The Quick Read: The most a new FHA cash-out loan can reach is 80% of your home’s appraised “adjusted value.” That cap covers the new first mortgage plus any second liens left in place. Whatever sits above your payoff, financed costs and premium is the cash you can take. You also need to have owned and lived in the home for 12 months before the case number is assigned.
Key Terms Defined
Adjusted value: The home’s value as set by the FHA appraisal, which is the number the 80% cap is applied to.
LTV (loan-to-value): The loan balance divided by the home’s value, shown as a percentage.
CLTV (combined loan-to-value): The same ratio, but counting the first mortgage and every other lien against the home.
Case number: The identifier FHA assigns to your loan file. Several timing rules count back from the day it is assigned.
Upfront premium: FHA mortgage insurance charged once, as a percentage of the base loan, and usually financed into the balance.
Seasoning: The waiting period a rule requires, such as owning or occupying the home for a set number of months.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.32% as of October 22, 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.
What Is the Maximum Amount on an FHA Cash-Out Refinance?
The maximum is 80% of adjusted value. HUD set that limit in Mortgagee Letter 2019-11, lowering it for case numbers assigned on or after September 1, 2019. HUD said the change was meant to reduce risk to the FHA insurance fund. HUD later folded the 80% figure into Handbook 4000.1, which is its main rulebook for FHA single-family loans.
Older articles still say 85%, and some say 95%. FHA cut the limit from 95% to 85% back in 2009, then to 80%. Those older numbers no longer apply to a current file.
The practical meaning is simple. At least 20% of your home’s appraised value stays as equity after closing. You cannot cash out every dollar, and you do not have to take the full amount even when the cap allows it.
Compare that with the other FHA refinance paths. An FHA rate-and-term refinance with an appraisal reaches 97.75% on a principal residence occupied for the previous twelve months. The FHA Streamline needs no appraisal but is not a cash-out product. The 80% cap belongs only to cash-out.
The Cap Is Applied to Everything, Not Just the Cash
Here’s the catch most people miss. The 80% applies to the whole new loan, not to the cash you receive. A home appraised at a given value supports a new loan of up to 80% of that value. From there, the payoff of your old mortgage comes off the top.
So the cash is not “80% of my value.” It is 80% of your value, minus what you must pay off, minus other costs. People who treat 80% as their cash number are routinely surprised at closing.
How the Maximum Gets Built, Step by Step
Across the wholesale programs Lendmire places FHA files with, the sequence runs the same way. Each step can shrink the number.
1. Appraisal sets adjusted value. The FHA appraisal produces the figure. A low appraisal lowers everything that follows.
2. Apply the 80% cap. That gives the largest total loan the program allows.
3. Subtract the payoff. Your current first mortgage must be paid in full by the new loan.
4. Subtract other liens. A HELOC or second mortgage that stays in place uses up part of the 80%. One that gets paid off is a use of proceeds instead.
5. Account for the premium. The upfront premium is 1.75% of the base loan. It is usually financed, so it raises the balance and takes room under the cap. An annual premium also applies. It runs between 0.15% and 0.75% of the balance depending on term, loan amount and LTV.
6. Account for closing costs. If you finance them, they sit inside the cap. If you pay them from proceeds, they reduce your cash.
7. What remains is your cash. Subject to lender guidelines and full file review.
County loan limits also apply to FHA loans. They are set by county and change every year, so check your county’s current limit with a lender. In most homes the 80% test binds first, but in a higher-priced home the county limit can be the lower ceiling. The lower of the two controls.
A Scenario Without Dollar Figures
Say you own a home that appraises well above your payoff, and you have no second lien. The loan can reach 80% of the appraised value. Your old mortgage comes out first. The financed premium comes next. What is left is your cash, before any closing costs you choose not to finance.
Now add a HELOC that stays in place. The 80% cap counts it. Every dollar of that line reduces the room for the new first mortgage dollar for dollar, so the cash drops by the amount of the line.
A third version: the appraisal comes in lower than you hoped. The cap shrinks with it. The payoff and costs stay the same, so the cash falls faster than the appraisal does. Appraisal gaps hit cash-out harder than they hit a purchase.
Who Qualifies: The Eligibility Rules
Maximum amount is only half the picture. These tests decide whether you get to the cap at all.
Owner-occupied principal residence. FHA programs cover one- to four-unit homes you live in. HUD’s handbook limits them to owner-occupied principal residences, so investment properties and second homes are not eligible. If your goal is a rental, this is the wrong product.
Twelve months of ownership and occupancy. On the programs we place with, the home must be owned and occupied for 12 months before the case number. A recent purchase usually has to wait. Lenders may recognize limited exceptions, such as inheritance, so ask your loan officer rather than assume.
Payment history. Lenders expect your mortgage payments to be current and on time. A recent late payment can stop the file. After a forbearance plan, expect a stretch of consecutive on-time payments before you qualify. Confirm the exact wording with the lender.
Credit and ratios. The wholesale programs Lendmire works with start at a 580 decision score. Debt ratios start at 31/43 (housing to total) with no compensating factors. Documented factors can push them to 40/50 at the top tier, and the automated underwriting finding governs most files. Credit events carry HUD waiting periods: two years from a chapter 7 discharge and three years from a foreclosure.
Manufactured homes. The home must have been permanently installed on its site for more than 12 months before the case number.
Documentation Checklist
A cash-out is a full new FHA loan, not a Streamline. Expect a full file. Here is what lenders typically ask for, though the exact list depends on the lender and your situation.
| Borrower type | Typical income documents | Always needed |
|---|---|---|
| W-2 employee | Recent pay stubs, W-2s | Photo ID, mortgage statement |
| Self-employed | Traditional personal-income documentation, profit-and-loss | Homeowner’s insurance |
| Retired / fixed income | Award letters, benefit statements | Proof of occupancy |
| Co-borrower | Same as their type above | Their own credit review |
Beyond income, several items come up on nearly every cash-out file:
- Proof of occupancy: utility bills, a driver’s license or similar records tied to the address.
- Current mortgage statements for the first loan and any second lien.
- Payoff statements for every lien being paid off at closing.
- Payment history showing the required on-time record.
- Homeowner’s insurance and property tax information.
- Source of any cash you bring to closing, since the lender needs to see where the money came from.
You will see these costs spelled out on the Loan Estimate. The CFPB’s Loan Estimate explainer describes closing costs as the upfront charges for getting the loan and transferring ownership. Compare that form across offers, because it shows estimated cash to close in one place.
What Reduces Your Cash
The gap between “what the cap allows” and “what lands in your account” comes from five places.
| Item | Effect on your cash |
|---|---|
| Old mortgage payoff | Comes off first |
| Second liens paid off | Reduce cash dollar for dollar |
| Financed upfront premium | Raises balance, uses cap room |
| Financed closing costs | Use cap room |
| Closing costs paid from proceeds | Reduce net cash directly |
Here’s a reality check. Some marketing for cash-out loans talks as if the cap is a payout. It is a ceiling. And any “no closing costs” pitch simply moves the costs into the balance or the loan terms. They don’t disappear.
Where the General Rule Breaks
The 80% rule is clean until it meets a real file. These cases need attention.
A second lien that stays. A HELOC or second mortgage counts toward the 80% combined limit. Lenders sometimes work around it by paying the lien off, closing the line or lowering its limit. Those are lender practices, not HUD rules, and they depend on the second lender’s cooperation.
A home owned free and clear. With no mortgage, there is no payoff. The whole amount under the cap, less costs and premium, can come to you, provided the ownership and occupancy tests are met.
Recently acquired property. Short ownership blocks the 12-month test. The better path is often a rate-and-term refinance, if it fits your goal, or waiting.
Hawaiian Homelands (Section 247). These mortgages are exempt from the 80% change. Section 247 and Section 248 loans also have their own premium treatment.
Multi-unit homes. One- to four-unit owner-occupied properties are eligible, but the same 80% test and the occupancy rule apply. You must live in one of the units.
Condos. Condo approval status can matter on FHA loans, so ask the lender early rather than late.
Divorce, inheritance and co-borrowers. Each can change who has owned and occupied the home, and for how long. Tell your loan officer at the start so the file is built correctly.
If the Appraisal Comes In Low
A low appraisal lowers the 80% ceiling. Your payoff and costs stay put. Cash shrinks faster than the value does.
Your options are practical ones. You can take a smaller cash amount. You can pay off a second lien so it stops counting. You can wait and reapply. Or you can ask the lender whether a review of the appraisal makes sense. Don’t count on a re-appraisal changing the number.
Cash-Out, Streamline or Rate-and-Term?
These are three different tools. Mixing them up is a common source of confusion.
| Feature | Cash-out | Rate-and-term | Streamline |
|---|---|---|---|
| Cash to you | Yes | No | No |
| Max financing | 80% LTV | 97.75% | Based on existing loan |
| Appraisal | Yes | Yes | Not required |
| Documentation | Full file | Full file | Limited |
| Existing loan | Any type | Any type | Must be FHA |
The Streamline is the light-paperwork product. Cash-out is not. If an ad says “low documentation” and “cash out” in one breath, read the fine print.
Your Decision in Practice
Start with the question of what the money is for. If the answer is a home project that raises value, a cash-out can make sense. If the answer is a vacation or consolidating spending debt, weigh it more carefully. You are replacing your existing loan with a larger new one, adding FHA premiums, and resetting your term.
A practical order of operations:
1. Estimate your home’s value and your total liens.
2. Multiply value by 80%, then subtract every lien and the financed premium. That is your rough ceiling.
3. Check your 12-month ownership and occupancy and your payment record.
4. Gather the documents above.
5. Compare Loan Estimates side by side.
Our read: the borrowers who get the best outcome are the ones who run the subtraction before they apply. The surprise at closing usually comes from the lien payoff or the premium, not from the cap itself.
Mortgage insurance deserves its own thought. On a thirty-year loan above 90% LTV, the annual premium lasts for the term. At or below 90% LTV, it ends after eleven years. A cash-out at 80% LTV falls in the second group. For a deeper look at what happens to insurance if you later leave FHA, see Lendmire’s piece Cash-Out Refinance Mortgage Insurance Rules When Leaving FHA. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
Texas homeowners face an extra layer of state rules on cash-out loans. Lendmire covers those in its article Texas Homestead Rules for an FHA Cash-Out Refinance.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Mistakes
- Treating 80% as the cash amount. It is the cap on the whole loan.
- Using old numbers. 85% and 95% are retired limits.
- Forgetting the HELOC. It counts toward the cap.
- Assuming the appraisal will match a listing site. The FHA appraisal decides.
- Believing “no cost” claims. The costs move into the balance or the terms.
- Confusing cash-out with a Streamline. Different paperwork, different rules.
- Trying it on a rental. FHA is for the home you live in.
If you want to see how the numbers work on your own home, the FHA cash-out refinance program page lays out the product. Remember that every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
What is the maximum amount I can borrow on an FHA cash-out refinance?
Up to 80% of your home’s appraised adjusted value, counting the new first mortgage and any second liens left in place. County loan limits also apply, and the lower of the two controls. Premiums and costs you finance use part of that room.
Can I cash out all of my equity?
No. The 80% cap leaves at least 20% equity in the home. Your payoff, other liens, premium and costs come out of the amount first, so the cash you receive is lower than the gap between value and balance.
Do I have to take the maximum?
No. You can borrow less than the cap allows. A smaller loan means a smaller balance and a smaller premium, so many borrowers size the loan to what they actually need.
Does the appraisal change how much I can get?
Yes. The cap is applied to the appraised value, so a lower appraisal lowers the ceiling. Since the payoff does not change, your cash drops by more than the appraisal does.
Can I use an FHA cash-out on a rental or second home?
No. FHA programs cover owner-occupied principal residences only, and occupancy is what decides the leverage you can reach.
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, and you can reach the team at 828-256-2183.
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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References
1. HUD Mortgagee Letter 2019-11
2. HUD Handbook 4000.1 Update 7.5 transmittal
3. HUD Handbook 4000.1 owner-occupancy excerpt
4. CFPB Loan Estimate 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: FHA Streamline vs Conventional Refinance for an FHA Loan With Equity · How to Switch From FHA to VA or Conventional With a Refinance · How to Cover the Cash to Close on a Condo With an FHA Loan
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.