FHA Cash-Out Refinance
The fha cash-out refinance is one of the main ways to turn home equity into cash. Here is the 2026 rundown.
How it works
An FHA cash-out refinance is government-insured, allowing up to 80% LTV with more flexible credit than conventional loans. It requires upfront and annual mortgage insurance and 12 months of on-time payment history. It suits borrowers with lower scores who still have solid equity.
Key things to know
- Combined loan-to-value usually caps near 85% (cash-out refinance at 80%).
- A second lien keeps your first mortgage; a cash-out refinance replaces it.
- Compare the rate type — fixed (home equity loan) vs variable (HELOC).
- Budget for closing costs (often lower or waived on HELOCs).
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Frequently Asked Questions
- What is the fha cash-out refinance?
- An FHA cash-out refinance is government-insured, allowing up to 80% LTV with more flexible credit than conventional loans. It requires upfront and annual mortgage insurance and 12 months of on-time payment history. It suits borrowers with lower scores who still have solid equity.
- Will it affect my first mortgage?
- Only a cash-out refinance replaces your first mortgage. A HELOC, home equity loan, or second mortgage sits behind it and leaves that rate alone.