The Quick Read: A cash-out refinance sizes the new loan from your home’s appraised value. A streamline sizes it from what you still owe on your current FHA loan. Cash-out is for homeowners who want to turn equity into cash and can pass a full credit review. A streamline is for homeowners who already hold an FHA loan and want a better loan with no cash back.
Both products replace your current mortgage, so people lump them together. They answer different questions. Cash-out asks, “How much is the home worth, and how much of that can the loan cover?” A streamline asks, “What do you owe today, and does the new loan help you?”
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.
Here is the fair split. Pick cash-out if you need money from your equity and you live in the home. Pick a streamline if you want to improve the loan you have and don’t need cash. Neither is better in the abstract. Each fits a different goal.
Side-by-Side
| Factor | FHA Cash-Out | FHA Streamline |
|---|---|---|
| Sizing basis | Appraised value | Existing loan balance |
| Leverage | Up to 80% LTV | Balance-based, no LTV test |
| Appraisal | Full appraisal | Generally none |
| Cash back | Yes, the point | Essentially none |
| Credit floor | 580 decision score at the wholesale programs | Limited credit review |
| Mortgage insurance | Upfront and annual premium | Premium continues |
| Occupancy | Owned and occupied 12 months | Must be an existing FHA loan |
| Documentation | Full income and credit file | Limited documentation |
Program figures here come from the wholesale FHA programs Lendmire places files with. They are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
What Does “Sizing the Loan” Mean?
Sizing means finding the largest loan the rules allow for your situation. Every mortgage has a ceiling. The question is what sets it.
On a cash-out, value sets it. A full appraisal gives the lender an adjusted value. The lender applies the leverage cap to that number. Your existing balance, your costs, and your cash all have to fit under that cap.
On a streamline, your old balance sets it. The home’s value barely matters. The FDIC’s FHA streamline summary says streamlines have maximum amounts based on the existing mortgage’s outstanding balance. It also says appraisals are not required and there are no LTV limits.
That one difference explains most of the rest. Value-based sizing needs an appraisal and a full file. Balance-based sizing needs neither.
How Is the Cash-Out Loan Sized?
The cash-out loan is capped at 80% of the home’s adjusted value. Your payoff, closing costs, and any remaining liens come out of that room first. Whatever is left is your cash. The cap is not the cash you receive.
Many borrowers misread this. Eighty percent of value is not 80% of value in your pocket. If you owe a lot, most of the room goes to paying off the old loan.
Here is how it flows:
1. A full appraisal sets the adjusted value.
2. The lender applies the 80% cap to that value.
3. The new loan pays off your current mortgage and any other liens being retired.
4. Costs and the financed upfront premium are covered.
5. What remains is your cash.
County loan limits apply on top of all this. They vary by county and change every year, so the value cap is not the only ceiling. For most homeowners with moderate-priced homes, the 80% cap binds first.
The cap used to be higher. HUD Mortgagee Letter 2009-08 set it at 85% of appraised value in 2009’s rules. HUD Mortgagee Letter 2019-11 later cut it to 80% to protect the FHA insurance fund from rising loan balances. If a page tells you 85%, it is out of date.
A word on how long you’ve owned the home. Across the wholesale programs we place files with, cash-out generally requires that you owned and occupied the home for 12 months before the case number is assigned. A home bought recently follows a different adjusted-value calculation, with an exception for inheritance or gifts from family.
Cash-out also gets a full review. Expect the lender to look at your credit, your income, and your payment history over the prior 12 months. Debt ratios start at 31/43 (housing and total) with no compensating factors. Documented strengths can stretch them toward 40/50 at the top tier, and the automated finding governs most files.
How Is a Streamline Sized?
A streamline starts from your current FHA balance and stays close to it. It is built to improve your loan, not to extract equity. No appraisal is needed, and the review of your credit is limited.
HUD describes the streamline as a refinance of an existing FHA-insured mortgage with limited credit documentation and underwriting. Your current loan must already be FHA-insured. Not every mortgage qualifies.
Three ideas define it:
- Balance-based sizing. The maximum comes from what you owe, so a home that dropped in value can still qualify.
- Net tangible benefit. The new loan has to help you in a way the lender can document. Shortening the term alone does not count.
- Payment record. Your current loan must be in good standing, and a seasoning period applies after your first payments.
You get no meaningful cash. HUD’s older handbook allowed only minor adjustments at closing, and the figure was small. Confirm the current limit with a loan officer rather than relying on a number from memory.
The streamline also keeps the mortgage insurance premium in play. It does not erase it.
One more caution. “Streamline” refers only to less paperwork. The FDIC summary notes it does not mean there are no costs. Some “no cost” offers simply build the costs into the interest rate or the balance. The costs exist either way.
Same Homeowner, Two Different Answers
Picture three owners, described in percentages rather than dollars.
Large equity. Say a homeowner owes about 45% of the home’s value. A cash-out has plenty of room under the 80% cap. After payoff and costs, a meaningful slice of equity can come out as cash. A streamline would give none of it.
Thin equity. Say another owner owes about 78% of value. The 80% cap leaves almost no room after costs and the financed premium. A cash-out barely works. A streamline is built for exactly this person if the goal is a better loan, since value never enters the sizing.
Underwater. A third owner owes more than the home is worth. Cash-out is off the table because value is the sizing base. A streamline can still work, provided the current loan is FHA-insured and the file meets the benefit and payment tests.
The pattern is simple. The more equity you have and the more you want it, the more cash-out makes sense. The less equity you have, the more a streamline wins.
When a Cash-Out Is the Better Fit
A cash-out fits when you need the equity and you can document a full file. It is the only one of the two that returns cash.
It works well when:
- You want to fund a major home project or pay off higher-cost debt.
- Your equity leaves real room under the 80% cap after payoff and costs.
- Your current loan is not FHA, since a streamline requires an existing FHA loan.
- Your credit and income can carry a full review.
Lendmire’s FHA cash-out refinance program page lays out how the wholesale programs approach it.
The tradeoffs are real. A cash-out raises your balance. The CFPB notes in its research blog on cash-out refinances that equity cashed out increases the mortgage balance. It also replaces your original mortgage, unlike a home equity line, which leaves your first mortgage in place.
Paying off other debt with home equity can make sense. The CFPB’s cash-out research notes it can, when the cost of pulling out the cash is lower than the cost of the debt it replaces. It also warns that turning other debt into home-secured debt can put the home at risk if payments become unsustainable. Think about that before you trade a credit card balance for a lien on your house.
Appraisal risk also matters. If the appraisal comes in low, the cap shrinks and so does your cash. Plan for a range, not a single figure.
When a Streamline Is the Better Fit
A streamline fits when you already hold an FHA loan, want an improvement, and don’t need cash. It asks less of you and does not depend on your home’s value.
It works well when:
- Your current loan is FHA-insured and in good standing.
- Your home’s value has not grown enough to support a cash-out.
- You want a lower payment or a more stable loan structure, and the new loan passes the benefit test.
- You’d rather skip the appraisal and the full income review.
The trade is straightforward. You give up cash. You gain a lighter process. Lendmire’s piece Can an FHA Streamline Refinance Give You Cash Out? walks through that limit in detail.
If you want cash and already have an FHA loan, the products can’t be blended. You choose one or the other. Some owners do a streamline now and consider cash-out later once equity grows.
What Can Override the Number?
Several things can change the answer. In order of how often they bind for a typical homeowner:
1. The value cap. On a cash-out, 80% of adjusted value is usually the first wall you hit.
2. The appraisal. A lower value than expected shrinks the room.
3. Your ratios. Your debt-to-income can limit the payment you can carry even when equity is ample.
4. County loan limits. They apply by county and change yearly.
5. Remaining liens. A second mortgage that stays in place uses up combined-LTV room on a cash-out.
On a streamline, the list is shorter: the balance, the payment record, and the benefit test.
One special case is worth knowing. The 80% cap does not apply to mortgages insured under Section 247, the Hawaiian Home Lands program, per the HUD letter above. It is a narrow exception.
Key Terms Defined
Adjusted value: The home value the lender uses to apply the leverage cap, taken from the appraisal. A different calculation applies to homes acquired within 12 months.
LTV (loan-to-value): The loan amount as a percentage of the home’s value. An 80% LTV means the loan is four-fifths of value. The exact numbers vary by lender and program and follow a full review of property, leverage, and credit.
Net tangible benefit: A documented improvement the borrower gets from a streamline.
Seasoning: The waiting period after your first payments before you can streamline.
Upfront premium: A one-time FHA mortgage insurance charge of 1.75% of the base loan, usually financed into the loan.
Annual premium: The ongoing FHA mortgage insurance, between 0.15% and 0.75% of the balance depending on term, amount and LTV. On a 30-year loan above 90% LTV it lasts the full term. At or below 90%, it ends after eleven years. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Which Should You Choose?
The honest verdict is that your goal decides it, not the product.
- Need cash from equity, live in the home, and can pass a full review? Cash-out.
- Hold an FHA loan, want a better loan, and don’t need cash? Streamline.
- Have thin equity or an underwater home? Streamline, if eligible.
- Hold a non-FHA loan and want cash? Cash-out is the only path of the two.
Each one has a cost. Cash-out gives you money and a bigger balance. A streamline gives you simplicity and no cash. Weigh the full terms on your Loan Estimate before choosing, and get a second opinion on the numbers.
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
Do I have to take the maximum cash-out amount?
No. The 80% cap is a ceiling, not a target. You can borrow less, which keeps the balance lower. Remember that payoff and costs come out of the cap first, so the true cash available is often far smaller than the cap suggests.
Can I roll closing costs into an FHA cash-out loan?
Costs and the financed upfront premium generally fit inside the new loan, as long as the total stays under the value cap. They reduce the cash you receive. A streamline also carries costs, despite the name.
Can an FHA streamline give me cash back?
Not in any meaningful amount. A streamline is built for improving the loan, and only a minor closing adjustment is allowed. If you want real cash, you need a cash-out.
What happens if my appraisal comes in low?
The cap shrinks because it is a percentage of adjusted value. Your cash drops, and a very low value can leave no cash at all. A streamline avoids this risk since it generally needs no appraisal.
Does my current loan have to be FHA?
For a streamline, yes. Only an existing FHA-insured loan is reviewed. For a cash-out, the loan you are paying off can be another type, provided the home meets the ownership and occupancy conditions.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. FDIC FHA Streamline Refinance summary
2. HUD Mortgagee Letter 2009-08
3. HUD Mortgagee Letter 2019-11
4. HUD: Streamline Refinance Your Mortgage
5. CFPB Office of Research blog on cash-out refinances
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 Refinance an FHA Loan Into Conventional With Enough Equity · How to Refinance an FHA Loan to Conventional as a First-Time Buyer · Refinance Requirements for Switching Into VA or Out of FHA
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.