The Quick Read: Usually none while probate is open and the estate still holds title. Once title is recorded in the heir’s name, the loan is sized the same way as any FHA cash-out: up to 80% of the home’s adjusted value, less the existing mortgage, any buyout of co-heirs, and the costs of the new loan. What is left is the cash. Occupancy, payment history and title decide whether you get that far.
The Short Answer, in Order
The cash amount is a subtraction problem. Probate decides when you are allowed to run it, not what the answer is.
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.
Here is the order that matters on a probate file:
1. Title has to sit with the borrower, not the estate.
2. The home has to qualify as an owner-occupied principal residence.
3. The appraisal sets the value, and the 80% cap applies to that adjusted value.
4. Everything that must be paid off comes out of the room under the cap.
5. Whatever remains is the cash to you.
One caveat up front. HUD does not publish a rule written for a home “in open probate” as its own category. The answer here combines HUD’s cash-out and inheritance rules with how title works during probate. The title points are lender and title-industry practice, not HUD rule. Say that to yourself before you plan around them.
Key Terms Defined
Probate: The court process that confirms a will, or sorts out an estate without one, and authorizes who receives the property.
Title: The legal record of who owns the home. A new mortgage must be recorded against the borrower’s title.
Adjusted value: The value FHA applies its loan cap to, as determined under HUD guidelines. It is not always the raw appraisal figure.
Cash-out refinance: A new first mortgage that pays off the old debt and gives you the leftover equity in cash. FHA treats a loan on a home with no mortgage the same way.
Combined LTV: The first mortgage plus any second liens, measured against the home’s value. The 80% cap applies to this combined number too.
Successor in interest: A person who takes over ownership of a home from a borrower, such as an heir. A “confirmed” successor is one the servicer has verified.
What the 80% Cap Means for Your Cash
The cap is 80% of adjusted value. HUD Mortgagee Letter 2019-11 cut the maximum LTV and combined LTV on FHA cash-out refinances to 80%, for case numbers assigned on or after September 1, 2019. HUD’s own announcement describes the earlier, higher cap that this change replaced, and notes an even earlier cut made in 2009.
If you have seen advice saying FHA lets you borrow 85% or more, it is out of date.
Across the wholesale programs Lendmire places files with, the FHA cash-out reaches 80% LTV on a home owned and occupied for 12 months before the case number. Every figure is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Here is the part families miss. The 80% is the ceiling on the whole loan, not the amount you receive. Think of it as a bucket with a line drawn at four-fifths full. The old mortgage, any second lien, a sibling’s buyout, the financed upfront mortgage insurance premium and closing costs all fill the bucket first. You get what is left above them.
The Cash Formula, Step by Step
Run it in this order. No dollar amounts are needed to see how it works.
1. Start with the adjusted value. The appraisal sets the value. FHA applies the cap to the adjusted value under HUD guidelines.
2. Take 80% of it. That is the largest base loan the program allows on the home.
3. Subtract the existing mortgage payoff. If the decedent had a loan, it must be paid off. If the home is paid off, this line is zero.
4. Subtract second liens and co-heir buyouts. The cap applies to combined LTV, so a home equity line counts. A court-ordered or agreed payment to a co-heir comes out here too.
5. Account for the loan’s own costs. On the programs Lendmire places, the upfront mortgage insurance premium is 1.75% of the base loan and is typically financed. Closing costs come out of the same room. The annual premium is separate and sits in the monthly cost, not in the cash math.
6. What remains is your cash.
A paid-off inherited home is the cleanest case. A house with no mortgage still counts as a cash-out refinance, so the formula runs with step 3 at zero.
Now picture a home with a mortgage and a co-heir to buy out. Steps 3 and 4 both take a bite, and the cash can shrink to very little. Same value, same 80%, much less in hand. An appraisal that lands below the family’s expectation shrinks the cash directly, because every dollar of value lost comes off the cap at 80 cents.
Why Open Probate Usually Blocks the Loan
The block is title, not the LTV math.
A cash-out is a new first mortgage recorded against the borrower’s title. During open probate, the estate or the deceased owner often still holds title. Lender and title-industry practice is that most lenders want a probate court order authorizing distribution to the heirs before closing. Title insurers generally will not insure a refinance on a property still in active estate administration. Neither point is a HUD rule. Both are how files get stopped in practice.
Here is where you stand at each stage:
| Stage | Can you apply for cash-out? | Next step |
|---|---|---|
| Probate just opened | Usually no | Keep paying taxes and insurance |
| Court order issued, deed not yet recorded | Often not yet | Record the deed in the heir’s name |
| Title recorded in heir’s name | Yes, if other tests are met | Confirm occupancy and payment history |
| Home treated as a rental | Not until 12 months of occupancy | Document move-in |
“Having the will” is not the same as having title. Probate paperwork alone is not recorded ownership. Lenders and title companies look for the deed in the heir’s name.
Documents commonly requested, as practice rather than a HUD list: the death certificate, the will or probate order, the recorded deed in the heir’s name, proof of occupancy, and a title search showing liens.
Occupancy: The Rule That Decides If FHA Applies at All
Standard FHA cash-out is for owner-occupied principal residences only. The usual test is 12 months of owning and living in the home before the case number is assigned.
Inheritance has an exception. Under FHA’s handbook, the heir does not need to meet the minimum occupancy period before applying, provided the home has never been treated as an investment property since the inheritance. That is why the common belief that you must wait 12 months after inheriting is wrong in the ordinary case.
The exception has a hard edge. If the heir rents the home out after inheriting, the clock changes. They are not cash-out eligible until they have lived in it as a principal residence for at least 12 months. A vacant house is not the problem. A rented house is.
This language comes from HUD Handbook 4000.1, which HUD describes as the authoritative source for FHA Single Family policy on its FHA INFO page. Handbooks change often. Check the current text before relying on any detail here.
Payment history on an existing loan matters too. The handbook asks the lender to document that all mortgages were paid within the month due for the previous 12 months, or since they were obtained if shorter. A decedent’s loan that fell behind during illness can create a question for the file.
Where the General Rule Breaks
These are the edge cases that stop files.
The executor or estate as borrower. The handbook’s inheritance language speaks of a borrower who inherited and occupies the home. It does not appear to allow an estate to take an FHA cash-out on its own. The working answer is that title must be in the heir’s name.
A sibling or parent helping to qualify. A non-occupant co-borrower is allowed on an FHA purchase, but income from a non-occupant co-borrower may not be used to qualify for a cash-out refinance. If the heir’s own income does not carry the loan, a relative’s income will not fix it here.
Co-heirs on title. Lenders generally will not lend on a property where title is shared with heirs who are not borrowing. A buyout needs a court decree or a documented agreement. The handbook does allow a departing title holder’s equity to be financed. That is the structure behind a buyout refinance, and it counts as property-related debt in a no-cash-out calculation. Buyout money is not cash to you. It goes to the co-heir.
A 2-4 unit home. If the heir lives in one unit, ask the lender how the home is classified before assuming anything. The handbook does not clearly define “investment” for that case.
Keeping the decedent’s FHA loan. You may not need to refinance at all. HUD states that all FHA-insured Single Family forward mortgages are assumable. An assumption takes no cash out. Separately, under CFPB Regulation X, a confirmed successor in interest is someone whose identity and ownership interest the servicer has confirmed, and a confirmed successor is treated as a borrower for the mortgage servicing rules. That protects your standing on the existing loan. It does not entitle anyone to a new cash-out loan.
How This Compares With Other Routes
Cash-out is one option. Which fits depends on what you need.
| Route | Cash to you | Probate fit |
|---|---|---|
| FHA cash-out | Yes, up to the 80% cap less payoffs | Needs title in heir’s name |
| FHA Streamline | No cash, existing FHA loan only | Only if the loan is already FHA |
| Conventional cash-out | Yes, with its own cap and rules | Title still needs to be settled |
| Assume existing FHA loan | None | Works while keeping the old loan |
The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review. It needs a net tangible benefit, and the premium continues. It is not a source of cash.
On the conventional side, Fannie Mae’s Selling Guide treats a new first mortgage on a property with no mortgage lien as a cash-out. Fannie Mae’s heirs’ property page notes that a limited cash-out refinance can help buy out a co-owner.
Private estate loans and probate cash advances exist for people who cannot wait. They are separate products with their own costs and risks, and they are not FHA programs. Selling is the other exit. Compare each against simply waiting for title to vest.
What the Decision Looks Like in Practice
Most heirs face three questions. Answer them in this order.
Do I have title yet? If not, the loan is not available. The work is finishing probate and recording the deed. Meanwhile the estate still owes property taxes, insurance and any existing mortgage payments, and those do not pause.
Does the home qualify as my principal residence? If you live there and it was never rented, the inheritance exception can apply. If it was rented, count 12 months of occupancy first.
Is the cash worth the new loan? A cash-out replaces whatever the decedent had with a larger, new FHA loan carrying mortgage insurance. On a thirty-year loan above 90% LTV the annual premium lasts for the term. At or below 90% it ends after eleven years. Compare that against keeping or assuming the existing loan. Cash-out at the 80% cap usually sits at or below that 90% line, but the premium terms are set by the program, so confirm them on your file.
The income, credit and payment-history tests still apply in full. Across the programs Lendmire places, FHA starts at a 580 decision score. Ratios run from a base of 31/43 up to 40/50 with documented compensating factors, and the automated finding governs most files. County loan limits apply and change every year. If you have a past bankruptcy or foreclosure, HUD’s waiting periods apply: two years from a chapter 7 discharge and three years from a foreclosure.
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
Can I get an FHA cash-out before probate closes?
Usually not. A cash-out is a new first mortgage recorded against your title, and during open probate the estate often still holds title. Most lenders want a court order authorizing distribution, and title insurers generally will not insure the loan while the estate is in active administration. That is industry practice, not a HUD rule, so a few lenders may differ.
How much cash will I actually receive?
Less than 80% of the home’s value. The cap is 80% of adjusted value, and the existing mortgage, second liens, co-heir buyouts, the financed upfront premium and closing costs all come out first. A paid-off home keeps the most cash. A low appraisal reduces it directly.
Do I have to wait 12 months after inheriting?
Not in the ordinary case. The handbook’s inheritance exception waives the minimum occupancy period, as long as the home was never treated as an investment property. If you rent it out after inheriting, you must live in it for 12 months before cash-out is available.
Can a paid-off inherited house get a cash-out loan?
Yes. A home with no mortgage still counts as a cash-out refinance, and the same 80% formula applies with no payoff to subtract. This is the most common inherited-home situation.
Do I have to refinance or assume the existing loan right away?
No. A confirmed successor in interest has servicing rights on the existing loan, and HUD says FHA forward mortgages are assumable. An assumption gives you no cash, so it fits when you want to keep the loan rather than pull equity.
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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References
1. HUD Mortgagee Letter 2019-11
3. HUD FHA INFO Messages (Handbook 4000.1)
4. HUD FHA FAQ: assumable mortgages
5. CFPB Regulation X, 12 CFR 1024.31
7. Fannie Mae heirs’ property page
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: FHA Cash-Out vs Waiting for Probate on an Inherited Home · How to Get an FHA Cash-Out on a Home Owned Before Marriage · How to Qualify and Apply for an FHA Cash-Out Refinance on a Home With No Mortgage
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.