The Quick Read: The amount is set by the loan ceiling, not by a separate cap on fees. An FHA cash-out refinance reaches 80% of your home’s value, and your old payoff, your financed costs and your cash all share that one limit. Every dollar of cost you roll in is a dollar of cash you do not receive. Military service does not change these FHA rules, though it does give you a VA loan to compare.
Key Takeaways
- Closing costs, prepaids and your payoff all fit under the same 80% loan-to-value ceiling.
- Rolling costs in shrinks your cash-out point for point. It also raises your balance.
- The 1.75% upfront mortgage insurance premium can be financed into the loan or paid in cash. Check with your loan officer on how the rules apply to your file.
- You need 12 months of owning and living in the home before the case number is assigned.
- A veteran gets no special FHA terms. A VA cash-out is a separate loan with its own fee and ceiling.
What Does “Rolling In” Actually Mean?
Rolling in means the new loan is large enough to pay your closing costs, so the costs are financed instead of paid from your pocket. On a cash-out refinance, those costs come out of the same pool as your cash proceeds. The loan is larger by the amount you roll in, so the real choice is who gets the equity: you, or the fee line items.
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.
Here is the distinction that trips people up. On a no-cash-out refinance, the loan covers the old payoff plus the costs of the transaction, and that is all. A cash-out refinance also lets you take cash from the equity, but it carries a lower ceiling, and the costs, the payoff and your cash all share it.
Some borrowers want to keep money in the bank at closing. Others want every possible dollar of cash and wonder what the fees will take. Both questions have the same answer: the math runs through one ceiling.
This article explains the mechanics around costs. Across the wholesale programs a broker arranges FHA files with, the FHA cash-out reaches 80% LTV on a home you have owned and lived in for 12 months before the case number. Lendmire’s FHA cash-out refinance program page gives the overview. Everything below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
How the 80% Ceiling Sets Your Limit
The new loan cannot exceed 80% of the appraised value, after FHA adjustments. That is the answer to “how much can I roll in.” The ceiling holds the whole stack, and the fees get whatever is left after the payoff.
Walk through the underwriting in order:
1. Eligibility. You need to have owned and lived in the home as your main residence for 12 months before the case number. The lender also reviews your mortgage payment history over that window. A short history can make a loan ineligible, and a late payment inside the window can block it.
2. Appraisal. The appraiser sets a value. The lender applies FHA adjustments to get the Adjusted Value, then multiplies by 80% to find your maximum loan.
3. Credit and ratios. The file is reviewed against a minimum decision score of 580 on the programs a broker reaches. The base debt ratios are 31/43, meaning housing cost and total debt as a share of income. Documented compensating factors can stretch those as far as 40/50 for the strongest files. For most files the automated finding governs.
4. Payoff stack. The lender takes the maximum loan, subtracts your existing mortgage and any liens, then subtracts financed closing costs and prepaids. What remains is your cash.
5. Disclosures. You receive a Loan Estimate, then a Closing Disclosure. Both show the numbers. More on that below.
One more limit sits next to the 80%. County loan limits apply, and the combined balance of your first loan and any other liens counts toward them. Those limits change every year, so check the current figure for your county before you plan.
Walking the Payoff Stack
Picture a homeowner whose existing mortgage is about 65% of the home’s appraised value. These are modeled assumptions, not market data. The ceiling is 80%, so the gap between payoff and ceiling is 15 points of value.
That 15-point gap is the whole pool. Out of it come the financed closing costs, the prepaids (such as the first stretch of interest and escrow deposits), and the financed upfront premium if you roll it in. Whatever remains is the cash in your hand.
Now run it two ways.
- Pay costs in cash. Your loan is sized to the payoff plus your full cash-out. You write a check at the table for the fees. Your balance is lower than if you had rolled the costs in, and so is your long-term cost.
- Roll costs in. Your loan is sized to the payoff plus the fees plus whatever cash is left. Your check at the table shrinks, but your cash proceeds shrink too, and your balance is higher.
Equity makes the difference. A homeowner at 50% of value has a 30-point pool and plenty of room. A homeowner at 75% has a 5-point pool, and the costs may eat most of it. In that case you may have to pay some fees out of pocket, or the cash-out may not be worth doing. If you are close to the ceiling, the no-cash-out refinance can be the better fit, since it reaches 97.75% on a principal residence occupied for the previous 12 months.
What Can You Roll In, and What Comes From Cash?
Most charges tied to getting the loan can be financed, as long as the total fits under the ceiling. What you cannot do is stretch beyond it. The table sorts the common line items.
| Cost | Can it be financed? | Where it comes from |
|---|---|---|
| Appraisal, title, recording | Generally yes | Loan proceeds, within the ceiling |
| Lender-side loan fees | Generally yes | Loan proceeds, within the ceiling |
| Prepaids and escrow deposits | Generally yes | Loan proceeds, within the ceiling |
| Upfront mortgage insurance | Yes, as a whole | Financed fully or paid fully in cash |
| Existing mortgage payoff | Yes, required | First claim on proceeds |
| Your cash-out | Whatever remains | Pool left after all of the above |
The premium line deserves a closer look. The upfront mortgage insurance premium is set at 1.75% of the base loan amount for FHA mortgages, per HUD Mortgagee Letter 2023-05. It is not optional. The rules let you finance it or pay it, but not part of each.
How the financed premium sits against the 80% ceiling depends on how the lender structures the loan. Some descriptions treat the ceiling as applying to the base loan, with the premium added on top. Confirm that treatment with your loan officer and on your disclosures, since it can move your cash by a visible amount.
Fees also vary by lender, county and loan size. The only reliable number is the one on your Loan Estimate.
Does a Veteran Get Different FHA Terms?
No. FHA underwrites the loan by the same rules for every borrower. Military status does not raise the ceiling, waive the premium or loosen the 12-month tests.
What a veteran gains is a second option. A VA cash-out refinance is a different loan. It has its own ceiling and its own fee structure, and the two products are not interchangeable.
On the VA side, borrowers pay a funding fee unless they qualify for an exemption, and that includes refinances. The VA funding fee and closing costs page is the place for current fee rates and exemption details. On a purchase or construction loan, only the funding fee can be financed. The cash-out refinance rules differ, so read that page rather than rely on a summary.
Here is how the three routes compare for closing costs. The FHA rate-and-term column is included only as a reference point, since it brings no cash to the borrower.
| Factor | FHA cash-out | VA cash-out | FHA rate-and-term |
|---|---|---|---|
| Costs rolled in? | Yes, inside 80% | Check VA’s rules | Yes, up to its ceiling |
| Cash to borrower | Yes | Yes | No |
| Ceiling | 80% LTV | See VA’s page | 97.75% LTV |
| Monthly mortgage insurance | Yes | No | Yes |
| Fee on top | 1.75% upfront | VA funding fee | 1.75% upfront |
A veteran leaving a VA loan for an FHA loan gives up VA-specific features, including freedom from monthly mortgage insurance. That is a general comparison, not a quoted rule. It is why the choice deserves real thought rather than a reflex.
Where the General Rule Breaks
The 80% rule holds for most files. A few situations change the picture.
You do not need cash. If you only want to lower your costs or change your loan, a no-cash-out FHA refinance can fold in the closing costs at a higher ceiling. The FHA Streamline goes further. It refinances an existing FHA loan with no appraisal and a limited credit review, but it requires a net tangible benefit, and the premium continues. A Streamline cannot be used to take cash out, so it is not a cash-out in disguise.
You inherited the home. The 12-month occupancy test can be waived if you inherited the property and have not treated it as a rental. If you rented it out, you would need to live in it for 12 months first. Confirm this with your loan officer, as it is an exception and not the standard path.
The home is a second home or rental. Standard FHA cash-out is for a principal residence. Occupancy decides the leverage, and a home you do not live in does not fit this program.
You have a recent forbearance or workout. A recent hardship plan can add conditions to the file. The specifics vary, so ask early rather than learn at the end.
You have a past credit event. HUD sets waiting periods after certain events, such as two years from a Chapter 7 discharge and three years from a foreclosure. Those are HUD’s rules, not a promise from any lender.
Your equity is thin. When the payoff already sits near 80%, there is little pool to share. Costs either come out of pocket or cancel the cash-out.
You think the ceiling is higher. Some web pages still show 85% or 95% for FHA cash-out. HUD cut the limit to 80%, as shown in its Handbook 4000.1 update, which carries the change from Mortgagee Letter 2019-11. If a page quotes a higher number, it is out of date.
What Rolling Costs In Does to Your Budget
Rolling in is a loan, so it costs money over time. A larger balance means a larger monthly payment and more interest over the term. It also raises the annual mortgage insurance premium, since that charge is a percentage of the balance.
The annual FHA premium on the programs a broker reaches is a percentage of the loan balance, and the exact rate depends on term, loan amount and LTV. On a 30-year loan with higher leverage, the annual premium can last for the full term, while at lower leverage it ends sooner. Every detail here varies by lender and program, and guidelines, property type, leverage and credit profile all apply.
The break-even idea is simple. Financing a cost saves you cash today and costs you interest later. If you plan to keep the loan for a long time, the extra interest adds up. If you expect to sell or refinance again soon, the cash you kept may be worth more than the interest you pay.
A few things to weigh:
- Cash today versus cost later. Keeping cash on hand has value if you need it for repairs or a reserve.
- Time in the home. Longer ownership favors paying costs up front.
- Lender credits. A credit can offset closing costs, but the trade-off usually shows up elsewhere in the loan terms. A credit appears as a negative number in the closing cost totals on your disclosures.
- Shopping for lower costs. Comparing Loan Estimates from several lenders is the most direct way to reduce what you roll in.
Reading Your Disclosures Before You Sign
Your Loan Estimate shows the upfront charges to get the loan and transfer ownership. It also shows Estimated Cash to Close, which tells you whether you owe money at the table. The CFPB’s Loan Estimate explainer walks through each page.
Before closing you receive a Closing Disclosure. It includes a line for “Closing Costs Financed (Paid from your Loan Amount),” described in the CFPB’s guide to the Loan Estimate and Closing Disclosure. That guide also sets a waiting period between receiving the Closing Disclosure and closing. Compare it line by line against your Loan Estimate. If a number moved, ask why.
A Practical Checklist Before You Decide
Run these questions in order.
1. Do you meet the 12-month test? Confirm ownership, occupancy and a clean payment history in that window.
2. Where does your payoff sit against 80% of value? A rough estimate tells you how big the pool is.
3. Do you need the cash? If not, price a no-cash-out refinance first.
4. Cash or financed costs? Decide whether to protect your reserve or your balance.
5. Have you priced the VA option? If you hold VA eligibility, get both sets of disclosures and compare them.
6. Did you check the county loan limit? It caps the new loan regardless of equity.
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. A broker can run the FHA and VA paths side by side so you see both sets of numbers before you commit to either.
Key Terms Defined
Adjusted Value: The appraised value after FHA adjustments, used as the base for the 80% ceiling.
Loan-to-value (LTV): Your loan balance as a percentage of the home’s value.
Upfront mortgage insurance premium (UFMIP): A one-time FHA charge of 1.75% of the base loan, financed entirely or paid entirely in cash.
Annual mortgage insurance premium: An ongoing FHA charge based on your balance, term and LTV, collected as part of your monthly payment.
Prepaids: Costs paid ahead of time at closing, such as initial interest and escrow deposits for taxes and insurance.
Lender credit: A rebate that offsets some closing costs, usually in exchange for other terms in the loan.
Cash-out refinance: A new loan that pays off your old one and lets you take the leftover equity as cash.
Frequently Asked Questions
Can I roll all my closing costs into an FHA cash-out refinance?
Usually, as long as the total stays under the 80% ceiling and the county loan limit. The costs share the ceiling with your payoff and your cash. If your equity is thin, some fees may have to come out of pocket, subject to lender guidelines.
Does financing closing costs reduce the cash I receive?
Yes, dollar for dollar. The loan is capped, so every financed fee takes room from the cash-out. A homeowner with a lot of equity barely notices. A homeowner near the ceiling can see most of the cash disappear.
Can I finance the upfront mortgage insurance premium?
Yes. The 1.75% premium can be financed, but only as a whole. You either finance all of it or pay all of it in cash. Ask your loan officer how it is treated against the ceiling on your file.
Is the VA cash-out a better deal for a veteran?
It depends on your numbers. VA has a funding fee unless you are exempt, and no monthly mortgage insurance. FHA has the 1.75% upfront premium plus an annual premium. Compare both Loan Estimates, and check VA’s page for current fee details.
Do I have to live in the home for a set time?
Yes. At least one borrower must have owned and lived in the home as a principal residence for 12 months before the case number is assigned. The lender also reviews your payment history over that window, so one late payment can block the loan.
For your own numbers, request a scenario review with Lendmire.
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 2023-05
2. VA funding fee and closing costs
3. HUD Handbook 4000.1 update transmittal
4. CFPB Loan Estimate explainer
5. CFPB guide to the Loan Estimate and Closing Disclosure
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: Can a Veteran Take an FHA Cash-Out to Avoid the VA Funding Fee? · How Much DC Recordation Adds to an FHA Cash-Out · How Much FHA Cash-Out Lends on a Duplex You Live In
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.