The Quick Read: The most cash you can pull out of an FHA cash-out refinance is set by FHA rules, not by which bank you pick. The new loan tops out at 80% of the home’s adjusted value, and the payoff of your old loan, required liens, closing costs and the financed insurance premium all come out of that amount first. What a lender changes is its overlays and its service. A mortgage broker that shops several wholesale lenders can match your file to the program that fits.
Who Actually “Offers” It, and Why the Bank Doesn’t Set Your Cash Out
HUD writes the rules, and FHA-approved lenders make the loans. A bank, a credit union and a non-bank lender can all be approved. The maximum loan-to-value is the same at each of them. HUD’s lender page covers lender participation in FHA programs and the annual county mortgage limits.
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 the search for the one bank that gives the most cash is a search for something that doesn’t exist. The ceiling is a federal rule. A lender can set a tighter limit, but it cannot set a higher one.
Where lenders differ:
- Credit overlays. A lender may ask for a higher score than the program minimum.
- Seasoning and payment-history interpretation. Some are stricter on how they read late payments.
- Appraisal handling and service. Some manage reconsiderations and conditions more cleanly.
- Cost structure. Fees and pricing vary, and they change your net cash.
Lendmire is a mortgage broker, not a lender. Its FHA cash-out refinance program page lays out the program figures. Across the wholesale programs it places files with, the work is matching the borrower’s scenario to a lender whose overlays fit it. The best program for your situation depends on your credit, your equity, your payoff balance and your documentation.
How an FHA Cash-Out Refinance Works, Start to Finish
An FHA cash-out refinance replaces your current mortgage with a new FHA-insured loan that is larger than what you owe. The new loan pays off the old lien. The leftover money goes to you.
The program reaches 80% LTV on a home you have owned and lived in for the 12 months before the FHA case number. It is for your primary residence. Program figures here are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Two points confuse people:
- You don’t need an FHA loan today. A conventional loan can be refinanced into an FHA cash-out.
- A paid-off home still counts as cash-out. HUD Mortgagee Letter 2020-30 treats a free-and-clear home that way, so the same cap applies.
The 80% Cap Is Where the Math Starts
HUD cut the maximum LTV on cash-out refinances from 85% to 80% in a 2019 HUD mortgagee letter. Consumer Finance Monitor’s summary of that letter notes that it applies to case numbers assigned on or after September 1, 2019, and that it is measured against the property’s adjusted value. It exempts Section 247 Hawaiian Home Lands loans. HUD said the change aligned FHA with the Fannie Mae and Freddie Mac cash-out limit, per DocMagic’s summary.
Two misreads are common.
“80% means I get 80% of my home’s value in cash.” No. The 80% limits the entire new loan. Your old balance comes out first.
“Some banks go to 85%.” Not on a standard FHA cash-out. That number is outdated.
Walking Through the Cash-Out Math
Here is the order of operations, with no dollar amounts, because the sequence matters more than any example.
1. Find the adjusted value. The appraisal drives this. HUD applies the cap to adjusted value, not to a number you choose.
2. Apply 80%. That is the ceiling on the new loan.
3. Check the county limit. County loan limits apply, and they change every year. For most owners the 80% test binds first. In high-cost counties with expensive homes, the county limit can bind first.
4. Subtract the payoff. Your existing mortgage and any liens that must be paid off come out.
5. Subtract closing costs. These come out of proceeds or get rolled into the loan.
6. Account for the financed premium. The upfront mortgage insurance premium is 1.75% of the base loan. It is commonly financed, which cuts your net cash.
7. What is left is your cash.
| Step | What happens | Effect on cash to you |
|---|---|---|
| Adjusted value | Appraisal sets the base | Higher value, more room |
| 80% cap | Limits the whole new loan | Sets the ceiling |
| Payoff and liens | Old loan paid first | Reduces cash |
| Closing costs | Paid or financed | Reduces cash |
| Upfront premium | 1.75% of base loan | Reduces cash if financed |
Notice that equity is not the same as cash. A home with a lot of equity but a large payoff leaves a small net amount.
What Decides How Much You Walk Away With
Several factors shape your net cash, listed here in rough order of influence:
- Adjusted value
- The 80% cap
- The payoff balance and any required liens
- The county loan limit
- Financed premiums and closing costs
- Whether the seasoning and payment-history tests are met
Three levers are in your hands. You can’t move the cap, but you can influence the rest.
1. Prepare the home for the appraisal. Fix visible deferred maintenance, gather a list of improvements, and make sure the appraiser can get into every room. Value is the biggest driver of the loan ceiling.
2. Clear small liens before you apply. A required lien payoff reduces proceeds dollar for dollar.
3. Size the request against the costs. A small cash-out can disappear into closing costs and the financed premium. Ask whether the net number justifies the reset of your loan.
How the Loan Gets Underwritten
The lender runs your credit, income and debt ratios through FHA underwriting. The wholesale programs Lendmire works with start at a decision score of 580, and cash-out files are reviewed lender by lender against that floor. HUD has lower credit tiers, but the wholesale network doesn’t reach below 580.
The base debt ratio pair is 31/43, housing to total. Documented compensating factors can stretch that toward 40/50 at the top tier, and the automated finding governs most files. Compensating factors might be reserves, a strong payment history or low payment shock. They need to be documented, not described.
One rule trips people up: income from a non-occupant co-borrower generally can’t be used to qualify for a cash-out refinance. A co-signer who doesn’t live in the home may help on a purchase, but don’t plan on that for cash-out.
Late payments matter. The lender must document 12 months of payment history on the loan being refinanced, per HUD Mortgagee Letter 2020-30. A late payment in the last 12 months can block a cash-out even when the credit score looks fine.
Mortgage Insurance and What It Does to Your Cash
FHA mortgage insurance has two parts, both set by HUD rather than a private insurer.
The upfront premium is 1.75% of the base loan. It is usually financed into the loan, so it lowers your net cash and raises the balance.
The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. HUD’s Mortgagee Letter 2023-05 lowered the annual premium rates for case numbers assigned on or after March 20, 2023. On a thirty-year loan above ninety percent LTV, the annual premium lasts for the term. At or below ninety percent, it ends after eleven years. Because a cash-out is capped at 80%, the at-or-below-ninety-percent rule is the one that applies to a standard FHA cash-out. Confirm it on your file.
Think of the premium as a program cost that shrinks your cash. It isn’t a bank fee, and no lender can waive it.
Where the General Rule Breaks
- Free-and-clear homes. Still a cash-out. Same cap, same seasoning.
- Recently bought homes. Generally ineligible. At least one borrower must have owned and lived in the home for the 12 months before the case number.
- Second homes and rentals. The standard FHA cash-out is for a primary residence. A second home or rental does not qualify for the same leverage, so the property’s occupancy sets the maximum loan.
- Hawaiian Home Lands. Section 247 loans were exempt from the 80% change.
- Divorce, separation or death. A borrower may need to be removed from the old loan and left off the new one. These files need a lender who handles them routinely. Ask early.
- Streamline and Simple Refinance. No cash out. Different product. The FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review, but it needs a net tangible benefit and the premium continues. The FHA rate-and-term with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. Don’t mix those figures with the cash-out cap.
- Lender overlays. HUD’s floor is not any lender’s floor. A lender may require a higher score or stricter seasoning.
- Rule changes. HUD updates its handbook from time to time. Confirm current rules with the lender before you plan around any one number.
Comparing Your Options
| Option | Cash out? | Key trade-off |
|---|---|---|
| FHA cash-out refinance | Yes, up to 80% LTV | Premiums reduce net cash |
| FHA Streamline | No | Needs an existing FHA loan |
| FHA rate-and-term | No | Reaches 97.75% on a primary home |
| Keep current loan | No | No reset, no cash |
A home equity loan or HELOC is a different structure: a second lien that leaves your first mortgage in place. Whether that fits depends on your first mortgage’s terms and how much you need.
When Taking the Maximum Is a Bad Idea
Maxing out leaves you with the least equity. It also replaces your current loan with a larger one, so your payment can rise and your terms reset. The CFPB’s guide on using home equity says a cash-out can lengthen your payoff timeline and that missed payments could lead to foreclosure, because the home is collateral.
Debt consolidation is the most common use. CFPB research on cash-out borrowers found they often pay down credit card and auto debt, and that credit scores rose at first, then slipped while staying above pre-refinance levels. A later CFPB report on non-mortgage debt paydown found student loans were less likely to be paid down. The risk is greatest if the cleared balances build back up while the mortgage stays larger.
Skip the maximum if the net cash is small after costs. Skip it if you’d be borrowing for spending that won’t last. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
How to Pick the Right Lender Through a Broker
Banks, credit unions and non-bank lenders can all do FHA cash-out. The useful question is which one fits your file. A broker shops several wholesale lenders and matches your credit, equity, payoff and documents to the program. A single bank only offers its own.
Ask any lender these:
- What is your minimum score for FHA cash-out, and is it above HUD’s?
- How do you read late payments in the last 12 months?
- Who orders the appraisal, and what is the reconsideration process?
- Will you put the Loan Estimate in writing so I can compare line by line?
Compare Loan Estimates side by side. The cash-to-you line, the payoff line and the financed premium line tell you more than the headline.
Documents to Have Ready
- Proof of 12 months of ownership and occupancy
- A 12-month payment history on the current mortgage
- Pay stubs, W-2s and tax returns for the borrowers who live in the home
- A payoff statement and a list of any other liens
- A list of home improvements, with receipts if you have them
Clean documents give the lender fewer preventable gaps to review. They don’t guarantee approval.
Key Terms Defined
Adjusted value: the property value HUD uses for the 80% test, based on the appraisal.
Seasoning: the time you must have owned and lived in the home before the case number.
Upfront premium (UFMIP): FHA’s one-time insurance charge, 1.75% of the base loan, usually financed.
Annual premium (MIP): FHA’s ongoing insurance charge, tied to term, loan amount and LTV.
Case number: the FHA identifier assigned at the start; its date starts the 12-month clock and fixes which year’s loan limit applies.
Overlay: a lender rule stricter than HUD’s.
Next Step
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. Call 828-256-2183 or request a quote.
Frequently Asked Questions
Do I need an existing FHA loan to get an FHA cash-out refinance?
No. A conventional loan can be refinanced into an FHA cash-out. You do need to meet the ownership, occupancy and payment-history tests, and the lender must approve the file under FHA underwriting.
Do some banks give a higher cash-out amount than others?
Not on the FHA ceiling. HUD sets 80% LTV, and a lender can only go lower. What differs is overlays, cost structure and how a lender handles appraisals and documents. Those can change your net cash. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Can I cash out right after buying my home?
Generally no. At least one borrower must have owned and lived in the home for the 12 months before the FHA case number. The payment-history test also applies to the loan being refinanced.
Does a paid-off home qualify as a regular refinance?
No. HUD treats a free-and-clear home as a cash-out refinance, so the same 80% cap and seasoning apply. Nothing about the payoff being zero changes the product.
Why is the cash I receive so much lower than 80% of my home’s value?
The 80% caps the whole new loan, not your cash. Your old balance, required liens, closing costs and the financed 1.75% upfront premium come out first. What remains is your net cash.
For current guidelines and terms, see Lendmire’s FHA loan programs page.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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 FHA Lenders – Maximum Mortgage Limits
2. HUD Mortgagee Letter 2020-30
3. Consumer Finance Monitor’s summary
5. HUD Mortgagee Letter 2023-05
6. CFPB’s guide on using home equity
7. CFPB research on cash-out borrowers
8. CFPB research on non-mortgage debt paydown
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: Banks That Offer an FHA Cash-Out Refinance After Twelve Months of Occupancy · How to Plan and Use an FHA Cash-Out Refinance Before Your ARM Resets · FHA Cash-Out Refinance vs Conventional Cash-Out to Pay College Tuition
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.