The Quick Read: It depends on your home’s value, what you still owe, and what the closing costs take out. There is no fixed dollar amount. The loan can reach 80% of your home’s adjusted value, and the cash you receive is whatever is left after your current mortgage, any other liens, and costs are paid. Tuition is allowed as a use, and the money comes to you, not to the school.
What Actually Reaches Your Bank Account?
Cash to you is the new loan minus everything that has to be paid off or paid for first. Think of it as a formula, not a number.
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.
1. Start with the home’s adjusted value. This is the appraised value after HUD’s adjustments.
2. Multiply by 80%. That is the ceiling on your new loan, including any other liens that stay in place.
3. Subtract the payoff of your current mortgage.
4. Subtract any other liens you are paying off.
5. Subtract the closing costs paid from the loan proceeds.
What remains is your cash. If the number is small or negative, the refinance does not help with tuition.
HUD set the 80% limit in Mortgagee Letter 2019-11, for case numbers assigned on or after September 1, 2019. Older articles that still show 85% are out of date.
Put plainly, at least 20% equity has to stay in the home after closing. You cannot pull all of it out.
Can the Money Go to Tuition?
Yes. A cash-out refinance does not limit what you spend the proceeds on. The lender does not ask for a tuition bill, and the school is not paid at closing. The funds go to you, and you pay the bursar.
That flexibility is why the loan fits tuition. It is also why you should plan the spending yourself, because nobody will hold the money for later semesters.
Which Homes and Borrowers Qualify?
Across the wholesale programs Lendmire places FHA files with, the cash-out option reaches 80% LTV on a home you have owned and occupied for 12 months before the case number is assigned. LTV, or loan-to-value, is the loan balance divided by the home’s value. This is Lendmire’s FHA cash-out refinance program in its simplest form. Everything is subject to lender guidelines and full file review.
Here is what shapes the amount in practice:
- Occupancy. It has to be your principal residence. A second home or rental is generally not eligible for this program.
- Appraisal. A low value shrinks the 80% ceiling, and so your cash.
- Credit and payment history. Recent mortgage late payments can reduce your options or rule out the loan.
- Debt ratios. The base pair is 31/43 (housing costs and total debts as a percent of income). Documented compensating factors can stretch it as far as 40/50 at the top tier. An automated finding governs most files.
- County loan limits. FHA sets the maximum loan by county, and the limits change every year. Check HUD’s lookup for your county.
You do not need an existing FHA loan. A conventional mortgage can be refinanced into FHA, and so can a home owned free and clear.
What Comes Off the Top Before You Get Paid?
Four things shrink your check, and the biggest is usually your old mortgage.
Your current payoff. The new loan replaces your whole first mortgage. If you owe a lot, little is left over.
Other liens. A home equity loan or HELOC that stays in place counts against the 80% cap. County loan limits apply to FHA loans as well. If a HELOC is open, the federal consumer-finance regulator notes its lender may need to approve the refinance or be paid off.
Mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, which can be 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 above 90% LTV, the annual premium lasts for the term. At or below 90%, it ends after eleven years. A cash-out at 80% falls in the second group, though the exact grid depends on your loan and is subject to lender guidelines. Both premiums eat into the benefit.
Closing costs. They come out of the proceeds if you roll them in, or out of your pocket if you don’t. Either way they reduce the net.
Your Loan Estimate and Closing Disclosure show the details. Look at “cash to close” and total closing costs separately. They are different numbers, and a refinance can show money coming to you while still carrying real costs.
Working Backward From a Tuition Bill
Start with the tuition total, not the loan size. Then ask whether the formula above can produce it.
Picture a family with a home worth a certain amount and a mortgage near half of it. The 80% ceiling leaves a gap of about 30% of the home’s value before costs. Costs and mortgage insurance trim that. If the family needs a sum that is most of that gap, the refinance is tight. If they need a small part of it, it works comfortably.
Now flip it. Picture a family whose mortgage is already around 75% of value. The 80% cap leaves a sliver. Even before costs, almost nothing is left. That family needs another source.
| Your situation | Likely result |
|---|---|
| Low balance, strong value | Meaningful cash after costs |
| Mid balance, one year of tuition | Often workable, check the net |
| High balance near 75% of value | Little or no cash |
| Four years of tuition, modest equity | May fall short |
| Recent late payments | Cash may be reduced or unavailable |
Ask a loan officer for a net-cash estimate before you commit to any tuition plan.
Timing: Tuition Is Due in Pieces, the Cash Comes in One Lump
You get one lump sum, but tuition is billed semester by semester. That mismatch matters.
Money you borrow today and spend next year costs interest in the meantime, on the full balance. You can park it in a savings account for later terms, but the interest you earn will not match what you pay on the loan.
Plan three things:
- Pay the school directly from your account, so the first bill is covered.
- Set aside the later semesters in a separate account.
- Allow time for the refinance itself. Refinances of a primary home carry a federal right to cancel, so funds may not reach you the moment you sign. Confirm the details with your lender before counting on a due date.
If the bill is due soon and the loan timing is uncertain, ask the school about a payment plan as a bridge.
The Cost Most People Miss
A cash-out refinance replaces your entire first mortgage. You give up your current rate on the whole balance, not just on the new cash.
This is the point that changes the answer for many families. If your existing loan is a good one, you are trading it for a new loan on a larger balance. The CFPB warns that a cash-out may lengthen the time to pay off your mortgage, and that you are turning equity into debt. Tuition paid this way is debt secured by your home. If you cannot pay, the home is at risk.
You are also spreading a few years of tuition over a long loan term. Ask for a Loan Estimate with the cash-out and compare it to your current loan, so you see the true cost side by side.
How Does It Compare With the Alternatives?
| Option | How it works | Key tradeoff |
|---|---|---|
| FHA cash-out refinance | Replaces first mortgage, pays cash | Reprices whole balance |
| HELOC | Adds a second lien you draw on | Keeps your first mortgage |
| Home equity loan | Adds a lump-sum second lien | Second payment |
| Student loans | Borrowed in the student’s or parent’s name | Not secured by your home |
| Rate-and-term refinance | Pays off loan and costs only | No cash to you |
The CFPB says the cost compared with a HELOC varies by terms. A cash-out replaces the first mortgage with a bigger one. A HELOC leaves it alone. If your current loan is strong, a second lien may keep more of it intact.
A rate-and-term FHA refinance reaches 97.75% on a principal residence occupied for the previous twelve months, but it only covers your payoff and costs. It does not generate tuition money.
When This Is a Bad Idea
Skip the FHA cash-out if any of these fit:
- Your current mortgage is a good one and the new cash is small by comparison.
- Your equity is thin, so the net after costs barely covers one term.
- You would be stretching to make the payment on a larger loan.
- The tuition need is four years of costs and the cash covers only part of it.
- A recent late payment may keep you from qualifying.
Financial aid formulas are a separate question, so ask the school’s aid office how home equity is treated.
Before You Apply
Gather these:
- Your latest mortgage statement, to show the payoff.
- Statements for any HELOC or home equity loan.
- Income documents and a list of monthly debts.
- The tuition bills and due dates.
Ask the loan officer:
- What is my estimated adjusted value and 80% ceiling?
- What is the estimated net cash after payoffs, mortgage insurance, and costs?
- How does the new loan compare with keeping my current one?
- When will funds reach me compared to my tuition due dates?
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.
Key Terms Defined
Adjusted value: the appraised value after HUD’s adjustments, which is the number the 80% cap applies to.
Cash-out refinance: a new, larger mortgage that pays off the old one and pays you the difference in cash.
Combined LTV: all loans on the home divided by its value, counting any second liens that stay.
Mortgage insurance premium (MIP): FHA’s insurance charge, with an upfront piece and an annual piece.
Cash to close: what you pay or receive at closing, which differs from total closing costs.
Frequently Asked Questions
Is there a typical dollar amount for an FHA cash-out refinance?
No. The amount depends on value, payoff, other liens, costs, and the county loan limit. Use the formula: 80% of adjusted value, minus payoffs and costs.
Does the lender send the money to the college?
No. The cash is paid to you, and you pay the school. That gives you flexibility but also means you must manage the money across semesters.
Can I borrow 85% of my home’s value?
Not on current FHA cash-out loans. HUD lowered the limit to 80% for case numbers on or after September 1, 2019. At least 20% equity must remain.
Do I need to already have an FHA loan?
No. You can refinance a conventional loan into FHA cash-out, or take cash from a home you own free and clear, if you meet the program rules.
Does the mortgage insurance reduce my cash?
It can, because the upfront premium can be financed, which raises your balance, and the annual premium adds to your monthly cost. Both reduce the net benefit.
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.
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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
1. HUD Mortgagee Letter 2019-11
2. CFPB, HELOC and refinancing your first mortgage
3. CFPB, Using home equity to meet financial needs
4. CFPB, similar loans to a HELOC
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: Can You Pay Off a PACE Lien With an FHA Cash-Out Refinance? · Best FHA Cash-Out Refinance Program Without Bringing Cash · FHA Cash-Out Refinance Rules After a Title Change
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.