How to Check an Upfront MIP Refund on a County-Limit FHA Cash-Out

The Quick Read: Confirm three things: your current loan is FHA-insured, it is inside its first three years of insurance, and the credit shows up as a reduction of the new upfront premium on your Loan Estimate and Closing Disclosure. The refund is a credit, not a check. Only an FHA-to-FHA refinance triggers it. On a county-limit cash-out, the lower of the 80% value test and the county loan limit decides how much you can borrow, so a credit does not automatically mean more cash.

What Is the “Refund,” Really?

It is a credit toward the new loan’s upfront premium. It is not money mailed to you. HUD’s Homeowners Fact Sheet on refunds says that when an FHA loan is refinanced, the refund from the old premium may be applied toward the upfront premium required for the new loan.

The idea is simple. When you took out your current FHA loan, you paid an upfront premium, usually financed into the balance. HUD treats part of that premium as unearned if the loan ends early and you move into another FHA loan. That unearned part offsets the new premium.

Across the wholesale programs Lendmire places FHA files with, the new upfront premium is calculated as a percentage of the base loan and financed into the balance. The credit shrinks that figure. It does not erase it. The new loan still carries an upfront premium.

Key Terms Defined

Upfront mortgage insurance premium (UFMIP): A one-time FHA insurance charge, calculated on the base loan and usually financed into the balance.

Refund credit: The unearned part of the old loan’s upfront premium, applied to reduce the new loan’s upfront premium.

Base loan: The loan amount before the financed upfront premium is added.

County loan limit: The maximum FHA loan amount for your county and unit count, set by HUD and updated each year.

Adjusted value: The appraised value figure FHA uses to apply its loan-to-value cap on a cash-out.

Case number: The FHA identifier assigned to a loan file. The limits that apply are the ones in effect when it is assigned.

Who Gets the Credit and Who Doesn’t

The credit has narrow eligibility. Mixing up the cases is a common source of confusion.

HUD’s fact sheet says that for loans endorsed on or after December 8, 2004, no refund is due unless the homeowner refinanced to a new FHA-insured loan, and none is due after the third year of insurance. It also says the rules are subject to change. Loans endorsed before that date follow different rules, and HUD’s Office of Inspector General has discussed how refund schedules have been revised over time.

Two misconceptions are worth clearing up. The first is the belief that the annual premium gets refunded too. It does not. The second is the belief that selling the home produces a refund. It does not.

How to Check the Credit, Step by Step

Run the check in this order. Some steps you can do yourself, but one only the lender can do.

1. Confirm the old loan is FHA-insured. Your closing documents from the original purchase or refinance show it. Look for an FHA case number and the endorsement date. Your servicer can confirm both if the paperwork is gone.

2. Check that the original loan paid an upfront premium. HUD’s form HUD-92900-B tells borrowers to review their settlement papers to see whether an upfront premium was paid.

3. Count the years. The credit applies only if the new FHA loan comes within the first three years of insurance on the old loan, counted from the old loan’s endorsement date. Refinancing just after the third anniversary can forfeit it. If you are close to the line, ask the loan officer exactly which date they are measuring from.

4. Ask the loan officer to confirm the credit amount. You cannot look this up yourself. HUD’s upfront premium guide says any refinance credit, meaning premium paid but not earned, from the prior case is applied to the new case. The lender sees this in HUD’s FHA Connection system. You see it only if the loan officer shows you.

5. Find it on your disclosures. The credit lowers the new upfront premium, so look for a smaller premium on the Loan Estimate and again on the Closing Disclosure. If the premium on the final disclosure looks like the full 1.75% of the base loan with no offset, ask why.

6. Run the two-ceiling test. This is the county-limit step, covered next.

The County-Limit Test on a Cash-Out

On a cash-out, two ceilings apply and the lower one binds. The first is value. HUD’s knowledge base states the maximum LTV or CLTV for a cash-out refinance is 80 percent of adjusted value for case numbers assigned on or after September 1, 2019. Across the wholesale programs Lendmire places files with, an FHA cash-out reaches 80% LTV on a home you have owned and occupied for 12 months before the case number. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

The second ceiling is the county loan limit for your unit count. County limits change every year, and the one that applies is the limit in effect when the case number is assigned. The same HUD knowledge base page says the combined amount of the first mortgage and any subordinate liens cannot exceed the nationwide mortgage limits.

The county limit measures the new loan balance, not the cash you receive. Divide the county limit by 0.80 and you get the approximate home value where the two ceilings cross. Below that value, the 80% value test binds first. On a high-value home, the county limit can bind before the 80% value test does, and above the crossover a bigger equity cushion does not raise your loan amount. That crossover is arithmetic, not an HUD-published figure.

Picture a homeowner whose home is worth well above that crossover. The 80% test would allow a larger loan, but the county limit stops it first. The cash out is smaller than the 80% math suggested. It is better to learn that before you apply.

Does the Credit Change the Limit Headroom?

The answer depends on how the lender’s worksheet treats the credit, and the public HUD material does not settle it for cash-outs.

HUD’s streamline maximum-mortgage worksheet explicitly subtracts the refund credit. The handbook text reviewed for this article has no equivalent wording for a cash-out. So the safe statement is narrow: the credit reduces the upfront premium due. Whether it also changes the figure measured against the county limit is something underwriting has to confirm on your file.

Ask the loan officer directly: “Does the credit change the amount tested against the county limit on my loan?” A clear answer, in writing, saves a surprise at the end.

Order of Operations on a County-Limit File

The sequence matters because each step feeds the next.

1. The appraisal sets the adjusted value.

2. The value cap takes 80% of that figure.

3. The base loan is built from your payoff, closing costs and the cash you want.

4. The new upfront premium is calculated on the base loan, then reduced by the refund credit.

5. The financed premium is added to reach the total loan amount.

6. The lender tests the result against the lower of the value cap and the county limit.

If the total comes out over the lower ceiling, the base loan must come down.

What to Match Against Your Paperwork

When the Credit Is Missing or Wrong

Start with the loan officer. Ask for the credit amount, the old case number the lender used, and the date measured for the three-year window. A wrong case number or a mismatched date is the first thing to rule out.

If the old loan is outside three years, the credit is correctly zero, and nothing is wrong. If the old loan was not FHA, the same is true.

If you believe the credit should apply and it does not, ask the lender to review it in HUD’s system before closing. After closing, your servicer and the new lender are the contacts.

Don’t confuse this with a different refund. HUD’s lender-facing refund page describes a refund of upfront premium on a canceled case. That is an overpayment or cancellation refund. It is not the refinance credit.

Where Sources Disagree

Some consumer pages say refund credits apply only to streamline and rate-and-term loans, while others include cash-outs. HUD’s fact sheet speaks of an FHA loan refinanced into a new FHA loan, without carving out cash-outs. Your lender’s underwriter applies HUD’s requirements and the lender’s own guidelines to your file, so ask the loan officer how the credit is treated on a cash-out. The worksheet treatment is where the real difference shows up, as described above.

What the Decision Looks Like in Practice

The credit is a bonus, not a reason to refinance. The trade-offs are plain.

• A smaller premium means a smaller financed balance, which slightly lowers the annual premium base and the monthly cost.
• It can reduce cash needed at closing if you pay the premium in cash.
• Timing can cost you. If you are near the end of year three, the date matters more than almost anything else.
• The new premium never disappears. On a thirty-year loan above the program’s loan-to-value threshold, the annual premium lasts for the term. At or below that threshold, it ends after eleven years, and a cash-out capped at 80% falls in that second group. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.

A homeowner with a conventional loan has no credit to check, and a homeowner with an older FHA loan may find the credit is zero. In both cases, the cash-out decision rests on the equity, the ratios and the new loan’s cost, not the refund. Program figures are subject to lender guidelines and full file review.

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 is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. HUD FHA Homeowners Fact Sheet on Refunds

2. HUD-92900-B

3. HUD Upfront Premium Payments and Refunds (FHA Connection guide)

4. HUD’s lender-facing refund page