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FHA Loans - Cash-Out Mortgage Refinance

The FHA loan program allows for a mortgage refinances of owner occupied properties. The maximum cash out refinance loan cannot exceed 85% of the appraised value of the home, which is 5% more than on a conventional loan.

As cash out refinance mortgage is defined as follows: A mortgage refinance where borrower gets more than $2,000 back after close of transaction, and / or, any refinance that involves consolidating a second mortgage or equity line that is less than 1 year old.

You may calculate approximately how much cash out you can get from a refinance by using the following formula:

  • Property Value X 95% = New Maximum Loan*
  • Maximum Loan - Amount Owed = Approx. Cash Out Amount

The cash out from your refinance mortgage can be used for any of the following:
  • Home Improvements
  • Bill Consolidation (and mortgage if second is less than 1 year old)
  • Large Purchases
  • Schooling
  • Vacation
  • Investment(s)

You may use the cash out refinance for 1-4 unit properties. You do not have to have an existing FHA loan in order to do a cash-out refinance.

An advantage of the program is if you have had previous credit issues, there is no minimum FICO score requirement. Also, you may cash out refinance sooner than you could with a conventional loan after major credit issues such as:

  • 2 yrs. after a Bankruptcy  vs. 3 yrs. for Conventional
  • 3 yrs. after a Notice of Default / Foreclosure vs. 4 yrs. for Conventional

Learn more about qualifying for a FHA cash-out refinance by clicking Here

* New Loan must be within maximum FHA loan limit for area property is located in.

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