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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.

Example: Home value $800,000 × 80% = $640,000 maximum loan. Existing balance $420,000. After closing costs, you could receive approximately $200,000 in cash.

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 original loan’s first payment date
  • 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.

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