The Quick Read: Many banks, credit unions and non-bank lenders can write this loan, because FHA sets one rulebook for all of them. The main test is simple: you must have owned the home and lived in it as your principal residence for the 12 months before the lender orders your FHA case number. What changes from one lender to the next is the extra screening layered on top. Your job is to find the lender whose screening fits your file.
What You Need to Know First
- The 12-month clock runs backward from the case number. It does not run from your application date or closing date.
- The new loan tops out at 80% of the home’s appraised value. That has to cover your old payoff, financed costs, the upfront insurance premium and your cash.
- Lenders can add their own rules (“overlays”) on credit, documentation and payment history.
- The cash you receive is whatever is left under that cap. It is not 80% of your home’s value.
- No single bank is “the” answer. The right program depends on your credit, equity and paperwork.
Do Banks Actually Offer This Loan?
Yes, but “banks” is a narrower question than it sounds. FHA does not issue loans. It insures them, and any FHA-approved lender can write one. That includes large banks, small community banks, credit unions and mortgage companies that are not banks at all.
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.
So a list of bank names would not help you. A bank that writes plenty of FHA purchase loans may still treat cash-out as a side product. A non-bank lender may handle it all day. The program is the same on paper. The appetite, the overlays and the underwriting habits are what differ.
That is where a broker earns a place in the process. Lendmire is a mortgage broker, not a lender. It works with a network of wholesale lenders and matches your situation to the one whose guidelines fit it.
How the 12-Month Clock Really Works
Ownership and occupancy are both measured. At least one borrower on the new loan must have owned the home and lived in it as a principal residence for the full 12 months before the case number is assigned. The case number is the identifier the lender requests from FHA once your file is ready to move forward.
Here is a worked date example with no dollar figures. Say you closed on your home and moved in on June 15. Twelve full months pass on the following June 15. A lender who orders the case number on June 10 is too early, even if you already submitted an application in May. A lender who orders it on June 16 or later is inside the rule.
That detail trips up a lot of people. Applying early does not start or stop the clock. Only the case number date counts.
If you are a couple of months short, you have a few choices:
- Wait, and keep every housing payment on time.
- Look at a different refinance type that does not pay out cash.
- Ask a broker whether another structure fits your goal.
Which choice fits depends on your goal and your timing, and each can be compared on a Loan Estimate once you apply.
Where the Rule Bends or Breaks
The general rule has edges. Each case below still gets reviewed on its own facts, and the outcomes shown are the usual reading rather than a promise.
| Your situation | Clock status | What to do |
|---|---|---|
| Lived in the home 12+ months, payments on time | Met | Ask a lender about sizing |
| Owned under 12 months | Not met | Wait, or consider other products |
| Inherited, then rented out | Not met | Occupy it 12 months first |
| Former home you moved out of, now moving back | Restarts | Count from move-in date |
| Second home or vacation home | Not eligible | Cash-out needs a principal residence |
| Mortgage paid off, no lien | Can qualify | Occupancy still has to be shown |
Two notes on that table. A home you rented out and then moved back into generally restarts the occupancy count, as lenders read the rule. And a second home does not qualify for this cash-out product, because occupancy decides the leverage.
How a Cash-Out Loan Is Underwritten, Step by Step
1. Eligibility screen. The lender confirms principal residence, the 12 months, and a clean-enough payment history.
2. Case number. The lender orders it. That date anchors the clock.
3. Occupancy proof. Lenders typically want documents that place you at the address, such as employment records, bills or bank statements.
4. Appraisal. An FHA appraisal sets the value. The 80% cap applies to the appraised value as FHA defines it.
5. Loan sizing. The new loan must pay off your current first mortgage and any liens being cleared. It also covers financed closing costs and your cash, all under the cap.
6. Underwriting. The lender reviews credit, income, debts and your mortgage payment history.
7. Disclosures and closing. You receive a Loan Estimate and a Closing Disclosure. Read the line showing closing costs financed separately from cash to close.
Across the wholesale programs Lendmire places FHA loans with, credit starts at a 580 decision score. The standard debt-to-income pair is 31/43, meaning housing costs and total debts as a share of income. Documented compensating factors can stretch that pair as far as 40/50 for the strongest files, and an automated finding governs most files. Every figure is subject to lender guidelines and full file review.
What Is the 80% Limit, and Why Is It There?
HUD capped cash-out refinances at 80% of adjusted value in Mortgagee Letter 2019-11, which applies to case numbers assigned on or after September 1 of that year. Any guide still quoting the older, higher cap is out of date. HUD’s announcement of the change described it as a risk-reduction step, noting that cash-out had become a large and growing share of FHA refinances.
The practical effect is easy to miss. The 80% covers everything: your payoff, financed costs and the upfront insurance premium. Your cash is the remainder. A home with a large existing balance may leave little to take out, and financing closing costs trims it further.
The CFPB’s home equity guide makes a related point: no equity product turns 100% of your equity into cash, and lenders expect you to keep a cushion.
What the Insurance Does to the Loan
FHA loans carry mortgage insurance in two parts. The upfront premium is 1.75% of the base loan, and it is usually financed into the balance. The annual premium falls between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan at or below 90% LTV, the annual premium ends after eleven years. Above 90%, it lasts the full term. A cash-out loan capped at 80% falls in the first group, subject to the lender’s program terms.
This is a program feature, not a price tag. The exact schedule sits in HUD’s published premium appendix, and a lender’s Loan Estimate shows what applies to you.
Where Lender Overlays Show Up
HUD sets the leverage cap and the occupancy rule. Lenders add overlays on top of HUD’s baseline, and those mostly touch credit and documentation. One lender may want a higher credit score than another. One may look harder at recent late payments. One may ask for more proof that you live in the home.
This is why two banks can give you two different answers on the same file. It is also why “does this bank do FHA cash-out?” is less useful than “does this lender’s overlay fit my credit and payment history?”
A late payment can sink a file even after the clock is met. Meeting the 12 months makes you eligible to be reviewed. It does not mean you will be approved.
How to Vet a Lender Before You Apply
Ask these questions, whether you call a bank, a credit union or a broker:
- Do you write FHA cash-out refinances regularly, or only occasionally?
- Do you add credit score or payment-history rules beyond HUD’s baseline?
- How do you document occupancy?
- Can you tell me how the 80% cap will apply to my payoff and costs?
- Does the Loan Estimate show closing costs financed separately from cash to close?
Pre-application checklist for the lender call:
- Your move-in date and closing date for the current home.
- Twelve months of mortgage statements.
- Two or more documents showing you live at the address.
- A rough payoff balance on your current loan.
- A clear reason for the cash, so the structure fits the goal.
If you want the answers across several lenders at once, that is the case for a broker. A broker shops multiple wholesale lenders and matches the scenario to the program. The best program for your situation depends on your credit profile, equity, documentation and how you plan to use the money.
Is Cash-Out the Right Tool?
An FHA cash-out is not the only way to refinance an FHA home.
- An 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 continues. It pays out no cash.
- An FHA rate-and-term refinance uses an appraisal and reaches 97.75% on a principal residence occupied for the previous twelve months. It also pays out no cash.
- A conventional cash-out uses different seasoning tests, based on loan age and time on title.
If your goal is cash, the cash-out loan is the one built for it. If your goal is a lower payment or a different term, one of the others may fit better.
The tradeoff deserves honesty. The CFPB guide notes that your payment may rise because the new loan is larger, and that the payoff may stretch out. Yet card balances trended back toward their earlier levels within a year. Turning unsecured debt into debt secured by your home helps only if the habits behind the balances change.
Key Terms Defined
Case number: The identifier the lender requests from FHA for your loan. The 12-month occupancy test counts back from this date.
Overlay: A lender’s own rule that is stricter than the FHA minimum. Overlays are why two lenders can answer the same file differently.
Adjusted value: The appraised value as FHA defines it for the leverage cap. The 80% limit applies to this number.
Principal residence: The home where you live as your main address. Second homes and vacation properties do not count for this program.
Upfront premium: The one-time FHA mortgage insurance charge, 1.75% of the base loan, usually added to the balance.
Frequently Asked Questions
Do I have to make 12 payments on my current loan?
No. The 12 months measure ownership and occupancy, not the number of payments on the loan you hold now. Payment history is a separate review, and lenders look at how your mortgage payments have been made recently. A clean record helps, and recent lates can raise questions even after the clock is met.
What if I am a couple of months short?
Waiting is usually the simplest route. Keep paying on time, keep your proof of occupancy organized, and have the lender order the case number after the 12 months are complete. If you cannot wait, ask a broker whether a different refinance type fits your goal, keeping in mind that those do not pay out cash.
Can I use a home I inherited?
Only once you have lived in it for 12 months as your principal residence. Renting it out after inheriting it does not count toward the clock. Lenders generally want the borrower on the new loan to be the one who has owned and occupied it.
Can a co-borrower who does not live there help me qualify?
Rules on this vary by lender and by loan purpose, and it is not safe to assume it helps on a cash-out. At least one borrower on the loan must meet the ownership and occupancy test. Ask the lender how a non-occupant’s income would be treated before you count on it.
Why do different banks give me different answers?
Overlays. HUD sets the cap and the occupancy rule, but each lender decides how strict to be on credit, payment history and documents. A broker that works with several wholesale lenders can compare those differences for your file. Everything remains subject to lender guidelines and a full file review.
Comparing Your Options
Picture a homeowner who has lived in the home well past the 12 months, has on-time payments and wants cash for repairs. Their equity has to fit under the 80% cap after the payoff and financed costs. A lender with light overlays may work. A lender with a higher credit floor may not.
Now picture a homeowner two months short of the clock. The better move may be waiting. The wrong move is applying early and hoping the case number date will not matter.
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. Nothing here is a commitment to lend, and eligibility depends on lender guidelines and full file review.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 cash-out LTV change
3. CFPB guide to using home equity
4. 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: FHA Cash-Out Refinance vs Conventional Cash-Out Without Selling the House · How Much Cash Comes Out of an FHA Cash-Out Refinance on a Home With No Mortgage? · How to Plan and Use an FHA Cash-Out Refinance to Build an Emergency Fund
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
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.