How Much an FHA Cash-Out Lends on a Condo Without Project Approval

The Quick Read: An FHA cash-out on a condo in a building that isn’t on FHA’s approved list reaches the same 80% loan-to-value ceiling as any other FHA cash-out. Project approval changes whether the unit can be financed at all, not how much it can borrow. The unit has to pass a one-off review called Single-Unit Approval, and the building’s existing FHA loan count has to leave room for one more. Everything is subject to lender guidelines and full file review.

What “Without Project Approval” Actually Means

FHA keeps a list of condo projects it has approved. A building off that list isn’t necessarily a bad building. It may never have applied, or its approval may have lapsed.

For a cash-out refinance, you have two routes:

• Approved project. The building has an FHA Condo ID, and the file follows the standard project path.
• Single-Unit Approval (SUA). The building is not approved, but your individual unit is reviewed on its own.

HUD’s condominium page says FHA insures loans to buy or refinance a unit in an approved project, or in a project that isn’t approved but meets the Single-Unit Approval requirements. To qualify for SUA, the project must be complete and ready for occupancy and have at least five dwelling units. It cannot be a manufactured home.

Here’s the catch most borrowers miss: SUA approves the unit, not the building. A neighbor can’t borrow against your approval, and you can’t borrow against theirs.

How Much Can You Take Out?

The ceiling is a percentage of the home’s adjusted value, and the same ceiling applies whether or not the project is approved. HUD lowered the cap in Mortgagee Letter 2019-11, for case numbers assigned on or after September 1, 2019. HUD’s announcement of the change notes that the cap had been higher before that, after an earlier cut in 2009. If you see an older, higher cap quoted somewhere, it’s stale.

HUD sets no lower percentage for a unit approved through SUA. The difference is eligibility, not leverage. A lender confirms this against your specific file.

Two points trip people up:

• The 80% is of value, not of equity. Your current payoff comes out of that 80% first. Closing costs and any required items come out next. What’s left is your cash.
• Combined LTV counts other liens. A second mortgage sits inside the same 80%.

The loan must also stay within the FHA county loan limit, which varies by county and resets every year. Most condo owners are nowhere near it, but in a high-cost county it is worth a quick check.

Appraisal sensitivity is real. Because the cap is 80%, every dollar of appraised value that disappears lowers your maximum loan by 80 cents. A thin sales history in a small building can make that appraisal harder to support.

Step by Step: How the Loan Is Underwritten

Across the wholesale programs Lendmire places FHA loans with, the cash-out path runs in a steady order. Here is how the condo wrinkle fits in.

1. Check your own eligibility first. Standard FHA cash-out is for a principal residence you’ve owned and occupied for 12 months before the case number is assigned. The wholesale programs start at a 580 decision score. Ratios start at 31/43 (housing to total) and can stretch to 40/50 at the top tier with documented compensating factors, though the automated finding governs most files.

2. Look up the building. If the project has an FHA Condo ID, you’re on the approved path. If it was never approved, or its status shows Expired, Rejected or Withdrawn, you’re on the SUA path. HUD’s FHA Connection help page describes both.

3. Request the case number. On the SUA path, the lender submits Form HUD-9991, the condo questionnaire. The case number is placed on hold until HUD reviews it and approves or rejects the unit. HUD’s help pages exempt FHA-to-FHA streamlines from that hold. A cash-out is not a streamline, so the hold applies.

4. The association completes its section. The HUD-9991 includes a part that the condo association or management company fills out. The lender reads it alongside the loan-level section.

5. The lender reviews the project. Reviews generally look at the building’s financial condition, how many units are owner-occupied, and FHA concentration. Exact thresholds sit in the HUD Handbook and change, so confirm them with your lender rather than relying on a number from a blog.

6. Full appraisal. A cash-out requires one. If you’ve owned the home 12 months or more, value is generally the as-is appraised value. Recent purchases or repair situations can change how “adjusted value” is set.

7. Loan math. Maximum base loan is 80% of adjusted value. Subtract the payoff, closing costs and required items. The remainder is yours.

A recent process change helps some files. HUD’s FHA INFO announcements describe automatic case number assignment for projects already registered in FHA Connection with a status of Expired or Rejected – Register SUA. FHA also reminds lenders that an SUA case number is not an approval of the unit or the project. Requests that can’t be assigned automatically still go to manual review by FHA staff.

Structures and Variations

The last row is the one that matters. On the SUA path, the cap on how many units in the building can carry FHA loans is far tighter than for approved projects. HUD’s FHA Connection help describes it as 10% for projects with ten or more units, and a maximum of two FHA-insured units for projects with fewer than ten. Because that help page is dated, a lender will check the figure against the current Handbook.

Your lender can’t change the cap. If the building is full, the loan is blocked regardless of how much equity you have.

Where the General Rule Breaks

The 80% ceiling is stable. These situations are where files stall or fail:

• A full building. A small building may already have its FHA slots used, and a file cannot move forward until a slot is open.
• Fewer than five units. SUA isn’t available.
• Not complete or not ready for occupancy. Not eligible.
• Manufactured-home condos. These are excluded.
• A lapsed approval. If your building was approved when you bought and has since expired, you aren’t stuck. Expired, Rejected and Withdrawn projects can use SUA. That’s the situation the recent automation targets.
• Occupancy. Second homes and rentals don’t qualify for standard FHA cash-out. Occupancy decides eligibility, not the percentage, and the investor lane is a separate world.
• Recent ownership. If you haven’t owned and lived in the home for 12 months, standard cash-out isn’t open. A rate-and-term refinance with an appraisal can reach 97.75% on a principal residence occupied for the previous twelve months, but that doesn’t put cash in your hand.
• Rule changes by case-number date. HUD applies rule changes based on when your case number was assigned, not when you applied. A change that starts on a given date doesn’t reach back to earlier case numbers. HUD’s Mortgagee Letters can also change the rules before the Handbook is updated, so a printed summary can lag.

One narrow exception: the 80% change does not apply to loans under Section 247 of the National Housing Act. Most borrowers will never see it.

Mortgage Insurance and the Bigger Loan

FHA charges an upfront premium of 1.75% of the base loan, usually financed into the balance, plus an annual premium that depends on term, loan amount and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts for the loan’s term. At or below 90%, it ends after eleven years. Because cash-out tops out at 80%, the shorter schedule is the usual one.

The Consumer Financial Protection Bureau points out that a cash-out refinance may lengthen the time to pay off your mortgage, and the payment may rise because the new loan is larger. HOA dues also count as a housing expense in your debt-to-income ratio, which matters in a condo.

What the Cash Gets Used For

Be honest about why you’re borrowing. CFPB research found more than half of cash-out borrowers each year from 2014 to 2019 cited paying off other bills or debts. The same research found credit card balances trended back toward their pre-refinance levels the following year.

Using equity to clear high-cost debt can make sense. It makes less sense if the spending habit that created the debt hasn’t changed.

Your Decision in Practice

Picture a homeowner in a six-unit building that never went through FHA approval. She’s owned and lived in her unit for several years, her scores clear the 580 floor, and she wants to consolidate debt. The 80% ceiling applies to her appraised value just as it would anywhere. Her real questions are different:

• Does the building have room under the FHA concentration limit?
• Will the association complete its part of the HUD-9991?
• Does the appraisal support the value?

Now flip it. A homeowner in a large, long-established complex finds the building’s approval expired a while back. Same 80%, same SUA route, probably more room under the limit. Her risk is paperwork, not leverage.

If the building can’t pass, the alternatives are a conventional cash-out (which uses its own project rules and its own leverage limits), a home equity loan or a HELOC. Each trades something: typically a different leverage ceiling, a second lien, or a variable structure.

• Does my building have an FHA Condo ID, and what is its status?
• If it isn’t approved, is there room under the FHA concentration limit?
• Who completes the association’s section, and how cooperative is the management company?
• How long have I owned and occupied the unit under FHA’s 12-month test?
• What is my estimated net cash after payoff and costs at 80% of value?

Key Terms Defined

Project approval: FHA’s review and listing of a whole condominium building as eligible for insured loans.

Single-Unit Approval (SUA): HUD’s review of one unit in a building that is not an approved project.

FHA Condo ID: the seven-character identifier an approved project receives.

HUD-9991: the questionnaire used on the SUA path, with sections for the lender and the condo association.

Adjusted value: the value the 80% cap is applied to, which isn’t always the raw appraisal.

FHA concentration: the share of units in a building carrying FHA-insured loans.

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. Program details are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

For your own numbers, request a scenario review with Lendmire.

About Lendmire

Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.

References

1. HUD FHA Condominiums page

2. HUD Mortgagee Letter 2019-11

3. HUD press release on the cash-out LTV change

4. HUD FHA Connection help (condo)

5. FHA INFO announcements

6. CFPB guide to using home equity

7. CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores