FHA Cashout Refinance Mortgage Loans
In this article, we will cover and discuss FHA Cashout Refinance Mortgage Loans versus other mortgage refinance loan programs. Requirements for FHA Cashout Refinance Mortgage Loans are different than any other mortgage loan program. Every mortgage loan program has its own guidelines when it comes to Cashout Refinance Loans.
FHA Cashout Refinance Eligibility Requirements
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 the 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 80% 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 many purposes. All proceeds from cashout refinance are tax-free.
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 the 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’s 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 a mortgage application, then 80% 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. 80% 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.
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:
- 80% loan to value on single-family homes
- 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 us at Gustan Cho Associates at 262-716-8151 or text us for a faster response. Or email us at [email protected]