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FHA Cash Out Refinance

Learn the current FHA cash out refinance loan requirements
Calculate how much you may be able to cash out refinance.

New FHA Cash Out

Homeowners are investing in their homes year after year, resulting in an increase in equity being established. This takes a variety of forms, including making mortgage payments that reduce the amount owed or completing home improvement and maintenance projects.  The value of your investment may also have grown due to general property value increases in your neighborhood.

At certain times, your investments might prove especially valuable, such as when you want to use your home’s equity to pay for a large project, a vacation, or other expenses.  FHA loans are often an excellent way to take advantage of the equity you have built up.  The FHA cash out refinance loan allows the highest allowable loan-to-value ratios of any cash out program (other than VA loans, which are exclusively offered to veterans).  Therefore, if you want to take out the most amount of your equity possible, a FHA loan will likely be your best bet.

Our FHA cash out refinance loans are available in the following states: Alabama, Arizona, Arkansas, California, Colorado, Florida, Georgia, Kansas, Louisiana, Iowa, Illinois, Indiana, Maryland, Michigan, Minnesota, North Carolina, New Hampshire, New Mexico, Ohio, Oklahoma, Oregon, South Carolina, Tennessee, Texas, Virginia, Washington, Wisconsin, Wyoming, and Utah.

FHA Cash Out Refinance Guidelines 

The guidelines for a cash out refinance through the FHA are straightforward.  The requirements are less than those of a conventional loan.

  • Credit Score – You must have at least a 580 credit score to qualify for a FHA loan.
  • Owner Occupied – The FHA cash out loan is only offered to borrowers on homes that are owner occupied, no investment properties are eligible to apply for this FHA program.
  • Payment History – A 12 month payment history with no more than one 30 day late payment is required.  You may be eligible for to apply after 6 months in your home, but the original appraisal would be used.
  • Appraisal – In order to use a new appraisal, you must have lived in your home for at least 12 months.  If you have not lived in your home for a full year, you still might qualify, but a new approval would not be allowed.  Your original appraisal would be used, or your home purchase price, whichever is the lesser amount.
  • Income / Assets – Borrowers, along with co-applicants who live in the home, must have qualifying debt-to-income ratios.  The mortgage payment (principle, interest, taxes, and insurance) must not exceed 29% of your income.  Your total DTI ratios must not exceed 41%, which includes other liabilities such as car payments and credit cards.  Exceptions to this rule are sometimes allowed.  When applying, borrowers must submit two years tax returns and copies (or stubs) of two most recent paychecks.
  • FHA Mortgage Insurance – Something to consider is that FHA loans require two types of mortgage insurance.  The upfront mortgage insurance premium is 1.75%.  So a 100,000 loan amount would require $1,750 to be added to the principle loan amount.  The second part of FHA mortgage insurance that is required is the monthly mortgage insurance premium.  As of 2015 this amount is 0.80%.  If you only need to borrow up to 80% of your home’s appraised value, you might want to see if you are eligible for a conventional cash out refinance loan.  It is best to compare both options to see which saves you the most money, while still meeting your cash out needs (how much you need or want to take out).

To receive the highest level of benefit from a mortgage refinance, it helps to have accrued a significant level of home equity.  If you bought your home more than a year ago, you can refinance your current mortgage for as much as 85 percent of the home’s appraised value.

FHA Cash Out Refinance Calculator

Want to see how much you may be able to cash out?  Use this cash out refinance calculator to determine the maximum amount of equity you may be able to take out of your home with an FHA loan.

Cash Out Refinance Calculator

What is your current loan situation

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How to Use the Mortgage Calculator – In order to use the FHA cash out refinance calculator you need to determine what you currently owe on your property (your loan balance). In the two boxes, enter in your current loan balance and the estimated value of your home. Then, click “submit”. This will provide you with the maximum amount you are able to borrow on top of your current loan balance (assuming you qualify). FHA loan guidelines restrict cash out loans to a 85% LTV. It used to be 95%, but HUD changed the guidelines in April, 2009.

A cash out refinance is a loan that pays off your existing mortgage and then gives you any extra cash after all the fees (such as the original loan balance and closing costs) have been paid.  FHA cash out refinances typically compare well with private mortgages, often with lower interest rates and loan fees.  The FHA also usually has less stringent requirements to qualify for a refinance, and they often require less documentation.

If you are planning to stay in your home for a longer period of time, refinancing might be a better option than applying for a second mortgage when you need extra cash. If you decide that an FHA cash out refinance is a good option for your situation, the next step is to contact us to apply.  We are also here to answer any of you questions.

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    Home Loan Programs Available In:

    Alabama, Alaska, Arkansas, Arizona, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Kansas, Kentucky, Louisiana, Idaho, Iowa, Illinois, Indiana, Maine, Massachusetts, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, and Wyoming.