The Quick Read: Any lender approved to write FHA loans can offer a cash-out refinance, so no single bank owns this product. Each lender adds its own rules on top of the program’s, and those differences decide who gets approved and how much cash reaches you. The new loan can reach up to 80% of your home’s appraised value. It replaces your current mortgage, whether that loan is FHA or not, and the difference comes to you as cash, minus costs.
What Should You Know Before Reading On?
- A cash-out refinance is a brand-new, larger mortgage. It is not a second loan stacked on the first.
- The 80% cap covers the whole new loan, not just the cash you receive.
- You generally need to have owned and lived in the home for 12 months before the case number is assigned.
- It requires full underwriting and an appraisal. It is not a streamline.
- The best program for your situation depends on your credit, your equity, and your payment history.
What Is an FHA Cash-Out Refinance?
An FHA cash-out refinance swaps your current mortgage for a new, larger FHA-insured loan, then pays you the difference. Say your home is worth 100% of its appraised value and you owe 40% of it. The new loan pays off that balance and any other liens. Whatever room is left under the 80% cap, after costs, is yours to use.
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.
That is the plain mechanic. The core limits are consistent across the programs a broker works with:
- Maximum financing on a cash-out is 80% of the home’s value.
- The home must be your principal residence.
- It must have been owned and occupied for 12 months before the case number.
- Full credit and income underwriting applies.
Does the current loan have to be FHA? No. The new loan pays off whatever mortgage is there. The FHA-insured part of your situation matters more for a different product, the streamline, which we’ll compare below.
This product is for the home you live in. Second homes and rentals are a different conversation, because occupancy decides how much leverage a lender will allow.
Which Banks and Lenders Actually Offer It?
Banks, credit unions, non-bank mortgage lenders, and brokers can all put you into an FHA cash-out loan. The requirement is that the institution holding the loan is FHA-approved. There is no official list of “banks that offer” this product. Any list you find online is a marketing choice, not a registry.
Here is how the institution types differ in practice.
| Institution type | What it offers | Trade-off |
|---|---|---|
| Bank or credit union | One lender’s FHA program | You see one set of overlays |
| Non-bank mortgage lender | FHA as a core product | Still one lender’s rules |
| Mortgage broker | Several wholesale lenders | Match depends on the file |
The word to focus on is overlays. An overlay is a rule a lender adds on top of the FHA minimums. One lender may ask for a higher credit score. Another may want longer payment history or extra reserves. Both are following FHA rules. They are just stricter than they have to be.
That is why the question “which bank offers it?” is slightly the wrong question. The better one is which lender’s overlays fit your file. A broker shops a file across multiple wholesale lenders and matches the scenario to the program. The lenders that write a given file depend on your credit profile, your payment history, your equity, and the property type. Lendmire works as that broker. It arranges the loan, but it does not lend.
How Do You Check That a Lender Offers FHA Cash-Out?
Ask these directly before you apply:
1. Are you FHA-approved, and do you write cash-out refinances on a principal residence?
2. What credit score do you require, and is it higher than FHA’s own minimum?
3. How do you treat late payments on my current mortgage?
4. Do you add any rule on reserves, debt ratios, or property type?
5. Will you give me a Loan Estimate so I can compare costs line by line?
Any lender that cannot answer these clearly is a poor fit. A Loan Estimate is the standard disclosure that shows your loan terms and costs, and it lets you compare offers side by side.
How Is the Loan Underwritten, Step by Step?
Underwriting is the lender’s full review of you and the property. An FHA cash-out gets the whole treatment: credit, income, debts, appraisal. The steps run in this order.
1. Choose an FHA-approved lender or broker. The lender must be approved and funded to close FHA loans. A broker places you with one.
2. Application and the case number. The case number is the file number assigned to your FHA loan. Your ownership and occupancy history are measured back from that date, not from the day you applied.
3. Appraisal. An appraiser sets the value. That figure drives everything that follows.
4. Sizing the loan. The new loan can reach 80% of the appraised value. Your payoff, any second lien, and financed costs come out of that room. What remains is your cash.
5. Credit and income review. The lender checks credit history, income, and debt ratios.
6. Payment-history review. Lenders look at how you have paid the mortgage you have now. Recent late payments hurt. The exact tiers vary by lender, so ask yours.
7. Closing and the right to cancel. You sign, then the cancellation window runs before funds are released.
Two details deserve more attention.
Debt ratios. Lenders compare your housing payment, and then all your monthly debts, to your income. The base pair is 31/43: housing at 31% of income and total debts at 43%, with no compensating factors. With documented compensating factors, such as strong reserves or steady income, ratios can stretch as far as 40/50 for the strongest files. An automated underwriting finding governs most files. These are program guidelines, and each lender applies them through its own overlays.
Late payments and forbearance. A recent late payment or a mortgage forbearance plan can push a file toward manual underwriting. That means a person reviews it line by line instead of an automated system. It can still work. It just takes a stronger file.
How Much Cash Can You Really Pull Out?
You can take the room between your payoff and the 80% cap, then subtract costs. HUD set that cap in Mortgagee Letter 2019-11, stating its purpose was to strengthen the equity position on cash-out loans and reduce losses in a default. Older guides that quote a higher cap are out of date.
The cap trips people up. It is not “80% of your equity.” It is 80% of the home’s value, and it covers the entire new loan.
Run it in percentages. Say your home appraises at 100% of value, and you owe 55% on your current mortgage. With the cap at 80%, that leaves up to 25 points of value in theory. Then take out:
- any second lien, which must be paid off,
- the upfront mortgage insurance premium, if you finance it,
- appraisal and closing costs that roll into the loan.
What remains is your cash. The more you owe now, the less room you have. A borrower who owes 75% has only 5 points of value left under the cap, and costs can eat much of it.
HUD described the earlier change as bringing FHA in line with the government-sponsored enterprises’ cash-out limit. Its 2019 announcement says the agency had last cut the cap in 2009. The cap has moved before and can move again, so confirm the current figure with your lender.
What Does Mortgage Insurance Do to the Loan?
FHA loans carry two mortgage insurance premiums, and both are built into the loan structure. The upfront premium is 1.75% of the base loan amount, and it is normally financed into the balance. That means the loan is a bit larger than the cash-and-payoff math suggests.
The annual premium is charged on the balance, and it runs between 0.15% and 0.75% depending on term, loan amount, and loan-to-value. How long it lasts depends on leverage. On a thirty-year loan above 90% LTV, it lasts for the term. At or below 90%, it ends after eleven years. A cash-out lands at or below 80%, so the shorter schedule is the one a thirty-year loan would normally fall under. Your lender will confirm how it applies to your file.
These are mechanics, not prices. Your Loan Estimate shows the actual cost.
How Does FHA Cash-Out Compare to Other Ways of Tapping Equity?
Each product answers a different need. This table shows where they split.
| Product | Cash to you? | Appraisal? | Key point |
|---|---|---|---|
| FHA cash-out | Yes | Yes | Up to 80% LTV, full underwriting |
| FHA streamline | No | No | Existing FHA loan, limited credit review |
| FHA rate-and-term | No | Yes | Up to 97.75% on a principal residence |
| Conventional cash-out | Yes | Yes | Different credit and ratio rules |
| HELOC or home equity loan | Yes | Usually | A second lien on top of your mortgage |
The streamline refinances an existing FHA loan with no appraisal and a limited credit review. It requires a net tangible benefit, and the premium continues. It does not give you cash. If you want cash, the streamline is the wrong tool.
The rate-and-term refinance changes your loan’s terms without cash out. With an appraisal, it can reach 97.75% on a principal residence you have occupied for the previous twelve months. That is far more leverage than cash-out allows, which tells you why cash-out costs more in equity.
A home equity loan or HELOC leaves your first mortgage alone and adds a second lien. If your current mortgage is a good one, that can make sense. A cash-out replaces the whole thing. The better choice depends on the mortgage you hold now and what you want from the new loan, so weigh those two points first.
Where Does the General Rule Bend?
- A paid-off home. A home with no mortgage can generally be treated as a cash-out too. Equity in a free-and-clear house is still equity, subject to lender guidelines.
- An inherited home. The 12-month ownership clock has special handling for some inherited properties. Ask whether your lender follows that path before you assume the clock is running.
- Three- and four-unit homes. FHA allows one to four units. Larger multi-unit homes can carry added tests such as reserves. Confirm with the lender.
- Manufactured homes. Extra property and installation requirements apply, and not every lender writes them.
- Credit events. HUD’s waiting periods are two years from a chapter 7 discharge and three years from a foreclosure. Those are HUD’s rules, and lenders may add their own.
- Co-borrowers. A non-occupant co-borrower’s income cannot be used to qualify on a standard cash-out, even though purchase loans allow that.
- Low scores. Lenders often set a higher credit floor on cash-out than on a purchase. A score near the bottom of the range generally means closer scrutiny.
None of these automatically closes a door. Each one changes which lender is the right match.
What Does the Decision Look Like in Practice?
Picture a homeowner with an FHA loan, a decent payment record, and roughly a third of the home’s value in equity. They want cash to pay off credit cards and a car loan. A cash-out may fit. The new loan pays off the old mortgage, clears the other debts, and replaces several payments with one.
Now picture the same homeowner, but with an existing mortgage on a very low payment and a goal of covering a one-time expense. A cash-out replaces the cheap loan with a bigger one. A home equity loan may be the better trade. The decision turns on what you give up, not just what you get.
The Consumer Financial Protection Bureau describes a cash-out refinance as a larger new mortgage that may lengthen your payoff time and raise your monthly payment. That is the trade in one sentence.
It also helps to know what happens to the debt you pay off. The CFPB’s report also found the score gains faded over time and card balances trended back up. Clearing the cards does not clear the habit.
This loan makes less sense when:
- the cash covers ongoing spending rather than a one-time need,
- your current mortgage is a strong one you would be giving up,
- the costs would eat most of the cash,
- your equity is thin after payoff and financed costs.
Do You Get a Chance to Back Out?
Yes. On a primary residence you generally get three business days to cancel a refinance after closing. You can waive that period only for a genuine financial emergency, using your own signed and dated written statement. Pre-printed waiver forms are not allowed, per the CFPB’s guidance on waiving rescission. Funds are released after the window closes.
Key Terms Defined
Cash-out refinance: A new, larger mortgage that pays off your current loan and gives you the leftover equity as cash.
LTV (loan-to-value): The new loan balance divided by the home’s appraised value, shown as a percentage.
Overlay: A rule a lender adds on top of the program’s minimum requirements, such as a higher credit score.
Case number: The file number assigned to your FHA loan. Ownership and occupancy are counted back from this date.
Mortgage insurance premium (MIP): The FHA insurance charged upfront and annually. It protects the lender, not you.
Manual underwriting: A line-by-line human review used when an automated system cannot approve the file on its own.
How Do You Compare Your Options?
Compare the programs and the equity each one reaches before you pick one. Ask for Loan Estimates, line up the overlays, and match the lender to your file instead of the other way around. 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. Reach the team at 828-256-2183 or request a quote.
Frequently Asked Questions
Do I need an FHA loan now to get an FHA cash-out refinance?
No. The new loan pays off whatever mortgage you have, FHA or conventional. If your current loan is FHA and you do not want cash, a streamline may be simpler. If you want cash, the cash-out is the product, and it needs a full appraisal and underwriting either way.
How much equity do I need left over?
The new loan can reach 80% of the home’s appraised value, so you need at least 20% of value left after the new loan, including financed costs. Some lenders set stricter limits through their overlays. The cash you receive is what remains after payoff, any second lien, and costs.
Can I use an FHA cash-out on a second home or rental?
Not under the standard program. Cash-out is for your principal residence. Occupancy decides the leverage available, so a second home or rental falls under different rules.
Why do lenders have different credit requirements for the same FHA loan?
Lenders set their own overlays above the program minimums. Some want a higher score, longer payment history, or extra reserves. A broker can match your file to a lender whose overlays fit it. Every approval is subject to lender guidelines and full file review.
Does the mortgage insurance ever go away?
On a thirty-year loan at or below 90% LTV, the annual premium ends after eleven years. A cash-out is capped at 80%, so that schedule generally applies. The upfront premium is paid once, typically financed into the loan. Confirm the schedule on your Loan Estimate.
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
1. HUD Mortgagee Letter 2019-11
2. HUD
3. HUD 2019 press release on the cash-out LTV change
4. CFPB: Using your home equity guide
5. CFPB: Cash-out refinance borrowers and credit scores
6. CFPB: Waiving your right of rescission
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 to Consolidate Debt?
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
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.