The Quick Read: The maximum is a cap on the whole new loan, not on the cash you receive. On an FHA cash-out refinance, that cap is 80% of your home’s adjusted value. Your cash is what remains after the new loan pays off your existing liens and covers costs. Subject to lender guidelines and full file review, the math runs in a set order, and you can run it yourself before you apply.
What Does “Maximum” Actually Mean?
The maximum is the largest total loan the program allows against your home. It is not the largest check you can get.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.32% as of October 22, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
Most borrowers misread this. They hear “80%” and assume they can pull out 80% of their equity or 80% of the home’s value. Neither is right. The 80% applies to the entire new mortgage, and that mortgage first has to pay off everything already owed on the house.
Here is the plain version:
- Ceiling: the most the new loan can be.
- Payoff: what the new loan must clear first, including your current mortgage and any other liens.
- Costs: closing costs and prepaid items.
- Cash to you: what is left after payoff and costs.
Some lenders also net out required repairs or other items. Across the FHA files Lendmire arranges, the gap between the “paper” ceiling and the check a borrower actually receives is where most surprises happen.
The Two Ceilings: Percentage of Value and County Limit
Two ceilings apply to every file. The loan has to fit under both, and the lower one controls.
The first is the percentage ceiling: a cap on the loan relative to adjusted value, covering all liens combined. HUD set this level in Mortgagee Letter 2019-11, which lowered the cash-out limit from its earlier level. HUD said it wanted to reduce risk to the FHA insurance fund as insured balances on cash-out loans grew. The letter also notes the limit had been cut at an earlier point as well. Some older lender sheets still show the prior figure, and that figure is out of date.
The second is the county loan limit. FHA sets a maximum mortgage for each area, and the limits change every year. HUD’s FHA Q&A page says the maximum mortgage cannot exceed the limit for the area, and it points borrowers to HUD’s mortgage limit lookup tool. This article does not quote county dollar figures because they move. Look up your own county.
In most counties, the 80% ceiling binds first. In higher-priced counties with larger homes, the county limit can bind first. A home worth a lot more than the local limit gets no extra room from 80% of its value. Check both, then use the lower one.
How Is the Maximum Calculated, Step by Step?
Run the steps in this order. Skipping around is how people get a wrong number.
1. Start with the appraised value. A cash-out refinance on FHA uses a full appraisal. Your own estimate, an online value, or an old appraisal is a placeholder only. The appraiser’s number is the one that counts.
2. Convert to adjusted value. If you have owned the home for 12 months or more, adjusted value is the appraised value. If you bought within the past 12 months, HUD’s handbook glossary says adjusted value is the lesser of purchase price plus documented improvements, or the appraised value.
3. Apply the 80% cap. Multiply adjusted value by 80%. That is the percentage ceiling on the total of all liens that will sit on the home after closing.
4. Check the county limit. Look up your county. If the limit is lower than the number from step 3, the county limit is your ceiling.
5. Take the lower of the two. That is your maximum base loan.
6. Subtract the payoff. Take off your current mortgage balance, plus accrued interest and any escrow or payoff add-ons. Your payoff figure will run higher than the balance on your last statement.
7. Subtract costs. Take off closing costs and prepaids that you are not paying out of pocket.
8. What is left is your gross cash. Repairs or other required items may reduce it further.
Keep the sequence straight: ceiling first, payoff second, costs third. Some online examples mix the order and produce two different “maximums” on one page. Don’t do that on your own numbers.
A fill-in worksheet
Copy this and fill it in with your own figures.
| Line | What goes here |
|---|---|
| A. Adjusted value | Appraised value, or the lesser-of figure if owned under 12 months |
| B. Percentage ceiling | A × 80% |
| C. County limit | From HUD’s lookup |
| D. Maximum base loan | Lower of B and C |
| E. Payoff | Current mortgage, interest, other liens |
| F. Costs and prepaids | Not paid out of pocket |
| G. Gross cash | D − E − F |
Where the Upfront Premium Fits
FHA charges an upfront mortgage insurance premium of 1.75% of the base loan, and it can be financed. HUD’s Q&A page says financed upfront premium is not counted when testing the area limit and the loan-to-value limit, so the total mortgage can exceed the base amount by the financed premium. That page walks through a purchase example. On a refinance, confirm with your loan officer how the premium is ordered in your file.
The practical point is simple. The 80% test applies to the base loan. The premium rides on top of it and adds to your balance. The premium is also a cost, so financing it means you carry it for the life of the loan.
There is also an annual premium. Across the programs Lendmire places FHA files with, it falls 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 term. At or below 90% LTV, it ends after eleven years. A cash-out loan sits at 80%, so the shorter schedule applies at that leverage, subject to program terms. HUD describes the premium structure in Mortgagee Letter 2023-05, which is the place to check the current table. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Worked Examples (All in Percentages of Value)
These are modeled assumptions, not market data. Dollar figures are left out on purpose. Set the appraised value equal to 100 and work from there.
Example 1: the percentage cap binds
Assume the home has been owned and occupied for more than 12 months. Appraised value is 100. The 80% ceiling is 80. Assume the county limit is well above that. Assume the existing payoff is 55, and costs and prepaids are 3.
- Maximum base loan: 80.
- Less payoff: 55.
- Less costs: 3.
- Gross cash: 22, or 22% of the home’s value.
So even at the maximum, you do not get 80% of value. You get 22% in this model.
Example 2: a second lien is in the way
Same home, but the owner also has a home equity line at 10 that will stay in place. All liens count toward the 80% cap, so the new first mortgage can be at most 70. If the first mortgage payoff is 45, the room is 25 before costs. Costs of 3 leave 22 in cash.
The takeaway: a second lien that stays in place uses up cap room. The cap is combined, not per loan. Paying off the line at closing frees that room, but then the payoff goes up and cash goes down.
Example 3: the county limit binds
Take a home in a high-cost area. Say 80% of its value comes to more than the county limit. The county limit becomes the ceiling. Your payoff and costs are subtracted from that smaller number, so cash drops, and sometimes disappears. This is the case most online guides skip. If your home appreciated a lot, run the lookup before you count on 80%.
Example 4: costs financed versus paid out of pocket
Costs and prepaids can come out of the loan proceeds, which lowers your cash. Or you can pay them separately and keep more of the proceeds. Either way the loan must stay under the ceiling. The question is only where the money comes from.
What Lowers Your Maximum
The ceiling is the starting point. Several things pull the real number down.
The appraisal. A lower value cuts the ceiling by 80 cents for every dollar of shortfall. The table shows how your ceiling shifts if the appraisal comes in under expectations.
| Appraisal vs. your estimate | Ceiling (as % of your estimate) |
|---|---|
| At your estimate | 80% |
| 5% lower | 76% |
| 10% lower | 72% |
| 15% lower | 68% |
Subtract the same payoff and costs from each row, and you can see how fast cash shrinks. A modest appraisal miss can take a big bite out of a modest cash amount.
A larger payoff than you expected. Accrued interest, escrow items and other liens can all push the payoff above your balance.
Debt-to-income. The paper maximum and the approved maximum can differ. The wholesale programs Lendmire works with start from a 31/43 ratio pair (housing over total) with no compensating factors. Documented compensating factors can reach 40/50 at the top tier, and the automated finding governs most files. If the new payment does not fit your ratios, the lender may approve a smaller loan than the ceiling allows.
Credit and payment history. The wholesale FHA programs Lendmire places files with start at a 580 decision score. Some lenders set a higher floor. The mortgage being refinanced should show on-time payments for the past 12 months. How much lateness a lender will tolerate depends on the lender, so ask before you apply.
Working Backward From the Cash You Need
Sometimes you know the cash you want. Reverse the formula.
Required adjusted value = (cash needed + payoff + costs) ÷ 0.80.
Say you want cash equal to 15% of your home’s expected value. Payoff is 55% and costs are 3%. Add them up: 73%. Divide by 0.80 and you need the appraisal to support a value of about 91% of your estimate. If the appraisal could plausibly come in below that, the target is at risk.
Then check the county limit against the loan that results. If the loan from that calculation exceeds the limit, the cash target cannot be met at this home, regardless of value.
Do You Have to Take the Maximum?
No. The maximum is a ceiling. You can borrow less.
Borrowing less keeps more equity in the home. The 80% cap already leaves at least 20% of adjusted value untouched, and the CFPB’s guide to using home equity says no option lets you convert all of your equity to cash. It also cautions that a cash-out refinance can stretch out your payoff time and raise your monthly payment, because the new loan replaces your old rate and terms.
Borrowing less also holds down the balance that carries the premium. And it can help the ratios, which is often what limits a file in practice. A smaller loan means a smaller payment, which leaves more room under the 31/43 and 40/50 tests.
People use cash-out money for debt payoff, repairs and large bills. Those are different jobs, and each has a different right size. If the cash replaces other debt, remember that you are swapping debt that isn’t secured by your home for debt that is.
Where the General Rule Breaks
A few cases change the answer.
Owned under 12 months. Adjusted value drops to the lesser-of figure. Separately, the program expects 12 months of ownership and occupancy as a principal residence before the case number is assigned. A recent purchase generally fails that test.
Inherited homes and gifts from family. HUD’s glossary says a home acquired within 12 months by inheritance or gift from a family member may use the appraised value. Occupancy treatment for inherited homes is more detailed, so ask your loan officer how it applies to your file.
Second homes and rentals. Cash-out under this program is for the home you live in. Occupancy decides the leverage, and a non-owner-occupied property does not fit this program.
Hawaiian Home Lands. HUD exempted Section 247 mortgages from the 80% reduction in the letter cited above. If you hold one, your lender will tell you which limit applies.
Streamline and rate-and-term. These are not cash-out. The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review, but it requires a net tangible benefit, and the premium continues. The FHA rate-and-term refinance with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. The higher leverage is the tradeoff: those loans give you little or no cash back.
| Refinance type | Appraisal | Cash back |
|---|---|---|
| FHA cash-out | Full appraisal | Yes, up to 80% LTV |
| FHA rate-and-term | Appraisal | Minimal |
| FHA Streamline | None | None |
Which program reaches more equity depends on your credit, your ratios and your home. Compare them on your own file.
Getting Your File Ready
The lender will want to see a few things beyond your equity. Gather these before you apply:
- Your latest mortgage statement, plus any HELOC statement.
- Proof of 12 months of payments on the loan being refinanced, if it does not report on your credit.
- Income documents and a list of monthly debts.
- A realistic read on what the appraisal might support.
The Lendmire team can walk through the numbers on the FHA cash-out refinance program page, and a loan officer can test the ceiling against your payoff before you pay for anything. Applying involves a hard credit pull and a temporary dip in your score, per the CFPB’s research on cash-out refinances. Every figure here is subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Key Terms Defined
Adjusted value: the value used to apply the cap. It equals appraised value for homes owned 12 months or more, and a lesser-of figure for newer purchases.
CLTV (combined loan-to-value): all liens on the home added together, divided by adjusted value.
Payoff: the full amount needed to clear your existing liens at closing, including accrued interest and other add-ons.
Upfront premium: the 1.75% mortgage insurance charge on the base loan, which can be financed into the loan.
Net cash: the amount you receive after payoff, costs and any required items come out of the new loan.
Frequently Asked Questions
What is the maximum LTV on an FHA cash-out refinance?
It is 80% of adjusted value, and the cap covers all liens combined. That is lower than the old 85% limit, which HUD replaced. The loan must also fit under the county loan limit, and the lower of the two sets your ceiling.
Can I take out 80% of my home’s value in cash?
No. The 80% limit applies to the total new loan. Your existing mortgage and any other liens get paid off first, then costs come out, and the remainder is your cash. In most cases that is a fraction of the ceiling.
Does a HELOC change my maximum?
Yes, if it stays in place. The 80% combined cap includes second liens, so a line that remains uses up room that the new first mortgage would otherwise have. Paying it off at closing frees the room but raises the payoff.
Do I need to have lived in the home for a certain time?
Yes. The program looks for 12 months of ownership and occupancy as your principal residence before the case number is assigned. It also looks for on-time payments on the mortgage being refinanced. How a lender treats lateness varies, so ask early.
Can I borrow less than the maximum?
Yes. The maximum is only a ceiling. A smaller loan keeps more equity in the home, lowers the premium balance and can help your debt-to-income ratios.
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. Call 828-256-2183 to run your payoff against the ceiling, and bring your latest mortgage statement. The ceiling is only the start of the math, and the appraisal usually decides how much of it you can use.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s FHA loan programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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 FHA Q&A: calculating the loan amount
3. HUD FHA mortgage limit lookup
4. HUD Handbook 4000.1 Glossary
5. HUD Mortgagee Letter 2023-05
6. CFPB guide to using home equity
7. CFPB’s research on cash-out refinances
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: FHA vs VA Cash-Out Refinance Requirements for Veterans · FHA Cash-Out Refinance vs Conventional Cash-Out for Thin Credit · Conventional vs FHA Cash-Out Refinance for Maximum Equity Access
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.