The Quick Read: Yes, in most cases, as long as you only need the new loan to pay off your current mortgage and its costs. Your plan for the money decides which loan you get. If you want real cash back, it is a cash-out loan, and the stricter tests apply.
What Actually Separates the Two Loans?
The use of the money separates them. A no-cash-out refinance pays off your existing mortgage, certain eligible liens and the costs of the transaction. A cash-out refinance lets the proceeds go to anything else. There is no box to tick. The loan’s purpose sets its type, and the lender documents it.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.32% as of October 22, 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.
Across the wholesale programs Lendmire places FHA files with, the question comes up often. A homeowner sees a lot of equity and assumes the cash-out version is the default. It is not. If your goal is a different loan structure, a different term, or taking a borrower off the loan, no-cash-out is usually the cleaner fit. Only a small incidental amount of cash comes back at closing, and the current limit on that amount is set by FHA’s Handbook, which the lender confirms for your file.
Cash-out fits when you want money for debt payoff, repairs, or another planned use. The trade is plain. You get liquidity, and you take on a larger balance, a lower leverage ceiling and more ownership tests. Lendmire’s FHA cash-out refinance program page lays out how the cash-out side works in more detail.
(Honestly, a lot of borrowers who ask this question already know the answer. They want the cleaner loan and are checking whether the system lets them pick it.)
The Leverage Gap: 97.75% vs. 80%
No-cash-out reaches higher leverage. On the FHA rate-and-term refinance, financing can reach 97.75% of appraised value on a principal residence you have occupied for the previous twelve months. The FHA cash-out tops out at 80% LTV, and the home must be owned and occupied for twelve months before the case number is assigned. The FDIC’s summary of the FHA 203(b) program confirms the 97.75% ceiling for no-cash-out and the owner-occupied primary residence requirement. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
That gap changes who can refinance at all. With a cash-out loan, you need roughly 20% equity left after the new loan. With no-cash-out, you can refinance with far thinner equity. A homeowner with modest equity may find cash-out is simply not on the table, and no-cash-out is the only path.
Shorter occupancy can lower the no-cash-out ceiling. If you have not lived in the home for the full twelve months, expect a lower maximum. The exact reduced figure varies by lender guidelines and file review.
The Three No-Cash-Out Types
FHA lists three no-cash-out refinance types: Rate and Term, Simple, and Streamline. They differ in which existing loans qualify and how much review the file gets. The HUD Handbook 4000.1 glossary defines each.
| Type | Existing loan | Appraisal | Cash back |
|---|---|---|---|
| Rate and Term | Any mortgage type | Yes | Incidental only |
| Simple | Must be FHA-insured | Yes | Incidental only |
| Streamline | Must be FHA-insured | No | None |
A few details matter here.
Rate and Term is the only no-cash-out type that can refinance a non-FHA loan. A homeowner with a conventional mortgage who wants to move into FHA uses this one. The new loan is full-documentation, so expect an appraisal, income review and credit review.
Simple Refinance applies only to an existing FHA loan. It can generally finance eligible costs into the balance, within the maximum. Check that treatment with your lender, because the details depend on the file.
Streamline is the lightest file. It refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit. The mortgage insurance premium continues. The FDIC’s FHA Streamline summary confirms that no cash may be taken out and no new appraisal is needed.
That last point trips people up. Streamline is not a gentle way to pull equity. It is the opposite.
No-Cash-Out vs. Cash-Out, Side by Side
On an FHA loan, no-cash-out is easier to qualify for and costs you the cash. Here is how the two compare on the points that decide most files.
| Factor | No-Cash-Out | Cash-Out |
|---|---|---|
| Use of proceeds | Payoff and costs only | Anything |
| Max financing | Up to 97.75% (rate-and-term) | 80% LTV |
| Ownership test | Occupancy history affects LTV | 12 months owned and occupied |
| Appraisal | Yes, except Streamline | Yes |
| Balance effect | Roughly the old debt plus costs | Larger balance |
| Premium | Upfront 1.75%, financed | Upfront 1.75%, financed |
Mortgage insurance applies on both paths, and it is a program fact rather than a price. The upfront premium is 1.75% of the base loan, and it can be financed. The annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan above 90% LTV, the annual premium lasts for the term. At or below 90% LTV, it ends after eleven years.
That detail matters for the choice. A no-cash-out loan at high leverage usually carries the premium for the full term. A cash-out loan is capped at 80%, so on a thirty-year term it falls in the shorter-premium group. That does not make cash-out cheaper overall, because the balance is larger. It is one more input.
Two other limits apply to both. County loan limits apply, and they change every year. And the usual file standards hold: a 580 decision score is where the wholesale programs Lendmire places FHA loans with start. Ratios begin at 31/43 and can reach 40/50 with documented compensating factors, and the automated finding governs most files. All of this is subject to lender guidelines and full file review.
When Does No-Cash-Out Make Sense?
Choose no-cash-out when the loan itself is the goal. The strongest fits look like this:
- You want a different loan structure, such as a different term or a move from an adjustable loan to a fixed one.
- You need to remove a borrower from the loan, or you are buying out a co-owner. Check how your lender treats the payoff in your situation.
- You have thin equity and cash-out’s 80% cap would block you.
- You want to avoid adding debt, and you do not need the money.
- You want simpler underwriting. Streamline in particular carries less review, if your existing loan is already FHA.
Cash-out makes more sense when the cash has a clear job. Paying off higher-cost debt can work if the cost of getting the cash is lower than the cost of the debt it replaces. The CFPB’s research on cash-out refinances makes that point. It also warns that turning unsecured debt into mortgage debt puts the home at risk if payments become hard to sustain.
Here is where the flip point sits. If you could qualify either way, ask what the cash will actually do for you. If the answer is vague, no-cash-out is probably the better call. If the answer is specific and the numbers work, cash-out earns its place.
Mixed Goals: A Lower Payment and Some Cash
A mixed goal usually means splitting the plan. Suppose you want to restructure the loan and also have money for a project. You have a few ways to handle it, and none is perfect.
One path is cash-out for both goals. You get the cash and the new structure in one loan, at a lower leverage ceiling and a larger balance. A second path is no-cash-out now and separate funding later, using something that leaves your first mortgage in place. The CFPB notes that home equity loans and lines of credit leave the first mortgage intact, while a cash-out refinance replaces it.
A homeowner who feels locked in to the current loan may prefer the second path. Lendmire’s piece Should a Lock-In Homeowner Choose an FHA Cash-Out Over a Second Lien? walks through that tradeoff. A cash-out refinance is not a second mortgage. It replaces the first one.
Three Borrower Scenarios
These scenarios use percentages and plain words, not dollars. They show how the choice tends to play out.
Scenario one: the thin-equity borrower. Picture a homeowner with an existing FHA loan, a few years of on-time payments and equity well under 20%. Cash-out is capped at 80% LTV, so it is likely out of reach. A Streamline could work, since it needs no appraisal and carries a limited credit review. The net tangible benefit still has to be there. No-cash-out is the path. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Scenario two: the borrower with plenty of equity and a vague plan. Say a homeowner has built well past 20% equity and is tempted to pull some out “just in case.” The cash-out path is open. But the larger balance accrues cost on money with no assigned job. Rate-and-term or Simple keeps the balance close to the old debt. Cash-out is available here, but choosing no-cash-out is the more disciplined move.
Scenario three: the borrower with a real project. Consider a homeowner with deep equity, twelve months or more of occupancy, and a defined repair budget. Cash-out reaches up to 80% LTV and fits the need. Here the larger balance has a purpose. No-cash-out would leave the project unfunded. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Edge Cases Worth Knowing
Paying off a second lien. In a no-cash-out refinance, a home equity line or other subordinate lien can stay in place if the FHA loan meets eligibility criteria. Seasoned junior liens can also be paid off inside the new loan. A recent second lien, one drawn for cash, may change the classification. Ask your lender how yours is treated.
Financing closing costs. On no-cash-out, eligible costs can generally be financed within the maximum, and that does not turn the loan into cash-out. A refund of a small, incidental amount after closing is also normal. A meaningful sum back to you changes the loan type.
No existing mortgage. FHA defines a cash-out refinance to include taking equity from a home with no mortgage on it. Lendmire’s article Can You Get an FHA Cash-Out Refinance With No Mortgage? covers that case.
Recent forbearance. After a mortgage forbearance plan, a borrower with fewer than three consecutive monthly housing payments since completing it must be manually underwritten. FHA’s Handbook update notes say so for both purchase and no-cash-out refinance.
Recent purchase. When a home was acquired recently, lenders may use the lesser of the appraised value or the documented purchase price in the calculation. That can lower the amount available.
Occupancy. Cash-out is for owner-occupied principal residences. If the home is not your primary residence, the leverage and eligibility picture changes. Occupancy decides the leverage.
Common Mistakes
- Assuming Streamline can pull equity. It cannot. No cash may be taken out.
- Expecting a bit of cash from no-cash-out. Only an incidental amount is allowed. Anything meaningful makes it cash-out.
- Assuming any FHA refinance needs an existing FHA loan. Only Simple and Streamline do. Rate-and-term and cash-out can pay off non-FHA loans.
- Mixing up the waiting periods. The twelve-month test is the main gate on cash-out. A different seasoning test belongs to the Streamline. Confirm which one applies to your loan.
- Assuming a refinance removes mortgage insurance. It does not by itself. The premium structure restarts on the new loan, and Streamline continues it.
- Treating a cash-out refinance as a rate decision. It is a different risk profile, and the lender will judge it that way.
One note on cost. Both paths carry closing costs, and no-cash-out can finance eligible ones into the balance. The costs do not disappear. They are built into what you owe.
Key Terms Defined
No-cash-out refinance: A refinance where the proceeds only pay off the existing debt and the costs of the transaction.
Cash-out refinance: A refinance where the proceeds are not limited to specific purposes, so you can take equity as cash.
Rate and Term: An FHA no-cash-out refinance that can pay off any type of existing mortgage, FHA or not.
Streamline: An FHA refinance of an existing FHA loan with no appraisal and no cash out, which needs a net tangible benefit.
LTV (loan-to-value): The new loan balance divided by the home’s appraised value.
Net tangible benefit: A measurable gain to the borrower from the refinance, which a Streamline must show.
The Practical 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. Bring your current loan type, how long you have owned and lived in the home, and what you would do with any cash. Those three answers usually settle the choice, subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Frequently Asked Questions
Can I choose no-cash-out if I have plenty of equity?
Usually yes. Having equity does not force you into cash-out. If your goal is only to restructure the loan, no-cash-out can be the right fit, and it keeps the balance close to what you owe now. Your lender confirms the classification once it sees how the proceeds will be used.
Can I roll closing costs into a no-cash-out refinance?
Generally yes, within the maximum financing allowed. Eligible costs can be built into the balance without making the loan cash-out. A Streamline works differently, so check with your lender whether costs can be financed on the type you are using.
Does an FHA Streamline allow any cash back?
No. The Streamline allows no cash out. It is limited to existing FHA loans, needs a net tangible benefit, and skips the appraisal. If you want to pull equity, you need a cash-out loan instead.
Can I switch from cash-out to no-cash-out mid-application?
Often, if the use of proceeds changes. The loan type follows the purpose, so the leverage ceiling and the tests change with it. The lender may need to re-run the file and review the appraisal and the numbers again. Raise it early.
Will a refinance get rid of FHA mortgage insurance?
Not by itself. The new FHA loan carries its own upfront premium of 1.75%, which can be financed, plus an annual premium between 0.15% and 0.75% of the balance. How long the annual premium lasts depends on term and LTV. Streamline continues the premium.
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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References
1. FDIC, FHA 203(b) Mortgage Insurance Program summary
2. HUD, Handbook 4000.1 Glossary
3. FDIC, FHA Streamline Refinance summary
4. CFPB, Cash-Out Refinances and Paydown Behavior of Non-Mortgage Debt Balances
5. CFPB, Office of Research blog on cash-out refinances
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 Switch From FHA to VA or Conventional With a Refinance · How to Cover the Cash to Close on a Condo With an FHA Loan · How Much an FHA Streamline Refinance Lowers the Payment
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.