The Quick Read: On a one-unit primary home, an FHA cash-out refinance reaches about the same leverage as a conventional cash-out: 80% of the home’s appraised value. FHA’s edge is not how much it lends. It is generally more flexible credit qualification, paid for with mortgage insurance that most conventional loans at 80% LTV or below do not carry. Net cash depends on appraised value, what you owe, and the costs rolled into the new loan, all subject to lender guidelines and full file review.
How an FHA Cash-Out Works
A cash-out refinance replaces your current mortgage with a new, larger one and pays you the difference. The proceeds are not limited to paying off old debt, which is what separates it from a no-cash-out refinance.
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.
The FHA cash-out is capped at a lower loan-to-value than it once was, on a home you have owned and occupied for 12 months before the case number is assigned. Before September 1, 2019, the cap was 85%. That older number still circulates, and it is wrong now. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Lendmire is a mortgage broker. It arranges these loans through wholesale lenders in the 16 states where it is licensed for consumer lending. It does not lend.
How the Loan Is Underwritten, Step by Step
Five pieces decide how much cash a file produces.
1. Value. The appraisal sets the adjusted value. The 80% cap is measured against that number, not the price you paid and not your own estimate.
2. Maximum loan. The maximum is 80% of that value. If a second lien stays in place, it counts toward the combined limit.
3. Payoff. Your existing first mortgage and any liens being paid off come out of the new loan first.
4. Costs. Closing costs paid from proceeds come out next. So does the upfront mortgage insurance premium if it is financed.
5. Cash to you. What remains is your net cash. This is plain arithmetic, not a HUD formula.
Credit and debt ratios sit on top of that. Across the wholesale programs Lendmire places FHA files with, the decision score starts at 580. The base ratio pair is 31/43 (housing and total debt) with no compensating factors. Documented compensating factors can reach 40/50 for the strongest files, and the automated finding governs most files. Everything here is subject to lender guidelines.
FHA vs. Conventional Side by Side
| Factor | FHA cash-out | Conventional cash-out |
|---|---|---|
| One-unit primary home leverage | 80% LTV | Generally the same 80% neighborhood |
| 2-4 units, second home | Second home not eligible; 2-4 unit primary residence is eligible | Lower leverage |
| Mortgage insurance | Upfront and annual | Generally none at 80% LTV or below |
| Credit flexibility | Generally more flexible | Generally tighter |
| Ownership requirement | Owned and occupied 12 months | Varies by lender |
The conventional limits come from Fannie Mae’s Eligibility Matrix. Caps run lower for 2-4 unit homes, second homes and investment properties. Check the current matrix for the exact figure on your property type, because lenders can add their own overlays.
FHA cash-out is for your principal residence only. If your plan involves a rental or second home, occupancy decides the leverage, and FHA does not reach it.
Why Leverage Is Not the Difference
The assumption most borrowers bring is that FHA lends more. On a cash-out, it does not. HUD’s FY2023 report on the MMI Fund confirms FHA cut its cash-out maximum in 2019. The report says the cut immediately reduced the share of cash-out refinances, though that share rose again in later years. It also says conventional and FHA cash-out together made up most refinance activity.
So the real comparison runs through three things:
- Credit. FHA is generally more forgiving of a lower score or a heavier debt load.
- Insurance. FHA charges it. Conventional at 80% LTV or below generally does not.
- Net cash. A financed premium shrinks what lands in your account.
How Mortgage Insurance Changes the Math
FHA carries an upfront premium of 1.75% of the base loan, usually financed into the balance. The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. HUD Mortgagee Letter 2023-05 sets the annual schedule.
Duration matters. On a thirty-year FHA loan with a higher LTV, the annual premium lasts for the term, while a lower-LTV loan sees it end after eleven years. A cash-out sits at 80% at most, so it lands in the shorter tier. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Run the logic on one hypothetical home. The same appraised value, the same payoff and the same equity go through both loans. At the 80% cap, both loans start at nearly the same gross amount. The FHA loan then loses the financed upfront premium from proceeds, and it adds an annual premium to the monthly budget. The conventional loan has no insurance line at that leverage. On a strong credit profile, that difference can leave more cash in hand and a lighter monthly cost with conventional, though each file depends on its own terms.
That flips when credit is thin. Conventional pricing adjusts upward as credit tiers drop, and some borrowers do not qualify at all. For them, FHA’s insurance is the cost of getting a loan.
Where the General Rule Breaks
Seasoning and occupancy. FHA wants you to have owned and occupied the home for 12 months before the case number. Files that assume this away get kicked back.
Second liens. A subordinate lien you keep counts toward the 80% combined limit. It does not let you go above it. The first mortgage plus any liens also has to fit within FHA’s statutory limits, and county loan limits apply.
Limited cash-out. Fannie Mae’s Selling Guide treats a refinance with small cash back as a limited cash-out refinance, with its own rules. FHA’s rate-and-term refinance and Streamline are also separate from cash-out. The FHA rate-and-term with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. The FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit. If you need no cash, those can be a better fit.
Manufactured homes. Conventional guidelines restrict manufactured-home cash-out, and the rules differ by program. Verify before you plan on it.
Low appraisal. The 80% cap applies to the value the appraiser reports. A lower value cuts the maximum loan and your cash by the same proportion. Ask about appraisal reconsideration with recent comparable sales if the number misses.
Who Each Loan Fits
| Borrower profile | Usually fits better |
|---|---|
| Strong credit, low debt ratios | Conventional |
| Lower score or heavier debts | FHA |
| Wants no ongoing mortgage insurance | Conventional |
| Needs ratios above conventional limits | FHA, with documented factors |
| Owns a second home | Conventional only |
| Plans to sell or refinance again soon | Compare insurance drag first |
Key Terms Defined
Adjusted value. The appraised value HUD uses to measure the loan-to-value cap.
CLTV. Combined loan-to-value, which adds subordinate liens to the first mortgage.
UFMIP. The upfront mortgage insurance premium FHA charges, usually financed into the loan.
Annual MIP. The recurring FHA insurance premium charged on the balance.
Seasoning. The required period you have owned and lived in the home before refinancing.
The Three-Day Cancel Window
A cash-out on your primary home carries a right of rescission. The CFPB explains that you have three business days to cancel after closing, and Saturdays count. The clock does not start until you receive the required documents. Without them, the right can run up to three years. If you rescind, you still owe the original loan. The cancel right can be waived only for a bona fide personal financial emergency, per the CFPB.
Switching Paths
You can move from conventional to FHA, or back. Each move is a new refinance with its own appraisal, seasoning and costs. To exit FHA insurance, you generally refinance into a conventional loan once your equity and credit support it, or you wait out the insurance term if your original loan qualified for the shorter schedule.
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.
Frequently Asked Questions
Does FHA lend more than conventional on a cash-out?
No, not on a one-unit primary home. Both generally sit near 80% of appraised value. FHA’s advantage is easier credit qualification, not leverage. Conventional can be lower for other property types.
Can a second loan push me above 80% on FHA?
No. HUD counts subordinate liens toward the combined LTV, so the first mortgage plus any second lien stays under the same 80% cap.
Is FHA mortgage insurance permanent on a cash-out?
Not at 80% LTV. The annual premium lasts for the term only above 90% LTV on a thirty-year loan. At or below 90%, it ends after eleven years. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
What decides how much cash I get?
Appraised value, your total payoff and the costs rolled into the new loan. The loan maximum minus payoff and costs is your net cash. A financed upfront premium reduces it.
Do I need to live in the home?
Yes. FHA cash-out is for your principal residence, owned and occupied for 12 months before the case number. Conventional allows other occupancies at lower leverage.
For your own numbers, request a scenario review with Lendmire.
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
1. Fannie Mae Eligibility Matrix
3. HUD Mortgagee Letter 2023-05
6. CFPB
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 the FHA Cash-Out Loan Works for Borrowers Priced Out of Conventional · How to Use the Inheritance Exception on an FHA Cash-Out · How to Get an FHA Cash-Out When Conventional Costs Too Much
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.