The Quick Read: FHA has no special “roof loan.” A roof or storm repair runs through the ordinary cash-out refinance, which reaches 80% of the home’s appraised value and requires 12 months of ownership and occupancy before the case number. The appraiser decides whether the roof passes. Storm damage adds a second check: the damage must be documented and repaired. All of this is subject to lender guidelines and full file review.
What You Need to Know First
- Cash-out is capped at 80% loan-to-value (LTV, the loan balance divided by the home’s value), so 20% equity stays in the home.
- You must have owned and lived in the home for the 12 months before the FHA case number.
- A leaking or worn-out roof is flagged by the appraiser. That is usually a condition to clear, not an automatic denial.
- Standard cash-out money is yours to spend however you like. A 203(k) rehab loan holds repair money in escrow instead.
- Insurance proceeds belong to the repair claim, not to the refinance.
How Does an FHA Cash-Out Refinance Work?
An FHA cash-out refinance replaces your current mortgage with a larger one and pays you the difference at closing. The new loan is a fresh first mortgage, so it carries its own closing costs and FHA mortgage insurance. Those costs are real and they shrink your net cash.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.24% as of October 29, 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.
Mortgage insurance has two parts. Across the programs I place files with, 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, the annual premium lasts the life of the loan. A cash-out at 80% LTV sits under that line, so it ends after eleven years.
For the full program overview, see Lendmire’s FHA cash-out refinance program page.
Why Is the Cap 80% and Not 85%?
It is 80%. HUD Mortgagee Letter 2019-11 lowered the maximum LTV and combined LTV on FHA cash-out refinances from 85% to 80% of adjusted value. HUD’s announcement says the same thing. Plenty of older pages still say 85%, and they are stale.
In plain terms: take the appraised value, multiply by 80%, and subtract what you owe. What is left is the most cash the loan can deliver, before costs. A low appraisal shrinks that number directly. So does a big existing balance.
One narrow exception exists. The change does not apply to Section 247 mortgages on Hawaiian Home Lands, per Consumer Finance Monitor.
Who Qualifies for the Standard Cash-Out?
You must be refinancing your principal residence, the home you actually live in. Second homes and rentals are not eligible for the standard FHA cash-out. At least one borrower must have owned and occupied the home for 12 months before the case number is assigned. A home owned free and clear can be cashed out too.
Inheritance has a twist. If you inherit a house and rent it out, you generally need to live in it for 12 months before a cash-out is allowed. Confirm this against HUD’s current Handbook 4000.1, since HUD updates it periodically.
Beyond occupancy, the lender looks at your credit and your debt-to-income ratios. Across the wholesale programs I use, FHA starts at a 580 decision score. The base ratio pair is 31/43 (housing costs / total debts, as a share of income). Documented compensating factors, such as reserves or a strong payment history, can stretch that toward 40/50 at the top tier. The automated underwriting finding governs most files.
How Is the Loan Underwritten, Step by Step?
Here is the sequence a roof-driven refinance follows.
1. Eligibility screen. The lender checks the 12-month ownership and occupancy test, your payment history, and the 80% cap.
2. Case number. FHA assigns one. The 12-month clock counts back from this date.
3. FHA appraisal. A roster appraiser sets value and tests the home against minimum property requirements. The appraiser looks at the roof and reports on it.
4. Roof outcome. A sound roof with at least two years of life left draws no condition. A leaking roof, one showing moisture, or one with under two years of life gets flagged.
5. Storm check. In certain federal disaster areas, a damage inspection report is also required (more below).
6. Clear the conditions. You complete the repair and document it, or you finance it through a 203(k).
7. Underwriting and closing. Standard FHA underwriting applies, and cash goes to you at closing.
Your own timeline depends on the lender, the appraiser and the repair. Plan for repairs to come first, not last.
What Does the Appraiser Do About a Roof?
The roof must keep out moisture and offer reasonable future utility, durability and economy of maintenance. That is the standard in HUD’s Handbook 4000.1. If the roof has less than two years of remaining life, the appraiser reports it. The appraisal is then typically made “subject to” an inspection by a professional roofer.
“Subject to” means the value stands only if a stated condition is met. The lender cannot clear it until someone proves the roof is fine or repaired.
Two things surprise people. First, an FHA appraiser is not a home inspector. Secondary industry sources say the appraiser views the roof but is not required to walk on it. Second, required repairs are limited to what protects marketability and the occupants’ health and safety. A cosmetically ugly roof that works is a different problem from a leaking one.
My practical advice: if you suspect trouble, have your own roofer look before the appraisal. Surprises at the appraisal stage cost you the most leverage.
What Changes After Storm Damage?
Two cases matter, and they are not the same.
Ordinary storm damage. If your area has no federal disaster declaration, the regular appraisal handles it. The appraiser flags visible damage, and you repair it before closing.
Declared disaster areas. For homes in a Presidentially-Declared Major Disaster Area designated for individual assistance, HUD requires a damage inspection report. Per FHA INFO 2024-72, an FHA roster appraiser completes it even if no damage turns up. It must be dated after the FEMA incident period, or 14 days from the incident start date, whichever is earlier. If the appraisal’s effective date falls on or after that required date, a separate report is not needed.
HUD revised this section of the handbook in Mortgagee Letter 2025-19. Ask your lender for the current requirements, because the details have shifted before.
Older articles quote specific dollar thresholds that split “close with a repair escrow” from “do not close.” Those are outdated. Treat the idea as the rule: minor damage can be handled with repairs, while major damage or an uninhabitable home stops the loan until it is fixed and re-inspected.
Your Roof Situation, and Your Path
| Situation | Likely lender response | Your path |
|---|---|---|
| Sound roof, 2+ years left | No roof condition | Proceed normally |
| Worn roof, under 2 years | Roofer inspection or repair | Repair, then document |
| Active leak | Repair required first | Fix before closing |
| Storm damage, open claim | Claim status reviewed | Settle claim, repair |
| Declared disaster area | Damage inspection report | Fresh appraisal can serve |
| Repair finished | Invoice or re-inspection | Provide proof |
The Sequencing Problem: Fix First or Refinance First?
Here is the catch. The cash-out pays you at closing, but a bad roof must be handled before closing. So how do you pay for the repair?
You have four realistic routes:
- Pay for the repair from savings or insurance, then refinance with proof of completion.
- Use a 203(k) so the repair money comes through the refinance and sits in escrow.
- Wait on the cash-out until the repair is done, then take cash for other needs.
- Skip the refinance and finance the roof another way, which may cost less than replacing your whole mortgage.
That last point deserves honest weight. A cash-out resets your entire balance, term and mortgage insurance. For a roof alone, a smaller repair loan or cash on hand can be cheaper than refinancing everything.
How Does a 203(k) Compare?
The 203(k) is HUD’s rehab loan. For a refinance, part of the proceeds pay off your old mortgage and the rest goes into an escrow released as work is completed, according to HUD’s 203(k) page. The home must be at least a year old. Limits track the Section 203(b) limits, per the SAM.gov assistance listing, and county loan limits apply.
| Factor | Standard cash-out | 203(k) |
|---|---|---|
| Who controls repair money | You | Escrow account |
| Use of funds | Unrestricted | Approved repairs |
| Roof condition | Must clear first | Financed in the loan |
| Max LTV in my programs | 80% | Set by lender and HUD |
HUD’s 2024 policy update raised the Limited 203(k) cap on total rehab cost to $75,000 from $35,000 and extended rehab periods. HUD reviews these caps annually, so the figure may have moved. The Standard 203(k) suits structural work and requires an FHA-approved consultant. The Limited version suits nonstructural work. A roof replacement is the sort of job lenders usually steer toward one of them.
For disaster victims, FHA’s 203(h) insures a loan to rebuild or replace a destroyed or damaged primary home in a presidentially declared disaster area, per DisasterAssistance.gov. HUD notes 203(k) can be combined with it.
What About Insurance Money?
Insurance proceeds belong to the repair claim, not to the refinance. When you have an existing FHA loan, your lender is named as a loss payee on the hazard policy. HUD’s Mortgagee Letter 2012-19 says proceeds for personal property, temporary housing and transition expenses must be promptly released to you. The servicing rules also direct the mortgagee to expedite release of proceeds for needed home repairs.
My read, and it is an inference rather than a HUD quote: if a new refinance is going to pay off the old lender, settle the claim status first. An open claim on a damaged roof complicates the appraisal and the payoff. Have your adjuster’s paperwork, contractor estimate and payment records ready.
Where the General Rule Breaks
- Streamline refinance. It is not a cash-out. It cannot deliver cash for repairs, and a cash-out cannot be used to dodge the roof test. A streamline requires an existing FHA loan, no appraisal, a limited credit review and a net tangible benefit.
- Bought under 12 months ago. Standard FHA cash-out generally is not available.
- Rentals and second homes. Occupancy decides the leverage, and standard FHA cash-out is for the principal residence only.
- Manufactured homes and condos. Special rules apply. Ask your lender, and verify against HUD.
- Hawaiian Home Lands. The 80% change does not apply to Section 247 mortgages.
Key Terms Defined
Adjusted value: The appraised value HUD uses to apply its LTV cap.
Subject to: An appraisal condition that must be satisfied before the lender can rely on the value.
Loss payee: The lender named on your insurance policy, so it shares in claim payments.
Presidentially-Declared Major Disaster Area: A place the federal government has formally declared a disaster zone, which triggers FHA’s damage inspection rule.
Frequently Asked Questions
Can I use FHA cash-out money to pay for a new roof?
Yes, but the roof usually has to clear the appraisal first. Standard cash-out proceeds are unrestricted, so you can spend them on anything. But a failing roof is flagged at appraisal and must be repaired and documented before closing. A 203(k) lets the repair ride inside the loan instead.
Will a bad roof automatically kill my refinance?
No. The appraiser flags it, and the lender needs a roofer’s inspection or completed repair to clear the condition. That is a condition, not necessarily a denial. Severe damage or an uninhabitable home is a harder stop.
Does the appraiser climb on the roof?
Secondary industry sources say FHA appraisers are not required to walk roofs, and an appraisal is not a home inspection. Having your own roofer inspect first is smart.
Can a streamline refinance get me cash for storm repairs?
No. A streamline cannot deliver cash. You would need a cash-out, a 203(k), or another way to fund the work.
Do disaster-area rules apply to every storm?
No. The damage inspection report applies to Presidentially-Declared Major Disaster Areas designated for individual assistance. Other storm damage is handled through the regular appraisal.
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. Program 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 current guidelines, see FHA loan programs.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 press release PR 19-114
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 Cash-Out Refinance Lenders to Remove an Ex-Spouse From the Mortgage After a Divorce · Best FHA Cash-Out Refinance Program With FHA Cash Reserve Requirements · How an FHA Lender Sizes a Cash-Out Refinance Against a Streamline
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.