The Quick Read: There is no fixed dollar amount of extra payment. Your income sets a ceiling on total monthly obligations through two ratios, usually 31% for housing and 43% for all debts. Documented compensating factors can stretch that to 40/50. A cash-out loan raises your balance, which raises your payment, and the new payment has to fit under the ceiling. Home value sets a second limit, 80% of the appraised value, and whichever limit is lower controls.
What Does “Same Income” Actually Limit?
Your income limits the payment, not the cash. The lender measures your gross monthly income, which is pay before taxes. Then it asks how much of that the new mortgage and your other debts can take up.
Two ratios do the work. The housing ratio compares your full monthly housing cost to gross income. The total ratio adds your other monthly debts, such as car loans, student loans and card minimums. The base pair across the FHA programs we place files with is 31/43, with no compensating factors. Documented compensating factors can reach 40/50 at the top tier. The automated underwriting finding governs most files.
Here is the part most guides skip. A cash-out refinance adds to your balance in three ways: the cash you take, the upfront mortgage insurance premium that gets financed, and any other costs rolled in. A bigger balance means a bigger payment. Whether that bigger payment fits is a separate test against the same income.
That is why two homeowners with the same equity can walk away with different results. Equity decides the most you could borrow. Income decides the most you can carry. If you want the program-level view first, Lendmire’s page on the FHA cash-out refinance program covers the basics, and this article goes deeper on the payment side.
How Is the New Payment Built?
The qualifying housing payment is the full monthly cost of owning the home, not just principal and interest. Only some pieces grow when the loan grows, and that distinction matters when you test your income.
| Payment piece | Changes with a bigger loan? | Why |
|---|---|---|
| Principal and interest | Yes | Scales with the balance |
| Annual mortgage insurance | Yes | Charged on the balance |
| Property taxes | No | Set by the county, not the loan |
| Homeowner’s insurance | No | Set by the policy |
| HOA dues | No | Set by the association |
The upfront premium is 1.75% of the base loan, and it is usually financed. Financing it raises the balance, so it raises the payment too. The annual premium depends on term, loan amount and loan-to-value. On a thirty-year loan at or below 90% loan-to-value, it ends after eleven years. Above that, it lasts the term. Cash-out loans cap at 80%, so the lower tier is the one that applies to this loan type, subject to lender guidelines.
One more driver sits outside the loan balance: the interest rate on the new loan compared with the old one. If your current loan carries a higher rate, a new loan can offset part of the added balance. If your current loan carries a lower one, the increase gets sharper. We do not quote rates here. Your Loan Estimate shows the real terms, and you compare that against your current payment.
How Do You Run the Ratios, Step by Step?
Start with your income, subtract the ceiling, and see what room is left for housing. Everything below uses percentages of gross monthly income, so it works at any income level. These are illustrative, not quotes.
A debt-to-income ratio is your monthly debt payments divided by your gross monthly income. Different loan products and lenders set different limits.
1. Set the ceilings. At 31/43, housing can be up to 31% of income. Everything combined can be up to 43%.
2. Subtract your other debts. Add up car, student and card payments as a share of income.
3. Find the lower number. Housing room is the lesser of 31%, or 43% minus your other debts.
4. Compare with the new payment. If the new housing payment is under that room, the ratios fit.
The table below shows how the ceiling moves with other debts. Think of it as maximum housing payment as a share of gross income.
| Other debts (% of income) | Housing room at 31/43 | Housing room at 40/50 |
|---|---|---|
| 0% | 31% | 40% |
| 10% | 31% | 40% |
| 20% | 23% | 30% |
Look at the first two rows. Light debt does not change anything, because the 31% housing cap binds first. In the third row, debts take a bite. The total ratio now binds, and housing room drops to 23%.
Now add the cash-out. Say your housing payment today is 22% of income. You take cash out and the new balance is about 20% larger. Principal and interest and mortgage insurance grow with that balance. Taxes and insurance do not. So the whole housing payment grows by less than 20%, which keeps it under about 26% of income. At 31/43 with light debts, that fits. With 20% in other debts, it breaks the 23% room.
That is the honest answer to the title. The extra payment you can take on equals your housing room minus your current payment. Cash-out size has to stay inside that gap.
What Happens When You Use the Cash to Pay Off Debts?
Paying off debts at closing removes them from the ratio, and the mortgage payment replaces them. This is the move that sometimes lets a larger payment fit on the same income.
Run a plain example. Housing is 22% of income and other debts are 18%, so the total is 40%. You do a cash-out and use the proceeds to clear the other debts.
| Item | Before | After, cash used for debts | After, cash kept |
|---|---|---|---|
| Housing | 22% | 30% | 30% |
| Other debts | 18% | 0% | 18% |
| Total | 40% | 30% | 48% |
| Fits at 31/43? | Yes | Yes | No |
The middle column fits, because the debts are gone. The right column does not. Take the same cash and keep it, and the total hits 48%. That file would need manual review, compensating factors and a lender willing to go to 40/50.
Before you do it, understand the tradeoff. You are moving unsecured debt onto your house. The CFPB’s research on cash-out refinances notes that turning other debt into mortgage debt can put the home at risk of foreclosure if payments become unsustainable. A better ratio on paper is not the same as a lighter burden. Do the move only if the cost of getting the cash is lower than the cost of the debt it replaces.
Where Does the Value Cap Come In?
The second limit is the appraisal. HUD’s Mortgagee Letter 2019-11 cut the maximum loan-to-value on FHA cash-out refinances to 80% of adjusted value. Before that, the cap had been 85%, and 95% before that. Those old numbers still float around online. Ignore them.
Treat 80% as a ceiling, not a promise. A home appraised at 100 units of value can support a new loan up to 80 units. If your current balance is 60 units, the gap is 20 units. Financed premium and any rolled-in costs use up part of that gap before you see cash. The lender runs the exact math on your file.
Value sets the maximum loan. Income sets the maximum payment. Whichever is lower controls. Plenty of borrowers have the equity but not the income room. A few have the room but not the equity.
The CFPB’s guide to using home equity explains that a cash-out replaces your mortgage with a new, larger one that includes the amount borrowed and fees. It also notes that lenders typically want you to keep at least 10% to 20% of your home’s value as equity. On an FHA cash-out the retained equity is 20%, which is the flip side of the 80% cap.
When Can the Ratios Stretch?
The 43% figure is a benchmark, not a wall. Several things can move it.
Automated approval. Most FHA files run through HUD’s automated scorecard first. An approve finding evaluates the whole file, and HUD’s archived reference guide explains that compensating factors are not required when the scorecard rates a loan acceptable. The mechanism is old, but it still explains why there is no single published cap.
Manual underwriting. A “Refer” finding sends the file to a person. Then the base 31/43 applies, and documented compensating factors can reach 40/50 at the top tier. Lenders typically weigh things such as savings left after closing, a long steady work history, and a small increase over your current housing payment. Each one has to be documented. None is automatic.
Lender overlays. This is why you hear different answers. Lenders can set stricter credit or ratio limits than FHA itself. The same income can work at one lender and fall short at another. When you compare options, ask about overlays, not just the program name. This is a big part of what a broker does: matching a file to the wholesale programs whose limits fit it.
Do not assume the stretch will be there. A stretched ratio is a possibility that gets reviewed, not a right.
Where Does the General Rule Break?
Some files do not follow the usual path. These are the edge cases we see most.
- Recent late payments. HUD’s Mortgagee Letter 2020-30 says a cash-out file must be downgraded to manual underwriting if any mortgage shows a current delinquency, a delinquency within the prior 12 months, or fewer than 12 consecutive payments since a forbearance plan ended. A payment counts as late if it is not paid within the month due. Strong income does not erase this. The timing matters.
- Forbearance history. After a forbearance plan, cash-out needs 12 consecutive payments. Purchase and no-cash-out refinances need only three. If you are close to that line, waiting can change the outcome.
- Owned less than 12 months. The FHA cash-out reaches 80% on a home you have owned and occupied for 12 months before the case number. Inherited homes can be treated differently under HUD’s rules, so ask the lender before assuming either way.
- Not your primary home. Standard FHA cash-out is for the home you live in. Occupancy decides the leverage, so a second home or rental follows different rules and a different loan.
- Non-occupant co-borrowers. On a purchase, FHA allows a co-borrower who will not live in the home. On cash-out, lenders generally do not extend that, so you cannot lean on someone else’s income the same way.
- Three- and four-unit homes. Extra tests such as reserves can apply. Confirm current rules with the lender.
- Niche programs. A small set of loans, such as Section 247 homes on Hawaiian Home Lands, is exempt from the 80% cap. It is a narrow case.
The late-payment rule trips up more good-income borrowers than the ratios do. A person with a clean income picture who missed one mortgage payment last spring can end up in manual underwriting. Check your payment history before you check anything else.
What If the Payment Does Not Fit?
Start with the lever you control most: the amount of cash. A smaller cash-out means a smaller balance and a smaller payment. You are never required to take the full 80%.
Then try these, in roughly this order:
1. Take less cash. Even a modest cut can bring the total ratio under the ceiling.
2. Pay off debts at closing. Use the proceeds to clear the monthly obligations that are crowding the ratio, with the foreclosure tradeoff in mind.
3. Compare terms. A longer term lowers the payment but raises the total cost over time.
4. Look at the other debts first. Paying down a card or car loan on your own may open the room.
5. Document compensating factors. If you are near 43%, savings left over and a stable job history may support a manual review.
6. Compare other loans. If your current loan is already FHA, or your equity is thin, a different structure may fit better.
Do not just ask what you can get. Ask what you can carry for the length of the loan.
What Do People Get Wrong?
Some of the most common mistakes come from half-remembered rules.
- “I can borrow 80%, so that’s what I’ll get.” Eighty percent is the ceiling. Income, payment history and the appraisal decide where you land.
- “FHA cash-out is still 85% or 95%.” Those caps are history.
- “43% is a hard limit.” It is a benchmark. Higher is possible with an automated approval or documented factors, but never assured.
- “Mortgage insurance goes away on its own.” It comes with the loan. The upfront premium applies to nearly all FHA mortgages, and the annual premium runs for the periods noted above.
- “Paying off my cards is free money.” It only helps if the cost of the cash is lower than the cost of the debt.
Key Terms Defined
Gross monthly income: Your pay before taxes and deductions, averaged over a month.
Housing ratio: Your full monthly housing cost divided by gross monthly income. The base limit is 31%.
Total debt ratio: Housing cost plus other monthly debts, divided by gross monthly income. The base limit is 43%.
Compensating factors: Documented strengths, such as savings or steady employment, that can support a higher ratio, up to 40/50 at the top tier.
Manual underwriting: A person reviews the file against the written rules, instead of relying on the automated finding.
Adjusted value: The appraised value as set for FHA purposes. The 80% cap is measured against it.
Upfront premium: A one-time mortgage insurance charge of 1.75% of the base loan, usually financed into the balance.
Frequently Asked Questions
Do I have to take the maximum cash?
No. The 80% figure is the ceiling, not a requirement. Taking less lowers the balance and the payment, and it often makes the ratios easier to meet. Many homeowners borrow only what they need for a specific goal.
Does mortgage insurance count toward my ratios?
Yes. The annual premium is part of the monthly housing cost the lender tests. The upfront premium usually gets financed, so it raises the balance and the payment too. Both push on the housing ratio.
Can I do an FHA cash-out on a home with no mortgage?
Often, yes, provided you meet the ownership and occupancy rules and the appraisal supports the loan. With no existing balance, the new loan is all cash plus financed costs. The payment is still tested against your income.
Can I add a co-borrower to help with income?
It depends on whether they live in the home. A non-occupant co-borrower is generally not permitted on a cash-out, even though one is allowed on an FHA purchase. A co-borrower who will live there can add income, but their debts and credit count too.
Does the payment have to go up?
Not always. The balance grows, but if your current loan carries a higher rate than the new one, the two effects can partly cancel. Mortgage insurance and the added balance usually push the other way. Compare your current payment with the new one on the Loan Estimate.
Where to Go From Here
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. A good first step is simple: write down your gross monthly income, your other monthly debts, and your current housing cost. That is enough to see how much room you have. Everything here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see FHA loan programs.
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References
1. CFPB: What is a debt-to-income ratio?
2. CFPB: Cash-out refinances and non-mortgage debt paydown
3. HUD Mortgagee Letter 2019-11
4. CFPB: Using home equity to meet financial needs
5. HUD Archives HOC Reference Guide: DTI
6. HUD Mortgagee Letter 2020-30
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: Refinancing An FHA 203(k) Loan After The Renovation Is Done · FHA Simple Refinance Vs FHA Streamline: The Appraisal Makes The Difference · FHA Cash-out Refinance Credit Requirements: The Floor And The Overlays Above It
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.