FHA Cashout Refinance Mortgage Loans Versus Other Loan Programs

This BLOG On FHA Cashout Refinance Mortgage Loans Versus Other Loan Programs Was UPDATED On April 7th, 2019

Requirements on FHA Cashout Refinance Mortgage Loans are different than any other mortgage loan programs.

  • Every mortgage loan program has its own guidelines when it comes to Cashout Refinance Loans
  • FHA Cashout refinance mortgage loans are available for owner occupied primary residences
  • It can be from one to 4 units owner occupant properties
  • Every loan program has its own mortgage guidelines when it comes to cashout refinance guidelines and the loan to value may depend on loan to value

In this article, we will cover and discuss cash-out refinance mortgage guidelines.

Requirements On FHA Cashout Refinance Mortgage Loans

Here are the guidelines for cashout refinance mortgage loans.

  • Full Appraisal is required
  • Non-Occupant Co-Borrower may not be added
  • Any co-borrowers added need to be occupant co-borrowers
  • FHA Cashout Refinance Loans allow up to 85% Loan To Value on one to four-unit properties
  • Any payoff statements are required if the property has liens

Proceeds from FHA Cashout Refinance Loans can be used for any purposes.

Mortgage Payment History

Borrowers for FHA cashout refinance mortgage loans need at least a six-month mortgage payment history if it is a recently purchased property.

  • Mortgage payment histories of less than six months do not qualify for cashout refinance mortgage loans

Here are the payment history requirements:

  • If borrower purchase property less than 12 months but greater than six months, zero late 30 day late payments are allowed
  • If borrower has owned the property more than 12 months, the last 12 months cannot have any 30 days of late payments

Maximum Loan To Value On FHA Cashout Refinance Mortgage Loans

If the homeowner has owned the subject property for less than 12 months prior to applying for FHA Cashout Refinance Mortgage Loans, the Loan to Value and/or Cumulative Loan To Value (LTV/CLTV) is capped to the lesser of the subject property appraised value and/or the original purchase price of the property.

  • If the homeowner has occupied and owned the subject property for at least one year to apply for mortgage application, then 85% LTV and/or CLTV will be based on the appraisal of the property
  • If the borrower has inherited the subject property and is occupying the property and the property is an owner occupant property
  • 85% LTV/CLTV based on the recent home appraisal value is permitted. Length of ownership does not matter

Occupancy Of Former Investment Property

If a homeowner decides to occupy a property that was formerly used as an investment property, the loan to value capped will be limited to 85% Loan To Value and/or Cumulative Loan To Value.

Secondary Financing

New secondary and/or subordinated financing on the property is not permitted. However, if there is an existing subordinate loan to lower the total indebtedness is not considered a new subordinate lien. This may be subordinated under HUD Guidelines.

Cashout Requirements With Other Loan Programs

Conventional Loans have different cashout refinance mortgage guidelines. Here are Conventional Cashout Refinance Guidelines:

  1. 80% loan to value on single family homes
  2. 75% loan to value on two to four units

VA Loans Cashout Refinance Requirements

VA Loans allow 100% LTV cashout refinance.

USDA does not allow cashout refinance. Borrowers who have more questions on doing a cashout refinance on their homes, please contact The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at gcho@loancabin.com.

Gustan Cho NMLS ID # 873293

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