The Quick Read: Your current loan type does not change the county limit. A cash-out refinance into FHA uses the same two caps whether you leave a conventional loan or an FHA loan. One cap is 80% of your home’s appraised value. The other is the county loan limit for your unit count. The lower of the two controls how much you can borrow. If you are a buyer under contract rather than a homeowner refinancing, skip to the section on switching mid-purchase.
Can a Conventional Borrower Switch to FHA?
Yes. A conventional loan does not block an FHA cash-out refinance. The new FHA loan pays off whatever mortgage you have now, and the leftover equity comes to you as cash. The FHA Streamline is the exception. It requires an existing FHA loan, so a conventional borrower can’t use it.
Plenty of homeowners assume they need an FHA loan to get an FHA cash-out. They don’t. Across the wholesale programs Lendmire places FHA files with, the old loan type rarely matters. The new loan’s rules matter.
Here are the core program facts for the FHA cash-out refinance program:
- The loan reaches up to 80% of the home’s value.
- You must have owned the home and lived in it as your principal residence for 12 months before the case number is assigned. A case number is the file ID the lender pulls to start the FHA process.
- The home must be your primary residence. This is not a program for second homes or rentals.
- The county loan limit applies on top of the 80% cap. County loan limits apply, and they change every year.
All of this is subject to lender guidelines and a full file review. None of it is a commitment to lend.
Why would a conventional borrower switch? Usually for flexibility, not extra equity. Conventional cash-out also tops out at 80%. FHA tends to look at credit and debt ratios differently. Across the programs Lendmire works with, the credit score entry point is 580 on purchase files. Ratios run from a base of 31/43 up to 40/50 with documented compensating factors. Those figures are the starting frame. Your file’s automated finding does most of the deciding.
What Is the FHA County Limit, and Who Sets It?
The county limit is a ceiling on the base loan amount. It depends on the county and the number of units, and HUD resets it each year. It measures the loan, not the home’s value. A $0-equity home and a mansion in the same county share the same ceiling.
HUD’s loan limit announcement lays out three tiers:
1. The floor. This applies in lower-cost counties. It is set at 65% of the national conforming limit. HUD applies it where 115% of the local median price falls below the floor.
2. The middle. Counties between the floor and the ceiling get a limit based on local median prices.
3. The ceiling. This is set at 150% of the conforming limit. It covers the highest-cost areas.
Special-exception areas, such as Alaska, Hawaii, Guam and the U.S. Virgin Islands, have higher ceilings. Ask your lender for the exact figure if you live in one.
Each tier is higher for two-, three- and four-unit homes. If you live in one unit of a small multi-unit building, the unit count changes your limit. This article never quotes a county dollar figure, because the figure depends on your county and the year. You can look yours up in HUD’s FHA mortgage limits lookup.
One more wrinkle. In metro areas, the limit follows the high-price county in the metro statistical area. A suburban county can share the core county’s limit.
How the 80% Cap and the County Limit Work Together
You face two gates. The lower one wins. For most homes, 80% of value is below the county limit, so the value cap decides. The county limit takes over on higher-priced homes in lower-limit counties.
The 80% test runs on what HUD calls “Adjusted Value,” not simply the contract or appraised figure. HUD’s mortgagee letter on the cash-out cap cut the maximum from 85% to 80%. HUD’s news release says the change aligned FHA with the conventional cash-out maximum. So the “FHA lets you borrow 85%” line you may have read is out of date.
Here is the decision rule in plain form:
| Gate | What it measures | When it decides |
|---|---|---|
| Value cap | 80% of adjusted value | Most homes |
| County limit | Base loan vs. county ceiling | Higher-priced homes in lower-limit counties |
| Liens left in place | Counts toward combined LTV | Any home with a second lien kept open |
The crossover point is simple arithmetic. Divide your county limit by 0.80. If your home is worth more than that, the county limit binds. If it is worth less, the value cap binds. That is a math shortcut, not an HUD-published figure.
Three Worked Scenarios
Scenario figures below are modeled assumptions, expressed as a share of home value. They are not market data.
Value cap binds. Say your county limit equals 95% of your home’s value. The 80% cap is lower, so it decides. Your current payoff is 60% of value. That leaves up to about 20% of value as room for cash, before closing costs and the financed insurance premium.
County limit binds. Say the county limit equals 65% of your home’s value. That is below 80%, so the county decides. If your payoff is 40% of value, you have room for about 25% of value before costs. The cap held you 15 points below what 80% would have allowed.
Payoff exceeds the limit. Say your payoff is 75% of value, and the county limit equals 70% of value. The new FHA loan can’t exceed the county limit, so it can’t even pay off the old loan. A cash-out is off the table, and a conventional or jumbo loan may fit better.
Where the Limit Is Only a Ceiling
The county limit tells you the most you could borrow. It does not tell you what you will get. The appraisal, your liens, your credit and payment history, and underwriting all set the actual amount. An 80% LTV does not guarantee approval or a cash amount. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
A low appraisal shrinks the cap directly, and your cash shrinks with it. That is the most common surprise. A homeowner counts on equity based on a neighbor’s sale or an online estimate, and the appraiser lands lower.
The upfront mortgage insurance premium adds another wrinkle. On FHA files, the premium is 1.75% of the base loan and is financed into the loan. How that financed premium is measured against the county limit depends on how the lender sizes the file. Confirm it with your lender before you plan around a number. Lendmire’s piece How Much the Upfront Premium Cuts an FHA Cash-Out at the County Limit walks through that mechanic.
How to Find the Limit for Your Address
1. Confirm your unit count. A single-family home is one unit. A duplex you live in is two.
2. Open the lookup tool. Use HUD’s FHA mortgage limits lookup. Enter your state and county.
3. Pick the right year. Limits reset each January. A case number assigned in December can face a different cap than one assigned in January.
4. Find the one-unit or multi-unit row. Read the limit for your unit count.
5. Compare it to 80% of your estimated value. Divide the county limit by 0.80. Your home’s value against that number tells you which cap binds.
6. Check for decreases. HUD publishes a list of jurisdictions where limits fell. If yours is on it, the new limit applies to your case number.
HUD also posts downloadable county files for lenders who want the full table. Check the current year’s limits, because last year’s figures can mislead you.
Conventional-Specific Mechanics
Leaving a conventional loan adds a few steps. They rarely change the cap, but they can change the cash.
Payoff. The new loan replaces the whole first mortgage. Your payoff statement includes the balance, accrued interest and any fees. Costs scale with the new loan, not just the cash you take.
Extra liens. If you have a second mortgage or home equity line, you have two choices. Pay it off with the new loan, or leave it in place. A lien left in place counts toward your combined LTV. That shrinks the room for cash.
Occupancy and seasoning. Seasoning means the waiting period between two events. Here, it is the 12 months you must have owned and lived in the home before the case number. At least one borrower must meet it. This rule can block a recent buyer.
Exceptions. If you inherited the home, you don’t need the minimum occupancy period. You must not have treated it as an investment property since the inheritance. If you rented it, you must live in it for 12 months first. A manufactured home must have been permanently installed on its site for more than 12 months before the case number.
Payment history. Lenders look at your recent mortgage payment record. Late payments can stop a file, and some lenders add their own, stricter standards on top of FHA’s.
Here is what tends to fail first in practice. The appraisal comes in low, a second lien stays open, or the occupancy period falls short. The county limit is rarely the first thing to bite. It matters more on higher-priced homes.
Lendmire’s article FHA Cash-Out LTV Limit When Moving From a Conventional Loan covers the leverage side in more depth.
Switching in the Middle of a Purchase
This section is for a buyer under contract, not a homeowner refinancing. Switching from a conventional loan to FHA after you sign is possible, but timing is the issue. The seller has agreed to a deal with certain terms. A new loan type can change the appraisal rules, the repair requirements and the closing schedule.
Before you switch, work through this checklist:
- Check your contract. Your financing contingency may or may not cover a loan-type change.
- Talk to your agent early. The seller or their agent may need to agree in writing.
- Expect the appraisal to matter. FHA appraisals check property condition as well as value. Repairs may be required.
- Ask the lender what is left. Which items remain in underwriting? Has the appraisal been ordered?
- Know the purchase figures. On a purchase, FHA reaches 96.5% financing with a 3.5% minimum investment at a 580 score or higher. Subject to lender guidelines.
Purchase county limits work the same way. The county loan limit applies to your base loan. Contract language and state rules vary, so a local attorney or agent can tell you what your contract requires.
If Your Number Is Above the Limit
If the county limit blocks the loan you want, you have options. Here they are side by side:
| Option | What it does | Tradeoff |
|---|---|---|
| Smaller cash-out | Borrow up to the limit, take less cash | Less cash than planned |
| Conventional or jumbo | Larger loans may be available | Different credit and ratio standards |
| Keep your current loan | Skip the refinance | No access to equity |
| Wait | Limits reset each January | The new cap may help or not |
A smaller cash-out is the simplest fix if the limit is only slightly below your target. A larger balance with high equity may point to a jumbo or conventional loan instead. Waiting only helps if your county’s limit rises or your value does. Ask your broker to run each path before you pick one.
FHA vs. Conventional Cash-Out
| Factor | FHA cash-out | Conventional cash-out |
|---|---|---|
| Max LTV | 80% | 80% (same cap) |
| Loan limit | County loan limit applies | Conforming limit applies |
| Mortgage insurance | Upfront plus annual premium | Typically avoided at 80% |
| Credit flexibility | Often more flexible | Often stricter |
| Existing loan type | Any mortgage | Any mortgage |
The two loans reach the same equity percentage. The difference is mostly in credit flexibility and mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, which is 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 loan term. At or below 90%, it ends after eleven years. That is a program fact, not a price quote. Your Loan Estimate shows your actual numbers. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
A borrower usually picks FHA for credit flexibility. If your credit is strong and you have 20% equity left after the loan, conventional may cost less in insurance. Run both before deciding.
Key Terms Defined
County loan limit: The maximum base loan FHA allows in your county for your unit count, reset each year.
Adjusted Value: The value FHA uses to test the 80% cap, which is not always the same as the raw appraised figure.
Case number: The file ID assigned when a lender starts an FHA loan. It sets the date used for occupancy and limit rules.
Combined LTV (CLTV): Your total loans against the home, divided by its value, including any liens left in place.
Seasoning: The waiting period before a loan or event counts, such as owning and living in the home for 12 months.
Upfront premium: A one-time FHA mortgage insurance charge of 1.75% of the base loan, usually financed into the loan.
Frequently Asked Questions
Do I need an existing FHA loan to get an FHA cash-out refinance?
No. FHA cash-out works on any existing mortgage, including a conventional one. Only the FHA Streamline requires a current FHA loan. The Streamline skips the appraisal, but it does not give you cash.
Does the county limit apply to my home’s value or my loan amount?
It applies to the loan amount. A home worth far more than the limit can still qualify, but the loan stays capped. The 80% value cap is a separate test. The lower of the two decides how much you can borrow.
Which cap usually binds first, 80% of value or the county limit?
For most homes, 80% of value is lower than the county limit, so the value cap binds first. Divide your county limit by 0.80 to find the crossover value.
Can the limit change while my application is in progress?
Yes, around the turn of the calendar year. Limits reset each January and apply by the case number’s assignment date. A case number from late in the year and one from early the next can face different caps. Ask your broker which limit year applies to your file.
What if my current mortgage balance is above the county limit?
Then a new FHA loan can’t exceed that limit either, so it can’t pay off the balance. A conventional or jumbo loan may fit better in that case. HUD also publishes a list of areas where limits fell, so check whether yours is on it.
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. As a mortgage broker, Lendmire arranges these loans through wholesale lenders. Approval and terms are subject to lender guidelines and full file review, and nothing here is a commitment to lend. Your Loan Estimate will show closing costs and estimated cash to close, so compare it line by line. The CFPB’s Loan Estimate explainer shows where to find each figure. Request a quote with the details of your home, your current payoff and your county, and get the two caps run side by side.
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. HUD loan limit announcement
2. HUD FHA mortgage limits lookup
3. HUD mortgagee letter lowering the FHA cash-out maximum
4. HUD news release on the cash-out change
5. CFPB Loan Estimate explainer
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Can a Non-Occupant Co-Borrower Be Added to an FHA Cash-Out? · FHA Cash-Out Income Documentation by Borrower Type and Income Source · Can an FHA Cash-Out Refinance Exceed the County Loan Limit?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.