The Quick Read: The program rules are the same no matter who writes the loan, so the right provider depends on your file, not on a ranking. A new FHA loan pays off your old FHA loan, and you keep the difference. The new loan can reach 80% of your home’s adjusted value, and your home must have been your principal residence for at least 12 months. A broker that shops several wholesale lenders can match your situation to the program and the lender that fit it.
Key takeaways
- The cash-out limit is 80% of adjusted value, so at least 20% equity stays in the home.
- The 12-month ownership and occupancy clock counts back from your case number, not from closing.
- An FHA Streamline refinance cannot put cash in your pocket.
- Mortgage insurance restarts on the new loan, and a bigger loan means bigger premiums.
- Compare providers on how they handle appraisals, extra requirements, and the Loan Estimate.
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.
What Is an FHA-to-FHA Cash-Out Refinance?
A cash-out refinance replaces your current mortgage with a new, larger one. The new loan pays off the old balance, and you receive the difference. When your current loan is already FHA, the old loan is simply the payoff item. You are not “converting” anything. You are getting a brand-new FHA loan.
That detail matters. The new loan is underwritten from scratch. Your history with the old FHA loan helps (a clean payment record is part of the picture), but it does not carry over any terms. New balance, new term, new mortgage insurance.
The short version is that FHA cash-out reaches 80% loan-to-value (LTV, the loan balance divided by the home’s value) on a home you have owned and lived in for 12 months before the case number. The case number is the file ID assigned when the lender orders your FHA appraisal.
Everything below assumes a home you live in. Second homes and rentals do not fit standard FHA cash-out. Living in the home is what qualifies you for that 80% ceiling.
Who Writes These Loans, and How Do You Choose?
Any FHA-approved lender can write an FHA cash-out loan, and the rules do not change by lender. What changes is how each one applies them. That is why the best provider for your situation is a different answer for different borrowers.
Nobody can honestly hand you a ranked list. The lenders that fit you depend on your credit profile, how much equity you hold, how your income is documented, and what your property looks like on paper. A ranking built for the average borrower is a ranking for nobody in particular.
Here is how a broker approaches it. Lendmire is a mortgage broker, not a lender. It works with a network of wholesale cash-out refinance lenders and matches your file to the programs that suit it. Wholesale lenders sell through brokers instead of storefronts. You get one conversation, and the broker checks your scenario against several sets of guidelines.
- Credit floor. The programs start at a 580 decision score. HUD itself has a lower tier for scores of 500 to 579, but the network does not reach below 580. Some lenders set a higher floor still.
- Extra requirements. A lender can add rules on top of FHA’s minimums. These are called overlays.
- Appraisal practices. Lenders handle value disputes and review differently.
- Communication. You will feel this one on closing week.
So you are not picking a name off a list. You are picking a fit.
How the Loan Is Underwritten, Step by Step
Underwriting an FHA cash-out follows a predictable path. The governing document is HUD Handbook 4000.1, the single source of FHA Single Family policy. HUD updates it regularly, so check the current version before relying on anything you read online, including this article.
1. Confirm the product. You want cash, and your goal is a new FHA loan. That points to cash-out, not a Streamline.
2. Pass the seasoning test. Seasoning is the waiting period before a loan is allowed. Here you must have owned and occupied the home as your principal residence for 12 months. The clock runs back from the case number date.
3. Get the case number and appraisal. The appraisal sets the value. The 80% limit then applies to adjusted value, a defined figure that is not always the raw appraised number.
4. Size the loan. The new base loan, any costs you finance, and any remaining junior lien must all fit under 80% of adjusted value. (A junior lien is a second loan or HELOC sitting behind your first mortgage.)
5. Underwrite the borrower. The lender looks at credit, income, debt, and payment history.
6. Close and receive proceeds. You get the Loan Estimate early and the Closing Disclosure before signing.
In step 5, the base debt-to-income pair is 31/43. The first number is housing cost as a share of income. The second is all monthly debts as a share of income. With no compensating factors, that is the starting line. Documented compensating factors, such as strong reserves or a clean recent payment record, can stretch the ratios to 40/50 at the top tier.
Every figure here is subject to lender guidelines and full file review. Nothing is a commitment to lend.
Sizing the Cash: A Worked Example in Percentages
Skip dollar amounts for a moment. Think in percentages of your home’s adjusted value.
Say your appraisal supports the full value and your current FHA balance sits at 60% of it. The cash-out limit is 80%. That leaves a gap of 20 points of value between your payoff and the ceiling.
Now subtract costs. Closing costs you choose to roll into the loan come out of that same gap. Any junior lien you must clear or keep counts against the 80% too, because combined LTV is capped as well. What remains is the cash you can take.
The rough formula: maximum cash is about 80% of adjusted value, minus your payoff, minus your costs.
Two quick notes on that picture:
- If your balance already sits near 80%, there may be little or nothing left to take.
- If the appraisal comes in low, every number above shrinks. A lower value lowers the ceiling, and the payoff stays the same. Ask your lender up front how it handles a value dispute. Some borrowers can supply recent comparable sales for review. Others must wait out the result.
That 20% equity cushion is deliberate: the 80% ceiling keeps at least a fifth of your home’s value as your own equity.
What Happens to Mortgage Insurance?
Mortgage insurance restarts. FHA charges two kinds on a new loan, and your old FHA loan’s insurance does not simply transfer.
- Upfront premium: 1.75% of the base loan. Most borrowers finance it into the balance.
- Annual premium: between 0.15% and 0.75% of the balance, depending on the term, loan amount, and LTV. It is paid monthly as part of the payment.
On a thirty-year loan above 90% LTV, the annual premium lasts the full term. At or below 90% LTV, it ends after eleven years. A cash-out loan at the 80% limit sits below that line, though a loan that pushes your balance higher starts to matter. These are program facts, not prices. Your Loan Estimate shows what applies to your specific loan. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Premium is charged on the whole loan, not only the cash. Borrow more, and you pay premium on more.
There is one more question to put to any provider. Does any credit for the premium on your old FHA loan apply when you refinance? The rules for that are specific to timing and loan type, and they do not necessarily extend to cash-out. Get the answer in writing from the lender instead of assuming.
Streamline, Rate-and-Term, or Cash-Out?
Existing FHA borrowers have three refinance paths, and only one hands you cash. A Streamline refinances an existing FHA loan with no appraisal and a limited credit review. It requires a net tangible benefit, meaning the refinance must measurably help you. The mortgage insurance premium continues. What it cannot do is give you meaningful cash back.
| Your situation | Likely path | Why |
|---|---|---|
| Want cash for any purpose | FHA cash-out | Reaches 80% LTV |
| Want a better term, no cash | FHA Streamline | No appraisal, limited credit review |
| Need a payoff with less equity left | FHA rate-and-term | Reaches 97.75% on a primary home |
| Need cash but want to keep your first loan | Separate home equity product | Leaves existing loan untouched |
| Owned under 12 months | Usually none yet | Cash-out seasoning not met |
The rate-and-term row deserves a note. It takes no cash for you, and it needs an appraisal. It reaches 97.75% on a principal residence you have occupied for the previous twelve months. If you want cash, that is a different path: the FHA cash-out, whose 80% limit applies to the whole new loan, not only the cash portion. That surprises people.
Veterans have another route entirely. Lendmire’s piece Top VA Cash-Out Refinance Providers When Speed to Approval Matters Most covers it.
A fair question is whether a Streamline plus a separate equity product beats cash-out. It is a genuine toss-up for some files. Cash-out puts everything in one new loan with one insurance structure. The split approach leaves your current loan in place. Which costs less over time depends on your balance, your term, and what you need the money for. Run both before choosing.
Where the General Rule Breaks
The 80% rule and the 12-month rule cover most files. These edge cases are where borrowers get tripped.
The 80% cap applies to the whole loan. HUD’s Mortgagee Letter 2019-11 sets maximum LTV and combined LTV for FHA cash-out at 80% of adjusted value. The old limit was higher. HUD’s announcement of the change explained that cash-out loans had become a large and growing share of FHA refinances, and the cap strengthened the equity position behind them. Older articles quoting a higher percentage are out of date. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Adjusted value is not the appraisal. The cap is measured against adjusted value as the Handbook defines it. A lender who quotes you “80% of the appraisal” is simplifying.
The 12 months run from the case number. They do not run from closing. Apply a few weeks early, and you may miss the window by days.
Owned less than 12 months. Standard cash-out is generally unavailable. Come back when the clock runs out.
Inherited home that was rented. You must live in it as your principal residence for 12 months before a cash-out becomes possible. Time as a landlord does not count.
Non-occupant co-borrower. On a purchase, a non-occupant co-borrower is allowed. On a cash-out refinance, lenders generally do not let that person’s income carry the loan. Ask before assuming.
Hawaiian Homelands (Section 247). The same letter excepts this program from the cut to the cash-out limit.
Credit events. HUD sets waiting periods after major credit events: two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD’s rules, and lenders may layer more on top.
What Cash-Out Really Costs You
Cash-out has a price beyond closing costs. Your balance goes up. Your term resets. Your mortgage insurance restarts on a bigger loan. Appraisal, title, and lender charges apply, and they appear on your Loan Estimate.
The CFPB’s Office of Research found that cash-out borrowers tended to have lower credit scores, lower incomes, and smaller loan amounts than other refinance borrowers. The same research notes that cash-out refinances made the 2008 crisis worse. Equity is a cushion, and cash-out spends it.
What do borrowers do with the money? The CFPB’s report on credit scores found that many pay down credit card and auto debt. Scores rose at the refinance. Then they gradually slipped, and balances drifted back up. Clearing a card with home equity works only if the card stays at zero afterward.
A practical test: if the cash covers a repair that protects the home’s value or replaces higher-cost debt you will not rebuild, the case is stronger. If it funds spending that disappears, a smaller loan or a different product may serve you better.
Ten Questions to Ask Any Provider
Before you apply, ask each provider these. The answers tell you more than a brand name does.
- Are you FHA-approved, and can I verify it?
- Do you add requirements above FHA’s minimums, such as a higher credit floor?
- How do you calculate adjusted value for the 80% limit?
- What happens if the appraisal comes in low?
- How will you count my 12-month occupancy?
- How do you treat any junior lien I hold?
- What does the Loan Estimate show for mortgage insurance, upfront and annual?
- Does anything carry over from the premium on my current FHA loan?
- Who handles my file, and how will you reach me with a condition?
- If I want cash, is cash-out the right product, or is something else cheaper?
Red flag: a provider who promises a “no-cost” refinance or a guaranteed result. The costs are still there. They are built into the balance or the loan terms. Compare the Loan Estimates side by side and look at the full terms.
You can also check a lender’s licensing in your state through the Nationwide Multistate Licensing System’s consumer access site before you share documents.
Key Terms Defined
Adjusted value: The value HUD uses for the 80% limit, which is not always the raw appraised number.
Case number: The FHA file ID assigned when the appraisal is ordered. It starts the 12-month clock count.
Combined LTV: All loans against the home, including any junior lien, divided by its value.
Mortgage insurance premium (MIP): FHA’s insurance on the loan, paid upfront and monthly.
Net tangible benefit: The measurable improvement a Streamline must give you, such as a better term.
Overlay: A lender requirement set above the program minimum.
Seasoning: The waiting period a home must be owned and occupied before cash-out.
Your 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. Reach out at 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. Borrowers with conventional or other loans can also use FHA cash-out if the home is their principal residence and they meet the seasoning and credit rules. Having an FHA loan already simply makes your old loan the payoff item. The new loan is still underwritten from scratch.
How much cash can I actually take?
Roughly 80% of adjusted value, minus your current payoff, minus the costs you finance. A junior lien counts against the same 80%. Your lender can run the exact result once the appraisal is in. The figures depend on lender guidelines and your full file.
Can I do a Streamline and get cash back?
No. It requires a net tangible benefit and returns no meaningful cash. If you want cash, you need the cash-out product or a separate equity loan.
What if my home appraises low?
The ceiling drops, because 80% is applied to a smaller value. Your cash shrinks and may disappear. Ask your provider how it handles value disputes before you pay for an appraisal. Some loans do not make sense after a low result.
Does the 12-month rule run from closing?
No. It counts back from the case number date, so the clock stops when the appraisal is ordered. If you are close to the 12-month mark, confirm the date with your lender before ordering anything.
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.
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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 2019-11
3. HUD press release on cash-out risk
4. CFPB Office of Research blog on cash-out refinances
5. 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 to Plan and Use an FHA Cash-Out Refinance Before Your ARM Resets · How Much Cash Comes Out of an FHA Cash-Out Refinance for Repairs Without a Contractor? · How Much Cash Comes Out of an FHA Cash-Out Refinance That Restarts the 30-Year Loan Clock?
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.