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. Learn more with this cash out refinance example.

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 LTV ratios on FHA cash out refinances at Freedom Mortgage. Check out this example:

Here, the homeowner might be able to increase their FHA loan balance to $280,000 (or 80% of their home’s value).

To get the estimated available cash, subtract the mortgage balance from the new maximum mortgage balance to get $30,000. You can use the calculator on this page to estimate how much cash you might get from the estimated equity in your home.

Remember, an FHA cash out refinance has closing costs you'll 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.

It can be easier to qualify for an FHA cash out refinance, compared to a Conventional cash out refinance. At Freedom Mortgage, you can often qualify with a credit score as low as 550.

You’ll have to fill out a new loan application, submit documents, and meet our financial criteria to get your refinance approved. Other requirements include:

• Home equity. You'll need a substantial amount of home equity to qualify for cash out refinancing. Learn more about home equity.
• Home appraisal. You’ll likely need a new appraisal to estimate your home’s current value and determine how much equity you have.
• Title search. We’ll probably require a new title search to check for liens or other claims on your home.
• 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 mortgage insurance premiums. Learn more about FHA mortgage insurance.
• Closing costs. You’ll need to pay closing costs that average between 3% to 4% of the loan amount, according to the U.S. Department of Housing and Urban Development (HUD). These include the upfront mortgage insurance premium.
• Disclosures and closing. You’ll need to sign disclosures and attend a closing to finalize your refinance. Learn more about our loan application process.

FHA cash out refinancing increases the amount of money you owe. As a result, you’ll probably pay more in interest over the life of your new loan. Learn more about cash out refinancing pros and cons.

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, the value of your home’s equity, and the current mortgage market environment.

We may be able to offer you a rate that is lower—or higher—than the rate you might see advertised by other lenders. Ask us today what FHA cash out rate we can offer you by calling 877-220-5533.