The Quick Read: On an FHA cash-out refinance, the government charge to record your new mortgage is a closing cost. It does not change your home’s appraised value, and it is not part of the loan-to-value formula itself. But it competes for room under the 80% cap on a cash-out. When the cap binds, every dollar of recording charge you finance is a dollar less cash in your pocket, or a dollar you pay out of pocket at closing. Subject to lender guidelines and full file review.
What to Know Before You Read the Rest
- The cash-out cap is 80% of the home’s value on a home you have owned and occupied for 12 months before the case number.
- A flat clerk fee and a tax based on your loan amount are two different charges, even when your state calls them both “recording.”
- The appraisal sets the ceiling. Recording charges only use up space under it.
- The 1.75% upfront mortgage insurance premium is figured on the base loan, and it is measured outside the 80% test.
- “High-cost” can mean a high loan-limit county or a high-tax state. Those are different problems.
Two Charges That Get One Name
A recording fee is a flat charge from the county clerk to file your mortgage in the public record. It depends on the document, often on page count. It does not grow when your loan grows.
A mortgage recording tax is a different animal. Some states charge a percentage of the loan amount to record a mortgage. A bigger loan means a bigger bill.
In high-cost states, this second charge is the one that moves your numbers. On a cash-out refinance, your whole new mortgage gets recorded, so the tax can apply to the entire new balance, not just the extra cash. Some places allow a credit or reduced base when an existing mortgage is carried forward. That varies by jurisdiction, and your title company is the one to ask.
| Charge | Measured on | Moves with loan size? |
|---|---|---|
| Clerk recording fee | Document and pages | No |
| Mortgage recording tax | Loan amount | Yes |
| Transfer tax | Often price or loan amount | Yes |
The FHA cash-out refinance program is built around one question: how much equity can you turn into cash after paying off the old loan and covering costs? Lendmire’s FHA cash-out refinance program page lays out the basics. This article goes one level deeper, into the recording line.
Where the Charge Gets Counted
Recording charges show up in four places on a file. Most explanations blur them together, so here they are apart.
The cap itself comes from federal rules. HUD Mortgagee Letter 2019-11 cut the maximum loan-to-value and combined loan-to-value on cash-out refinances from 85% to 80% of the adjusted value. It also says the first mortgage plus any subordinate liens cannot exceed the Nationwide Mortgage Limit.
The rules fit together like this. The cap is set on the base loan and the adjusted value. Recording charges never touch the value side of the math, but they can eat into the loan side.
| Where | Does the charge count? | What it means for you |
|---|---|---|
| Closing-cost total | Yes | Raises what you owe at closing |
| Appraised value | No | Value is set by the appraiser |
| Base loan vs. 80% cap | Indirectly | Financed costs use up cap room |
| Net cash to you | Yes | Higher charges mean less cash |
The base loan is the mortgage amount before any financed upfront premium. HUD’s Handbook 4000.1 glossary defines it that way. It defines loan-to-value as that base loan divided by the adjusted value. Combined loan-to-value adds the balance of any subordinate mortgages that stay in place.
How the File Gets Built, Step by Step
This is how a cash-out file moves from a homeowner’s request to a closing table, and where recording charges land.
Step 1: Eligibility and value basis. Across the wholesale programs Lendmire places FHA files with, the cash-out reaches 80% on a principal residence you have owned and occupied for the 12 months before the case number. The adjusted value is the appraised value for a home held that long. For a home acquired in under 12 months, it can be capped at the purchase price plus documented improvements, with an exception for inheritances and family gifts per HUD’s handbook update.
Step 2: The appraisal. The appraiser sets the value. The 80% test is applied to that number. Recording charges do not touch it.
Step 3: The payoff and the cash. The base loan has to pay off your existing mortgage, fund the cash you want, and cover any costs you roll in. Recording charges sit in that last bucket.
Step 4: The Loan Estimate. Recording fees and transfer taxes appear together in the section for taxes and other government fees. Recording fees are listed first and transfer taxes second.
Step 5: The Closing Disclosure. The same section appears again, now with recording fees split into deed and mortgage lines. On a refinance there is typically no deed, so the mortgage line carries the weight.
Step 6: The financed premium. Lendmire’s FHA programs charge an upfront mortgage insurance premium of 1.75% of the base loan, which is financed. If you roll recording charges into the base loan, the base grows, and so does the premium figured on it. A small effect, but it is real.
Step 7: The decision. Adjusted value, 80% cap, payoff, and total closing costs together decide the outcome. A larger tax means less cash out, or more cash brought to closing, when the cap binds.
A Worked Example in Percentages
Run the numbers on a hypothetical home. These are modeled assumptions, not market data, and they are in percentages of the appraised value so you can scale them to your own file.
- Appraised value: 100%.
- Cash-out cap on the base loan: 80%.
- Existing mortgage payoff: 60%.
- Closing costs, including a loan-based recording tax, financed into the loan: 3%.
- Cash left for you: 17%.
Now suppose the recording tax is higher than expected and costs total 4% instead. Cash falls to 16%. The cap did not move. The payoff did not move. The bigger tax simply took a point of room.
Pay those costs in cash at closing and the base loan can reach 80% with the payoff at 60%, leaving 20% in cash before the costs you brought. You keep more proceeds but write a check. This is the real choice on a tight file: finance the charge and net less cash, or pay it and keep the room.
If you need a specific cash amount, compare it to the Loan Estimate before assuming the full 80% is usable.
Reading the Forms: The Label Does Not Decide
Here is the quirk that trips people up. Under CFPB Regulation Z section 1026.37, recording fees are government charges to record and index documents, set by document type or physical traits such as page count. They are not based on loan amount or sale price.
A charge that is a percentage of the loan is disclosed as a transfer tax instead. The CFPB’s own example is a fee of 0.5% of the loan amount. The name used under state or local law does not decide the line.
So your state’s “mortgage recording tax” may appear under transfer taxes, while the flat clerk fee appears under recording fees. Same trip to the county office, two lines on your estimate. The CFPB’s sample Closing Disclosure shows the layout, with deed and mortgage lines in the recording row.
Tolerance rules matter too. Recording fees are limited collectively with other charges, while transfer taxes are zero tolerance under Regulation Z section 1026.38. If a recording charge shifts between estimate and closing, which bucket it sits in affects what is allowed.
Can a lender mark these charges up? HUD’s older closing-cost chapter (legacy mortgagee handbook, Chapter 5) says a lender may charge customary recording fees and taxes and add them to existing debt on a refinance. It also says no charge may exceed what the lender paid. That chapter is from a handbook family since replaced, so treat it as a principle, not the current rule.
What “High-Cost” Actually Means Here
The phrase carries two meanings, and people mix them.
High-cost loan-limit areas. FHA limits are set by county and change every year. County loan limits apply to your loan, and a bigger limit gives you more room to borrow in an expensive county. That has nothing to do with recording charges directly.
High-cost closing states. Some states charge a mortgage recording tax on the loan amount. That raises closing costs, which is the issue here. A home can sit in a county with a high loan limit in a state with no such tax. It can also be the reverse.
In states with a loan-based tax, a CEMA-type structure, where an existing mortgage is consolidated or assigned, may shrink the taxed amount. It has been used in New York. Whether it is available on a given FHA file is a question for the lender and the title company, so it should not be assumed.
For a look at how fee caps interplay in one state, see Lendmire’s piece Texas FHA Cash-Out Fee Cap Rules for High-Cost Closing States.
Where the General Rule Breaks
The 80% story is clean until one of these shows up.
- A second lien that stays. A HELOC or second mortgage left in place counts toward the combined 80%. That shrinks the base loan available, so recording charges squeeze harder.
- Owned under 12 months. The adjusted value can be capped by the purchase price. The cap is then measured against a smaller number.
- Hawaiian Homelands (Section 247). The 80% change does not apply there, per the same Mortgagee Letter.
- Reverse mortgages. HUD lists recording fees and taxes as allowable charges in separate reverse-mortgage guidance. Keep that program separate from a standard forward cash-out.
- Occupancy. The FHA cash-out is for a principal residence. For a second home or a rental, occupancy decides the leverage, and this program does not apply.
- No-cash-out refinance. It is limited to paying off debt and covering transaction costs. The cash-out test is the 80% cap. Costs compete with proceeds there, instead of being part of a payoff-plus-costs test.
- After closing. HUD’s servicing rules allow a reasonable fee for recording a satisfaction only in states where the borrower, not the lender, is responsible for recordation.
- Trust-held homes. Title can complicate a cash-out. Lendmire’s piece Can a Trust Home in a High-Cost State Get an FHA Cash-Out? covers that.
Common Mix-Ups
- “A recording fee and a mortgage tax are the same line.” They are not, as the forms show.
- “FHA lets you borrow up to 85% on a cash-out.” That cap was lowered to 80%.
- “The financed premium counts against the LTV.” It sits outside, because the test uses the base loan.
- “A second lien left in place doesn’t count.” It does, toward the combined test.
- “Recording charges are negotiable with the lender.” They are set by the government. You can confirm the figure with the county.
- “The number can’t change after the estimate.” It can, within the tolerance limits.
- “I can skip the tax in my cash-out estimate.” On a tight file, that is how a cash number turns out wrong.
How to Check Your Own Number
1. Ask your loan officer which of your charges are flat fees and which are loan-based.
2. Ask the title or closing agent whether the tax applies to the full new loan or only the increase.
3. Ask whether any credit or reduced base applies for the existing mortgage.
4. Compare the Loan Estimate’s government fees line to the cash amount you need.
5. Confirm the figure with the county recorder’s schedule.
6. Decide whether to finance the charges or pay them at closing.
Key Terms Defined
Recordation charge: The government cost to file your new mortgage in the public record, either a flat fee or a tax based on loan size.
Base loan amount: The mortgage amount before any financed upfront premium is added.
Adjusted value: The value FHA uses for the cap, usually the appraised value on a home owned 12 months or more.
Combined loan-to-value (CLTV): The base loan plus any other mortgages left in place, divided by the adjusted value.
Upfront mortgage insurance premium: A one-time FHA premium of 1.75% of the base loan, usually financed into the loan.
Transfer tax: A government tax on moving title or, in some places, on a loan amount. It appears on its own disclosure line.
Frequently Asked Questions
Does a mortgage recording tax reduce my FHA cash-out amount?
Yes, it can. When the 80% cap is the limit on your file, financed closing costs, including a loan-based tax, use room that would otherwise be cash to you. If you pay the charge at closing, the cap room stays but you bring funds.
Is the financed upfront premium part of the 80% limit?
No. The cap is measured on the base loan before the 1.75% premium is added. The premium is still part of what you owe, so it affects your balance and payment even though it sits outside the test.
Is a recording tax the same as a recording fee?
No. A recording fee is a flat clerk charge tied to the document. A tax based on loan amount is disclosed as a transfer tax, whatever your state calls it. Both are paid when your mortgage is recorded.
Does a cash-out refinance cost more to record than a purchase?
It can in a state with a loan-based tax, because a refinance re-records the entire new mortgage. A purchase also records a mortgage, but a refinance can carry the tax on the full balance. Ask your title company whether a credit for the existing mortgage applies.
Where do I find my exact recording amount?
Look at the government fees section of your Loan Estimate, then the Closing Disclosure. Confirm it with the county recorder’s schedule. The government sets these amounts, so they are not negotiated with the lender.
Comparing Your Options
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 that arranges FHA loans through wholesale lenders, so the comparison covers more than one path. Bring your Loan Estimate and your target cash number, and the recording line is the first place to look.
In a state that taxes the loan amount, the recording line is often the quiet reason a cash-out number comes in lower than the 80% math suggested.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. HUD Mortgagee Letter 2019-11
2. HUD Handbook 4000.1 Glossary
3. HUD Handbook 4000.1 Update 15
5. CFPB sample Closing Disclosure
6. Regulation Z section 1026.38
7. HUD legacy mortgagee handbook, Chapter 5
This article is part of Lendmire’s FHA Loan series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Document an Inherited Home for an FHA Cash-Out · Can a 2-4 Unit Primary Home With a High DTI Get an FHA Cash-Out? · How to Prepare a Condo for an FHA Cash-Out Appraisal
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.