The Quick Read: An FHA cash-out loan has to clear two ceilings, and the lower one controls. One is the 80% LTV cap on the appraised value. The other is the county loan limit for the home’s unit count. The home must be your principal residence, owned and occupied for 12 months before the case number. For most homes the 80% test binds first, and the county limit takes over on higher-priced homes. All of this is subject to lender guidelines and full file review.
Borrowers near the county limit tend to ask the wrong question. They ask how much equity they have. The file asks how large the loan can be, and that answer comes from two separate tests. This article walks through both, step by step, and shows where files near the ceiling get tight.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.40% as of October 15, 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.
Lendmire is a mortgage broker. It arranges FHA loans through wholesale lenders, and it does not lend or approve. Program details below reflect what the wholesale programs it works with typically allow, and none of it is a commitment to lend.
What Is an FHA Cash-Out Refinance?
An FHA cash-out refinance replaces your current mortgage with a new, larger FHA-insured loan. The new loan pays off the old one and the closing costs. What is left comes to you as cash. FHA loans are made by private lenders and insured by the FHA, and the maximum loan amount varies by county, as the Consumer Financial Protection Bureau explains for FHA loans generally.
You do not need an existing FHA loan to use it. A conventional mortgage can be paid off with an FHA cash-out. The home does have to be your principal residence. Investment properties and vacation homes do not qualify.
For the program overview, see Lendmire’s FHA cash-out refinance program page.
Key Terms Defined
LTV (loan-to-value): the loan balance divided by the home’s appraised value.
CLTV (combined loan-to-value): the first mortgage plus any other liens, divided by value.
Base loan amount: the loan before the financed upfront premium is added.
UFMIP (upfront mortgage insurance premium): a one-time FHA premium of 1.75% of the base loan, which can be financed.
Annual MIP: the monthly mortgage insurance premium, set by term, loan amount and LTV.
Case number: the FHA identifier the lender assigns. Its date decides which year’s county limit applies.
County loan limit: the maximum FHA loan for a county and unit count, set by HUD.
What Are the Core Requirements?
The core tests are occupancy, ownership time, payment history, credit and ratios. Each one can block a file no matter how much equity the home has.
| Requirement | What it means | Where files trip |
|---|---|---|
| Occupancy | Principal residence only, 1 to 4 units | Rental or second home |
| Seasoning | Owned and occupied 12 months before case number | Recent purchase |
| Payment history | Mortgage payments documented for the prior 12 months | Late payments |
| Credit | Wholesale programs start at a 580 decision score | Scores below 580 |
| Ratios | Base pair 31/43, up to 40/50 with documented factors | Heavy debt load |
| LTV | 80% maximum on cash-out | Low appraisal |
A few notes from the file side.
Seasoning. If the loan is newer than 12 months, the payment history covers the life of the loan. The lender also pulls payoff statements on every existing mortgage. Confirm exact wording against HUD’s current Handbook 4000.1.
Payment history. Late mortgage payments in the prior 12 months can push a cash-out toward manual review or make it ineligible. Lenders read this differently, so ask early.
Credit. Pricing and available terms vary by lender, borrower profile, property type, and full underwriting review. Some lenders set a higher floor on cash-out. That is a lender overlay, not an FHA rule.
Ratios. The automated finding governs most files. The 31/43 pair applies with no compensating factors. Documented factors can stretch toward 40/50 at the top tier. Not every borrower reaches it.
Inherited homes. There is an exception to the 12-month occupancy rule for inheritance. Consumer summaries say it does not apply if the home was used as an investment property. Verify against the handbook before counting on it.
How Is the Maximum Loan Calculated?
The maximum base loan is the lesser of 80% of the adjusted value and the county limit for the unit count. HUD’s Handbook 4000.1 Update 7.5 transmittal, which carries Mortgagee Letter 2019-11, lowered the cash-out LTV and CLTV cap to 80%. Older pages that show 85% are out of date.
Work it in order.
1. Get the appraisal. The appraised value sets the number. The lender applies the 80% factor to adjusted value, not to the tax assessment or the purchase price.
2. Apply the 80% test. Multiply value by 0.80. That is the LTV ceiling. Any second liens count toward the combined cap.
3. Look up the county limit. Use the limit for the county and the unit count, for the right limit year.
4. Take the lower number. That is your maximum base loan.
5. Subtract the payoffs and costs. Cash to you is the new loan minus the old mortgage payoff, closing costs and prepaid items.
Steps 2 and 3 are independent. Strong equity does not lift the county ceiling. The limit applies to the loan, not to the home’s value.
When the County Limit Binds Instead of 80%
On most homes the 80% test is the tighter one. The county limit binds only when 80% of the value exceeds the limit. That happens on pricier homes.
Picture a homeowner in a county where the limit is modest and the home appraises well above what the limit supports at 80%. The borrower has plenty of equity. The 80% number would allow a bigger loan. The county limit says no. The loan is capped at the limit, and the extra equity stays in the house.
Now flip it. Picture a home worth somewhat less than the limit divided by 0.80. Here 80% of value falls below the limit, so the LTV test controls and the limit never comes into play.
This is why “near the limit” needs a working definition. Your loan is near the limit when either 80% of value or the requested loan sits close to the county number. Small changes then move which test controls.
Which changes move the answer?
- A lower appraisal shrinks the 80% ceiling. If the county limit was binding, a modest drop may change nothing. If 80% was binding, the cash falls.
- A higher payoff or higher costs cut the cash you receive, not the maximum loan.
- A different unit count changes the county limit, since multi-unit limits are fixed multiples of the one-unit limit.
- A new limit year can raise or lower the ceiling, which brings us to the next section.
How Do You Find Your County Limit?
Use HUD’s FHA mortgage limits lookup. The CFPB tells consumers to set “Limit Type” to “FHA Forward” and pick the current limit year. Enter the state and county, then read the figure for your unit count.
HUD sets limits by county or metro area from median home prices. The actual limit is 115% of the area median price only when that figure falls between the national floor and the ceiling. HUD’s lender page lists the floor and ceiling and shows jurisdictions where the limit decreased. A decrease can catch a borrower who assumed last year’s number.
Two timing facts matter.
- The limit follows the case-number date. HUD’s Mortgagee Letter 2025-23 applies the current limits to case numbers assigned on or after the start of the calendar year. A case assigned in December uses the old limit.
- The national floor is a minimum, not a standard. Many counties sit higher, up to the ceiling, and the floor applies to one-unit homes. Alaska, Hawaii, Guam and the U.S. Virgin Islands have a higher ceiling.
This article does not publish a county dollar figure on purpose. Pull your own from the lookup. County loan limits apply and they change every year.
Does the Financed Premium Count Against the Limit?
No, the financed premium does not count against the statutory limit. HUD’s legacy Handbook 4155.1 states that the statutory limit does not include the upfront premium. The maximum mortgage may exceed the limit by the amount of the new UFMIP.
The UFMIP is 1.75% of the base loan, and it can be financed or paid in cash. That means financing it on a loan near the ceiling does not by itself push the base loan over. The legacy handbook has been superseded, so confirm the structure with the lender against current Handbook 4000.1 wording. HUD’s FHA Answers page confirms the 1.75% figure and that the annual premium varies by term, base loan amount and LTV.
If you want the premium math in more depth, Lendmire’s piece How Much the Upfront Premium Cuts an FHA Cash-Out at the County Limit covers it.
What Does Mortgage Insurance Do to the Budget?
It adds a monthly cost for years. The annual premium on the programs Lendmire works with runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV. That is a program fact, not a quote.
Duration is the part borrowers miss. On a thirty-year loan above 90% LTV, the annual premium lasts for the term. At or below 90% it ends after 11 years. A cash-out capped at 80% sits under 90%, so the 11-year schedule is the usual one. HUD’s Mortgagee Letter 2023-05 sets that structure. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
There is also a higher premium tier for larger base loan amounts, tied to the national conforming limit. Borrowers near the county limit on a high-cost home may land in it. The threshold has moved over time, so ask the lender which tier applies.
The CFPB cautions that for borrowers with good credit and a medium down payment, FHA loans tend to cost more than conventional loans. That is worth weighing, and a conventional cash-out has its own, different caps.
Where the General Rule Breaks
The 80% and county-limit framework holds for most files. These are the named edge cases.
- Loan already above the limit. A cash-out cannot exceed the mortgage limit. The only HUD-documented allowance is the UFMIP exception above.
- Under 12 months of ownership. The cash-out rule needs the full 12 months. A no-cash-out refinance is a different product with different treatment.
- Multi-unit homes. Limits rise with unit count, but you must live in one unit. The building can have no more than four units.
- Non-occupant co-borrowers. A non-occupant co-borrower is allowed on an FHA purchase. Lender summaries say one cannot be added to a cash-out to meet credit requirements. Confirm with the lender.
- Limit decreases. A county’s limit can fall from one year to the next. A case number assigned after the change uses the lower figure.
- Rate-and-term and streamline loans. These do not pay out meaningful cash. The FHA rate-and-term with an appraisal reaches 97.75% on a principal residence occupied for the previous 12 months. The FHA Streamline refinances an existing FHA loan with no appraisal and a net tangible benefit. If you only want to change your loan terms, that is a different conversation from cash-out.
- Occupancy. A rental or second home does not fit this program. Occupancy decides the leverage, and a different loan type applies.
What Are Your Options If the Ceiling Blocks the Loan?
A loan that hits the county limit has a few paths. None is automatic.
- Take less cash. Reduce the cash-out amount so the base loan stays under the limit.
- Pay down debt first. A lower payoff leaves more room under the cap.
- Check unit count and limit year. A different case-number timing or a correct unit count can change the ceiling.
- Compare other loans. A conventional cash-out, a home equity loan or a HELOC has different caps and costs. They are comparison points only, and each carries its own terms.
Rank them by what you need. If the goal is a large lump sum from a high-value home, the county limit may rule FHA out. If the goal is a moderate amount from a mid-priced home, the 80% test is the one to plan around.
Pre-Application Checklist
Gather these before the case number is assigned, since the date fixes the limit year.
- Proof of 12 months of ownership and occupancy.
- 12 months of mortgage payment history, or the full history if the loan is newer.
- Payoff statements for every existing mortgage and lien.
- Income and debt documents for the ratio calculation.
- Your county and unit count, plus the limit from HUD’s lookup.
- A rough check of 80% of your likely value against that limit.
HUD announced a batch of FHA policy updates in June, and the items identified did not change cash-out LTV or occupancy rules, per HUD’s news release. Rules can still shift, so confirm with the lender against the current handbook.
Common Misconceptions
- “FHA cash-out goes to 85%.” That figure is obsolete. The cap is 80%.
- “The county limit caps my home’s value.” It caps the loan, not the price or value.
- “20% equity guarantees a specific cash amount.” Occupancy, payment history, credit, income, appraisal and costs all matter.
- “The national floor applies everywhere.” It is only the minimum for one-unit homes.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Frequently Asked Questions
Can I borrow more than my county limit if I have a lot of equity?
No. The county limit is a hard ceiling on the base loan, whatever the home is worth. High equity helps you pass the 80% test, but the lower of the two limits controls: the county limit or the 80% loan-to-value cap.
Do I need an existing FHA loan to do an FHA cash-out?
No. The loan you are paying off can be conventional or FHA. What matters is that the home is your principal residence and that you meet the ownership, payment history, credit and ratio tests.
How long must I have lived in the home?
12 months of ownership and occupancy before the case number is assigned. A narrow inheritance exception exists, and consumer summaries say it does not cover a former investment property. Confirm the exact wording with the lender.
What happens if my appraisal comes in low?
The 80% ceiling shrinks with the value. If that test was already the tighter one, your maximum loan and cash both drop. If the county limit was binding, a small drop may not change the loan amount.
Can I cash out on a duplex or a fourplex?
Yes, within limits. Multi-unit limits are higher, but you must live in one unit and the building cannot exceed four units. The same 80% cap applies, subject to lender guidelines and full file review.
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 for the home you live in. For a loan near the county limit, the first step is simple: pull your county number, multiply your value by 0.80, and see which one comes out lower.
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. Consumer Financial Protection Bureau
2. HUD Handbook 4000.1 Update 7.5 transmittal (carries Mortgagee Letter 2019-11)
3. HUD FHA Mortgage Limits lookup
4. HUD FHA Lenders – Maximum Mortgage Limits
5. HUD Mortgagee Letter 2025-23
7. HUD FHA Answers – Mortgage Insurance Premium structure
8. HUD Mortgagee Letter 2023-05
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 Payment History Requirements After a Late Payment · FHA Cash-Out Approval Requirements for a Condo Unit · FHA Cash-Out Refinance Requirements on a Paid-Off Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.