FHA cash out refinances
FHA cash out refinances
FHA cash out refinances help you get cash from your home's equity. You can use this cash to pay for home improvements and college educations. You can use it to pay down higher interest debts too.
With a cash out refinance, you replace your current FHA mortgage with a new FHA mortgage for a higher amount and get the difference in cash at closing. For example, if your mortgage balance is $250,000, with FHA cash out refinancing you might be able to get a new mortgage for $280,000 resulting in $30,000 cash.
You’ll need to fill out a new loan application and meet financial criteria to get your cash out refinance approved. Learn more with our cash out refinance example.
We are a top FHA lender in the U.S. according to Inside Mortgage Finance, Jan-Jun 2023.
FHA cash out refinances
- All qualified homeowners eligible
- Minimum credit score often 550
- Mortgage insurance required
Conventional cash out refinances
- All qualified homeowners eligible
- Minimum credit score often 620
- No mortgage insurance with 20% or more equity
- No funding fee
VA cash out refinances
- Only qualified Veterans and others eligible
- Minimum credit score often 550
- No mortgage insurance
- Funding fee required
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An FHA cash out refinance allows you to get cash from your home’s equity. It replaces your current FHA mortgage with a new FHA mortgage for a higher amount. At closing, you’ll receive the difference between the two loans in cash.
FHA cash out refinances can have competitive rates and lower minimum credit scores compared to conventional cash out refinances.
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How much cash you might get from your home’s equity depends on three things: your home’s current value, your current mortgage balance, and the maximum loan-to-value ratio (LTV) of the refinance.
FHA cash out refinances don’t let you borrow the full value of your equity. Instead, you can only borrow some of its value based on the refinance’s LTV. We usually offer 80% maximum loan-to-value ratios on FHA cash out refinances at Freedom Mortgage. Check out this example:
Current Home Value $350,000 Current mortgage balance $250,000 Sample maximum LTV 0.8 or 80% Maximum new mortgage balance $280,000 ($350,000 x 0.8) Maximum cash available $30,000 ($280,000 - $250,000) Here, the homeowner might be able to increase their FHA loan balance to $280,000 or 80% of the home’s value.
To get the estimated available cash, subtract the mortgage balance from the new maximum mortgage balance and get $30,000. You can use the calculator on this page to estimate how much cash you might get from your equity.
Remember, an FHA cash out refinance has closing costs you need to pay or add to your loan amount. When you add these costs to your loan, you might be able to borrow less cash as a result.
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You’ll have to complete a new loan application, submit documents, and meet financial criteria to get your refinance approved. Other requirements include:
- Home equity. You need a substantial amount of home equity to qualify for cash out refinancing. Learn more about home equity.
- Credit score. At Freedom Mortgage, 550 is often our minimum credit score for FHA cash out refinances.
- Home appraisal. You’ll likely need a new appraisal to estimate your home’s current value. This helps us determine how much equity you have.
- Title search. A title search checks for liens or other claims on the home. We’ll probably require a new title search.
- Mortgage Insurance Premiums (MIP). You’ll pay an upfront mortgage insurance premium as part of your closing costs with an FHA cash out refinance. You’ll also pay monthly premiums. Learn more about FHA mortgage insurance.
- Closing costs. You need to pay closing costs which average between 3% and 4% of the loan amount according to the U.S. Department of Housing and Urban Development (HUD). This total includes the upfront mortgage insurance premium.
- Disclosures and closing. You’ll need to sign disclosures and attend closing to finalize your refinance. Learn more about our loan application process.
FHA cash out refinancing increases the amount of money you owe on your mortgage. As a result, you’ll probably pay more in interest over the life of your new loan.
FHA cash out refinances can also increase the number of years on your mortgage. This might also increase how much you pay in interest. Learn more about cash out refinancing pros and cons.
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The FHA cash out rate we may be able to offer is personal to you. Your rate is affected by your credit score, your income and finances, and the value of your home’s equity as well as the current mortgage market environment.
We may be able to offer you a rate that is lower—or higher—than the rate you see advertised by other lenders. Ask us today what FHA cash out rate we can offer you by calling 877-220-5533 .
Cash out refinance calculator
The amount of cash you might get from a cash out refinance depends on the value of your home’s equity and the loan-to-value ratio of your refinance. Change the default values to personalize your estimate!
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Cash Out Refinance Calculator Results*: $50,000
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A loan advisor from Freedom Mortgage will reach out to you to review your results and discuss the request for a cash out refinance on your home’s equity.
Cash Out Refinance Calculator Results*: $50,000

Ask us what cash out refinance rate we can offer you!
The cash out refinance rate we may be able to offer you depends on your credit score, income, finances, the current mortgage rate market, and other factors. Freedom Mortgage may be able to offer you a rate that is lower – or higher – than the rate you see advertised by other lenders. Ask us today what cash out refinance rate we can offer you.