The Quick Read: It depends on your home’s appraised value and what you still owe. The new loan can reach 80% of the home’s value, counting every lien together. Your cash is that ceiling, minus the payoff of your current loans, minus closing costs and the upfront mortgage insurance premium. At least 20% of the value stays in the house as equity.
That is the whole answer in one breath. The rest of this page shows you how to run it on your own numbers, what shrinks the check, and who should skip this loan.
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 for Your Cash
Your cash equals 80% of the appraised value, minus every lien you pay off, minus the costs of the new loan. Five steps get you there. Each one is a subtraction, and none of them is exotic.
1. Start with the value the appraisal comes back at. FHA calls the number it uses the Adjusted Value.
2. Multiply by 80%. That is the ceiling for all liens combined.
3. Subtract the payoff of your current first mortgage. Subtract any second mortgage or other lien you are clearing too.
4. Subtract closing costs, prepaid items such as escrow deposits, and the upfront mortgage insurance premium.
5. Check the result against your county’s FHA loan limit. County loan limits apply, and they change every year.
What is left is the check you receive.
The most common mistake is treating 80% as a share of your equity. It is a share of the home’s value. If you owe 60% of the value today, you do not get to borrow 80% of your 40% equity. You get room between 60% and 80% of the value, and the costs come out of that room.
Borrowed Is Not the Same as Received
The loan amount is bigger than the check. Many people miss this, and it is the single biggest source of disappointment at the closing table.
The new loan pays off your old mortgage first. It then covers the costs of closing the new one. Only what remains is yours. (A “cash-out refinance” is not a bonus on top of your loan. It is one new, larger mortgage that replaces the old one, fees included.)
The Consumer Financial Protection Bureau’s home equity guide describes it the same way. It also notes that a larger loan can mean a higher monthly payment and a longer road to paying the mortgage off.
A Worked Example (Modeled, Not a Quote)
Run the numbers on a home that appraises at exactly the value you hoped for. Every input below is a modeled assumption, not a market fact. Real costs depend on the loan, the lender, and the property.
- Ceiling for all liens: 80% of value.
- Current mortgage payoff: assume 55% of value.
- Closing costs, prepaids, and the upfront premium together: assume 4% of value.
- Cash to you: 80 − 55 − 4 = 21% of value.
So a home that supports an 80% ceiling and carries a 55% balance puts roughly a fifth of its value in your hands. Not the 25% you might guess from the gap alone.
Now see what happens when the appraisal or the payoff moves.
| Scenario | Ceiling (% of hoped value) | Cash (% of hoped value) |
|---|---|---|
| Appraises as hoped, 55% owed | 80% | About 21% |
| Appraises 5% low, 55% owed | 76% | About 17% |
| Appraises 10% low, 55% owed | 72% | About 13% |
| Appraises as hoped, 70% owed | 80% | About 6% |
| Appraises as hoped, 76% or more owed | 80% | Little or none |
Costs are held at 4% of the hoped-for value in every row. That is a simplification, since costs shift with the loan size.
Look at the third row. A 10% miss on value cost eight points of cash. The appraisal is the biggest swing factor because a lower value shrinks the ceiling dollar for dollar, while your payoff stays put.
Who Qualifies for the Cash
You can take cash out of your home if you have owned and lived in it for 12 months before the case number is assigned, and your payment record is clean. Those two items come before credit scores or anything else. Here is how the rules play out in practice.
Ownership and occupancy. The home must be your principal residence, and you must have owned and occupied it for the prior 12 months. A standard FHA cash-out is a primary-home product. It is not meant for a second home or a rental. If you own a rental or vacation property, occupancy decides the leverage, and this loan is not built for it.
Payment history. If you have a mortgage, you need at least six months of payments on the loan being refinanced. With six to 12 months of history, every payment must have been made when due. With 12 months or more, every payment must have landed within the month it was due across the previous 12.
Free-and-clear homes. A home with no mortgage can still be refinanced for cash. The payment-history test simply has nothing to measure.
You do not need an FHA loan today. The loan being paid off can be any mortgage, FHA or not. That surprises people. Across the wholesale programs we place files with, plenty of FHA cash-out borrowers come in from conventional loans.
Credit and ratios. FHA programs start from a 580 decision score across the wholesale programs we use. Some lenders set a higher floor for cash-out, so a score that works for a purchase may not clear a given cash-out file. The base debt ratios are 31/43, meaning housing costs at 31% of income and total debts at 43%. Documented compensating factors can stretch that to 40/50 at the top tier. The automated underwriting finding governs most files. All of this is subject to lender guidelines and a full file review, and none of it is a commitment to lend.
What Caps Your Cash
Five things limit the check even when you have plenty of equity. Know them before you count on a number.
The appraisal. Covered above. A low value cuts the ceiling and the cash together.
The county loan limit. The FHA limit applies to the combined mortgage amount. In a lower-limit county, a large home value can still leave you capped by the limit instead of the 80%. County loan limits apply, so check yours with a loan officer before assuming the 80% math is the binding one.
Timing. Buy less than 12 months ago and a standard FHA cash-out is generally off the table. The borrower must have owned the home and lived in it for the full 12 months before the case number is assigned.
Payoffs. Every lien being cleared comes off the top. That includes a second mortgage, a home equity line, or a lien that turns up in the title search. People forget the second lien until the payoff statement shows up.
Second liens you keep. The 80% cap is combined. If you keep a second mortgage or HELOC in place, it counts against the same ceiling. A second loan does not get you past the cap.
Mortgage Insurance and Closing Costs: What Actually Comes Out
FHA charges two kinds of mortgage insurance, and both cost you cash or monthly budget. The upfront premium is 1.75% of the base loan amount. Under HUD Mortgagee Letter 2023-05, that upfront figure sits alongside an annual premium that HUD lowered for newer case numbers. Borrowers commonly finance the upfront premium into the loan. Financed or not, it is a cost of getting the cash, so treat it as coming against your check.
The annual premium runs between 0.15% and 0.75% of the balance, depending on the loan term, loan amount, and LTV. On a thirty-year loan above 90% LTV, it lasts for the full term. At or below 90% LTV, it ends after eleven years. A cash-out at 80% falls in that second group, which helps. These are program facts, not a price quote. Your Loan Estimate shows the real figures for your file. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Closing costs come on top. A cash-out refinance is a new loan with its own appraisal, title work, and fees. Some of those costs get paid from proceeds and some get rolled into the balance. The effect is the same: the check shrinks.
Edge Cases Worth Knowing
A few situations change the answer.
- Inherited home. HUD’s archived refinance reference treated an inherited home as potentially eligible if you have lived there as your primary residence since the inheritance. That archive is old. Details on how inheritance works should be confirmed against current guidelines with your loan officer before you rely on it.
- Co-borrowers. Under HUD Mortgagee Letter 2023-17, income from a non-occupant co-borrower cannot be used to qualify on a cash-out. Rental income from an accessory dwelling unit on a one-unit property also cannot count as income. Nonprofits and government agencies are not eligible borrowers.
- Late payments. Under HUD Mortgagee Letter 2020-30, a cash-out file with a current or recent mortgage delinquency is downgraded and must be manually underwritten. A single late payment can push a file into manual review or out of eligibility. Describe your history to your loan officer before you apply.
- Forbearance. A completed forbearance plan, followed by a run of on-time payments, is required. The exact count is set by HUD, so ask for the current requirement.
- Manufactured homes. Extra restrictions apply. Ask early.
- Credit events. HUD’s waiting periods are two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD rules, not a promise from any one lender.
Cash-Out vs. the Other Ways to Tap or Reshape Your Loan
Cash-out is one option among several, and each answers a different question. If you do not need cash, you may not need this loan at all.
| Option | What it does | Cash to you? |
|---|---|---|
| FHA cash-out | New loan up to 80% of value | Yes |
| FHA rate-and-term | Reaches 97.75%, needs appraisal | No |
| FHA Streamline | Existing FHA loan, no appraisal | No |
| HELOC or second loan | Adds a second lien, keeps first | Yes |
The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review. It requires a net tangible benefit, and the mortgage insurance premium continues. It cannot give you cash. The rate-and-term version needs an appraisal and reaches 97.75% on a principal residence you have occupied for the previous twelve months. It also pays out no cash.
A HELOC keeps your current first mortgage in place and adds a second loan. The FHA cash-out replaces the first mortgage with a new loan and limits all liens together to 80% of value, which leaves 20% of the home’s value untouched.
Here is a toss-up worth thinking through. If your current first mortgage is one you are happy with, a second loan may reach the cash without touching it. If the first mortgage is the problem, a cash-out refinance fixes both at once. Which one wins depends on the whole picture, not just the check size. A mortgage broker can compare them side by side.
What Borrowers Do With the Cash (and the Caution)
Paying off other debts is the most common use. The CFPB’s report on cash-out borrowers found that more than half of cash-out borrowers chose it in the earlier years the survey covered, and more than 40% in the later years.
The same report found that credit card balances trended back toward their pre-refinance levels in the following year. They did not return fully, but they moved that way. Paying cards off with home equity clears the balance. It does not change the spending pattern that built it.
Turning card debt into a mortgage also stretches it over a longer term. That is a real cost, not a loophole.
Who Should Skip This Loan
Skip it if any of these fit.
- You bought the home within the last 12 months.
- You have recent late payments on the mortgage being paid off.
- You owe close to or more than 80% of the home’s value. There is no room.
- You need the cash for something you could cover another way, such as a smaller second loan.
- Your current loan has terms you value and you only need a modest amount.
If one of these fits, a cleaner path is waiting, repairing your payment record, or looking at a second loan instead.
Key Terms Defined
Adjusted Value: The home value FHA uses to measure your loan. It comes from the FHA appraisal and sets the 80% ceiling.
Combined loan-to-value (CLTV): The total of all liens on the home divided by its value. FHA’s 80% cap applies to this combined figure.
Base loan amount: The loan before the upfront mortgage insurance premium is added. The 1.75% premium is figured on this amount.
Payoff: The exact balance needed to close out a current loan or lien on the closing date. It includes interest owed up to that day.
Prepaids: Costs paid at closing for things that come due soon, such as escrow deposits for taxes and insurance.
Net tangible benefit: The test that a Streamline must pass. The refinance has to leave you measurably better off.
Frequently Asked Questions
Do I need an existing FHA loan to get an FHA cash-out refinance?
No. The loan being paid off can be any mortgage, and a home with no mortgage can qualify too. The test is that you have owned and lived in the home for 12 months before the case number is assigned, plus a clean payment record on any mortgage you are replacing.
Can I do a cash-out refinance if I bought the home last year?
Often not. A standard FHA cash-out needs 12 months of ownership and occupancy before the case number is assigned. If you are close to that mark, waiting a few months can open the door. If you need cash sooner, a second loan on top of your existing mortgage may be a better fit.
Does a second mortgage or HELOC help me get more cash?
No. FHA’s 80% cap is combined, so any second lien you keep counts against the same ceiling. Paying it off inside the refinance frees room, but it also comes out of your check. A second loan does not raise the limit.
How much does the appraisal matter?
More than almost anything else. A lower value shrinks the 80% ceiling and the cash dollar for dollar, while your payoff stays the same. A 10% shortfall in value can wipe out a large share of your check, as the sensitivity table above shows. Treat any early estimate as a range, not a promise.
Can I get cash out with weaker credit?
Possibly. FHA programs start from a 580 decision score across the wholesale programs Lendmire works with, and some lenders set a higher floor on cash-out files. Payment history and the 12-month rules often matter more than the score alone. Eligibility is subject to lender guidelines and a full file review.
What to Do Next
Work the formula first. Take your best estimate of value, multiply by 80%, subtract what you owe, and subtract a cushion for costs. If the result is a number worth chasing, the next step is a real appraisal and a Loan Estimate. That document shows the actual costs for your file. Your own figure will differ from any example here, so treat this page as an estimate, not a quote.
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.
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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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. Details on how inheritance works
4. HUD Mortgagee Letter 2023-17
5. HUD Mortgagee Letter 2020-30
6. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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 After Delisting the Property? · How Much Cash Comes Out of an FHA Cash-Out Refinance to Build an Emergency Fund? · FHA Cash-Out Refinance vs Conventional Cash-Out Without Selling the House
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.