
- Thinking the limit only matters for purchases. It applies to refinances too.
- Using an old cash-out LTV figure. Older, higher caps are gone. The current cap is 80%.
- Counting the upfront premium against the limit. It does not count against it, though it does raise the balance.
- Using a neighbor’s county limit. Limits vary by county and by unit count.
- Skipping the lookup. The tool takes a minute, and everything else depends on it.
Honestly, the best habit is to run the numbers before you fall in love with a cash-out figure. Start with your payoff, then your appraised value, then the county limit.
Key Terms Defined
County loan limit: The most FHA will lend on the base loan in your county and for your number of units. It resets each year.
Adjusted value: The home’s appraised value after FHA’s adjustments. It is the number the 80% test uses.
LTV (loan-to-value): Your loan balance divided by the home’s value. An 80% LTV means the loan is four-fifths of the value. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
CLTV (combined loan-to-value): The same idea, but it counts all liens on the home, not just the first mortgage.
Base loan amount: The loan before the financed upfront premium is added. The county limit applies to this number.
Upfront mortgage insurance premium: A one-time charge of 1.75% of the base loan. FHA lets you finance it into the loan.
Payoff: The balance you must pay to close out your existing mortgage, shown on a payoff statement.
Your 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. A short conversation about your payoff, your home’s value and your county can show which cap you are likely to hit.
Frequently Asked Questions
Can my conventional loan be bigger than the FHA limit and still be refinanced into FHA?
No. The payoff has to fit under the FHA county limit on the base loan, and under 80% of adjusted value. A conventional balance above the county limit cannot be covered by an FHA loan. Options include a conventional or jumbo refinance, or keeping your current loan.
Does the financed upfront premium count toward the county limit?
No. The premium can sit on top of the limit. It does raise your balance, so your payment rises with it. Confirm current handling with your lender, since program documents may have been updated.
Is the FHA county limit the same as the conventional conforming limit?
No. They are tied together by formula, but they are different numbers set under different rules. The FHA limit is usually lower in most counties. Look up the FHA figure using HUD’s tool, and do not assume it matches the conventional limit.
Which limit applies if the limits change before I close?
The one in effect when your FHA case number is assigned. HUD’s annual letter makes the case-number date the deciding date. If you are close to a year-end reset, ask your loan officer when your case number will be assigned.
Can I use FHA cash-out on a second home or rental?
No. FHA cash-out is for a principal residence you own and live in. Occupancy decides the leverage, and a second home or rental is not eligible.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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. HUD FHA Mortgage Limits lookup
2. CFPB, What are the FHA loan limits for my county?
3. HUD Mortgagee Letter 2025-23, Nationwide Forward Mortgage Limits
4. HUD Handbook 4155.1, Chapter 3, Section B (historical)
5. CFPB’s research on cash-out refinances
6. HUD Mortgagee Letter 2019-11, cash-out refinance LTV
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 Cash-Out for a Higher-Value Home · Should a Condo Owner Choose FHA Cash-Out or Conventional? · Does an FHA Cash-Out Near the County Limit Get an MIP Refund?
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
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.