How Much Cash Comes Out of an FHA Cash-Out Refinance After Delisting the Property?

The Quick Read: The cash is the new loan, capped at 80% of the home’s appraised value, minus everything that loan has to pay off or cover. Delisting does not change that formula. It affects whether a lender will take the file and when, not how much cash the math produces. Subject to lender guidelines and full file review, the payoff of your current mortgage, any second lien, the financed upfront premium and financed closing costs all come out before you see a dollar.

What Actually Sets the Cash Amount?

The 80% cap is the whole story on size. HUD Mortgagee Letter 2019-11 set the maximum loan-to-value and combined loan-to-value for an FHA cash-out refinance at 80% of the adjusted value. HUD’s announcement described the change as a reduction from the earlier, higher limit, and it noted that cash-out loans made up a large share of all FHA-insured refinance transactions. Plenty of web pages still quote the old number. Skip them.

Here is the waterfall, in order:

1. Take the appraised value. That is the “adjusted value” for a home you’ve owned a year or more.

2. Multiply by 80%. That’s the ceiling on the entire new loan.

3. Subtract the payoff of your current first mortgage.

4. Subtract any second lien that stays in place or must be paid. The combined cap means it counts against the same 80%.

5. Subtract the financed upfront mortgage insurance premium, which is 1.75% of the base loan.

6. Subtract financed closing costs.

What’s left is your cash. Not the 80%. The 80% is the cap on the whole loan, and the cash is only the remainder.

Run it on percentages. Suppose your current mortgage balance equals 50% of the home’s appraised value, and there is no second lien. The new loan can reach 80%, so the gap is 30% of value. The upfront premium and financed costs then come out of that 30%. A low appraisal shrinks the cash almost point for point, because every dollar of lost value cuts the cap by 80 cents.

Does Delisting Change the Math?

No. The formula is identical whether the home was ever listed. What delisting changes is eligibility, and mostly through lender policy rather than a HUD rule.

HUD sets the occupancy and ownership tests, and none of them is tied to a listing. Individual lenders add their own overlays on top. Across the wholesale programs Lendmire works with, a recently listed home is a question the lender wants answered in writing, and the answer varies by lender. Some want the listing formally cancelled rather than simply expired. Some set an off-market waiting period before they’ll take an application. Some ask for a letter explaining why you’re keeping the home and what the cash is for.

Because those are overlays and not HUD rules, one lender’s “no” is not every lender’s “no.” That’s where a broker earns the fee: the same file can read differently across lenders. Still, confirm current wording with the lender, since handbook updates roll out on a schedule and secondary summaries lag.

One practical point. Make the delisting decision before the appraisal and case number are ordered, not after. If you cancel the listing, document it, and then order the appraisal, the file is clean from the start.

Which Tests Does the Home Still Have to Pass?

Delisting doesn’t waive the basics. Across the wholesale FHA programs Lendmire places files with, the cash-out refinance reaches 80% loan-to-value on a home you’ve owned and occupied as your principal residence for 12 months before the case number is assigned. That’s an owner-occupied loan. It isn’t available on a second home or a rental.

Several things follow from that:

• Occupancy is a clock. If you moved out and rented the home while it was listed, even briefly, the 12-month occupancy test can break. Secondary reproductions of HUD’s handbook language say a borrower who rents out an inherited home isn’t eligible for cash-out until they’ve lived there 12 months, with an inheritance exception when the property was never treated as an investment. Check the exact wording against HUD before relying on it.
• Payment history counts. Lenders review your mortgage payments over the prior year. The exact lookback varies by lender and the handbook section that applies, so ask which one governs your file.
• Free-and-clear homes qualify. A home with no mortgage can be refinanced as a cash-out transaction, and the same 80% cap applies.
• A bought-recently home is a different case. Within 12 months of purchase, standard cash-out generally isn’t available, and delisting doesn’t fix that. HUD’s handbook glossary also calls for an as-is appraisal on a property acquired within 12 months of the case number date.
• A non-occupant co-borrower may not help here. On a purchase, a non-occupant co-borrower is allowed. Cash-out is stricter, so confirm with your lender whether a non-occupant co-borrower’s income can be used on your file.

Credit and income get the usual review. The wholesale programs Lendmire places FHA loans with start at a decision score of 580. Debt-to-income ratios start at a 31/43 base pair, and documented compensating factors can reach 40/50 at the top tier, though the automated finding governs most files. Everything is subject to lender guidelines.

Where Does the Cash Shrink?

County loan limits apply and change every year, so ask your loan officer which one governs your county. On a modest-value home, the limit rarely binds. On a high-value home, it can.

One caution on the premium. The 1.75% is calculated on the base loan, and the total with the premium rolled in is what has to fit the loan-to-value rules. Handbook details on that interaction are worth confirming with the lender before you plan around a precise number.

What About Annual Mortgage Insurance?

The annual premium doesn’t reduce your cash at closing, but it changes what the loan costs to carry. Across the programs Lendmire places, it runs between 0.15% and 0.75% of the balance, depending on term, loan amount and loan-to-value. On a thirty-year loan above 90% loan-to-value, it lasts for the full term. At or below 90%, it ends after eleven years. Since a cash-out loan caps at 80%, the shorter schedule is the one that typically applies, subject to lender guidelines.

That premium is a program feature, not a price quote. Your Loan Estimate is where the actual figures appear.

Key Terms Defined

Adjusted value: The value HUD uses to apply the loan cap. For a home owned 12 months or more, it’s the appraised property value.

Combined loan-to-value (CLTV): Your first mortgage plus any second liens, divided by the home’s value. On FHA cash-out, it’s capped at 80%.

Case number date: The date HUD assigns the file its case number. The 12-month ownership and occupancy tests are counted back from it.

Upfront mortgage insurance premium: A one-time FHA charge of 1.75% of the base loan, usually financed into the new loan.

Seasoning: The length of time you’ve owned, occupied or been off the market before applying. HUD sets some seasoning rules, and lenders add others.

How Does the Timeline Fit Together?

Think of it as a sequence, not a single date:

• Purchase date. Starts your ownership clock.
• Listing and delisting. The listing itself isn’t a HUD clock, but lenders may want it cancelled and documented.
• Occupancy. You need 12 months of ownership and occupancy before the case number.
• Case number and appraisal. Order these after the file is clean.
• Closing and disbursement. The new loan pays off the old one, and the remainder comes to you.

Notice what’s missing: no step where the listing date lowers your cash.

What Should You Prepare If the Home Was Listed?

• Proof the listing is cancelled, not just expired.
• A short letter explaining why you’re keeping the home and how you’ll use the cash.
• Records showing you lived in the home through the occupancy period.
• Twelve months of mortgage payment history.
• Any lease or rental history, if the home was rented at any point, since that bears directly on the occupancy test.

How Does This Compare With the Alternatives?

The flip point is the existing loan. If your current mortgage terms are better than anything available now, replacing it just to reach equity may cost more than a second loan would. If you’re already refinancing for other reasons, cash-out can fold everything into one loan. The CFPB’s guide to using home equity notes that a cash-out refinance may extend your payoff time and raise your monthly payment, and that lenders generally want you to keep 10% to 20% of your home’s value as equity. FHA’s 80% cap is firmer than that general guidance.

Common Misconceptions

“FHA lets me borrow 85%.” That ended in 2019. The cap is 80%.

“80% is the cash I get.” It caps the whole loan. Payoff, liens, premium and costs come out first.

“HUD requires a waiting period after delisting.” HUD’s occupancy and ownership tests still apply, but any wait tied to a listing is lender policy and varies.

“Delisting and refinancing right away is a loophole.” The ownership, occupancy and payment-history tests still apply.

“The listing price sets my cash.” Only the appraisal counts.

“An FHA Streamline can pull out cash.” It’s built for a rate-and-term change on an existing FHA loan, not meaningful cash.

A niche note: mortgages on Hawaiian Home Lands under Section 247 weren’t covered by the 80% change, per Consumer Finance Monitor.

If You’re Weighing Your Options

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. Subject to lender guidelines and full file review; 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 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.

References

1. HUD Mortgagee Letter 2019-11

2. HUD archived press release PR 19-114

3. HUD Handbook 4000.1 Glossary

4. CFPB, Using home equity to meet financial needs

5. Consumer Finance Monitor