The Quick Read: On an FHA cash-out refinance, the entire new loan tops out at 80% of your home’s appraised value. That cap covers your old mortgage payoff, any other liens, and any closing costs you finance, and what is left over is your cash. A wholesale lender follows the same FHA cap a bank does, and its own overlays can only make the number smaller. Subject to lender guidelines and full file review, nothing here is a commitment to lend.
The Short Version
- The cap is 80% of appraised value, applied to the whole new loan, not just the cash you take.
- Your payoff, liens, and financed costs come out of that 80% first. Cash is the remainder.
- You generally need to have owned and lived in the home for the 12 months before the case number is assigned.
- Credit score, income, and debt ratios decide whether you are approved. They do not raise the cap.
- County loan limits apply. For most homeowners the 80% test binds first.
What Is a Wholesale Lender, and Does It Change the Cap?
A wholesale lender makes loans that arrive through mortgage brokers instead of its own branches. The broker takes your application, gathers your documents, and places the file with a lender whose program fits you.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.18% 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.
Does that channel change the maximum? No. The 80% ceiling is an FHA rule, and every FHA-approved lender works under it. What differs between lenders is everything layered on top: minimum credit score, debt-ratio limits, property types, and how closely they read your payment history. Those layers can tighten the number. They cannot loosen it.
That is the practical edge of working with a broker. One lender may decline a file that another writes, and a broker can match the file to the program that suits it.
How the Maximum Gets Built, Step by Step
Think of the maximum as a bucket with a fixed size. Here is how it fills.
1. The appraisal sets the value. The lender orders an appraisal. The 80% test runs against that appraised value, as FHA adjusts it. A lower appraisal shrinks the bucket.
2. Multiply by 80%. That is the most the new loan can be.
3. Subtract your payoff. The balance on the mortgage being replaced comes out first.
4. Subtract other liens you are paying off. A second mortgage or home-equity line that gets cleared comes out next.
5. Subtract financed costs. Any closing costs you roll into the loan come out of the same bucket.
6. What remains is your cash. That is the money you can take at closing.
The upfront mortgage insurance premium works a little differently. It is 1.75% of the base loan, and it can be financed on top of that base amount. The annual premium is separate and falls 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 for the full term. At or below 90% LTV it ends after eleven years, and because a cash-out tops out at 80%, it falls in that second group.
A Walkthrough in Percentages
Say your home appraises at 100% of its value. The cap puts the new loan at 80%. Suppose your current payoff is 60% of value. That leaves 20% of value to cover any other liens, financed costs, and your cash.
Now suppose you also finance closing costs. Every point you roll in is a point you do not receive as cash. Pay the costs out of pocket instead, and more of the 20% reaches you. The Loan Estimate you receive shows the real number for closing costs.
The Two Limits Behind the Number
Two ceilings apply at once. One is a percentage of value. The other is a dollar limit.
HUD’s Mortgagee Letter 2019-11 cut the maximum loan-to-value and combined loan-to-value on cash-out refinances to 80 percent. Before that change the cap was 85%. HUD’s archived announcement says the move aligned FHA with the maximum cash-out leverage allowed by the government-sponsored enterprises, Fannie Mae and Freddie Mac. It also notes that FHA had earlier moved the cap down from 95% to 85%. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The second ceiling is the county loan limit. HUD sets these by county and unit count, and they reset every calendar year. Look up your county on HUD’s single-family lender page rather than trusting a number someone repeated to you. In higher-priced counties, check it early. In most places the 80% test comes first.
What Shrinks Your Number
The headline cap is a ceiling, not a promise. Several things pull the actual loan below it.
| Factor | Effect on your maximum |
|---|---|
| Low appraisal | Cuts the 80% base and your cash |
| Large payoff balance | Uses up most of the 80% |
| Financed closing costs | Come out of the same bucket |
| Other liens being paid | Reduce what is left |
| Lender overlays | Can lower approval or ratio limits |
| County loan limit | Caps the dollar amount in expensive areas |
Lender overlays deserve a closer look. An overlay is a lender’s own rule layered on top of FHA’s, and it can set a stricter credit score floor than the program itself. Across the wholesale programs Lendmire places files with, FHA loans start at a 580 decision score, and some lenders set a higher floor than that. HUD’s lower 500-579 tier is a HUD rule that this network does not reach. Ratios work the same way. The base pair is 31/43 (housing to total income) with no compensating factors. Documented factors can reach 40/50 at the top tier, and the automated finding governs most files.
Your credit score affects approval and pricing. It does not change the 80%.
Where the General Rule Breaks
Most of the surprises come from a handful of situations.
You bought less than 12 months ago. A standard FHA cash-out needs the home owned and occupied for the 12 months before the case number. Buy last spring and want cash out now, and the program is closed to you. A no-cash-out refinance may still be an option.
Your payment history has a late. The lender reviews payments on the mortgage being paid off. A late payment in the review window can block or delay the approval. Shorter ownership brings stricter payment-history tests, so ask your broker how your history reads before you apply.
You own the home free and clear. FHA treats a withdrawal of equity where no mortgage exists as a cash-out too. The same 80% applies, though there is no payoff to subtract, so the cap goes first to any other liens or financed costs and then to your cash. You are borrowing against a house with no loan on it, but the file still runs through full underwriting.
Your existing loan is not FHA. You do not need an FHA loan to get an FHA cash-out. A conventional or other mortgage can be refinanced into one.
The home is a second home or a rental. Standard FHA cash-out is for the home you live in. Occupancy decides the leverage, and a non-owner-occupied property does not qualify under the standard program.
You inherited the home. Inherited property can follow a different occupancy test. Ask your broker to check it against FHA’s current handbook before you count on it.
You have a prior FHA loan from the last three years. A mortgage insurance refund credit can reduce your new upfront premium. It lowers the premium. It is not paid to you as cash.
You have a recent credit event. HUD sets waiting periods after certain events: two years from a chapter 7 discharge and three years from a foreclosure. Those are HUD rules, not promises from any one lender, and your broker can review how they apply to your file.
FHA Cash-Out vs. the Other FHA Refinances
People mix these up, and the confusion costs them time. They are separate products with different leverage.
| Feature | Cash-out | Rate-and-term | Streamline |
|---|---|---|---|
| Cash back | Yes | Little to none | No |
| Max LTV | 80% | 97.75% on a primary home | Not value-driven |
| Appraisal | Yes | Yes | No |
| Existing loan | Any mortgage or none | Any | Must be FHA |
| Occupancy history | 12 months | 12 months | Per program |
The rate-and-term refinance reaches 97.75% on a principal residence occupied for the previous twelve months, but it is built for changing the loan, not pulling out equity. The streamline refinances an existing FHA loan with no appraisal, a limited credit review, and a net tangible benefit, and the mortgage insurance premium continues on that loan. If you want meaningful cash, cash-out is the one that delivers it, and the 80% cap is the price of admission.
Wholesale vs. Your Bank: What Changes
Your own bank can offer FHA cash-out, but it has one set of guidelines. A broker sees several. If one lender’s overlay on credit, ratios, or property type blocks your file, another may not.
That is the whole advantage. It is not a higher cap. It is a better chance of landing a program that fits your situation. The best fit for you depends on your credit profile, how much equity you hold, how much cash you need, and your documents.
What the Decision Looks Like in Practice
Start with the equity you will leave behind. At least 20% stays in the home after closing. If you bought with a small down payment or purchased fairly recently, you may not have much room above that line.
Next, think about the monthly budget. The new loan replaces the old one. Your payment reflects a larger balance, a new term, the annual mortgage insurance premium, taxes, and homeowners insurance. If your old loan carried a low rate, the new payment can climb noticeably. Weigh what you would use the cash for against that higher carry.
Then compare costs. You can pay closing costs out of pocket, deduct them from proceeds, or finance them within the 80% cap. Financing them is convenient. It also cuts your cash dollar for dollar.
The CFPB’s guide to the Loan Estimate and Closing Disclosure shows where total closing costs and closing costs financed appear on those forms. Read them side by side.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Adjusted value: The appraised value as FHA adjusts it, which is the number the 80% test runs against.
Case number: The FHA ID assigned to your loan file; the 12-month ownership and occupancy lookback runs from the date it is assigned.
LTV (loan-to-value): The new loan balance divided by the home’s value, shown as a percentage.
Upfront mortgage insurance premium: A one-time FHA charge of 1.75% of the base loan, which can be financed.
Overlay: A lender’s own rule that is stricter than FHA’s minimum, such as a higher credit score floor.
Wholesale lender: A lender that funds loans submitted by mortgage brokers rather than selling through its own branches.
Frequently Asked Questions
Can a wholesale lender lend more than 80% on an FHA cash-out?
No. FHA caps the cash-out loan at 80% of adjusted value, and that applies to every FHA lender. A wholesale lender can set a lower ceiling through its own overlays, but never a higher one.
Does a higher credit score raise how much I can borrow?
Not the cap. The 80% stays the same at any score. Credit affects whether you are approved, the lender’s overlays, and the pricing you are offered.
Does the 80% apply only to the cash I take out?
It applies to the whole new loan. That includes your payoff, any other liens you clear, and closing costs you finance. Cash is what remains after those come out.
Do I need an existing FHA loan to do an FHA cash-out?
No. A conventional loan, another type of mortgage, or no mortgage at all can be refinanced this way. The home does have to be your principal residence, owned and occupied for the 12 months before the case number.
What happens if the appraisal comes in low?
The 80% is recalculated on the lower value, so the maximum loan shrinks and your cash drops with it. Ask your broker whether the payoff and costs still fit, and whether waiting or a different refinance type makes sense.
Next Step
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. Request a quote or call 828-256-2183.
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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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 archived press release on the cash-out cap
3. HUD FHA Lenders Single Family page
4. CFPB Guide to the Loan Estimate and Closing Disclosure
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: VA Cash-Out vs FHA Cash-Out After a Quitclaim Deed: What Decides · How Much an FHA Cash-Out Lends to Pay Off a Partner or Relative · FHA Cash-Out vs VA Cash-Out for a Veteran With a Co-Trustee
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.