Quick answer
FHA cash-out requires the home to be your principal residence for the required period before the case number is assigned. Lenders verify through tax returns, utility bills or other documents.
Key takeaways
- FHA requires on-time payments on the existing mortgage for a recent period. Payment history
- Homes with no mortgage may be eligible for cash-out under FHA rules. Properties owned free and clear
- Rules for adding non-occupant co-borrowers on cash-out differ from purchases. Non-occupant co-borrowers
Occupancy
FHA cash-out requires the home to be your principal residence for the required period before the case number is assigned. Lenders verify through tax returns, utility bills or other documents.
Payment history
FHA requires on-time payments on the existing mortgage for a recent period.
Properties owned free and clear
Homes with no mortgage may be eligible for cash-out under FHA rules.
Non-occupant co-borrowers
Rules for adding non-occupant co-borrowers on cash-out differ from purchases.
Occupancy detail
HUD requires that the property was owner-occupied as the borrower's principal residence for the 12 months before case number assignment. Rental properties are not eligible for FHA cash-out.
Payment history detail
Borrowers generally must have made all mortgage payments within the month due for the 12 months before case number assignment, or for the time since the loan began if shorter.
Free and clear
A home owned free and clear can be refinanced with FHA cash-out if occupancy is met.
Maximum loan
HUD caps cash-out loans at 80 percent of the appraised value, subject to FHA loan limits.
Read the handbook
HUD Handbook 4000.1 contains the full rules.
Non-occupant co-borrowers
Ask your lender how HUD's rules treat a co-borrower who does not live in the home before applying.
General education only; confirm current rules with official sources and a licensed lender.
Sources
Sources reviewed .