The Quick Read: It depends on your home’s appraised value and what you owe. The new FHA loan can be at most 80% of the home’s Adjusted Value. Your cash is what remains of that 80% after the payoff of your current mortgage, any second lien, and costs that get financed into the loan. Twelve months of ownership and occupancy clears the seasoning gate. It does not set the amount.
Here is the formula in one line: cash is 80% of Adjusted Value, minus the payoff, minus any other liens, minus financed costs. Program details are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
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.
Why There Is No Fixed Cash Number
HUD Mortgagee Letter 2019-11 lowered the maximum loan-to-value and combined loan-to-value on FHA cash-out refinances from 85% to 80% of Adjusted Value. FHA had cut the cap before that, from 95% to 85%. HUD’s announcement tied the change to risk, noting that cash-out loans had become a large and growing share of FHA refinances.
So 20% of the value stays in the home. Whatever you already owe comes out of the 80% first. What is left is yours.
Any page still showing 85% is out of date. HUD’s older reference material carried that figure, and it has been superseded.
The Math From Value to Net Cash
A worked example in percentages only. Treat these as illustrations, not quotes.
Say the home appraises at 100 units of value. The maximum loan is 80 units. If the payoff plus financed costs come to 60 units, the cash is about 20 units. If they come to 80 or more, there is no cash at all.
| Scenario | Payoff plus costs | Max loan | Cash out |
|---|---|---|---|
| Low equity | 78 units | 80 units | about 2 units |
| Moderate equity | 60 units | 80 units | about 20 units |
| High equity | 35 units | 80 units | about 45 units |
One more piece. On Lendmire’s FHA cash-out refinance program page, the upfront mortgage insurance premium is 1.75% of the base loan and is financed. That raises the balance, and it sits inside the 80% cap along with other financed costs. The annual premium then depends on term, loan amount and LTV. Those are program facts, not prices.
Does 12 Months of Ownership Qualify You?
Yes, on the seasoning test, provided the home has been your principal residence. Across the wholesale programs Lendmire places, an FHA cash-out reaches 80% LTV on a home owned and occupied for 12 months before the FHA case number is assigned. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Two details matter in practice:
- The clock runs to the case number, not to closing and not to the day you apply.
- Occupancy has to be real. Owning a home you rent out does not count. The home must be your principal residence.
Meeting the clock is not approval. The file is still reviewed for credit, payment history, income, debt ratios and reserves.
Why Your Cash May Be Less Than You Expect
Cash at the one-year mark can come out smaller than the headline 80% suggests. Four things drive that.
1. Little equity built. If you bought with a low down payment, the payoff is close to the original loan. A year of principal paydown is small.
2. Modest appreciation. The appraisal sets the ceiling. A low appraisal shrinks the maximum loan, and the cash shrinks with it.
3. Financed costs. The upfront premium and other costs come out of the same 80%. The “cash to borrower” line on the Closing Disclosure is the net figure, not the headline.
4. Other liens. A second mortgage gets paid off from the 80% too, because the combined LTV cap is also 80%.
This is why a homeowner with an FHA purchase loan and a year of ownership should run the formula before counting on a number.
The Appraisal and Adjusted Value
The FHA appraisal produces the value HUD adjusts into “Adjusted Value,” and the 80% test runs against that. Appraisal reconsideration is a routine step when comps come in light. A packet with recent nearby sales and documented improvements gives the appraiser something concrete to review. It does not promise a higher value.
County loan limits also apply. FHA limits are set by county and change every year, so check the limit for your county and unit count. For most borrowers the 80% test binds first.
What If You Have Owned Less Than 12 Months?
The standard cash-out is not available. Expect tighter treatment, and plan around the seasoning date instead of forcing the file.
One exception comes up:
- Inherited homes. If you inherit a home, the standard cash-out generally requires that you occupy it as your principal residence for 12 months. Renting it out does not build that history. HUD’s older reference guide also allowed inherited homes within 12 months where the borrower had occupied the home since inheriting it. Rules have changed since, so confirm current treatment with the lender.
A rate-and-term refinance is a different product. It pays off the existing loan without taking cash, and with an appraisal it reaches 97.75% on a principal residence occupied for the previous 12 months. If your goal is a lower balance or a different term and you do not need cash, that route keeps more equity available.
FHA Cash-Out Compared With the Alternatives
| Option | Cash to you | Equity left in home | Best fit |
|---|---|---|---|
| FHA cash-out | Yes | 20% | Need cash, FHA-friendly credit |
| FHA rate-and-term | No | Up to 2.25% (97.75% LTV) | Change term, no cash |
| FHA Streamline | Essentially none | Unchanged | Existing FHA loan, no appraisal |
| Conventional cash-out | Yes | Set by that program | Stronger credit and equity |
| HELOC or home equity loan | Yes | Often 10-20% | Keep first mortgage as is |
The CFPB’s home equity guide notes that lenders typically want you to keep 10-20% equity on cash-out, HELOC or home equity loans. FHA’s 80% cap keeps 20% in the home. One feature of the Streamline is worth noting: it refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit, and the premium continues.
What the Cash Costs You Over Time
A cash-out replaces your current mortgage with a larger loan. The CFPB guide says that can stretch the payoff time and raise the monthly payment. That is mechanics, not a verdict. If the current loan has a low payment and a short remaining term, replacing it for cash is a real trade.
Many people use the cash to pay down other debt. CFPB research on cash-out borrowers found that more than half said they were paying off other bills or debts in each year from 2014 to 2019. Converting card debt into a mortgage balance only helps if the card habit changes.
Mortgage insurance matters too. On a thirty-year FHA loan above 90% LTV, the annual premium lasts the full term. At or below 90% it ends after eleven years. Because the cash-out cap is 80% LTV, a thirty-year cash-out falls in the eleven-year group. Terms still depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Documents That Keep the File Clean
- Proof of occupancy: driver’s license, utility bills, bank and credit card statements at the address.
- Mortgage payment history: the current servicer’s statements. Lenders generally want a clean recent record.
- Payoff statements for the first mortgage and any second lien.
- Income and debt documents for the automated review.
- Settlement statement from the purchase, which supports ownership dates.
A mismatch between the address on your ID and the property is the quiet one. Fix it before the file goes in.
Misconceptions to Drop
- “FHA lets me borrow 85%.” Out of date. The cap is 80%.
- “A higher credit score raises the cap.” It does not. The 80% applies regardless of score, though score affects eligibility and review.
- “Cash out equals 80% of my value.” The 80% is the whole new loan. Payoff and costs come out first.
- “Any loan type can be refinanced into FHA cash-out.” A conventional, VA or other loan can be paid off by an FHA cash-out if the FHA tests are met.
- “Second homes and rentals qualify.” Occupancy decides it. FHA cash-out is for the home you live in.
Key Terms Defined
Adjusted Value: The appraised value after HUD’s adjustments, which the 80% cap runs against.
Case number: The FHA identifier assigned to the loan, which marks the end of the 12-month clock.
Seasoning: The required period of ownership and occupancy before cash-out is available.
Combined LTV: The total of all liens on the home divided by its value. On FHA cash-out it is also capped at 80%.
Net cash: What is left of the new loan after the payoff, other liens and financed costs.
A Quick Estimator Before You Call
Write down four numbers: your estimated home value, your current mortgage payoff, any second lien balance, and a rough allowance for financed costs. Multiply value by 80%. Subtract the other three. If the result is small or negative, cash-out does not fit yet, and waiting for more paydown or appreciation may.
The refinance of a principal dwelling generally carries a three-business-day right to cancel after signing.
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
Is there a minimum or guaranteed cash amount at 12 months?
No. The amount is whatever remains of the 80% after payoff, other liens and financed costs. With little equity it can be close to zero.
Does a higher appraisal always mean more cash?
Generally yes, because the 80% is applied to the higher Adjusted Value. The payoff does not change, so each added unit of value flows mostly to the cash. Lender review of the file still applies.
Can I use cash-out on a rental or second home?
No. FHA cash-out is for a principal residence, and occupancy decides the leverage.
What if I only have 11 months of ownership?
The standard cash-out is not available. Waiting until the full 12 months have passed before the case number is assigned is the cleaner path.
Does the upfront mortgage insurance reduce my cash?
It can, because the upfront premium is financed into the loan, so it raises the balance inside the 80% cap and leaves less room for cash. The annual premium then depends on term, amount and LTV.
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. HUD Mortgagee Letter 2019-11
2. HUD press release on the FHA cash-out cap
3. HUD’s older reference guide
5. CFPB research on cash-out borrowers
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 Much Cash Comes Out of an FHA Cash-Out Refinance to Consolidate Debt? · How Much Cash Comes Out of an FHA Cash-Out Refinance If a Co-Borrower Lives Elsewhere? · How Much Cash Comes Out of an FHA Cash-Out Refinance for a Child’s Home Gift?
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
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.