The Quick Read: An FHA cash-out stops the new loan at 80% of the appraised value. A VA cash-out can reach 100% of the value VA assigns, with the funding fee counted inside that cap. Your check is whatever is left after the old loan is paid off and costs are covered. When only one spouse is on the loan, that spouse’s income, credit and eligibility decide the answer.
Key Takeaways
- The program sets the ceiling on the new loan. The payoff, closing costs and any premium or fee set the cash you actually walk away with.
- FHA leaves at least 20% equity in the home. VA can leave none.
- Only the people on the note have their income and credit counted. A spouse off the loan still matters in some states, and for VA eligibility.
- FHA needs 12 months of ownership and occupancy first. VA has no mortgage insurance, but it has its own tests.
How Does a Cash-Out Work in the First Place?
A cash-out refinance replaces your current mortgage with a bigger one. The new loan pays off the old balance and any liens. You keep the difference as cash. The size of the new loan comes from the home’s appraised value, so the appraisal is the first number that matters.
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 formula is short:
1. Take the program’s ceiling percentage times the appraised value. That is the largest new loan allowed.
2. Subtract the payoff on your current mortgage and any other liens.
3. Subtract closing costs and prepaid items that are rolled into the loan.
4. Account for any financed premium or fee. It adds to the new balance and shrinks the usable room under the ceiling.
What is left is your cash. The ceiling is not the cash, and the two are easy to confuse. A person hears “80%” and thinks they get 80% of their home’s value. They do not. They get 80% of the value as a maximum loan, minus everything the loan must first pay off.
The rest of this piece shows how the FHA and VA versions compare for a couple where one spouse carries the mortgage.
What Does the Same Home Put in Your Pocket Under Each Program?
Dollar examples can mislead, so use percentages. Say your home appraises at 100% of its value and your current payoff is 50% of that value. Here is the ceiling math before any costs.
| Step | FHA cash-out | VA cash-out |
|---|---|---|
| Ceiling on the new loan | 80% of value | 100% of VA value |
| Current payoff | 50% | 50% |
| Room before costs | Up to 30% | Up to 50% |
| Equity left at closing | At least 20% | Can be none |
Now subtract. Closing costs and prepaid items come out of that room, whether you pay them in cash or roll them into the loan. On FHA, the upfront mortgage insurance premium is 1.75% of the base loan, and it is financed on top. That means the new balance ends up a little higher than the base loan. On VA, the funding fee can be financed too. But VA’s own rules say the fee cannot push the loan above 100% of reasonable value, so any overage is paid at closing, according to VA’s loan-guaranty circular.
Your cash will therefore sit below those top-line figures. By how much depends on the file. Lender policies, appraisal results and credit can also pull the usable amount below the program ceiling, subject to lender guidelines and full file review.
Notice what the table says about the two programs. On identical homes with identical payoffs, VA can release far more. The tradeoff is eligibility. VA needs a qualifying veteran or surviving spouse. FHA does not.
What Is the FHA Side Like, Step by Step?
FHA cash-out is for a home you own and live in. Across the wholesale programs Lendmire places FHA loans with, the cash-out reaches 80% LTV on a home owned and occupied as your principal residence for 12 months before the case number is assigned. That clock matters. A couple who bought last spring cannot cash out this fall under FHA, no matter how fast the value has climbed. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Here is how the loan is underwritten:
1. Seasoning check. The lender confirms you have owned and lived in the home for 12 months. Your mortgage payment history is reviewed too, and late payments can stop the file or limit your options.
2. Application and case number. The lender orders an FHA case number. Then it reviews income, assets, credit and debts.
3. Credit and ratios. The wholesale programs start at a 580 decision score for maximum financing. The base debt ratio pair is 31/43, meaning housing costs of 31% and total debts of 43% of income. Documented compensating factors can stretch that to 40/50 at the top tier, and the automated finding governs most files.
4. Appraisal. The appraiser’s adjusted value sets the 80% ceiling.
5. Payoff and closing. The new loan pays the old mortgage and liens. You receive the balance.
On cost, FHA charges an upfront premium of 1.75% of the base loan on nearly all mortgages, per HUD Mortgagee Letter 2023-05. It also charges an annual premium. In the wholesale programs, that annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV it lasts for the term. At or below 90% it ends after eleven years. A cash-out at 80% LTV lands in the shorter-duration group on those terms. These are program mechanics, not a price quote. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
FHA is also worth a look when your credit is rough. Credit events carry HUD waiting periods: two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD rules, not a promise from any lender.
What Is the VA Side Like?
VA cash-out is the equity-heavy option. VA’s cash-out rules cap the new loan at 100% of VA reasonable value. That number comes from a VA appraisal, and the funding fee sits inside it. The home must be one you own and live in.
Three VA features shape the check:
- No monthly mortgage insurance. VA’s program page lists no private mortgage insurance. That keeps the ongoing carrying cost lower than an FHA loan of the same size, because FHA charges an annual premium.
- Net tangible benefit. Every VA cash-out has to show the borrower gains something real. The options include dropping monthly mortgage insurance, shortening the term, lowering the principal-and-interest payment, or holding the loan well under the cap. Replacing an FHA loan can meet the test by removing that insurance.
- Loan types. A Type I refinance does not exceed the payoff of the loan it replaces. A Type II exceeds it, and the difference goes to you as cash. The cash-out discussed here is Type II.
VA can also refinance any type of lien. That helps if you carry a second mortgage or a home-equity line in addition to the first loan. A streamlined VA refinance, known as an IRRRL, cannot do that.
What Changes When Only One Spouse Is on the Loan?
The people on the note carry the file. Their income, credit and debts are what the lender reviews. A spouse who is not on the loan does not add income to the qualifying math. That sounds like a drawback, but it can also protect you. A spouse with weak credit stays off the file, and does not drag the score down.
The details differ by program.
| Household | FHA cash-out | VA cash-out |
|---|---|---|
| One spouse on loan | That spouse’s income and credit decide | Same, if that spouse is the eligible veteran |
| Both spouses on loan | Both incomes and credit count | Both count; guaranty covers the veteran’s share |
| Veteran plus civilian spouse | FHA does not care who is a veteran | A spouse is the exception to the joint-loan rule |
| Non-veteran only | FHA still works | Not eligible unless a surviving spouse |
FHA, married couples. A spouse on the note counts for both income and credit, and a spouse who lives in the home is an occupant, not a non-occupant co-borrower. On a cash-out, a co-borrower who does not live in the home generally cannot use their income. So adding a parent or sibling to boost the file usually will not work here. If you live in a community-property state, a spouse who stays off the note may still have debts reviewed under HUD guidance, unless state law excludes them. Ask your loan officer before assuming that spouse is invisible.
VA, veteran plus civilian spouse. VA’s Buyer’s Guide says VA’s guaranty cannot cover a non-veteran’s share of a loan unless that person is the veteran’s spouse. A civilian spouse is the exception. So a couple made up of a veteran and a civilian spouse is not treated as a “joint loan” with a reduced guaranty. A non-spouse co-borrower, such as a friend or sibling, does get that reduction, and it can change what the lender needs from you.
Surviving spouses. The Buyer’s Guide also says a surviving spouse who was not on the loan being refinanced can only do a cash-out, and only once VA has qualified them as a surviving spouse.
Divorce buyouts. The streamlined VA refinance generally cannot pay out equity. Removing a co-borrower usually means a cash-out that includes the buyout money. The remaining borrower must then qualify alone. That is the same logic as the FHA path: the loan lives or dies on one person’s income and credit.
Even so, state rules can shape the signature requirements and the allowed leverage. Some states cap cash-out LTV below the federal programs. Ask for the details that apply to your state.
How Do You Choose Between FHA and VA?
If you qualify for VA, run it first. Then compare it against FHA. For everyone else, FHA is the program that fits.
Choose FHA if:
- Neither spouse has VA eligibility.
- You are fine leaving at least 20% equity in the home.
- You have owned and lived in the home for 12 months.
- Your credit sits near the bottom of what conventional loans want, but you clear the 580 decision score used across the wholesale programs.
Choose VA if:
- One spouse is a veteran, or you are a qualifying surviving spouse.
- You want the largest possible check, or you want to avoid a monthly mortgage insurance charge.
- You can show the net tangible benefit VA requires.
- You are not worried about leaving little or no equity afterward.
If your current loan is FHA and you are weighing a streamline instead, that is a different tool. The FHA streamline skips the appraisal and does not pay out cash. The FHA rate-and-term refinance with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. Neither gives you cash.
One honest tension here. The bigger check from VA is also the bigger risk. With little or no equity left, a dip in home values can leave you owing more than the house is worth. That is a real cost, and it does not show up on a closing statement.
What Shrinks Your Check?
These are the items that sit between the ceiling and your deposit:
| Item | Effect on the check |
|---|---|
| Payoff of the current loan | Largest deduction |
| Other liens | Paid from proceeds |
| Closing costs and prepaids | Reduce cash or add to balance |
| FHA upfront premium (1.75%) | Financed on top of the base loan |
| VA funding fee | Counts inside the 100% cap |
| Lender limits | May set the ceiling lower |
Each of these shows up on the Loan Estimate and Closing Disclosure, the standard forms you receive for a consumer mortgage. Compare them line by line. Costs financed into the loan do not vanish. They raise your balance and reduce the cash you get.
Is the Cash Worth It?
A bigger loan means a bigger balance to pay back. The CFPB’s guide to using home equity notes that a cash-out can lengthen the time to pay off your mortgage, and your monthly payment may rise because the loan is larger. That is true of both programs. A couple with one income on the loan should check the new payment against that single income before moving forward.
Use of the proceeds matters too. CFPB research on cash-out refinancing found that borrowers often use the cash to pay down credit card and auto debt. Credit scores improved at first, then gradually worsened, and card balances trended back toward earlier levels. The lesson is simple. Paying off a card with home equity only helps if the card stays paid off.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Adjusted value: the appraised value FHA uses to set the cash-out ceiling.
Reasonable value: the value from a VA appraisal that sets VA’s ceiling.
LTV (loan-to-value): the loan balance divided by the home’s value, shown as a percentage.
Cash-out refinance: a new, larger mortgage that pays off the old one and pays you the difference.
Upfront premium: the one-time FHA mortgage insurance charge, financed into the loan.
Funding fee: the one-time VA charge, which counts inside the 100% cap and may not apply to every veteran.
Net tangible benefit: the real gain VA requires a cash-out to deliver, such as dropping mortgage insurance.
Seasoning: the time you must own and occupy a home before a program allows a cash-out.
Frequently Asked Questions
Can my spouse stay off the loan and still get an FHA or VA cash-out?
Usually yes. Only the borrowers on the note have income and credit counted. A spouse off the loan may still need to sign certain closing documents depending on state law. In community-property states, the lender may also review that spouse’s debts. Your loan officer can tell you which rules apply where you live.
Does adding my spouse raise the cash I receive?
Not directly. The ceiling comes from the home’s value and the program. Adding a spouse can help you qualify if your income or credit is too thin alone, but the check comes from the same formula. A second borrower with high debts can make qualifying harder, not easier.
Can I take all my equity?
Only with VA, and only up to 100% of reasonable value including the funding fee. FHA stops at 80% of adjusted value, so at least 20% equity stays in the home. Either way, payoff and costs come out before the cash reaches you.
Does a civilian spouse reduce my VA entitlement?
A civilian spouse is the exception to VA’s joint-loan rule, so a veteran and spouse on one loan is not treated as a reduced-guaranty joint loan. A non-spouse co-borrower is different. Ask your lender how that works for your file.
Do I need to wait before a cash-out?
FHA wants 12 months of ownership and occupancy before the case number is assigned. VA wants a home you own and live in. Lenders may add their own history requirements, subject to lender guidelines and full file review.
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, since nothing here is a commitment to lend.
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 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
2. HUD Mortgagee Letter 2023-05
3. VA Pamphlet 26-7, Chapter 6: Refinancing Loans
6. CFPB guide to using home equity
7. CFPB research on cash-out refinancing
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: Banks That Offer an FHA Cash-Out Refinance When Your Current Mortgage Is an FHA Loan · How an FHA Cash-Out Works on a Duplex With a Locked-in Mortgage · How to Qualify and Apply for an FHA Cash-Out Refinance With Existing FHA Mortgage
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.