FHA Cash-Out Refinance — How to Access Your Home Equity
If you’ve owned your California home for a few years and values have increased, you may have substantial equity. An FHA cash-out refinance lets you access that equity and use it for home improvements, debt consolidation, or nearly any other purpose.
How FHA Cash-Out Refinance Works
You refinance your existing mortgage (FHA or conventional) into a new, larger FHA loan. The difference between your new loan amount and what you owed is paid to you in cash at closing.
Maximum LTV: 80%
The maximum Loan-to-Value ratio for an FHA cash-out refinance is 80%. This applies to both LTV and CLTV.
Eligibility Requirements
- Occupancy: Must be your primary residence. At least one borrower must have owned and occupied the property for at least 12 months prior to case number assignment
- Payment history: All mortgage payments for the prior 12 months must be on time (0x30). Minimum 6 payments on the existing loan, and at least 210 days since the closing date of the loan being refinanced
- Credit score: Minimum 580 (many lenders set overlays requiring 620–640 for cash-out)
- Non-occupant co-borrower income: Cannot be used to qualify for a cash-out refinance
- Active listing: Property cannot currently be listed for sale — the listing must have expired or been cancelled before application
What You Can Roll Into the New Loan
- Existing loan payoff balance
- Closing costs and prepaid items
- Subordinate mortgage liens being paid off
Cash-Out vs. Streamline
Unlike the FHA Streamline, a cash-out refinance requires a full new appraisal, complete income and employment documentation, and a full credit review. It is a full-documentation refinance — no shortcuts.
How it compares with conventional cash-out
Both an FHA and a conventional cash-out refinance on a primary residence top out at 80% loan-to-value, so the maximum cash looks similar. The difference is mortgage insurance. A conventional loan at 80% LTV does not require PMI, while an FHA cash-out loan carries an upfront premium and a monthly premium on top of the interest rate. Conventional cash-out also requires at least six months on title and an existing first mortgage that is at least 12 months old, with waivers for cases such as inheritance. Where the borrower’s credit score is the sticking point, FHA can still be the only workable route, which is why we price both.
Questions to answer before you borrow
- What is the cash for? Home improvements that add value are different from consolidating card debt, which converts unsecured balances into debt secured by your home.
- How long will you keep the home? Closing costs and the upfront premium take time to earn back.
- Would a second loan fit better? A HELOC leaves your current first mortgage untouched.
- Is your payment history clean? The 12-month on-time requirement is strict.
Documents to gather
- Recent pay stubs, W-2s, and two years of tax returns if you are self-employed
- Your latest mortgage statement and the 12-month payment history
- Homeowner’s insurance declarations page and property tax bill
- A list of any debts or second liens you plan to pay off at closing
- Proof you have lived in the home at least 12 months, such as utility bills or a driver’s license address
Frequently asked questions
Can I do a cash-out refinance soon after buying?
Not usually. At least one borrower must have owned and occupied the home for 12 months before the case number is assigned, and the payment-history rules apply too.
Will my monthly payment go up?
Most likely, because the balance increases. The size of the change depends on the new rate, the term and how much cash you take. We show the payment alongside a no-cash-out option so you can see what the extra cash costs each month.
Can I cash out from a rental property with FHA?
No. FHA cash-out is for your primary residence only. Investment properties need a different program.
Related guides
- Conventional cash-out refinance
- FHA streamline refinance
- FHA rate and term refinance
- How a HELOC works
- What a refinance costs
Practical Takeaways
- Maximum LTV is 80% — your home must have at least 20% equity
- Must have owned and occupied the property for 12 months
- Perfect payment history required for the prior 12 months
- Non-occupant co-borrower income cannot be used
- Full documentation required
- Both FHA and conventional cash-out top out at 80% LTV, but only the FHA loan adds mortgage insurance at that level.
- Decide what the cash is for before borrowing; debt consolidation turns unsecured debt into debt secured by your home.