The Quick Read: The best program for your situation is usually the full-documentation FHA cash-out refinance, because it is the only FHA refinance that puts cash in your hand. It replaces your current FHA loan with a new, larger FHA loan, and you keep the difference. The new loan reaches up to 80% of your home’s adjusted value. The FHA Streamline is cheaper and simpler, but it allows no cash out.
What Does an FHA Cash-Out Refinance Actually Do?
An FHA cash-out refinance pays off your current mortgage with a new FHA loan that is larger than the balance you owe. You receive the difference as cash. The proceeds are not limited to specific purposes, so the money is yours to use as you see fit.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.24% as of October 29, 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.
You do not need an existing FHA loan to use this program. It can replace an FHA or a non-FHA mortgage. Having an FHA loan already does not block you, and it does not change the basic rules. It does change a few practical details, which come up below.
Lendmire’s FHA cash-out refinance program page lays out how the brokerage arranges these loans. Here is the full picture.
Key Terms Defined
Cash-out refinance: A new mortgage that pays off the old one and gives you the leftover equity as cash.
FHA Streamline: A refinance of an existing FHA loan with no appraisal and a limited credit review. It allows no cash out.
Rate-and-term refinance: A refinance that changes your interest rate or loan length without taking meaningful cash out.
LTV (loan-to-value): The loan amount divided by the home’s value. An 80% LTV means the loan is 80% of what the home is worth. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Upfront mortgage insurance premium (UFMIP): A one-time FHA insurance charge, 1.75% of the base loan, usually financed into the loan.
Annual mortgage insurance premium (MIP): An ongoing FHA insurance charge collected monthly. Its size depends on loan term, loan amount and LTV.
Case number: The FHA identifier assigned when a lender starts your loan. Several eligibility tests are measured at this date.
Key Takeaways
- Cash-out is capped at 80% LTV, so at least 20% equity stays in the home.
- A Streamline can never give you cash.
- You generally need to have owned and lived in the home for 12 months before the case number.
- It is full underwriting: income, assets, credit and an appraisal.
- Your old upfront premium does not come back as cash.
Why Is the Cap 80% and Not Higher?
The cap is 80%, and older numbers you may see online are out of date. HUD lowered the maximum LTV for cash-out refinances from 85% to 80% for case numbers assigned on or after September 1, 2019. That matched the maximum the government-sponsored enterprises allow. HUD had earlier cut the limit from 95% to 85% in 2009.
HUD’s reasoning was straightforward. Cash-out refinances had grown to 64% of FHA-insured refinance transactions, and the agency wanted to reduce risk and preserve homeowner equity. The Handbook 4000.1 update wrote the 80% limit into the handbook for both LTV and combined LTV, which counts any second liens against the same ceiling.
The cap applies to the adjusted value of the property as HUD’s guidelines define it, not simply the number a seller or neighbor suggests. A higher credit score does not buy a higher cash-out LTV. Across the wholesale programs Lendmire places files with, the cash-out reaches 80% LTV on a home you have owned and occupied for 12 months before the case number. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
There is one narrow exemption. Mortgages insured under Section 247, the Hawaiian Home Lands program, are outside the 80% change.
How Is the Loan Underwritten, Step by Step?
Underwriting follows a clear order, and each step can stop the file. Here is the sequence a broker walks through with you.
1. Check the 12-month test. At least one borrower generally needs to have owned and lived in the home as a principal residence for 12 months before the case number is assigned. Exceptions exist in the handbook for situations like inheritance, and a lender reviews those individually.
2. Check payment history. Lenders look hard at how you paid your current loan. Recent late payments can sink a cash-out even when equity is plentiful.
3. Assign the case number. The lookback and the leverage test are measured here.
4. Verify the full file. Income, assets, credit and debt-to-income are all documented. This is not a Streamline.
5. Order the appraisal. The appraised value, adjusted under HUD’s formula, sets the ceiling.
6. Size the loan. The new base loan can reach 80% of adjusted value. County loan limits apply too, and they change every year, so a lender confirms yours for your county.
7. Close. The new loan pays off the old FHA loan. Your payoff, closing costs and the new upfront premium come out of the proceeds. What is left is your cash.
Step 6 is where homeowners get surprised. The cash you receive is not 80% of the value minus your balance. Costs and the financed premium shrink it.
What Do the Ratios and Credit Look Like?
Across the wholesale programs Lendmire places FHA loans with, the decision score starts at 580. HUD permits scores in the 500-579 range under its own rules, but the lender network does not go below 580.
The base debt-to-income pair is 31/43. That means housing costs up to 31% of income and total debts up to 43%, with no compensating factors. Documented compensating factors, such as strong reserves or a history of handling larger housing costs, can stretch the pair to 40/50 at the top tier. The automated underwriting finding governs most files. All of this is subject to lender guidelines and full file review.
If you have a past credit event, HUD’s waiting periods apply: two years from a chapter 7 discharge and three years from a foreclosure. Those are HUD rules, not a promise from any one lender.
How Does Mortgage Insurance Work on a Cash-Out?
The upfront premium is 1.75% of the base loan, and HUD’s FHA guidance confirms that it is collected at closing. Most borrowers finance it into the new loan. The annual premium is collected in monthly installments, and in the programs Lendmire works with it runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV.
Duration matters. On a thirty-year loan above 90% LTV, the annual premium lasts for the full term. At or below 90% LTV, it ends after eleven years. Because a cash-out tops out at 80%, the shorter eleven-year duration generally applies. A lender confirms the schedule on your file.
Here is a detail that helps existing FHA borrowers. HUD guidance says the upfront premium is not refundable, except when you refinance into a new FHA mortgage. If you do that within three years, a credit applies. It reduces your new upfront premium. It is not paid to you in cash, and you should verify the details against HUD’s current schedule.
Cash-Out or Streamline? Matching the Program to the Goal
The cash-out is the best program only if cash is the goal. If you want something else, a different FHA refinance may fit better. The FDIC’s guide to FHA streamlines confirms that no cash may be taken out on a Streamline, appraisals are not required and no LTV or CLTV limits apply.
| Your goal | Usually the better fit | Why |
|---|---|---|
| Take cash from equity | FHA cash-out | Only FHA refinance that pays cash |
| Change term or payment, no cash | FHA Streamline | No appraisal, limited review |
| Move to a higher-LTV refinance, minimal cash | FHA rate-and-term | Reaches 97.75% on a principal residence |
| Shed FHA insurance entirely | Conventional refinance | Depends on equity and credit |
The Streamline requires a net tangible benefit, meaning the refinance has to help you in a measurable way, and the premium continues. The rate-and-term refinance takes an appraisal and reaches 97.75% LTV on a principal residence you have occupied for the previous twelve months. Cash beyond limited amounts is not permitted there. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Here is a worked comparison in plain words. Say you own a home with 35% equity, you have lived there for four years and you pay on time. A cash-out reaches 80% of value, so it can release roughly 15% of the home’s value before costs, the financed premium and your payoff are netted out. A Streamline releases nothing. If the only thing you want is a smaller payment, the Streamline is likely the cleaner tool.
When Does the Standard Rule Break?
A few situations change the answer.
- Recent purchase. If you have owned or lived in the home under 12 months, the standard cash-out generally is not available. Some lenders also add their own seasoning overlays, so a different lender may read the same file differently.
- Recent late payments. A strong appraisal does not cure a rough payment history.
- Home listed for sale. Many lenders will not do a cash-out while the property is on the market, and the required time off the market varies by lender.
- Not your primary home. The program is aimed at owner-occupied principal residences. If the property is a rental or second home, occupancy decides the leverage, and the FHA cash-out is not the tool for it.
- Old FHA loan endorsed on or before May 31, 2009. Special reduced premiums exist, but they apply to Streamline and simple refinances, not cash-out.
- Older case numbers. The old 85% limit applied only before September 1, 2019, and is irrelevant to new files.
In files like these, the first call a broker makes is usually to a lender whose overlays fit, rather than to the program itself. The same borrower can get a different answer from two lenders on seasoning or payment history.
What Does the Decision Look Like in Practice?
A cash-out is a trade. You give up a seasoned loan for a bigger, newer one. The new loan restarts the amortization clock, and the monthly premium is based on the larger balance. So taking cash out can raise your payment even when the interest cost is similar. That is why a cash-out can be the wrong choice for someone whose only goal is a lower payment.
Run these questions before you commit.
1. What will the cash do? Paying off higher-cost debt or funding a repair that protects the home is different from covering ongoing spending.
2. What are you giving up? If you have a long-seasoned FHA loan, compare the full cost of replacing it with the cash you gain.
3. Can you handle the bigger loan? Full underwriting tests your income against the new, larger obligation.
4. Is 20% remaining equity acceptable? The cap means you can never extract all of it.
5. Would a Streamline now and a cash-out later cost double? Doing both means paying twice for closing costs and premiums.
Alternatives deserve a look, too. A home equity loan or line keeps your first mortgage intact. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
If your existing loan is adjustable, Lendmire’s piece on FHA cash-out refinance terms for an adjustable first mortgage covers that wrinkle.
Who This Is Not For
Skip the cash-out if you want a lower payment and no cash, if you bought within the last year, if you have recent late payments, or if you would be left with very little equity cushion. A Streamline, a rate-and-term refinance or simply waiting may serve you better.
How a Broker Finds the Right Fit
No single lender is the best answer for every file. The program that suits you depends on your seasoning, payment history, credit profile and how much cash you need. Lendmire is a mortgage broker, licensed for consumer lending in 16 states, and it works with wholesale lenders rather than lending directly. A broker shops the file across those lenders, matches the scenario to the program and shows you the Loan Estimate for each option so you can compare the full terms.
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. Program figures here are subject to lender guidelines and full file review, and none of this is a commitment to lend.
Frequently Asked Questions
Do I need an existing FHA loan to get an FHA cash-out refinance?
No. The program can replace an FHA loan or a non-FHA mortgage. Having an FHA loan does not block you or change the core rules. What matters is the 12-month ownership and occupancy test, your payment history, your credit and the appraised value.
Can an FHA Streamline give me cash?
No. No cash may be taken out on a Streamline. It skips the appraisal and has no LTV limits, but that is because it only changes the terms of your existing FHA loan. For cash, you need the full-documentation cash-out.
Do I get my old upfront premium back?
Not as cash. If you refinance FHA-to-FHA within three years, a credit can reduce your new upfront premium. After that window the credit generally is not available. Verify the schedule against HUD’s current rules.
How much equity stays in my home?
At least 20%. The cap is 80% of adjusted value, and any second liens count toward it. A higher credit score does not raise that cap.
Does the cash have to be spent a certain way?
No. HUD’s definition says cash-out proceeds are not limited to specific purposes. Tax questions are separate, and a qualified tax professional can speak to your situation.
For your own numbers, request a scenario review with Lendmire.
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
1. HUD Archives press release 19-114
2. HUD Handbook 4000.1 Update 7.5 transmittal
3. HUD FHA Answers: Mortgage insurance premium structure
4. FDIC Affordable Mortgage Lending Guide: FHA Streamline
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 an FHA Cash-Out Refinance Pay Off a Spouse in a Divorce? · VA Cash-Out vs FHA Cash-Out for a Former Service Member’s Spouse · Gift of Equity vs Cash Gift for a Family FHA Purchase: What Decides
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
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.