The Quick Read: An FHA cash-out in DC closes in a set order: appraisal, underwriting, a Closing Disclosure, then recording of the new deed of trust. The new loan can reach 80% of the home’s appraised value, and payoff, financed costs and the upfront mortgage insurance premium all come out of that room before any cash reaches you. DC government charges at recording are a separate budget line, and how the recordation tax applies to a refinance is something your title or settlement agent should confirm before closing.
What Is an FHA Cash-Out Refinance, and Who Qualifies?
An FHA cash-out refinance replaces your current mortgage with a larger FHA-insured loan and pays you the difference. It is for a primary residence only. Investment properties and second homes do not qualify.
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.
Across the wholesale programs Lendmire places FHA loans with, the cash-out is capped at 80% loan-to-value on a home you have owned and occupied for 12 months before the FHA case number is assigned. That clock runs back from the case number date, not from closing day.
The 80% ceiling is recent history. HUD Mortgagee Letter 2019-11 cut the cash-out limit to 80% of adjusted value for case numbers assigned on or after September 1, 2019. The previous cap was 85%. HUD’s own announcement of the change described the new cap as lining up with what the government-sponsored enterprises allow on cash-out loans.
Who fits? Typically a homeowner with real equity, a payment history that holds up under review, and income that supports the larger loan. The base ratio pair is 31/43 (housing and total debt to income), and documented compensating factors can stretch that to as high as 40/50 for the strongest files. Credit scoring starts at a 580 decision score across the wholesale lenders Lendmire works with. All of this is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
One more boundary: occupancy is the whole test. A home you rented out for part of the past year, inherited and never lived in, or only recently moved into can fail the 12-month standard. Lenders may also layer their own requirements on top of the FHA rules.
How Is the Loan Underwritten, Step by Step?
Underwriting moves in a fixed order, and each step feeds the next. Here is the sequence for a DC home.
1. Eligibility check. The home is your principal residence, and you have owned and occupied it for the required 12 months before the case number.
2. Case number and appraisal. The appraisal sets the ceiling. The 80% cap applies to adjusted value, and every lien on the property counts toward combined loan-to-value.
3. Credit, income and ratio review. The reviewer looks at payment history, income stability and debt-to-income against FHA guidelines and lender overlays.
4. Loan Estimate. The lender delivers it after application. Government charges appear here under “Taxes and Other Government Fees.”
5. Closing Disclosure. It lands before closing and shows the final numbers, including recording charges.
6. Signing, rescission and funding. On a primary-residence refinance you generally have a right to rescind before the new loan funds. Cash is released after that window, not at the signing table.
7. Recording. The settlement agent records the new deed of trust with the DC Recorder of Deeds.
Why the appraisal matters more than most borrowers expect
A low appraisal shrinks your cash faster than it shrinks your home’s value. The reason is the 80% cap. The new loan must cover your payoff, financed closing costs and any financed upfront premium first. Only what remains is cash to you.
Say the appraisal comes in 5% below what you hoped. The ceiling drops with it, and the fixed items (payoff and costs) stay put. So the cash you receive takes the entire hit. A borrower expecting a comfortable payout can end up with a thin one.
Where Does the Mortgage Insurance Come In?
FHA loans carry two mortgage insurance charges, and both reduce your net cash. The upfront premium is 1.75% of the base loan, and it can be financed into the balance. That means it uses up some of your 80% room.
The annual premium is paid monthly and runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. On a thirty-year loan with a higher LTV, it lasts for the life of the loan. With a lower LTV, it ends after eleven years. A cash-out capped at 80% falls in the lower-LTV group, which matters when you compare long-term cost against other options. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
These are program facts, not advertised prices. Your Loan Estimate shows the figures that apply to your file.
What Does DC Charge at Recording?
DC government charges come in three kinds, and borrowers often mix them up. The key point: a flat recording fee, a recordation tax and a transfer tax are different things.
| Charge | What it is | Does it hit a refinance? |
|---|---|---|
| Recording fee | Flat clerk charge to record a document | Yes |
| Recordation tax | Percentage-based tax on recorded documents | Depends on exemption |
| Transfer tax | Tax tied to a change of title | Generally no |
The recording fee. The DC Recorder of Deeds charges a flat fee of $150 to record a deed of trust, mortgage or modification. A separate fee schedule also lists a small per-document surcharge on top of that. The CFPB’s definition of recording fees is the charge to record and index the loan and title documents. Unlike transfer taxes, they are not based on sale price or loan amount.
Transfer tax. DC transfer tax attaches to deeds. A refinance that leaves title unchanged generally does not trigger it. If your refinance also adds or removes someone from title, ask your settlement agent whether a deed is being recorded, because that changes the picture.
Recordation tax on a refinance. Official guidance and local title and broker pages describe this tax differently, so treat it carefully. DC’s Office of Tax and Revenue Tax Notice 2023-04 says a refinance is taxed on the excess of the new principal over existing debt on which tax was already paid or exempted. It also says exemption claims need documentation. Some local title and broker pages describe residential refinances as owing only the clerk’s fee when the right affidavit is filed.
The honest summary: DC may exempt a residential refinance deed of trust from recordation tax when the proper affidavit is recorded. Otherwise, tax may apply to new money above the old balance. On a cash-out, the “new money” question is not academic. Your Loan Estimate and your title agent will confirm which treatment applies, and no one should promise you a zero before they have seen the file.
What about the first-time buyer rate and the purchase-money exemption?
Neither helps you here. DC’s reduced recordation rate for first-time homebuyers applies to deeds and must be claimed when the deed is recorded. And the purchase-money deed-of-trust exemption applies when the deed of trust is recorded together with the deed. A refinance of a home you already own does not qualify for either.
What Paperwork Does the DC Recording Package Need?
The core form is DC’s FP-7/C recordation and transfer tax return. OTR’s instructions say a completed FP-7/C is required to record any deed of trust, and a separate form is filed for each one.
For a residential deed of trust, the recorder’s FAQ points to the FP7/C accompanied by a Security Affidavit (Class 1) if an exemption is claimed. That affidavit is the piece worth watching. If it is missed, the exemption may not be applied, and the tax question reopens.
Who handles this? Your settlement agent assembles and records the package. You sign. But you can ask a simple question ahead of time: “Which exemption are you claiming on my deed of trust, and is the affidavit in my signing package?” It takes ten seconds and prevents a surprise.
How Do Recording Costs Show Up on Your Disclosures?
Government charges sit in one box. On the Loan Estimate, they appear under “Taxes and Other Government Fees,” per the CFPB’s guide to the Loan Estimate and Closing Disclosure. On the Closing Disclosure, they appear in Section E, listed as “Recording Fees,” as the CFPB’s sample form shows.
Two practical points follow.
First, you cannot negotiate government charges. They are set by law. What you can control is understanding which exemption applies.
Second, these charges are not lender-controlled, so the usual tolerance rules work differently for them. The CFPB’s home loan toolkit notes that some closing costs can rise at closing, generally by no more than 10% in the relevant fee group. Do not assume that cushion protects a government line.
How Do You Budget the Cash You Will Actually Receive?
Start from the ceiling and subtract. The arithmetic runs in this order, and it works without a single dollar example.
| Step | Line | Effect on your cash |
|---|---|---|
| 1 | Appraised value x 80% | Sets the loan ceiling |
| 2 | Minus current mortgage payoff | Reduces room |
| 3 | Minus financed closing costs | Reduces room |
| 4 | Minus financed upfront premium (1.75%) | Reduces room |
| 5 | What remains | Your cash from the loan |
Government recording charges are not part of this loan ceiling. If they are paid out of your proceeds rather than financed, subtract them from the line 5 result, and your Closing Disclosure shows which applies. Write each line in your own worksheet using the figures from your Loan Estimate. The common mistake is treating 80% as “I can pocket 20% of my equity,” but the 80% cap covers the whole new loan, payoff and costs included. Your cash is whatever the cap leaves after everything else is paid.
A larger loan also means a larger monthly obligation and larger mortgage insurance cost. That is the tradeoff behind every cash-out, and it deserves a sober look before you commit.
Where Does the General Rule Break?
- Missed occupancy window. Renting the home for part of the year, an inherited property that sat vacant or rented, or a delayed move-in can break the 12-month test. Cash-out is not allowed until the clock is satisfied.
- Non-occupant co-borrower. On a cash-out, a non-occupant co-borrower’s income generally cannot be used to qualify, even though FHA purchase loans allow it.
- Title changes. Adding or removing a spouse at the same time as the refinance can mean a deed is recorded, which pulls transfer and deed recordation questions into the file.
- Missed exemption affidavit. If the affidavit was not in the package, tell your settlement agent right away. It is far easier to fix before recording than after.
- Wrong loan type. An FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review, but it is not a cash-out. If you need cash, it is the wrong tool. If you only need a lower payment on an existing FHA loan, it may be the better one.
The FHA rate-and-term refinance with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. That is far more leverage than the cash-out, which is why borrowers who do not need cash often fare better there.
Key Terms Defined
Adjusted value: The appraised value, adjusted under FHA rules, that the 80% cap is measured against.
Combined loan-to-value (CLTV): All liens on the home added together, divided by its value.
Deed of trust: The security document DC uses to pledge your home as collateral for the loan.
Recording fee: A flat charge to file and index the loan documents with the Recorder of Deeds.
Recordation tax: A percentage-based DC tax on certain recorded documents, subject to exemptions.
Transfer tax: A tax tied to the transfer of title through a deed.
Right of rescission: A short window after signing in which you may cancel a refinance on your primary residence before funding.
What Should You Do Before Closing Day?
Run through this short list.
- Confirm your 12-month ownership and occupancy history, counted back from the case number.
- Ask the title agent which DC exemption is being claimed and whether the Class 1 affidavit is in the package.
- Compare the Closing Disclosure’s Section E to your Loan Estimate line by line.
- Bring government ID and plan for the rescission window before expecting funds.
- Keep your worksheet next to the final numbers and recalculate net cash.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
How much cash can I take out with an FHA cash-out in DC?
Up to 80% of the home’s adjusted value, minus everything the new loan must cover first. Your payoff, financed costs and the upfront mortgage insurance premium all come out of that room. Whatever remains is your cash. County loan limits also apply, and the final figure depends on your appraisal and lender guidelines.
Does DC charge transfer tax on a refinance?
Generally no. DC transfer tax goes with a deed transfer, and a refinance without a title change does not usually record one. If you are also changing who is on title, ask your settlement agent whether a deed is part of the package.
Is recordation tax zero on a DC refinance?
Not necessarily, and no one should promise it. DC tax guidance describes a tax on new principal above the existing debt unless an exemption is substantiated. A properly recorded affidavit may support an exemption on a residential deed of trust. Your title agent confirms which treatment applies to your file.
Why does the 12-month clock matter?
It decides whether you qualify at all. HUD requires the home to have been owned and occupied as your primary residence for 12 months before the case number is assigned. Rental periods or a delayed move-in can break it, so count back from the case number date, not closing.
Can I use an FHA cash-out on a rental or second home?
No. FHA cash-out is for a principal residence, and occupancy decides the leverage available.
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.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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 2019-11
2. HUD Archives press release PR 19-114
3. DC OTR Recorder of Deeds FAQ
4. CFPB Regulation Z § 1026.37
6. DC OTR Reduced Rate First-Time Homebuyers FY2025
8. CFPB’s 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: How an FHA Cash-Out Works With a Non-Borrowing Spouse · FHA Cash-Out vs Selling an Inherited Home as a Retiree · How an FHA Cash-Out Lender Reads Condo Litigation
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
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.