The Quick Read: Government recording and transfer charges come out of the same 80% ceiling that limits your cash. Every point of value those charges use up is a point you cannot take home. The fix is to plan the cash amount backward from the ceiling, instead of picking a number and hoping the closing costs fit. You decide whether to pay the charges out of pocket or finance them. Both choices change your net cash.
Key Takeaways
- An FHA cash-out tops out at 80% of the appraised value, and that cap covers the whole new loan, not only the cash you take.
- You generally need to have owned and lived in the home for 12 months before the FHA case number is assigned.
- Recording fees and transfer taxes are set by government offices, not by lenders, so you cannot shop them down by switching lenders.
- Financed closing costs still sit under the 80% ceiling and reduce your cash dollar for dollar.
- Where these charges run high, the Loan Estimate is your best planning tool. Read it before you pick a loan amount.
What Are Recordation Charges, and Why Do They Hurt in Some Places?
Recordation charges are what a county or state office collects to put your new mortgage into the public record. Some places charge little. Others charge a lot, sometimes because they tax the mortgage itself. The same refinance can carry very different government costs depending on where the home sits.
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.
Three terms get blurred together. They are not the same thing.
| Charge | What it is | Tied to loan size? |
|---|---|---|
| Recording fee | Fee to file the deed of trust or mortgage | Usually not |
| Recordation tax | Tax some places levy on the mortgage | Often yes |
| Transfer tax | Tax on moving title, mostly on sales | Yes, where it applies |
The details vary a lot by state and county, so no single national number exists. What matters for planning is how the charges behave in the math. They are real costs. They are fixed by statute or a local fee schedule. They do not shrink if you pick a different lender.
Some places apply a mortgage tax to the full new loan. Others apply it only to the increase over the old balance. A few exempt certain refinances. Your title company or closing attorney can tell you which rule applies to your county.
How Does the 80% Ceiling Work With Those Charges?
The FHA cash-out refinance reaches 80% of the appraised value, and that limit applies to the total loan, not just the cash. If a second lien stays in place, it counts toward the limit too. Whatever room remains after the payoff and the costs is your cash.
Here is the simple formula:
1. Take the appraised value. The ceiling is 80% of it.
2. Subtract your current payoff balance.
3. Subtract the closing costs you choose to finance, including government charges.
4. What is left is the most cash you can receive.
Run it in percentages of value. Say the home appraises at 100%. The ceiling is 80%. Your payoff is 60%. That leaves 20% of value. Now suppose financed costs, government charges included, come to 4%. Your cash drops to 16%.
Now suppose the local charges are higher and the financed costs reach 6%. Cash drops to 14%. That is a modest-looking change, but it comes straight out of your pocket. This is a simplified illustration. It leaves out the financed upfront premium, which your lender’s worksheet handles under its own rules.
Many borrowers pick a cash target early, and then the Loan Estimate shows government charges that eat into it.
Why Does the Appraisal Matter So Much Here?
The appraisal sets the value, and the value sets the ceiling. A low appraisal shrinks your cash, not just your equity picture. If the value comes in 5% under what you expected, the ceiling falls with it. High government charges then take a bigger share of what is left.
Your payoff balance matters just as much. A home with a large remaining balance leaves little room. A home with a small balance, or none at all, leaves much more. Homes owned free and clear can still be refinanced as cash-out. In that case the whole 80% ceiling is available, less costs.
The loan must also stay inside the county loan limit. County limits apply to FHA loans and change every year. Check yours with a loan officer rather than relying on an old figure.
What Does Qualifying Look Like, Step by Step?
Here is how a cash-out file moves from start to finish.
Step 1: The eligibility screen. The home must be your principal residence. You generally need to have owned and lived in it for 12 months before the FHA case number is assigned. Count back from the case number date, not from closing. The lender also reviews your mortgage payment history.
Step 2: Credit and ratios. The wholesale programs we place FHA loans with start at a 580 decision score. The base ratio pair is 31/43. That means your housing payment is about 31% of income and your total debts about 43%. Documented compensating factors, such as strong reserves or a long job history, can stretch the pair up to 40/50 at the top tier. An automated underwriting finding governs most files. All of this is subject to lender guidelines and full file review.
Step 3: Case number and appraisal. The appraiser sets the value. The 80% ceiling applies to that figure.
Step 4: Mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, which can be financed. It also charges an annual premium 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. On a thirty-year loan at or below 90% LTV, it ends after eleven years, and a cash-out at the 80% ceiling falls in that second case.
Step 5: The Loan Estimate. This is where the government charges first appear in writing. More on that below.
Step 6: Payoff and disbursement. The old lien is paid first. Whatever room remains after payoff and costs is your cash.
Step 7: Recording. The new mortgage goes into the public record, and that is when the government charges are collected.
Where Do I Find These Charges on the Loan Estimate?
Look for the section labeled taxes and other government fees. The Consumer Financial Protection Bureau (CFPB) defines government recording charges as fees that state and local agencies assess for legally recording your deed, mortgage and related loan documents. They show up in section E on page 2 of both the Loan Estimate and the Closing Disclosure.
The rule behind the form separates the two kinds of charge. Under Regulation Z, recording fees are not based on the sale price or loan amount. Transfer taxes are state and local fees on mortgages and home sales, based on the loan amount or sales price. The form shows “Recording Fees and Other Taxes” on one line and “Transfer Taxes” on another.
That split helps you spot errors. If the transfer tax line looks too large for a refinance, ask why. Some places do not apply a sale-style tax to a refinance at all.
The CFPB also notes that the sum of these charges and certain other settlement services generally cannot rise by more than a set percentage in total at closing. Ask your lender which of your fees fall into that group. The CFPB guide to the Loan Estimate and Closing Disclosure shows how to compare the two forms line by line.
Pay the Charges in Cash or Finance Them?
You can pay closing costs out of pocket or fold them into the new loan. Both routes have a price. Neither avoids the 80% ceiling.
| Factor | Pay in cash | Finance into the loan |
|---|---|---|
| Cash you bring to closing | Higher | Lower |
| Cash you receive | Higher | Lower |
| Loan balance | Smaller | Larger |
| Room under the 80% cap | More | Less |
| Best when | You have savings set aside | You want to keep your savings untouched |
Financing feels easier, but it does not shield you. Every financed dollar uses up room under the ceiling. A larger balance also means a larger base for the annual premium, and the financed upfront premium adds to the loan.
Here is a way to think about it. If you need a specific amount of cash, work backward. Start at the 80% ceiling. Subtract the payoff. Subtract the financed costs. If the result falls short of your need, you have three choices. You can pay some costs in cash. You can take less. Or you can look at a different structure.
What Can I Control, and What Is Set by Law?
You cannot change the recording fee or the tax rate. You can control several things around them.
- The cash amount. Ask for less than the ceiling allows, which leaves a buffer if the charges come in above the estimate.
- The payoff list. Paying off a small debt with the loan proceeds uses up room under the cap, so compare that with paying the debt separately.
- Which costs you finance. You may finance some costs and pay others in cash.
- Lender-controlled fees. Government charges are the same across lenders. The lender’s own fees are not, so that is where Loan Estimates differ.
- Questions to title. Ask the title company or closing attorney how local taxes apply to a refinance, and whether any exemption or reduced base applies. Get this early.
Where Does the General Rule Break?
The 80% rule is clean. These cases bend it.
Owned less than 12 months. The standard cash-out is not available. A rate-and-term refinance is the alternative. It pays off the old loan and costs, with no cash to you. For a principal residence occupied for the previous twelve months, it reaches 97.75% LTV. A lower ceiling applies if you have lived there for less time. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Inherited homes. If you inherited a property and rented it out, lenders generally want you to live in it for 12 months before a cash-out. Confirm how your lender counts the time.
Free-and-clear homes. These work. With no mortgage to pay off, the ceiling leaves the most room for cash.
Co-borrowers. On a cash-out, income from someone who does not live in the home generally cannot be used to qualify. That differs from a purchase, where a non-occupant co-borrower is allowed.
Second homes and rentals. Standard FHA cash-out is for the home you live in. Occupancy decides the answer.
The FHA Streamline. This is a no-cash-out product for an existing FHA loan. It requires no appraisal, a limited credit review and a net tangible benefit. It will not hand you equity.
Hawaiian Home Lands. These loans were excluded when HUD lowered the cap, according to HUD Mortgagee Letter 2019-11. That is a narrow category, but it shows the rule is not universal.
What If the Numbers Fall Short?
Start by finding out why. Usually it is one of three things: a low appraisal, a large payoff, or government charges higher than expected.
The 80% figure itself is not a lender preference. HUD lowered the cash-out cap in the same mortgagee letter cited above, which applies to case numbers assigned after the change. HUD’s press release says the change lines FHA up with the maximum cash-out LTV the government-sponsored enterprises allow. So no lender can lift it for you. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Your options, roughly in order:
1. Pay more of the costs in cash and take the same amount.
2. Take less cash and keep a cushion.
3. Wait for more equity if the home is likely to gain value or you can pay down the balance.
4. Compare other routes, such as a conventional refinance or a home equity product. Their ceilings and costs differ, and the tradeoffs depend on your loan and your county.
5. Skip the refinance if the costs outweigh the benefit. A high-cost county can make the math unattractive, and that is a legitimate answer.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Your Next Move
Before you pick a number, get a Loan Estimate and look at section E first. Then work the formula backward from the ceiling. 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. Everything here is subject to lender guidelines and full file review, and nothing in it is a commitment to lend.
Key Terms Defined
Adjusted value: The appraised value used to set the cap. For a home owned 12 months or longer, HUD’s Handbook 4000.1 defines it as the property value from the appraisal.
Cash-out refinance: A new mortgage that pays off your old one and gives you the leftover equity as cash.
Recording fee: A government fee to file your mortgage in the public record.
Transfer tax: A state or local tax based on the loan amount or sale price, where it applies.
Upfront premium: The FHA insurance charge of 1.75% of the base loan, which can be financed.
Principal residence: The home where you live most of the year. FHA cash-out is for this type of home.
Frequently Asked Questions
Can I finance the government recording charges into an FHA cash-out?
Yes, in most cases. The charges can be rolled into the loan, but they still count toward the 80% ceiling. Each financed dollar reduces your cash dollar for dollar. Your lender’s worksheet shows how the financed insurance premium is counted.
Do recording charges change if I switch lenders?
No. Government offices set them, not the lender. When you compare Loan Estimates, focus on the lender’s own fees, rate and program terms. The recording and transfer lines should look the same across lenders in the same county.
Does a refinance trigger the same transfer tax as a sale?
Not necessarily. Some places tax the mortgage itself, some tax only the increase over the old balance, and some exempt certain refinances. Ask your title company or closing attorney how your county treats a cash-out.
How long do I have to own the home first?
Generally 12 months of ownership and living there, counted back from the FHA case number date, not from closing. If you fall short, a rate-and-term refinance may be available with a higher ceiling but no cash out.
Can a higher credit score raise the 80% cap?
No. The cap holds regardless of score. Score and ratios affect whether you qualify, not how much leverage you can reach.
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. The Consumer Financial Protection Bureau (CFPB)
2. CFPB Regulation Z, Section 1026.37
3. CFPB guide to the Loan Estimate and Closing Disclosure
4. HUD Mortgagee Letter 2019-11
5. HUD press release on cash-out risk
6. HUD Handbook 4000.1, Update 18
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 Lender Reads a Solar Lien in a High-Cost State · How a Conventional Cash-Out Replaces FHA Mortgage Insurance · How an FHA Cash-Out Works During a Divorce Buyout
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
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.