FHA loans · Guide

FHA Cash-Out Refinance: How It Works

Eligibility, occupancy and seasoning rules, mortgage insurance and appraisal requirements for an FHA cash-out refinance.

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Quick answer

An FHA cash-out refinance replaces your current mortgage (FHA or not) with a new FHA-insured loan larger than what you owe, paying you the difference. It is available only on an owner-occupied principal residence.

Key takeaways

  • An FHA cash-out refinance replaces your current mortgage (FHA or not) with a new FHA-insured loan larger than what you owe, paying you the difference. What it is
  • A new upfront and annual mortgage insurance premium apply. Mortgage insurance
  • FHA loan limits vary by county. Loan limits

What it is

An FHA cash-out refinance replaces your current mortgage (FHA or not) with a new FHA-insured loan larger than what you owe, paying you the difference. It is available only on an owner-occupied principal residence.

Key requirements

  • Occupancy and ownership: FHA requires you to have owned and lived in the home as your principal residence for a minimum period first.
  • Payment history: recent on-time mortgage payments are required.
  • Maximum loan-to-value: FHA sets a cash-out cap that is lower than the purchase limit.
  • Full appraisal by an FHA-roster appraiser.
  • Credit and income are fully underwritten.

Mortgage insurance

A new upfront and annual mortgage insurance premium apply. If you have strong credit and equity, compare the total cost with a conventional cash-out.

Loan limits

FHA loan limits vary by county. Look up your county on HUD’s FHA Mortgage Limits page.

Official source: HUD Single Family Housing Policy Handbook 4000.1.

Updated · Last reviewed

This page is general education. Program rules change; confirm current requirements with the official sources linked here and with a licensed lender.

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Your path through this site

Prefer one page? FHA loan basics gathers every guide, calculator and key term in reading order.

  1. Get the rules straightBegin with FHA Cash-Out Occupancy and Seasoning Explained; FHA Cash-Out Appraisal and Property Standards covers the next question most borrowers have.
  2. Do the math yourselfFHA mortgage insurance explainer uses only figures you type.
  3. Compare FHA with the alternativesSix questions in the loan finder show which programs to read about.
  4. Shop and verifyUse the checklist with each lender and look them up on NMLS Consumer Access.

Explore

Guides on this site

FHA Cash-Out Occupancy and Seasoning Explained

A closer look at how FHA verifies occupancy and payment history for cash-out refinances.

FHA Cash-Out Appraisal and Property Standards

What the FHA appraisal checks on a cash-out refinance and how to prepare the home.

FHA Cash-Out Documents Checklist

The documents typically needed for an FHA cash-out refinance.

FHA Cash-Out Refinance: The Process From Application to Funding

What happens at each stage of an FHA cash-out refinance, and what you can do to keep it on track.

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Glossary

Terms these guides use

FHA
The Federal Housing Administration, part of HUD, which insures qualifying mortgages.First used in FHA Cash-Out Occupancy and Seasoning Explained
Appraisal
An independent opinion of market value used by the lender.First used in FHA Cash-Out Appraisal and Property Standards
Loan-to-value (LTV)
The loan amount divided by the property value.First used in FHA Cash-Out Appraisal and Property Standards
Cash-out refinance
A refinance where the new loan exceeds the payoff and the borrower receives the difference.First used in FHA Cash-Out Refinance: The Process From Application to Funding

All 20 terms, A to Z