An FHA Cash-Out Refinance lets homeowners replace their existing mortgage with a larger FHA-backed loan and take the difference in cash.
It’s insured by the Federal Housing Administration (FHA) — which helps lenders approve borrowers with lower credit scores or higher debt-to-income ratios.

Example:

If your home is worth $400,000 and you owe $250,000, you may refinance up to 80% of your home’s value — or $320,000.
After paying off your old loan, you could get around $70,000 in cash, minus closing costs.

You can use this money for home renovations, debt consolidation, tuition, or any other major expense — FHA doesn’t restrict your cash-out purpose.

2025 FHA Cash-Out Example (Updated Numbers)

According to recent mortgage data (Ainvest, 2025):

Item	Example
Home Value	$400,000
Current Loan Balance	$250,000
Max FHA LTV	80% ($320,000)
Estimated Cash-Out	$70,000
Closing Costs (2–5%)	~$5,000
Net Cash to Borrower	~$65,000
Estimated Rate (2025)	~6.50%–6.80% (with MIP)

You’ll still keep 20% equity ($80,000) in your home.

But note: You’ll pay FHA Mortgage Insurance Premiums (MIP) — both upfront and annually. (LendEDU)

FHA Cash-Out Requirements

Requirement	FHA Standard
Residency	Must be your primary home, not investment property.
Occupancy	Live in the home at least 12 months.
Loan-to-Value (LTV)	Max 80% of appraised value.
Credit Score	Minimum 500, but 620+ preferred.
Debt-to-Income (DTI)	Typically under 43%.
Payment History	On-time for past 12 months.
Loan Limits	Must fall within local FHA loan limits.

Pros and Cons of FHA Cash-Out

Benefits

Easier to qualify than conventional loans
Lower credit score requirements
Flexible use of funds (renovation, debt payoff, tuition, etc.)
Replaces a higher-rate loan with a new, possibly better term

Drawbacks

Adds new debt by increasing your loan balance
Requires Mortgage Insurance (MIP) even with 20% equity
Higher closing costs (2–6% of loan)
Could reduce your home equity buffer if property values fall

When Does FHA Cash-Out Make Sense?

Good idea when:

You have 20%+ equity and need funds for valuable purposes (renovation, debt payoff)
You want to switch from a high-interest loan
You can’t qualify for a conventional refinance due to credit or DTI

Not ideal when:

Your current mortgage rate is lower than today’s (~6.5%)
You already have limited equity
You qualify for a conventional cash-out (to avoid MIP)

Want to see if FHA Cash-Out fits your goals? Get a real-time quote now »

FHA vs. Conventional Cash-Out in 2025

Feature	FHA Cash-Out	Conventional Cash-Out
Credit Score	500–620+	660+
Max LTV	80%	80%
Mortgage Insurance	Required (MIP)	Required if <80% equity
Typical Rate (2025)	~6.5–6.8%	~6.25–6.5%
Flexibility	Easier qualification	Lower cost if strong credit

Why Choose Loan Factory for FHA Cash-Out Refinancing

At Loan Factory, we combine AI-powered technology with access to 240+ wholesale lenders — giving you instant side-by-side comparisons and the Best Price Guarantee.

Why homeowners choose us:

Best Price Guarantee: If we can’t beat a competitor’s offer, we’ll pay you $1,000 (Terms & Conditions)
240+ lenders for real-time rate shopping
AI-powered MOSO platform for faster approvals
Local loan advisors offering personal support
Zero application or junk fees
Trusted by Thuan Nguyen – #1 Loan Officer in the U.S.

The FHA Cash-Out Refinance can be a powerful tool to unlock home equity — especially if you have moderate credit or need flexible funds.

Just make sure to compare rates and weigh insurance costs carefully.

Ready to see how much cash you can take out from your home?

Apply online today: www.LoanFactory.com/apply

Check your FHA Cash-Out rate: www.LoanFactory.com/quote

Or talk to an advisor: (660) 333-3333