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FHA cash out refinances

FHA cash out refinances

FHA cash out refinances help you get cash from your home's equity. You can use your cash for home improvements, education, paying down debt, and much more.

With a cash out refinance, you replace your current FHA loan with a new FHA loan for a higher amount and get the difference in cash at closing. If your current mortgage balance is $250,000, you might get a new mortgage for $280,000 and receive $30,000 in cash by refinancing.

FHA cash out refinances can have competitive rates and lower credit score requirements compared to Conventional cash out refinances. FHA cash out refinances come with mortgage insurance costs, however.

We are a top FHA lender in the U.S. according to Inside Mortgage Finance, Jan-Sep 2023.

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FHA cash out refinances

  • All qualified homeowners eligible
  • Minimum credit score often 550
  • Mortgage insurance required
Learn More
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Conventional cash out refinances

  • All qualified homeowners eligible
  • Minimum credit score often 620
  • No mortgage insurance with 20% or more equity
  • No funding fee
Learn More
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VA cash out refinances

  • Only qualified Veterans and others eligible
  • Minimum credit score often 550
  • No mortgage insurance
  • Funding fee required
Learn More
  • 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 our 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 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.

  • It can be easier to qualify for an FHA cash out refinance than 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 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 the 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 premiums. Learn more about FHA mortgage insurance.
    • Closing costs. You need to pay closing costs averaging between 3% and 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 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, 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 assumes your loan-to-value ratio is 80%. This calculator is made available as a self-help tool for your personal use. We do not guarantee its accuracy or applicability to your individual circumstances. Resulting calculations are for illustrative and informational purposes only and are not intended as investment or financial advice. Consult a qualified financial advisor before making important personal finance decisions. To get a better understanding of the benefits of refinancing, speak with a loan advisor at Freedom Mortgage.

Cash Out Refinance Calculator Results*: $50,000

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* This calculator is made available as a self-help tool for your personal use. We do not guarantee its accuracy or applicability to your individual circumstances. Resulting calculations are for illustrative and informational purposes only and are not intended as investment or financial advice. Consult a qualified financial advisor before making important personal finance decisions. To get a better understanding of the benefits of refinancing, speak with a loan advisor at Freedom Mortgage.

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.

By entering your mobile number and email address and clicking “Get Your Results” below, you consent to be contacted, including via automated technology, by Freedom Mortgage and any of its current or future affiliated companies (collectively “Freedom Mortgage”) at that mobile number and email address for marketing purposes. You affirm that you are the subscriber of the phone number(s) and email address or that the subscriber has authorized you to provide this consent. Your consent is not a condition of purchase of goods or services from Freedom Mortgage. You can revoke your consent at any time by contacting Freedom Mortgage at 855-690-5900.
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Cash Out Refinance Calculator Results*: $50,000

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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.

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