The Quick Read: The new loan can reach 80% of the home’s appraised value, after HUD’s adjustments, and no more. Everything the loan pays off or finances sits under that ceiling: your old mortgage, any second lien, and financed costs. Cash to you is what remains. A low appraisal lowers the ceiling and shrinks the cash, and the county loan limit is a separate cap on top.
What Is an FHA Cash-Out Refinance?
It replaces your current mortgage with a larger FHA loan and hands you the difference in cash. You are not borrowing on top of the old loan. The old loan disappears.
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.
The cap is a percentage of the home’s value, not a percentage of your equity. Borrowers often mix the two up.
Lendmire is a mortgage broker. It arranges FHA loans through wholesale lenders in 16 states, and the lender reviews the file and makes the decision. Everything below is subject to lender guidelines and full file review.
Key Terms Defined
Appraised value: the estimate of what your home is worth, written by a licensed appraiser.
Adjusted Value: the figure HUD’s rules produce from that appraisal. The lender applies the cap to this number, not to your own estimate or the contract price.
LTV (loan-to-value): the new loan divided by the home’s value. An 80% LTV means the loan equals four-fifths of value. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Base loan amount: the loan before the financed upfront mortgage insurance premium is added.
Upfront premium: the one-time FHA mortgage insurance charge, 1.75% of the base loan. It can be financed into the loan.
Case number: the FHA file number assigned to your loan. Several eligibility clocks count back from this date, not from closing.
How Does the Appraisal Set the Maximum Loan?
The ceiling equals 80% of the Adjusted Value. HUD Mortgagee Letter 2019-11 set the maximum loan-to-value and combined loan-to-value at 80% of Adjusted Value on cash-out refinances. It applies to case numbers assigned on or after September 1, 2019.
Before that, the cap was 85%. HUD said the cut aligned FHA with the cash-out limit Fannie Mae and Freddie Mac already used, per its 2019 announcement. Some older pages still show 85%. Ignore them.
The full appraisal is not optional here. Unlike the FHA Streamline, which skips it, a cash-out needs an FHA-roster appraiser to set value. That report also checks FHA property condition standards, so it does two jobs.
From Appraisal to Cash: The Order of Deductions
Think of the ceiling as a bucket. Several things fill it before you see a dollar.
1. Start with the Adjusted Value. Multiply by 80%. That is the maximum loan.
2. Subtract your current mortgage payoff. That includes any second lien the new loan must clear.
3. Subtract financed closing costs. Anything you roll into the loan uses up room.
4. Subtract the financed upfront premium. The 1.75% charge is added to the loan, so it counts against the ceiling too.
5. What is left is your cash.
Run it in percentages. Say the home appraises at 100% of value. The ceiling is 80%. If your payoff is 45% of value, 35% of value remains to be shared between costs and cash. Financed costs and the premium come out of that 35% first.
That is why the maximum loan is not the cash you receive. The two figures answer different questions.
What Happens When the Appraisal Comes In Low?
The ceiling drops, and cash drops faster than you would expect. Your payoff does not shrink when the value does. The whole decline comes out of the cash.
Picture the same home at three appraisal outcomes, with the payoff holding at 45% of the original expected value:
| Appraisal vs. expectation | Ceiling (80%) | Room above payoff |
|---|---|---|
| At expectation (100%) | 80% | 35% of expected value |
| 5% lower (95%) | 76% | 31% of expected value |
| 10% lower (90%) | 72% | 27% of expected value |
Each 1% the value falls removes 0.8% of expected value from the ceiling. All of that comes out of cash. Financed costs and the premium stay roughly fixed, so a low appraisal squeezes the middle of the bucket hard.
Your options, in the order most borrowers consider them:
1. Take the smaller cash amount. If it still covers your goal, the deal can proceed.
2. Ask about a review. Your loan officer can tell you whether the appraisal has an error worth raising, such as wrong square footage or missed comparable sales. A disagreement over opinion is not an error.
3. Wait and reapply. A valid appraisal lasts 180 days under Mortgagee Letter 2022-11, and an update can extend it up to a year, per FHA Connection. That helps with timing, not with a weak value.
4. Switch products. If the cash is too small to justify the cost, a different refinance or keeping your loan may fit better.
Cash can also hit zero. When the payoff, financed costs and premium eat the whole ceiling, a cash-out makes no sense. Know that before you pay for the appraisal.
Who Qualifies?
- Owner-occupied primary residence. Cash-out is for the home you live in. Occupancy decides the leverage, so a second home or rental does not get this program.
- About a year of ownership and occupancy before the case number date. The program is built around a home owned and lived in for 12 months.
- A clean recent mortgage payment record. The lender verifies and documents your housing payment history, per Mortgagee Letter 2020-30. Lenders look hard at recent lates.
- A decision score of 580 or higher on the programs Lendmire works with.
- Debt ratios. The base pair is 31/43 (housing costs over income, then all debts over income). Documented compensating factors can stretch that to 40/50 at the top tier, and the automated finding governs most files.
Homes owned free and clear can also be refinanced as cash-out. The 80% cap is the same whatever your score. Credit affects approval and pricing, not the cap.
An 80% cap does not guarantee approval or a particular cash amount. Credit, income, debts and property condition still decide the outcome.
Costs That Shrink Your Check
Two items matter most for FHA.
Mortgage insurance. The upfront premium is 1.75% of the base loan and is usually 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, it lasts for the term. At or below 90%, it ends after eleven years. Because cash-out loans cap at 80%, the shorter schedule can apply.
Closing costs. These are the upfront charges for getting the loan. Per the CFPB, rolling them into the loan lowers what you pay at the table but adds interest over time. For FHA, financed costs also use up ceiling room. Your Loan Estimate and Closing Disclosure list every charge.
The CFPB’s research on cash-out refinances notes that using equity to pay off other debt can make sense if the cost of extracting the cash is low enough. The same logic applies to any use of the cash. Your balance grows, and so does the premium base.
Where the General Rule Breaks
- County loan limits. The new loan cannot exceed the FHA limit for your county and unit count, even with plenty of equity. County loan limits apply and change every year. Check HUD’s limit lookup for your county.
- Streamline refinances. The FHA Streamline is for existing FHA loans, needs no appraisal, and is not a cash-out product.
- Rate-and-term refinances. With an appraisal, an FHA rate-and-term can reach 97.75% on a principal residence occupied for the previous twelve months. It gives no cash, so it fits a different goal, and comparing it with the FHA cash-out refinance helps if you are unsure which one you need.
- Hawaiian Homelands. Mortgages insured under section 247 of the National Housing Act, the Hawaiian Homelands program, are not held to the 80% loan-to-value ceiling that applies to other FHA cash-out refinances.
- Divorce, separation or death. Buyouts get special treatment with separate tests. Ask your loan officer.
- Manufactured homes. They carry separate restrictions, so raise your home type with your loan officer early.
- Forbearance history. If you were in forbearance, expect the lender to want a completed plan and consecutive on-time payments afterward.
- Credit events. HUD’s waiting periods apply: two years from a chapter 7 discharge, three years from a foreclosure. Those are HUD rules, not a promise from any lender.
What Should You Decide?
Start with the cash you actually need. Then estimate the ceiling: 80% of what you honestly expect the home to appraise for, minus your payoff, minus financed costs and the premium. If the result falls short of your goal, no appraisal will fix that.
Then compare. A cash-out replaces your whole first mortgage. A home equity line, per the CFPB’s HELOC brochure, leaves your first loan alone, and closing costs are generally higher on a cash-out. If your current loan is one you want to keep, that matters.
Equity also matters after closing. At the 80% cap, at least 20% of the home’s value stays yours.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Reach the team at 828-256-2183.
Frequently Asked Questions
Is the 80% limit based on my equity or my home’s value?
Your home’s value. The whole new loan can reach 80% of Adjusted Value, and your payoff, financed costs and cash all share that room. You cannot take 80% of your equity as cash.
Can I use my own estimate of what the home is worth?
No. The lender uses the appraisal after HUD’s adjustments. Your estimate, an online figure or a neighbor’s sale price may help you plan, but none sets the ceiling.
Does a higher credit score raise how much I can take out?
Not the cap. The 80% limit is the same at every score. Credit affects whether the file is approved and how it is priced.
Can I get cash out of an FHA Streamline?
No. A Streamline refinances an existing FHA loan without an appraisal and without meaningful cash back. For cash, you need the cash-out program and a full appraisal.
What if I own my home free and clear?
You can still refinance it as a cash-out. With no payoff to subtract, more of the ceiling is available, though financed costs and the premium still come out first and the county loan limit still applies.
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.
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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 news release on the cash-out change
3. HUD Mortgagee Letter 2022-11
4. FHA Connection appraisal help
5. HUD Mortgagee Letter 2020-30
6. CFPB: Closing Disclosure explainer
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 Much an FHA Cash-Out Lends to Pay Off a Partner or Relative · How Lenders Underwrite an FHA Cash-Out Refinance When the Appraisal Comes Back Low · How Lenders Underwrite an FHA Cash-Out Refinance Without a Mortgage
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.