Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Quick Read: A 580 score is the entry point for FHA’s maximum-financing tier, but it does not raise your cash-out limit. Cash-out on an FHA loan reaches 80% of the home’s appraised value at every score. A 580 gets you in the door; the 12-month ownership record, the payment history, the debt ratios and the appraisal decide whether the file works. Everything here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
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.
What an FHA Cash-Out Refinance Actually Is
An FHA cash-out refinance is a new first mortgage that pays off your current one and hands you the difference in cash. It is not a second loan. Home equity loans and HELOCs leave your first mortgage in place, which is the CFPB’s description of how those products differ from a cash-out refinance.
You do not need an existing FHA loan to do one. The old loan can be conventional, VA or anything else secured by the home. The new loan is FHA-insured, and that brings FHA’s mortgage insurance, FHA’s appraisal rules and FHA’s underwriting.
Key Takeaways
- 580 is the line for FHA’s maximum-financing tier. The wholesale programs Lendmire places FHA loans with start at 580, so that is the practical floor.
- Cash-out tops out at 80% LTV. The 96.5% figure is a purchase limit.
- Ownership and occupancy of 12 months before the case number are required.
- Payments on the existing mortgage need to be clean over the prior 12 months.
- The lowest borrower-level score on the loan is the one that counts.
- Some lenders set a higher floor than FHA does, so a 580 does not guarantee approval anywhere. Every figure here varies by lender and program, and guidelines, property type, leverage, and credit profile all apply.
Key Terms Defined
Minimum Decision Credit Score (MDCS): The lowest borrower-level credit score among everyone on the loan, which FHA uses to set limits on the file.
LTV (loan-to-value): The new loan balance divided by the home’s appraised value, shown as a percentage.
Case number: The FHA identifier assigned to your loan file; ownership and occupancy seasoning are counted back from the date it is assigned.
Upfront mortgage insurance premium (UFMIP): A one-time FHA premium, 1.75% of the base loan, usually financed into the balance.
Compensating factors: Documented strengths, such as reserves or a long job history, that let a file carry higher debt ratios.
Overlay: A requirement a lender adds on top of FHA’s own rules.
Does a 580 Score Qualify You for FHA Cash-Out?
It meets the credit tier, nothing more. HUD’s score tiers are laid out in Mortgagee Letter 2026-11. As a law-firm summary of the letter reports it, scores below 500 are ineligible, scores from 500 to 579 are limited in leverage, and scores of 580 and above reach maximum financing.
Two things follow for a cash-out borrower.
First, 580 does not unlock a bigger cash-out. The score-based leverage tiers are purchase-style financing limits. Cash-out has its own cap of 80% of value, and that cap is the same at every score. A borrower at 580 and a borrower at 740 face the same 80% ceiling.
Second, 580 keeps you out of the tighter ratio limits. The same HUD letter says transactions with a decision score below 580, or with no score, may not exceed 31/43 qualifying ratios without acceptable compensating factors. At 580 and above, the file can use the broader ratio room, up to 40/50 with documented compensating factors at the top tier.
Across the wholesale programs placed through Lendmire, 580 is where FHA files begin. HUD’s 500-to-579 tier exists, but the network does not reach below 580. If you are at 560, that is a different conversation, and it starts with the score.
How the Loan Is Underwritten, Step by Step
The order below is the order a file moves through. Each step is a place a 580 file can stall.
1. Case number assignment. The lender requests an FHA case number. That date anchors the seasoning tests that follow.
2. Ownership and occupancy seasoning. The home must have been owned and occupied as your primary residence for 12 months before the case number. Lenders document occupancy with things like employment records or utility bills.
3. Payment history. The mortgage payments on the loan being paid off should have been made within the month due over the prior 12 months, or since the loan began if that is shorter. HUD’s Mortgagee Letter 2020-30 applied this same test to forbearance: a cash-out borrower who completed a plan needed 12 consecutive on-time payments afterward. That letter was current when issued, and the handbook controls today.
4. Credit pull and the decision score. The lender pulls a tri-merge report. For each model, three scores means the middle one, two scores means the lower one, and one score means that one. The lowest borrower’s result becomes the file’s decision score.
5. Underwriting. Most files run through FHA’s TOTAL Scorecard, the automated system. A “refer” result, or a low-score file, may go to manual underwriting, where compensating factors carry real weight.
6. Appraisal. The appraised value sets the 80% ceiling. A low appraisal shrinks the cash directly.
7. Mortgage insurance. The upfront premium is 1.75% of the base loan, financed into the balance. An annual premium also applies.
8. Closing. The new loan pays off the old first lien. What remains is disbursed to you. Because this is a consumer mortgage, you receive a Loan Estimate and a Closing Disclosure along the way.
How the 80% Cap Works in Practice
The cap means roughly 20% equity stays in the home after closing. Say you own a home appraised at a round 100 units of value with a mortgage balance of 60. The new loan can reach 80. The payoff of the old loan and any costs you roll in come out of that new loan, and what is left is your cash. The upfront premium is financed too, so it adds to the balance you owe. The lender’s Loan Estimate shows exactly how the premium is figured on your file.
That is the part many borrowers miss. The headline LTV is not the cash. The payoff and the costs all come out of the new loan, so net proceeds run below what the cap alone suggests.
The cap also matters for a 580 borrower with thin equity. If your balance is already near 70% of value, there is little room left after the payoff and costs. In that case, an FHA rate-and-term refinance, which on a principal residence occupied for the previous twelve months reaches 97.75%, may fit the goal better when the goal is the loan terms rather than cash.
Annual mortgage insurance 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 the life of the loan. At or below 90%, it ends after eleven years. With cash-out capped at 80%, that second case generally applies. HUD’s insurance schedule is the reference for the full table. Figures here are program facts, not a quote.
Where a 580 File Gets Stuck
A 580 file usually gets stuck on the factors around the score rather than the score itself. Each one below can change the outcome.
Lender overlays. HUD sets a minimum; lenders can add their own. Some lenders set a higher cash-out floor than FHA does, so approval at a given score is not assured. This is why a 580 can be approved through one channel and declined through another. Wholesale access matters here: a broker with several lender channels can look for the one whose guidelines fit the file.
Payment history. One late payment in the prior 12 months on the current mortgage can derail a cash-out file. A streamline refinance looks at a shorter window, so cash-out asks more of your payment record.
Debt ratios. At 31/43 with no compensating factors, a 580 file has little room. Documented reserves, stable employment or modest payment change can push the ratios toward 40/50 where the automated finding allows.
The co-borrower’s score. The lowest borrower-level score counts. Adding a spouse with a lower score can drop the file’s decision score, even if the primary borrower is stronger. Sometimes the cleaner move is to leave the lower-score spouse off the loan, if income allows.
Appraisal shortfall. A value that comes in light cuts the 80% ceiling. Ask the lender how appraisal reconsideration works before ordering anything, and have recent nearby sales ready.
Recent credit events. HUD’s waiting periods are two years from a chapter 7 discharge and three years from a foreclosure. Those are HUD’s rules, not a promise from any network or lender. Collections and recent lates also feed the automated finding.
Edge Cases
Scores from 500 to 579. HUD allows them, with leverage limits. In practice, the wholesale programs Lendmire places loans with start at 580, and many lenders set cash-out minimums above HUD’s floor. Plan around 580 as the working line.
Inherited homes. Some secondary sources say the 12-month occupancy requirement is waived for inherited property. If the heir then rents the home out, the 12 months of owner-occupancy applies before cash-out. Confirm the exact wording with the lender before relying on it.
Manufactured homes. Additional installation and seasoning conditions apply. Treat the details as lender-specific and ask early.
Free-and-clear homes. Owning without a mortgage does not skip the 12-month seasoning. Online claims to the contrary should be confirmed with the lender before you rely on them.
Forbearance history. Cash-out requires a stretch of consecutive on-time payments after a completed plan, as the 2020 letter described.
Streamline refinances. An FHA Streamline refinances an existing FHA loan with no appraisal, a limited credit review and a net tangible benefit. No cash comes out. The FDIC’s program sheet notes a lighter payment-history test, no more than one 30-day late in the prior six months. If you only want to change your loan terms and already hold FHA, this may be the easier route.
Reverse mortgages. FHA’s HECM program does not use credit scores in underwriting, so it sits outside this discussion.
The Scoring-Model Change Coming Next
HUD’s letter adds VantageScore 4.0 and FICO 10T as acceptable models alongside Classic FICO, for FHA case numbers assigned on or after January 1, 2027, as HUD’s FHA information page confirms. The 500 and 580 thresholds do not change, and a tri-merge report is still required. When more than one model is submitted, the lowest selected result governs.
So the new models will not lower the bar. They could change which number lands on your file. If your score differs by model, ask your loan officer which one the lender will use.
What the Decision Looks Like for a Borrower
Consider a homeowner with a 580 score, 12 months of occupancy, spotless mortgage payments and equity near 35% of value. The 80% cap leaves room. After the payoff and costs, there is real cash, but less than the cap alone implies. The ratios hold at the base pair, so the automated finding matters.
Now change one thing. The same homeowner has one late payment seven months ago. The file now fails the payment-history test, and waiting out the 12 months is the fix. The score did not change. The file did.
The choice is rarely “can I get cash.” It is whether this loan is the right tool. A cash-out replaces your current mortgage with a larger one. The CFPB’s guide for older homeowners notes that it may lengthen your payoff time and may raise your monthly payment. A CFPB report on cash-out borrowers found paying off other debts to be the most common use of proceeds, and that credit scores rose after the refinance before gradually slipping, though they stayed above pre-refinance levels.
Paying unsecured debt with home equity converts it into debt secured by your house. That is the trade, and it deserves a clear look before you sign. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Documents to Have Ready
- Government ID and Social Security numbers for all borrowers
- Recent pay stubs and W-2s, plus tax returns where the file needs them
- Two months of bank statements, with large deposits explained
- The current mortgage statement and the last 12 months of payment history
- Proof of occupancy for the prior 12 months, such as utility bills or employment records
- Homeowners insurance declarations page
- Documentation for any credit event, such as a collection payoff letter or a bankruptcy discharge
A clean packet gives the lender fewer gaps to chase. It does not guarantee approval.
If You Are Just Below the Line
At 570, the practical path is to raise the score, not to hunt for an exception. Pay down revolving balances, correct reporting errors, and avoid new credit inquiries. Then re-check.
Shopping several lenders within a short window is generally treated as a single inquiry by scoring models, but confirm that with each lender.
Frequently Asked Questions
Can I get an FHA cash-out refinance with a 580 credit score?
Yes, 580 meets FHA’s maximum-financing score tier, and it is the starting point for the wholesale programs Lendmire places loans with. You still need 12 months of ownership and occupancy, clean recent payments and ratios the file can carry. Approval is subject to lender guidelines and full file review.
Does a 580 score let me borrow more than someone with a lower score?
No. Cash-out is capped at 80% of the appraised value at every score. The higher leverage tied to 580 and above applies to purchase financing, not cash-out. Your score affects eligibility and ratio room, not the cash-out ceiling.
Why would a lender turn me down if FHA allows my score?
Lenders can add overlays on top of FHA’s rules, so a score that meets HUD’s tier may still fall short of one lender’s cash-out minimum. The lowest borrower’s score also controls the file, so a co-borrower with a lower score can pull the whole file down. Another lender channel with different guidelines may review the same file differently.
Is an FHA rate-and-term refinance easier than cash-out at 580?
Often, yes. If you do not need cash, a rate-and-term refinance asks less of the file, and so does an FHA Streamline on an existing FHA loan, which needs no appraisal and only a limited credit review.
Will I pay mortgage insurance on an FHA cash-out loan?
Yes. The upfront premium is 1.75% of the base loan, usually financed into the balance, and an annual premium also applies, between 0.15% and 0.75% of the balance depending on term, amount and LTV. At or below 90% LTV on a thirty-year loan, the annual premium ends after eleven years.
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. You can also request a quote through the quote request page.
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. CFPB’s description of how those products differ
2. HUD Mortgagee Letter 2026-11
4. HUD Mortgagee Letter 2020-30
6. HUD Mortgagee Letter 2023-05
9. CFPB Older Americans housing guide
10. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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 to Get an FHA Cash-Out Refinance After Withdrawing a Home Listing · How Much an FHA Cash-Out Lends a Veteran With Thin Credit · FHA Cash-Out Refinance vs Conventional Cash-Out Minimum Credit Score
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
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.