The Quick Read: An FHA cash-out on a condo is a new loan that pays off your current mortgage and hands you the difference in cash. Two separate tests decide it. The first is about you: you must have owned and lived in the home for 12 months, and the new loan can reach 80% of the home’s appraised value at most. The second is about the building, which must be FHA-eligible, either as an approved project or through a one-unit review. In a high-cost state, the county loan limit is a third check, and the lower of the two limits controls.
What Is an FHA Cash-Out on a Condo?
An FHA cash-out refinance replaces your existing mortgage with a larger FHA-insured loan. The extra balance comes to you as cash after the old loan and closing costs are paid. The government insures the loan, and a private lender funds it. Lendmire is a mortgage broker, so it arranges the file through wholesale lenders and does not lend the money itself.
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.
Condos add a wrinkle that houses do not have. A lender can approve you and still be stopped by your building. The loan is secured by your unit, but the project’s finances, insurance and owner mix get reviewed too. A high-cost state adds another layer, since condo prices there often push against county loan limits.
If you want the program basics before the condo detail, start with Lendmire’s FHA cash-out refinance program page.
Step by Step: How the Loan Gets Underwritten
Here is the sequence a file follows. Each step can stop the loan, so the order matters.
1. Screen the borrower. The condo must be your principal residence. You must have owned and lived in it for 12 months before the FHA case number is assigned. Second homes and rentals do not qualify for this program.
2. Check the building. Before anyone orders an appraisal, someone confirms whether the project is on the FHA-approved list. If it is not, the lender looks at a one-unit review.
3. Order the appraisal. The appraiser sets the value, and the cap is run off that number.
4. Size the loan. The new loan must cover the payoff, financed costs and your cash while staying under the leverage cap and the county limit.
5. Underwrite. The lender reviews credit, income, debts and the property together. Across the wholesale programs we place FHA files with, the decision score starts at 580.
6. Close. Your Closing Disclosure itemizes every cost and shows the cash you receive.
Notice what is missing: a shortcut. A strong credit score does not cure a building that is off the list.
Gate One: You and the Home
Gate one has four parts: time in the home, leverage, credit and income, and debt ratios.
Time in the home. The 12-month clock is about ownership and occupancy, not about value. Appreciation does not shorten it. If you have owned the condo for less than 12 months, a standard cash-out is generally off the table. Rate-and-term options with different leverage may apply, but those do not pay you cash.
Leverage. FHA cash-out reaches 80% of the condo’s value. That is a cap on the whole new loan, not on the cash you take. Suppose you already owe a lot on the unit. The cap applies to the full balance plus anything financed, so your payoff eats into the room first. You also keep at least 20% equity after closing.
Credit and income. Credit events carry HUD waiting periods: two years from a chapter 7 discharge and three years from a foreclosure. Those are HUD’s rules, not a network promise.
Debt ratios. The base pair is 31/43. That means housing costs at 31% of income and total debts at 43%, with no compensating factors. Documented compensating factors can raise the pair to as much as 40/50 at the top tier. The automated finding governs the ratios on the file. Your condo association dues count as part of the housing payment, so a building with high monthly dues squeezes you harder than a similar unit with low dues.
Gate Two: The Building
The building test is separate from yours. It is also a common place for a condo cash-out to stall.
The answer capsule: a condo can be financed under FHA if the project is on the approved list, or if the lender gets a one-unit approval for a unit in a project that is not. If neither works, the loan cannot go forward as FHA.
HUD’s condo list shows how a project got approved: HUD approved it directly, or a lender approved it under delegated authority. The same list shows a status, and the status is what you care about.
| Project status | What it means for you | Next move |
|---|---|---|
| Approved | Applications can be processed | Proceed to appraisal |
| Withdrawn | Applications cannot currently be processed | Ask about one-unit approval |
| Not on the list | No project approval on file | Ask about one-unit approval |
| Expired or lapsed | Approval needs renewal | Confirm status before paying for anything |
The list also reports FHA concentration, which is the share of units with active FHA loans or case numbers. A building can be approved on paper and still be crowded with FHA owners.
What Is One-Unit Approval?
Single-unit approval is a way to finance one condo in a building that has no project approval. The lender completes HUD Form 9991, a questionnaire with supporting documents. Two details from that form matter. An owner-occupied unit includes one the owner lives in for part of the year and does not rent for most of it. A unit still owned by the builder or developer is not owner-occupied.
The project-level tests that sit behind this path come from HUD’s final rule on single-family condominium approval. It sets owner-occupancy standards for the project and uses reserve requirements as a baseline. Exact thresholds depend on the project’s size and facts, so your lender pulls them for your specific building. Each figure is subject to lender guidelines and a complete review of property type, leverage, and credit.
Approval is no guarantee. The lender has to document the building and the unit, and a building with thin reserves or heavy rentals can fail even with a clean borrower file.
Where the 80% Cap Meets the County Limit
Two ceilings apply at once, and the lower one wins.
The first is the leverage cap. HUD’s Mortgagee Letter 2019-11 set both the maximum loan-to-value and the combined loan-to-value for cash-out refinances at 80% of Adjusted Value. That cap used to be higher. HUD lowered it because cash-outs had become a large and growing share of its refinance business, as the agency explained in its announcement of the change.
The second is the county loan limit. FHA sets limits by county, and they change every year. This is where a high-cost state matters. Condo prices there can run high enough that the 80% cap and the county limit are close to each other, and sometimes the county limit is the tighter one. You cannot borrow past it just because 80% of the value would allow more.
So the practical rule is simple. Take 80% of the appraised value. Compare it to your county’s limit. Use the smaller number. Lendmire does not quote county limits on this page because they change, and your loan officer will pull the current figure for your county.
The appraisal matters more than usual here. Condo comps can be thin in a single building, and if the value comes in low, the cap drops with it. The cash you were counting on is the first thing to shrink.
A Worked Example, in Percentages
Dollar figures would only mislead, so this uses shares of the appraised value. Every input is illustrative.
1. Start with the ceiling. The new loan can be 80% of the appraised value, or the county limit if that is lower.
2. Subtract your payoff. Say your current mortgage is a bit over half of the value. That leaves about a quarter of the value between the payoff and the cap.
3. Subtract the financed premium. The upfront mortgage insurance premium is 1.75% of the base loan, and borrowers usually finance it.
4. Subtract financed closing costs. Anything you roll into the loan comes out of the same room.
5. What remains is your cash.
The lesson is that the headline number is not your cash. The payoff comes first, then the premium, then the costs. A borrower who owes close to the cap may find the cash is small enough to question the whole refinance.
The CFPB notes that lenders typically want you to keep 10% to 20% of your home’s value as equity after tapping it. On FHA, the 20% you keep is built into the cap.
What Happens to Your Monthly Budget
A cash-out makes the loan bigger, and that has three effects.
- The payment goes up. More principal means a larger principal-and-interest payment. The CFPB also warns that a cash-out may stretch the time it takes to pay off your mortgage.
- Mortgage insurance is added on top. FHA charges the upfront premium described above, plus an annual premium between 0.15% and 0.75% of the balance. The exact annual figure depends on your term, loan amount and LTV. At 80% LTV on a thirty-year loan, the annual premium ends after eleven years. Above 90% LTV it would last the full term. These are program mechanics, not a quote.
- Dues stay in your ratios. Association dues count in your debt-to-income, so a high-dues building uses up room that the 31/43 base pair gives you. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Rolling closing costs into the loan lowers what you pay at the table. It raises the total cost of the loan, because you pay interest on those costs for as long as you hold it.
When the General Rule Breaks
- Building approval lapses mid-file. A withdrawn or expired status can derail a refinance late in the process. This is why the project check comes before the appraisal.
- Heavy FHA concentration. A building can have too many FHA owners already. If so, your unit may not be added even though you qualify.
- Inherited condo that was rented. The 12-month occupancy clock starts when you live in it, not when you inherit it. If it was a rental, you must occupy it for the full period before cash-out applies.
- Owned less than 12 months. Standard cash-out is generally unavailable. An FHA rate-and-term refinance reaches 97.75% on a principal residence you have occupied for the previous twelve months, but it pays no cash.
- Title held in a trust. The loan can sometimes work, but the documents change.
- Married borrowers where one spouse is not on the loan. Closing states differ on who signs.
- Investment property or second home. Not eligible for this program.
High-cost markets often have older buildings, special assessments and insurance issues on the master policy. Any of these can slow a project review, so ask about them early.
What If the Building Fails Review?
Don’t panic, and don’t pay for an appraisal until you know. Work through these options in order.
1. Ask for one-unit approval. If the building is not on the approved list, the lender may be able to document your unit alone. This only works if the project passes its own tests.
2. Check the status again. A withdrawn or lapsed approval might be renewed by the association. Ask your management company where that stands.
3. Consider a conventional cash-out. Conventional programs use their own project rules, not HUD’s. A building that fails one set of rules can pass the other.
4. Look at a home equity loan or line. These leave your first mortgage alone, which can matter if your current loan is one you want to keep.
5. Keep the loan you have. If you have an existing FHA loan, a Streamline refinance has no appraisal, a limited credit review and a net tangible benefit. It pays no cash.
How It Compares
| Factor | FHA cash-out | Conventional cash-out | Home equity loan or line |
|---|---|---|---|
| Replaces your first mortgage | Yes | Yes | No |
| Building rules | HUD project rules | Conventional project rules | Lender’s own rules |
| Mortgage insurance | Upfront and annual | Depends on leverage | Not typical |
| Credit flexibility | Wider | Narrower | Varies |
| Cash limit | 80% of value | Varies by program | Varies by lender |
None of these wins every time. FHA often suits a borrower with a lower score or a higher debt load. Conventional can suit a stronger file or a building FHA will not accept. A home equity product suits someone who wants to keep a first mortgage they already like.
Ask These Before You Pay for an Appraisal
A short list saves real money:
- Is my building on the FHA-approved list, and what is its status?
- If not, can you pursue one-unit approval, and who orders the review?
- What is my county’s current loan limit, and how close am I to it?
- How much of the new loan goes to my payoff, the premium and financed costs?
- How do my association dues change my debt-to-income?
- If the appraisal comes in low, what happens to my cash?
Have these documents ready: photo ID, recent pay stubs, traditional personal-income documentation, your latest mortgage statement, your association’s dues statement and proof of homeowners insurance.
Key Terms Defined
Adjusted Value: the appraised value, as HUD defines it, that the 80% cap is measured against.
Approved project: a condo building that is on HUD’s list and eligible for FHA loans on its units.
Single-unit approval: a review that lets the lender finance one unit in a building that has no project approval.
Cash-out refinance: a new, larger loan that pays off your old one and gives you the difference in cash.
Financed premium: the upfront mortgage insurance charge, added to the loan balance instead of paid at closing.
FHA concentration: the share of units in a building that carry FHA loans or FHA case numbers.
Where to Go From Here
Start with the building, not the borrower. Know your project’s status and your county’s limit, and the rest of the math falls into place. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. Every figure here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
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.
Frequently Asked Questions
Can I get an FHA cash-out on a condo that isn’t FHA-approved?
Sometimes. If the building is not on the approved list, a lender may pursue single-unit approval for your unit. That route requires documentation on the project, and the building has to pass its own tests. If it fails, the loan cannot proceed as FHA, and a conventional or equity-based option may fit better.
How much cash can I take out?
The new loan can reach 80% of the appraised value, or the county limit if that is lower. Your payoff, the financed premium and any financed closing costs come out of that room first. Whatever remains is your cash. A borrower who owes close to the cap may receive little.
Does the 80% limit apply only to the cash I take?
No. It applies to the entire new loan and any remaining liens against the appraised value. Many borrowers assume it covers just the extra cash. It covers everything, which is why your existing balance matters so much.
Do I need to live in the condo?
Yes. This program is for a principal residence you have owned and lived in for 12 months before the case number. Second homes and rentals do not qualify. If you inherited a condo that was rented, the occupancy clock starts when you move in.
Do association dues affect whether I qualify?
They do. Dues count as part of your housing payment in your debt-to-income. The base ratio pair is 31/43, and documented compensating factors can stretch it to 40/50 at the top tier. A building with high dues leaves less room under those limits.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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
2. Federal Register, Project Approval for Single-Family Condominiums
3. HUD Mortgagee Letter 2019-11
4. HUD press release on cash-out risk
5. CFPB, Using home equity to meet financial needs
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: Can You Get an FHA Cash-Out on a Home With a Solar Lien? · Can an FHA Cash-Out Refinance Pay Out an Ex After Divorce? · Can a High-DTI Borrower Free Up Payment With an FHA Cash-Out?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.