Top FHA Cash-Out Refinance Providers With Closing Costs Rolled Into the Loan

The Quick Read: There is no official ranking of FHA cash-out lenders, and the best program for your situation depends on your home, your credit, and how much equity you hold. Every FHA-approved lender works under the same federal leverage cap of 80% of the home’s value. You can usually finance eligible closing costs, but they come out of the same capped loan, so every dollar you roll in is a dollar of cash you no longer receive.

What Is an FHA Cash-Out Refinance?

An FHA cash-out refinance replaces your current mortgage with a new, larger FHA-insured loan and hands you the difference in cash. The lender pays off your old loan first. Whatever room is left under the cap becomes your cash.

In short, the home must be your principal residence, and across the wholesale programs Lendmire places files with, the loan reaches 80% LTV. LTV, or loan-to-value, is the new loan balance divided by the home’s appraised value. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.

Lendmire is a mortgage broker, not a lender. It arranges these loans through wholesale lenders in the 16 states where it does consumer lending. That matters for the “top providers” question, which comes up next.

Why There Is No Honest “Top Providers” List

The FHA program is a federal insurance program. HUD sets the core rules, and every approved lender follows them. So the loan itself looks the same everywhere: same leverage cap, same upfront insurance premium, same occupancy test.

What differs is everything around the edges. Lenders add their own overlays, which are extra requirements stricter than HUD’s minimums. One may want a higher credit score. Another may look harder at payment history. A third may handle certain property types differently.

A ranking would miss that. The lender that is right for a borrower with a recent late payment is not the one that fits a borrower with strong credit and a simple file. A broker shops several wholesale lenders and matches your scenario to the program that fits. That is the honest version of “top provider”: the one that fits your file.

How the Loan Is Built, Step by Step

Here is how a cash-out file moves from start to finish.

Step 1: Eligibility. The home must be your principal residence. At least one borrower must have owned and lived in it for the 12 months before the FHA case number is assigned. A second home does not qualify for standard FHA cash-out, and neither does a property you do not live in.

Step 2: Case number and appraisal. The appraisal sets the value. HUD’s cap applies to the property’s Adjusted Value, which can differ from the raw appraised number. The appraisal decides how much room exists under the cap.

Step 3: The loan amount. The new loan must cover three things: the payoff of your existing mortgage, any closing costs you finance, and the cash you take. The total must fit under 80% of value.

Step 4: Mortgage insurance. FHA loans carry an upfront premium of 1.75% of the base loan, and that premium is financed. There is also an annual premium, billed monthly, between 0.15% and 0.75% of the balance depending on term, loan amount, and LTV. It is a program cost, not a number any lender advertises.

Step 5: Credit and income review. Across the network, the base ratio pair is 31/43 (housing costs and total debts as a share of income) when a file has no compensating factors. Documented compensating factors can raise those limits as far as 40/50 for the strongest files. An automated finding governs most files. Credit and income are reviewed as part of the full file, subject to lender guidelines.

Step 6: Disclosures. You receive a Loan Estimate and, later, a Closing Disclosure. They show closing costs, any lender credit, and cash to close.

Where the 80% Cap Comes From

HUD cut the maximum cash-out LTV to 80% in a 2019 Mortgagee Letter. It had been 85% since 2009 and 95% before that. If you read an article saying FHA cash-out goes to 85% or higher, it is out of date.

HUD’s press release said the change aligned FHA with the maximum cash-out LTV that Fannie Mae and Freddie Mac allow. The stated goals were less risk to the insurance fund and more protection for borrower equity.

Two practical points follow. First, the cap is HUD’s rule, not a lender’s preference, so shopping around will not raise it. Second, a higher credit score does not buy more cash. Score affects approval and pricing, but the 80% ceiling is the same for everyone.

How Rolling Closing Costs In Actually Works

Rolling costs in means the new loan balance includes them, so you bring less cash to the table.

Here is the mechanical catch. The 80% cap is a hard ceiling on the base loan, not on the final balance. Financed costs sit under it alongside your payoff and your cash, except the upfront premium, which is financed on top of the capped base loan. Think of the cap as a bucket. Payoff goes in first, then financed costs, and your cash is whatever space remains.

Two consequences:

• Your cash shrinks. Financing costs reduces the cash you walk away with, dollar for dollar.
• Your total cost grows. The CFPB’s closing disclosure guidance says rolling costs in lowers what you pay at closing but adds to your overall cost because of the added interest.

The same CFPB guidance notes that total closing costs and “cash to close” are different figures. Read both lines on your Loan Estimate.

Three Ways to Handle Closing Costs

Borrowers generally face three paths. Here they are side by side, described without dollar figures.

The third path deserves a warning. A “no closing cost” refinance is not free. The CFPB explains that those costs are either covered by a lender credit, paid for through a higher interest rate, or rolled into the loan through a higher balance. Either way, you pay. The question is whether you pay now, through the balance, or through the rate.

Picture a homeowner with a home near the 80% limit. Financing costs there may leave almost no cash to take. Paying costs out of pocket, or taking a smaller cash amount, may be the cleaner move. A homeowner with plenty of room under the cap has more freedom to finance.

Where the General Rule Breaks

A few situations bend the standard path.

Owned under 12 months. Standard FHA cash-out is not available. Some lender programs base value on the lesser of appraised value or purchase price, but that is a lender practice, not HUD text.

Inherited and rented out. The 12-month occupancy clock applies before cash-out. The home must have been your principal residence for the full period.

Non-occupant co-borrower. On a purchase, a non-occupant co-borrower is allowed. A cash-out refinance is stricter. Income from someone who does not live in the home generally cannot be used, so confirm with your loan officer before counting on it.

Streamline and rate-and-term refinances. These are different products. The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review, and it requires a net tangible benefit. The FHA rate-and-term refinance, with an appraisal, reaches 97.75% on a principal residence occupied for the previous 12 months. If you want no cash out, those paths may allow far more leverage than the cash-out cap.

Hawaiian Home Lands. Section 247 loans are exempt from the 80% cap.

Loan limits. County loan limits apply and change every year. Your county’s limit applies to the base loan, so check it with your loan officer.

How the Choice Looks in Practice

A working decision runs in this order.

1. Confirm eligibility. Principal residence, 12 months of ownership and occupancy before case number assignment.

2. Estimate your room. Take 80% of your likely value and subtract your payoff. What remains is the pool for costs and cash.

3. Decide what to finance. If the pool is thin, pay costs in cash or take less out.

4. Compare Loan Estimates. Use the APR and the full cost lines. The CFPB recommends comparing offers this way.

5. Ask each lender about overlays. Credit floor, payment history rules, and property restrictions.

Also ask whether upfront insurance is financed and how the estimate shows it. And ask what the new payment looks like with your chosen mix of costs and cash. Do not skip that last one. A cash-out refinance with a larger balance and a bigger annual premium base raises your monthly payment.

When should you skip rolling costs in? If the cash you need is small, if you plan to sell soon, or if your equity is already near the cap. In those cases, financing costs eats the very cash you came for.

Key Terms Defined

Adjusted Value: HUD’s version of the home’s value, used to test the 80% cap. It can differ from the raw appraisal.

Overlay: A lender’s own requirement stricter than HUD’s minimum, such as a higher credit score.

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

Annual mortgage insurance premium (MIP): A monthly FHA insurance charge that varies by term, loan amount, and LTV.

Lender credit: A discount on closing costs that is paid for through a higher interest rate.

Case number: The FHA identifier assigned to your file. The 12-month occupancy test counts back from this date.

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. Program details are subject to lender guidelines, and 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.

References

1. HUD Mortgagee Letter 2019-11

2. HUD press release 19-114

3. CFPB: Closing Disclosure explainer