The Quick Read: Usually far less than a sale would put in your hands, because the new loan is capped at 80% of the home’s appraised value and that cap has to cover your old payoff and any financed costs first. What is left after those subtractions is your cash. Selling converts all of your equity to cash, less selling costs, while a cash-out refinance leaves at least 20% equity in the home and replaces your mortgage with a larger one.
What “Cash Out” Actually Means
Cash out is the new loan minus everything the new loan has to pay off. That’s the whole idea. The 80% figure is the size of the loan, not the size of your check.
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.
An FHA cash-out refinance replaces your current first mortgage with one new loan. Under HUD’s cash-out rule, the maximum loan-to-value for case numbers assigned since September 2019 is 80% of the adjusted value. Before that change the cap was 85%, so older articles and old advice overstate what’s available today.
The wholesale programs behind Lendmire’s FHA cash-out refinance program work inside that 80% ceiling. Your existing loan doesn’t have to be an FHA loan, and a home with no mortgage at all can also be refinanced this way. Every figure here is subject to lender guidelines and full file review.
The Formula, Step by Step
Net cash is a five-step subtraction. Run it in this order and the number stops being a mystery:
1. Start with the appraised value (HUD calls it the adjusted value).
2. Multiply by 80%. That is the largest base loan the program allows, subject to county loan limits.
3. Subtract the payoff of your current first mortgage, plus any liens that must be paid off at closing.
4. Subtract the costs that are financed into the new loan, because they use up room under the cap.
5. Subtract any costs taken out of your proceeds. The remainder is your net cash.
Here is how that plays out without dollar figures. Picture a homeowner who owns a home outright. Eighty percent of the value is available as a loan, and after closing costs the check is a bit smaller than that. Now picture a homeowner with a balance equal to 60% of the value. The cash is roughly the gap between 80% and 60%, trimmed by costs. A third homeowner with a balance near 75% of the value has only about five percent of the value left under the cap, and costs trim that sliver further, so the check may be very small.
Value drives everything. A low appraisal shrinks the cap, and the cap shrinks your cash dollar for dollar.
Which Costs Shrink the Check?
Financed costs reduce cash because they count toward the 80% cap. Costs paid from your pocket or deducted from proceeds also reduce what you walk away with. No path makes them disappear.
- The upfront mortgage insurance premium. It is 1.75% of the base loan and is usually financed, which means it sits inside the 80% cap.
- Closing costs. These are a meaningful percentage of the loan. A “zero cash to close” result doesn’t mean zero cost; the costs were paid from proceeds, financed, or built into the loan terms.
- Payoffs of other liens. A second mortgage that must be cleared comes off the top before you see a dollar.
The annual premium doesn’t reduce your check, but it does change your monthly budget. It runs between 0.15% and 0.75% of the balance depending on term, loan amount and LTV. On a thirty-year loan with a higher LTV, it lasts the full term. With a lower LTV, it ends after eleven years, a duration structure reflected in HUD’s premium schedule. A cash-out at 80% sits in the shorter bracket. HUD lowered annual premiums in Mortgagee Letter 2023-05, so older premium tables you might find online are out of date. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
County loan limits also apply, and they change every year. In higher-cost counties they can trim the loan below 80% of value. This article doesn’t quote them, and your loan officer will check your county.
Cash-Out Refinance vs. Selling
Selling gives you the most cash. Refinancing gives you cash and keeps the home. Which is “better” depends on what you need the money for and whether you want to stay.
| Factor | FHA Cash-Out Refinance | Selling the Home |
|---|---|---|
| Cash in hand | Loan up to 80% of value, less payoff and costs | All equity, less selling costs |
| Equity left | At least 20% stays in the home | None |
| New debt | Larger mortgage, new insurance | None |
| Monthly payment | May rise; payoff period may extend | Ends with the sale |
| Home | You keep it | You move |
| Main risk | Foreclosure if payments stop | Replacement housing cost |
The Consumer Financial Protection Bureau states the tradeoff plainly: using home equity means taking out a loan that must be repaid, and missed payments can put the home at risk. A sale carries no such risk, because the debt goes away at closing.
Selling costs include agent commissions and transfer costs, and they vary widely by market, so no national figure belongs here. The honest comparison is net to net: what you would clear after selling, versus what you would net after the refinance, plus the cost of carrying a larger loan for years.
When the Cash Is Too Small to Matter
A cash-out refinance can technically work and still not be worth doing. Run this checklist before you apply:
- Thin equity. If your balance is already close to 80% of value, there’s little room left to pull from.
- A low-cost existing loan. Replacing it reprices the entire balance, not just the cash. You’d be giving up what you have to get a little more.
- A second lien that must be paid. Clearing it can consume most of the proceeds.
- A soft appraisal. If value comes in low, the cap drops and so does the check.
- A short horizon. If you plan to move soon, closing costs and insurance have little time to pay for themselves.
If several of these describe your situation, the refinance probably isn’t worth pursuing. It only makes sense when the cash is large enough to justify repricing the whole loan.
Who Qualifies for an FHA Cash-Out
The home must be your owner-occupied primary residence. Across the wholesale programs Lendmire places FHA files with, the common baseline is that you’ve owned and lived in the home for at least 12 months before the case number is assigned, and your mortgage payments have been on time over that stretch. A home bought within the past year generally isn’t eligible for cash out, and its value is tied to the purchase price. If you need to confirm an edge case, such as an inherited home, check it against HUD Handbook 4000.1 before relying on it.
Program parameters in the wholesale network typically include a minimum decision score of 580. The base debt-to-income pair is 31/43 (housing and total) with no compensating factors, and documented compensating factors can raise it to 40/50 for the strongest files. The automated finding governs most files. Some lenders set stricter credit floors than the program minimum, so two lenders can give different answers on the same borrower. Lenders also review income, assets, credit, other debts, the property’s value and the amount you want to borrow, as the Federal Reserve’s refinancing guide describes.
Recent credit events matter too. 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 lender.
FHA Cash-Out vs. the Other Refinance Options
Only the cash-out version puts money in your pocket. The others have different limits and different purposes.
| Option | Cash to you | Appraisal | Leverage ceiling |
|---|---|---|---|
| FHA cash-out | Yes | Yes | Lower cap than rate-and-term |
| FHA rate-and-term | No (incidental only) | Yes | 97.75% on a primary residence |
| FHA Streamline | No | No | Net tangible benefit rule |
A rate-and-term refinance can reach 97.75% because it isn’t taking equity out. Take more than incidental cash and the loan is reclassified as cash-out, with the lower 80% cap. The Streamline refinances an existing FHA loan with a limited credit review, and the FDIC’s summary notes that streamlines don’t require an appraisal. No appraisal, no cash.
A home equity loan or HELOC is a different animal altogether: a second lien that sits behind your existing mortgage. A cash-out replaces the first mortgage with one new loan. If your current rate is one you’d hate to lose, the second-lien route is worth pricing, though it carries its own costs and risks.
The Real Cost of Taking the Cash
Borrowed equity has to be repaid. The CFPB notes that a cash-out refinance may extend the time it takes to pay off your mortgage, and your monthly payment may rise because you’re replacing your loan with a larger one. Interest rate and other terms change as well, since the whole loan is new.
What you do with the money matters as much as how much you get. The CFPB’s analysis of cash-out borrowers found that many use the proceeds to pay down other debts, particularly credit card and auto loans, and it cautions that paying non-mortgage debts with mortgage debt can increase foreclosure risk. A more recent CFPB study looks at how those balances behave after the refinance. The Federal Reserve adds that many financial advisers caution against using cash-out refinancing to pay off unsecured or short-term debt. Credit card balances without collateral become balances secured by your house.
Money used for repairs or improvements that add value is a different situation from money used to cover recurring spending. The first can build equity back. The second just moves the problem.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Keep or Sell? A Practical Decision Guide
Sell if you were going to move anyway, if your equity is large and you want all of it, or if a bigger mortgage would strain your budget. Refinance if you want to stay, your existing loan isn’t cheap to lose, and the cash is large enough to justify the costs.
Some situations in plain terms:
- Downsizing. Selling usually wins, since you want the equity and a smaller home.
- Relocating soon. Selling usually wins. Refinancing costs rarely pay back on a short horizon.
- Major repairs on a home you love. Refinancing can fit, provided the cash covers the project.
- Consolidating debt. Proceed carefully. You’re turning unsecured debt into debt secured by your home.
- Thin equity. Often neither option works well until value or balance changes.
Plan ahead, too. The 12-month ownership and payment-history clock is counted back from case number assignment, so a homeowner at month ten can’t skip ahead.
Key Terms Defined
Adjusted value: The value, taken from the appraisal, that the 80% cap is applied to.
Base loan amount: The loan before the financed upfront premium is added.
Upfront mortgage insurance premium: A one-time FHA charge of 1.75% of the base loan, usually financed.
Net cash: What you actually receive after the payoff, financed costs and any costs taken from proceeds.
Seasoning: The ownership and payment-history period required before cash out is allowed.
Net tangible benefit: The measurable gain an FHA Streamline must give the borrower.
Frequently Asked Questions
Can I get 80% of my home’s value as cash?
No. Eighty percent is the maximum size of the new loan, not your payout. Your current mortgage balance and any financed costs come out of that amount first, so the check is whatever remains.
Do I need an FHA loan already to do an FHA cash-out?
No. The refinance can pay off any existing first mortgage, FHA or not, and a home with no mortgage can also qualify. The home must be your owner-occupied primary residence, and the ownership and payment-history requirements still apply.
Does financing closing costs reduce my cash?
Yes. Financed costs count toward the 80% cap, so every dollar financed is room you can’t take as cash. Paying costs out of pocket keeps more room under the cap but takes money from you at closing.
Can an FHA Streamline give me cash?
No. A Streamline refinances an existing FHA loan without an appraisal and without cash out. If you want equity, you need the cash-out program, which requires an appraisal and sets the lower leverage cap.
Will the mortgage insurance go away?
It depends on the loan. On a thirty-year loan at or below the program’s leverage threshold, the annual premium ends after eleven years; above that threshold it lasts the loan’s term. Because a cash-out tops out at 80%, the shorter bracket applies. The upfront premium is paid once, usually financed into the loan.
Weighing It With a Broker
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. Lendmire is a mortgage broker, so lenders review each file; nothing here is a commitment to lend.
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
1. HUD Appendix 1.0, Mortgage Insurance Premiums
2. HUD Mortgagee Letter 2023-05
3. CFPB: Using home equity to meet financial needs
5. Federal Reserve Board: Refinancings
7. CFPB: Cash-out refinance borrower outcomes
8. CFPB – Cash-out refinances and paydown of non-mortgage debt
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 Much Cash Comes Out of an FHA Cash-Out Refinance Twice in a Row? · How Much Cash Comes Out of an FHA Cash-Out Refinance Resetting the Mortgage to 30 Years?
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
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.