FHA Cash-Out Refinance Minimum Credit Score Requirements

The Quick Read: There is no single FHA cash-out credit score. Three layers decide it: FHA’s published score table, the cap on how much you can borrow against your home, and the lender’s own floor. Across the wholesale programs Lendmire places FHA files with, 580 is where the line starts. A higher score does not buy you more cash, because the cap is the same at every tier. Your score decides whether a lender takes the file and on what terms.

One Score? No, Three Layers

Three things set your real minimum, and they stack.

Layer one is FHA’s score table. It sorts borrowers by a single “decision score.” Scores of 580 and up are eligible for maximum financing. Scores from 500 to 579 get a lower maximum. Below 500, the loan is not eligible for FHA insurance.

Layer two is the cash-out cap. A cash-out refinance tops out at 80% of the home’s appraised value. That cap applies at every score tier. So FHA’s table, by itself, does not add a special higher floor just for cash-out.

Layer three is the lender. FHA’s tiers are minimums. A lender can ask for more, and many do. In Lendmire’s experience arranging these files, the wholesale lenders it works with start at 580. FHA’s lower tier exists on paper, but the network does not reach below 580. Lenders set higher floors still. Program figures here are subject to lender guidelines and full file review.

Lendmire’s FHA cash-out refinance program page covers the structure of the loan itself.

A quick comparison of leverage: a purchase at 580 or higher reaches 96.5% financing with 3.5% down. A cash-out stops at 80%. You are borrowing against equity, so the lender wants a cushion left behind. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.

Which Score Does the Lender Use?

Your lender pulls a three-bureau credit report. It then works out one number for the whole loan, called the minimum decision credit score. That is the score FHA’s table uses to set your maximum financing.

For each borrower, the lender generally takes the middle of three scores. If only two scores exist, it takes the lower one. If only one exists, that one stands. Then comes the step that surprises people: with more than one borrower, the lowest borrower-level score drives the transaction.

Picture a married couple. One has a 700 score and the other a 575. The file is judged at 575. Dropping the lower-score spouse from the loan can change the outcome, though it also removes that income from the file.

FHA has also opened the door to newer scoring models alongside classic FICO, per HUD Mortgagee Letter 2026-11. The score thresholds themselves stay the same. Your score under a newer model does not lower the bar.

One more point: the score on a free app is rarely the one your lender sees. Mortgage lenders use their own scoring versions, and the numbers can differ by several points.

What Your Score Changes, Tier by Tier

Score does not change how much cash you can pull out. It changes whether the file is workable.

Ratios are where score shows up most. A ratio compares your monthly debts to your income. The base pair is 31/43: housing costs at 31% of income and total debts at 43%. That applies with no compensating factors. Documented strengths, like cash reserves or a long job history, can stretch the pair up to 40/50 at the top score tier. Most files are decided by FHA’s automated underwriting finding, and a strong score helps you get a clean one.

Lower scores also narrow your choices. Fewer lenders will take the file, and the lenders that do may ask for more documentation.

How an FHA Cash-Out Gets Underwritten, Step by Step

1. Eligibility screen. The home must be your principal residence. You must have owned and occupied it for 12 months before the case number is assigned. Lenders also review your payment history on the current mortgage over the past year. Late payments in that window can stop the file before the score matters.

2. Credit pull. The lender pulls the three-bureau report and sets the decision score, as described above.

3. Underwriting. The file runs through FHA’s automated system. A favorable finding often settles it. Otherwise an underwriter reviews the file by hand, and documented compensating factors matter more.

4. Appraisal. The appraisal sets value. The 80% cap applies to the adjusted value. HUD Mortgagee Letter 2019-11 set that cap for cash-out refinances, and it replaced an older, higher limit. HUD’s own announcement said the change was meant to reduce risk from cash-out lending. County loan limits also apply to the new loan.

5. Loan amount and mortgage insurance. FHA charges an upfront premium of 1.75% of the base loan, usually financed into the balance. An annual premium also applies, between 0.15% and 0.75% of the balance depending on term, loan amount and LTV. HUD’s premium structure page explains the upfront premium is collected at closing and the annual premium monthly. On a thirty-year loan at or below 90% LTV, the annual premium ends after eleven years. Since cash-out stops at 80%, that is the group you land in.

6. Closing and the cancel window. On a refinance of your primary home, you generally have three business days to cancel after signing. The CFPB explains the right of rescission: Saturdays count, Sundays and legal holidays do not. Cash is generally not released until that window closes. If you cancel, you still owe the original loan.

Where the Rule Bends

Most borrowers fit the standard path. A few situations change the picture.

• A home with no mortgage. Taking equity out of a paid-off home still counts as a cash-out. The 12-month ownership and occupancy test, credit standards and appraisal all still apply.
• An inherited home. FHA’s guidance has allowed inherited homes if you have lived in the property since the inheritance. If you rent it out first, the occupancy clock has to run before you can use this path.
• A different current loan. You do not need an existing FHA loan. A conventional or VA mortgage can be refinanced into an FHA cash-out.
• Hawaiian Home Lands. Loans under Section 247 are exempt from the 80% cap change. It is a niche exception, noted by Consumer Finance Monitor.
• Manufactured homes and 3–4 unit homes. Extra requirements apply, such as a permanent foundation or added reserve tests. Ask a loan officer early.
• Streamlines. An FHA Streamline refinances an existing FHA loan with no appraisal and a limited credit review. It has no cash-out and works differently on credit.
• Past credit events. HUD sets waiting periods: two years from a chapter 7 discharge and three years from a foreclosure. Those are FHA’s rules, not a promise from any lender, and some lenders wait longer.

Is Cash-Out the Right Product?

Sometimes the credit score points you to a different loan.

A cash-out replaces your whole loan. It adds mortgage insurance, and closing costs apply to the entire new balance. A home equity loan leaves your first mortgage alone, which can matter if you like your current loan. This one is a genuine toss-up for many homeowners, and it turns on how much you need and how long you will stay.

Borderline Score? Here Is the Practical Play

Say your score sits just under a lender’s line. A few moves can help.

• Check what drives the number. Card balances, a recent late payment and a collection each carry different weight. Paying revolving balances down is often the quickest lever, and it costs nothing.
• Fix the payment history first. A late payment on the mortgage you are refinancing can matter more than the score itself.
• Ask lenders for their floor, not FHA’s. You want the number the lender will actually accept.
• Consider timing. If a derogatory event is recent, a waiting period may apply regardless of score.

Run three quick pictures. A borrower at 640 with moderate ratios and 30% equity usually has a workable file. A borrower at 585 with a co-borrower at 560 is judged at 560, and the file stalls. A borrower at 700 with a late payment last month has a strong score and a payment-history problem.

Applying will bring a hard credit pull.

Key Terms Defined

Decision credit score: the single score a lender uses to place your file in FHA’s table, based on the lowest borrower-level result.

LTV (loan-to-value): the new loan balance divided by the home’s appraised value. Cash-out stops at 80%.

Compensating factors: documented strengths, such as reserves or stable employment, that let a lender accept higher debt ratios.

Lender overlay: a rule a lender adds on top of FHA’s minimums, such as a higher credit score floor.

Mortgage insurance premium: FHA’s insurance charge, with an upfront piece financed at closing and an annual piece collected monthly.

Weighing Your Options

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 mortgage broker arranges the loan through wholesale lenders and does not lend directly. Final terms are subject to lender guidelines and full file review, and nothing here is a commitment to lend.

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.

For the program’s current guidelines, see FHA loan programs.

References

1. HUD Mortgagee Letter 2026-11

2. HUD Mortgagee Letter 2019-11

3. HUD press release on the cash-out LTV change

4. HUD FHA Resource Center, mortgage insurance premium structure

5. CFPB, the right of rescission

6. Consumer Finance Monitor