FHA has a "cash-out" and a "no cash-out" refinance. There is are few major advantages when applying for a FHA cash-out refinance than possibly doing a conventional cash-out refinance. All scenarios are for primary residences only.
| FHA CASH-OUT | CONVENTIONAL CASH-OUT |
| Up to 95% of the value of your home -- 95% LTV | Up to 90% of the value of your home -- 90% LTV |
| No hits on pricing on cash-out | ¾ of a point hit up to 90% cash-out |
| Monthly mortgage insurance is .50% of loan amt | Monthly mortgage insurance is .52% of loan amt |
| Subordinate financing may take place & can exceed the CLTV of 90%. CLTV = total combination of 2 loans divided by the value of your home. A 1st & 2nd mortgage. The CLTV can be over 100% as long as the borrower qualifies with income for both loans. | Subordinate financing cannot exceed 90% CLTV. |
FHA 95% cash-out guidelines :
- The property secured can only be 1 -2 unit properties.
- You must own the home for 12 + months.
- You can not have any 30 day late in the last months. Even if it is approved through FHA score card. No exceptions. But you can do up to 85% financing with lates on your mortgage less than 12 months.
FHA 85% cash-out guidelines :
- The property secured can be 1 - 4 unit properties.
- Properties acquired by inheritances within the last 12 months are eligible for this type of refinancing. The lender must document the acquisition by showing the borrowers inheritance.
- If the property was purchased less than a year ago, the 85% LTV is based on the purchase price and not the new appraised value.
Tip : Your cash out mortgage in todays market could be very beneficial. Especially with rates still low, you can liquidate you equity and use the money in other financial vehicles to earn more money. "Don't work for your home, ,make your home work for you." This is what is described as financial planning. Seek a mortgage professional that understands your needs and goals, who understands the market, and who can put all of this together to allow you financial freedom.
FHA programs and insight :
The First Time Homebuyer Series :
Buying Tips :
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For more information on FHA cash out refinancing, please go to this link. The FHA Expert
For more information on how you can obtain your dream home, please click here : Mortgage Financing Options
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Jeff, Very good FHA information! I was actually thinking of this exact scenario today...