The Quick Read: The program rules are the same for every FHA-approved lender, so the right provider depends on how a lender handles your file, not on a ranking. An FHA cash-out refinance replaces your current mortgage with a larger one and pays you the difference. It reaches up to 80% of your home’s value, and it generally requires that you have owned and lived in the home for 12 months. A mortgage broker that shops several wholesale lenders can match your situation to the program that fits.
Key Takeaways
- FHA cash-out tops out at 80% loan-to-value, well below the 96.5% available on an FHA purchase.
- You must have owned and occupied the home for 12 months before the case number is assigned.
- You pay a new upfront mortgage insurance premium and a new annual premium. Neither carries over from your old loan, and a qualified local professional or your lender can confirm the current amounts.
- Lenders add their own rules on top of FHA’s, which is why two lenders can treat the same file differently.
- Cash-out is not the only way to get at equity. A streamline, a rate-and-term refinance, or a home equity line may fit better.
What Is an FHA Cash-Out Refinance?
It is one new first mortgage that pays off your old one and puts the extra money in your hands. It is not a second loan stacked on top of the first. Your old interest rate and term go away. You get a fresh loan with a new term.
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.
Say your home is worth a certain amount and you owe 60% of that. A cash-out refinance can raise the new loan toward 80%. The gap, after closing costs and the premium, comes to you as cash. The home secures the larger loan. That’s the trade.
The short version: the loan is built for homeowners who live in the property and want to turn equity into cash without leaving FHA financing.
Why FHA specifically? Some owners have credit profiles or debt loads that fit FHA’s ratios better than a conventional loan’s. Others already hold an FHA loan and want to stay in the program. Conventional cash-out may suit a borrower with strong credit and a lot of equity, and it deserves a look. FHA tends to matter most when the credit profile is the sticking point.
What Does “Top Provider” Actually Mean Here?
There is no neutral ranking of FHA cash-out providers. The best program for your situation depends on your credit, your equity, your debt load, the property, and how you document income. Anyone who hands you a single “top” name for every borrower is selling something.
Here is what is true. FHA sets the program rules. A lender approved by FHA makes and underwrites the loan. Beyond those rules, lenders set their own overlays. These are extra requirements, such as a higher minimum score or tighter limits on recent late payments. Lenders also differ in how they handle appraisals and property condition issues.
That’s why a broker matters. Lendmire is a mortgage broker, not a lender. It arranges FHA loans through a network of wholesale lenders and matches a file to the lender whose guidelines fit it. Across the wholesale programs Lendmire places files with, FHA cash-out starts at a 580 decision score. Some lenders set a higher floor for cash-out. A borrower with a borderline score may find the answer depends entirely on which lender reviews the file.
When you compare providers, look at four things:
- Whether the lender is FHA-approved.
- Its overlays on score, payment history and debt ratios.
- How it handles appraisal disputes and repair requirements.
- What its Loan Estimate shows for costs.
How the Loan Is Underwritten, Step by Step
Underwriting is a sequence of tests. Each one can shrink the cash or stop the loan. Here is the order they usually run.
1. Occupancy and ownership. The standard FHA cash-out is for your principal residence. You must have owned and lived in the home for 12 months before the case number is assigned. A recently bought home usually stops here.
2. Payment history. The mortgage must be current, and the file needs a current payoff statement, according to HUD’s refinance reference guide. Many lenders add a stricter look-back on late payments. That is lender-level policy, so it varies.
3. Appraisal. The appraisal sets value, and the 80% cap works off that value. A low appraisal shrinks the cash or removes it. The home also has to meet FHA property standards, so repair requirements can come up.
4. Credit. Across the programs Lendmire places files with, the starting point is a 580 decision score. HUD allows a lower tier for some loans, but the wholesale network does not reach below 580. A higher score generally widens your options and the ratios a lender will accept.
5. Debt-to-income ratios. The base pair is 31/43, meaning housing costs at 31% of income and total debts at 43%, with no compensating factors. Documented factors, such as reserves or a strong payment record, can stretch that toward 40/50 at the top tier. The automated underwriting finding governs most files.
6. Income and assets. Expect to document employment, income, bank statements, homeowners insurance, a mortgage statement, and a payoff. Lenders also commonly ask what the funds are for.
7. Payoff and closing. The new loan pays off the old mortgage and any liens. You receive the remainder. The upfront premium is due, and it is typically rolled into the loan balance.
Everything here is subject to lender guidelines and full file review. None of it is a commitment to lend.
Key Terms Defined
Loan-to-value (LTV): the new loan amount divided by the home’s appraised value, shown as a percentage.
Cash-out refinance: a new first mortgage larger than the old one, with the difference paid to you.
Upfront mortgage insurance premium: a one-time FHA charge of 1.75% of the base loan, usually financed into the balance.
Annual mortgage insurance premium: an ongoing FHA premium, between 0.15% and 0.75% of the balance depending on term, loan amount and LTV.
Overlay: a lender’s own rule that is stricter than the FHA minimum.
Decision score: the credit score a lender uses to decide eligibility, generally the middle score across the bureaus.
Cash-Out, Streamline, Rate-and-Term, or HELOC?
The right tool depends on what you need from the loan. Taking cash is one goal. Lowering a payment or changing a term is another. Mixing them up is where homeowners lose money.
| Option | Cash to you | Appraisal | Best fit |
|---|---|---|---|
| FHA cash-out | Yes, up to 80% LTV | Yes | Need cash, FHA-friendly profile |
| FHA streamline | No | None | Existing FHA loan, no cash needed |
| FHA rate-and-term | No | Yes | Change term, up to 97.75% LTV |
| HELOC or home equity loan | Yes | Usually | Keep the first mortgage as is |
The streamline refinances an existing FHA loan with no appraisal and a limited credit review. It must show a net tangible benefit, and the mortgage insurance continues. It does not put cash in your hands. The FHA rate-and-term reaches 97.75% LTV on a principal residence you have lived in for the previous twelve months, but it pays out no cash either. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
A home equity loan or line leaves your current mortgage in place. That matters if your existing loan is one you want to keep. The CFPB explains that a cash-out refinance may cost more or less than a HELOC depending on the terms. There is no universal winner. This one is a genuine toss-up until you compare actual Loan Estimates.
A rough rule: if you need a large sum and your current loan has no special value to you, cash-out is worth pricing. If you need a smaller amount and like your current loan, an equity line may be cleaner. If you only want a lower payment on an FHA loan, the streamline may beat both.
Where the General Rule Breaks
The 80% cap and the 12-month test cover most files. A few situations bend them.
A recently purchased home. The 12-month ownership and occupancy test is a hard stop for most newly bought homes. Waiting is often the only fix.
A home with no mortgage. A property owned free and clear can still be refinanced as an FHA cash-out, provided you have owned and occupied it for 12 months before the case number. No payoff comes out of the proceeds, so more of the equity reaches you.
An older, higher cap. HUD’s archived reference guide shows an older, higher cap, but that number is out of date. Today the cap is 80%. Treat anything quoting the old number as stale.
Manufactured homes. These carry extra restrictions, and lender appetite varies. This is a place where overlays diverge sharply between lenders.
Credit events. HUD sets waiting periods: two years from a chapter 7 discharge and three years from a foreclosure. These are HUD’s rules, not promises from any lender. Lenders may add time.
County loan limits. FHA loan limits are set by county and change every year, and the cash-out loan has to fit under them. A home in a high-cost county has more room than one in a low-cost county.
A second home or rental. The standard FHA cash-out is for a principal residence. Occupancy decides the leverage, so a non-owner-occupied property falls outside this program.
A non-FHA home. This article assumes you want to stay in FHA, but the home does not have to carry an FHA loan today. A conventional loan can be refinanced into an FHA cash-out if you meet the tests. Some owners move the other way, out of FHA, to drop mortgage insurance.
What the Costs and Trade-Offs Look Like
Cash-out resets your mortgage, so look at the whole new loan, not just the payout. Start with mortgage insurance.
The upfront premium is 1.75% of the base loan, financed into the balance. The annual premium sits between 0.15% and 0.75%, depending on term, amount and LTV. On a thirty-year loan at or below the program’s LTV threshold, which covers an FHA cash-out since it tops out at 80%, the annual premium ends after eleven years. Above that threshold it lasts for the term. HUD has also reduced the annual premium for newer loans, as FHA INFO 2023-11 announced. The official rulebook is HUD Handbook 4000.1, and your lender applies the current schedule. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A common misconception: a cash-out does not remove mortgage insurance. An FHA-to-FHA cash-out comes with new premiums. Getting rid of mortgage insurance means leaving FHA for a loan without it, which depends on your equity and credit.
Other costs to weigh:
- A larger balance. The monthly payment may rise because the loan is bigger. The CFPB’s guide to using home equity notes that a cash-out may also stretch the time it takes to pay off the mortgage. A fresh term means you restart the clock.
- Closing costs. These are generally higher on a cash-out than on some other equity products. Compare the Loan Estimate and Closing Disclosure line by line.
- Less equity. The 80% cap leaves at least 20% of your home’s value as equity. You still own less of the home than before.
- Risk to the home. The house is collateral. A larger loan means more at stake if income drops.
What do borrowers do with the money? A CFPB study of cash-out borrowers found many use it to pay down credit card and auto debt. Credit scores improved at first, then gradually worsened, and card balances trended back toward their earlier levels. Debt payoff can make sense. It works best when spending habits change along with the balances.
A Worked Example in Percentages
Consider a hypothetical homeowner with a 640 score who has lived in the home for several years. The home appraises at a given value, and the borrower owes 60% of that. The payoff, closing costs and financed premium all compete for room under the 80% cap. After those come out, what’s left is the cash.
Now change one variable. Suppose the appraisal comes in lower than expected. The 80% cap shrinks with it, and the cash shrinks faster than the value drops, because the payoff doesn’t move. A modest appraisal miss can erase most of the proceeds.
Change a different variable. Suppose the owner owes 75% instead of 60%. Only a sliver of room is left. After costs, there may be little or nothing to take out. At that point cash-out is probably the wrong tool, and a streamline or a home equity line is worth a look.
This is why the first step is a rough equity check against the 80% line. A broker can run it before you pay for an appraisal.
Questions to Ask Before You Choose
Use this list with any lender or broker.
- Is the lender FHA-approved, and does it have overlays on score or payment history?
- What does the Loan Estimate show for total costs, and how does the upfront premium appear?
- How does the lender handle a low appraisal or repair conditions?
- Will the new loan restart my term, and what does that do to total interest?
- Is a streamline or an equity line a better match for what I need?
Red flags are worth naming too. Be wary of any promise of a “no-cost” refinance. The costs are built into the interest rate or the balance, not erased. Be wary of any pitch that skips the comparison with your current loan. And be wary of a provider that quotes you before it has seen your payoff, your score and your occupancy history.
Gather these first: recent pay stubs and tax documents, bank statements, your latest mortgage statement, homeowners insurance, and a short note on what the funds are for.
Why a Broker Fits This Loan
A direct lender offers its own program and its own overlays. A broker can compare several. The tradeoff is that you rely on the broker’s judgment about fit, so ask how it chooses a lender and what it shows you.
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.
Frequently Asked Questions
How much equity can I take out with an FHA cash-out refinance?
Up to 80% of the home’s appraised value, counting your payoff and costs, subject to lender guidelines. At least 20% of the value stays as equity. A low appraisal or a large existing balance can leave little or no cash.
Can I do a cash-out refinance on a home I just bought?
Usually not. The standard FHA cash-out requires 12 months of ownership and occupancy before the case number is assigned. If you have owned the home for less time, other options may exist, but they carry different leverage and rules.
Will a cash-out refinance get rid of my FHA mortgage insurance?
No. An FHA-to-FHA cash-out brings a new upfront premium of 1.75% and a new annual premium. On a thirty-year loan at or below 90% LTV, the annual premium ends after eleven years. Leaving mortgage insurance behind generally means moving to a non-FHA loan.
Is an FHA cash-out cheaper than a HELOC?
It depends on the terms. A cash-out replaces your whole mortgage, while a HELOC leaves it in place, so compare the total cost of both paths.
Do I need perfect credit?
No. The wholesale programs Lendmire places files with start at a 580 decision score. Higher scores widen your options, and some lenders set a higher floor for cash-out. Debt ratios and payment history matter alongside the score.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency 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 Archives: Refinances reference guide
2. CFPB: What Other Types of Loans Are Similar to a HELOC
4. HUD Handbook 4000.1, Update 18
5. CFPB: Using home equity to meet financial needs
6. CFPB study of cash-out borrowers
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 Much Cash Comes Out of an FHA Cash-Out Refinance on a Home With No Mortgage? · FHA Cash-Out Refinance vs Conventional Cash-Out Without Selling the House
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- 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.