The Quick Read: It depends on the building first and the borrower second. FHA cash-out suits owners with thinner credit or higher debt ratios, in a building that is FHA-eligible. Conventional cash-out tends to suit owners with strong credit, more equity, and a condo project that passes its review. In a high-cost state, the loan-size ceiling and the building’s status deserve a look before your credit score does.
Both loans replace your current mortgage with a larger one and hand you the difference in cash. The two programs run on different rules, and on a condo the project’s finances and paperwork can matter as much as yours.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.18% as of November 5, 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.
Side-by-Side
| Factor | FHA Cash-Out | Conventional Cash-Out |
|---|---|---|
| Maximum leverage | 80% LTV | Varies by occupancy; often at or below FHA’s |
| Credit floor | Lower floors, 580 decision score at the wholesale programs we use | Generally higher; set by lender and automated findings |
| Debt ratios | 31/43 base; up to 40/50 with documented factors | Set by automated findings and lender overlays |
| Mortgage insurance | Upfront 1.75% plus annual premium | Often none at lower leverage |
| Occupancy | Principal residence only | Primary, second home, or rental, at tighter leverage |
| Ownership test | Owned and occupied 12 months before the case number | Own seasoning rules, often shorter |
| Condo review | HUD-approved project or Single-Unit Approval | Fannie Mae or Freddie Mac project standards |
| Loan size | County loan limits apply | County conforming limits apply |
Treat the conventional column as a pattern, not a promise. Conventional guidelines shift by occupancy, unit count and lender. Your quote shows the real numbers.
Why the Building Comes First
Check the project before you check yourself. That is how condo files actually go.
On the FHA side, HUD says it insures condo loans for a unit in an FHA-approved project. It also insures units in a non-approved project that meets Single-Unit Approval requirements. The project must also meet HUD’s standards for insurance coverage, financial condition, title, pending legal action and physical condition.
Single-Unit Approval is narrower than it sounds. HUD requires the project to be complete, with at least five units, and to meet a subset of project tests. Those cover owner-occupancy, concentration of FHA loans and financial condition. The approval covers your unit only. It does not make the building FHA-approved. The lender submits the request through the process HUD describes in its FHA Connection condo help. Expect extra paperwork.
On the conventional side, the lender checks the project against Fannie Mae or Freddie Mac standards. Fannie Mae’s Selling Guide says a unit in a project marked “Unavailable” in its Condo Project Manager tool cannot be sold to Fannie Mae. Typical trouble spots are litigation, large special assessments tied to critical repairs, thin reserves and too much commercial space.
Here is the catch. A building can pass one program and fail the other. Some fail both. Nobody should assume that FHA approval carries over to conventional, or the reverse.
When the FHA Cash-Out Is the Better Fit
FHA cash-out fits when the borrower file is the weak link and the building is not.
- Your credit is middling. Across the wholesale programs we place FHA files with, the decision-score floor starts at 580. Conventional lenders often want more.
- Your debt ratios are high. FHA starts at 31/43 and can reach 40/50 with documented compensating factors, subject to the automated finding. Condo dues count toward your housing ratio, so a high-cost condo can strain ratios fast.
- You live in the unit and have for a while. FHA cash-out is for a principal residence only, and the home must be owned and occupied for 12 months before the case number.
- The building is already FHA-approved. That removes the biggest unknown.
The tradeoff is mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, usually financed into the balance. It also charges an annual premium between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan with a higher LTV, the annual premium lasts the full term, while at lower LTVs it ends after eleven years. Since FHA cash-out sits well below that higher-LTV threshold, the eleven-year version is the one you would usually be looking at, subject to lender guidelines.
One myth to retire: FHA cash-out does not go to 85% or 95%. Old HUD archive pages still show an 85% cap, which is outdated. The current limit for our program is 80% of value.
Wholesale lenders also apply FHA’s county loan limits. Those change every year, and in a high-cost county the ceiling can bind before the 80% cap does. Look up your county’s number on HUD’s and FHFA’s sites, not in an old blog post.
When the Conventional Cash-Out Is the Better Fit
Conventional cash-out fits when the borrower file is strong and the building is the open question, or when FHA premiums would cost more than they are worth.
- Your credit and ratios are comfortable. A strong file can avoid the mortgage insurance FHA requires. Whether a conventional loan carries insurance depends on leverage, so compare it in your own quote.
- You want a lower-leverage cash-out. If you only need a modest slice of equity, conventional can be cleaner.
- The unit is a second home. Conventional cash-out also exists for second homes, at tighter leverage than a primary residence. FHA cash-out does not, because it is limited to an owner-occupied principal residence.
- The building is warrantable but not FHA-approved. Many buildings pass conventional review without ever seeking FHA approval.
- You need a bigger loan. In high-cost counties, the FHA and conventional ceilings can land close together, but they are set separately. If your needed loan exceeds the FHA ceiling for your county, conventional may be the only route, and a jumbo may be the next one. Check both.
The tradeoffs are tighter credit expectations and a full project review. A full cash-out refinance generally does not get the relaxed project-review treatment that some limited transactions receive. Expect the lender to look hard at HOA budgets, reserves, insurance and special assessments.
Two Gates, Plus One for Condos
Think of the file as three gates, in this order.
1. The building. Is the project eligible under FHA, conventional, or both? If neither, stop and talk about alternatives.
2. The loan size. Does the amount you want fit under both the LTV cap and your county’s loan limit? A larger county limit does not mean you can borrow up to it. The LTV cap still applies, and on a high-priced condo either one can bind first.
3. The borrower. Credit, ratios, reserves, and the automated finding.
Picture a homeowner with a 700-range score and a building the lender cannot get cleared for FHA. Conventional is the path. Now picture a homeowner with a 600-range score, high ratios and an FHA-approved building. FHA is probably the only door open. Same equity, opposite answers.
FHA applies its cap to “Adjusted Value,” which can differ from the raw appraisal. A thin comparable set in a luxury building can trim usable equity either way.
Decision Cheat Sheet
| Your situation | Likely lean |
|---|---|
| Strong credit, warrantable building | Conventional |
| Thinner credit, FHA-approved building | FHA |
| Building approved for neither | Neither; consider alternatives |
| Need exceeds the FHA county ceiling | Conventional or jumbo |
| Second home | Conventional |
| High ratios because of condo dues | FHA, subject to the automated finding |
What Else to Weigh
Cash-out turns equity into debt. The CFPB notes it may lengthen your payoff time and change your monthly payment. It is not free money. A home equity line or a second mortgage can leave your first loan alone, which matters if the loan you have is one you want to keep.
Also expect condo-specific delays in paperwork. HOA questionnaires and project documents are routinely requested, and some HOAs take their time answering.
Key Terms Defined
Cash-out refinance: A new mortgage larger than your current one, where you receive the difference in cash.
Approved project: A condo building HUD has placed on its approved list for FHA loans.
Single-Unit Approval: HUD’s path for one unit in a non-approved building, covering that unit only.
Warrantable: A condo project that meets Fannie Mae or Freddie Mac standards for conventional loans.
LTV (loan-to-value): The loan amount as a percentage of the home’s appraised value.
Mortgage insurance: Coverage that protects the lender, paid by the borrower, upfront and over time on FHA loans.
Balanced Verdict
Neither loan wins on its own. FHA is the more forgiving choice for the borrower’s credit and ratios, while conventional can cost less if your credit is strong, though it brings a full project review of the building. In a high-cost state, the loan-size ceiling can quietly override both. Start with the building, confirm the loan size, then see which program your file fits.
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. See Lendmire’s FHA cash-out refinance program page for how the FHA side works. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Frequently Asked Questions
Can I get an FHA cash-out loan on a condo that is not FHA-approved?
Sometimes. HUD allows Single-Unit Approval for a unit in a non-approved project that is complete, has at least five units, and meets a subset of project tests. Approval covers that unit only and adds paperwork. Some buildings will not qualify.
Does FHA cash-out let me borrow more than conventional?
Not usually. FHA cash-out has a program ceiling on loan-to-value, and conventional cash-out is often at or below that. The bigger difference is who qualifies, since FHA accepts lower credit and higher ratios.
Do both loans require mortgage insurance?
FHA always does: an upfront premium of 1.75% plus an annual premium. Conventional cash-out at lower leverage often does not carry private mortgage insurance. Compare the full cost in your own Loan Estimate.
Can I cash out on a condo I use as a second home?
Not with FHA, which is limited to a principal residence. Conventional programs may allow it at tighter leverage, subject to lender guidelines.
Does a higher county loan limit mean I can borrow that much?
No. The loan must fit under both the county limit and the LTV cap. Whichever is lower controls.
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 brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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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
2. HUD – FHA Connection condo help
3. Fannie Mae Selling Guide – Full Review Process
5. CFPB – Using Your Home Equity guide
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: How an FHA Cash-Out Lender Reads a Solar Lien in a High-Cost State · Can a High-DTI Borrower Free Up Payment With an FHA Cash-Out? · FHA Cash-Out Refinance Requirements to Go Fixed
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.