FHA cash-out refinance rules, in the order lenders check them
Rule 3: the equity cap
Handbook note
FHA caps a cash-out refinance at eighty percent of the appraised value, so the new loan cannot exceed that share and you keep at least the rest as equity. The cash you receive is what remains after paying off existing liens and closing costs. A new appraisal sets the value.
Last reviewed against the primary sources listed below.
The order of operations
- Appraisal sets the value.
- The cap sets the largest loan.
- Payoffs and costs come out first.
- What remains is your cash.
Owner questions
Can I take out all my equity with FHA?
No. The cap means you keep part of your equity in the home.