Paid Off Your Debt Using Cash-Out Refinance

Cash-Out Refinance Mortgage Guidelines on Home Loans

Gustan Cho Associates are mortgage brokers licensed in 48 states

This guide covers cash-out refinance mortgage guidelines. Cash homebuyers are the home buyers of choice for any home seller and home seller’s realtor. Cash buyers normally can get the winning bid on a property with multiple offers. Home sellers normally take a lower offer on a multi-offer to a cash buyer with no contingencies. Most buyers do not want to tie up their cash on a home purchase. However, many buyers do have the means of pulling the cash together to purchase a home cash. Often, they may want to do a cash-out refinance right after their purchase.

Waiting Period Requirements on Cash-Out Refinance

Many home buyers assume that if they purchase a home with cash, they can turn around and do a cash-out refinance the next day. They often borrow money from family, relatives, or close friends and will pay them back right after they close by doing a cash-out refinance. Unfortunately, cash-out refinance rules and regulations have changed after the major 2008 real estate market collapse. There are strict rules about doing a cash-out refinance after a home purchase. There are mandatory waiting periods to do a refinance mortgage. This is for both Conventional and FHA mortgage loan programs.

FHA Loan Refinance Mortgage

FHA loan programs have a 6 month waiting period for a rate and term refinance mortgage. The maximum loan to value on a rate and term FHA Refinance Mortgage is 97.75% LTV.

  • To do a cash-out FHA Loan refinance mortgage, there is a 12 month waiting period
  • The maximum cash-out loan to value on an FHA loan refinance mortgage is capped at 85% LTV
  • The property cannot be listed on the market on any refinance loans

Conventional Loan Refinance

How to refinance conventional loans

To do a rate and term, as well as a cash-out, refinance, there is a six month waiting period after a home purchase.

  • The maximum loan to value on a conventional cash-out refinance is 80% loan to value
  • Two appraisals may be required depending on the conventional lender

Fannie Mae Delayed Financing Mortgage Program: No Waiting Period For Cash-Out Refinance

Under Fannie Mae’s Delayed Financing mortgage program, there is no waiting period to do a cash-out refinance mortgage.

  • A homeowner can do a cash-out refinance mortgage the next day after they close the home cash
  • There are terms with Delayed Financing
  • Maximum cash-out on refinance mortgage with the Delayed Financing program is 70% and the loan amount
  • It cannot be greater than the actual purchase price

For example, here is a case scenario:

  • if you purchased a home for $200,000 cash
  • want to do a cash-out refinance a mortgage under the delayed financing program
  • the maximum mortgage loan amount is $140,000

Case Scenario

Here is a case study:

  • purchased the home for $100,000
  • did $100,000 worth of renovations to the home
  • home is appraised at $200,000
  • the maximum borrower can get a cash-out refinance is $100,000
  • not $140,000 because loan amount cannot be greater than the purchase price
  • on this case is $100,000

Other Cash-Out Refinance Mortgage Loan Programs

USDA does not allow cash-out refinance mortgage loans. VA does allow 100% cash-out refinance mortgage. However, VA Loans are only for veteran borrowers with a valid Certificate Of Eligibility. Gustan Cho Associates Mortgage Group has various loan programs for cash-out refinancing. NON-QM Loans and Bank Statement Loans for self-employed borrowers are becoming increasingly popular. NON-QM Jumbo Mortgages are available for self-employed borrowers with no tax returns required and credit scores down to 620. Contact us at Gustan Cho Associates Mortgage Group at 800-900-8569 or text us for faster response. Or email us at

Related> What is delayed financing?

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