Cash Out Refinance
The maximum loan-to-value and combined loan-to-value (LTV) of any cash-out refinance is 85%. The calculation is based either off the appraised value or the original sales price, depending on the length of time you have owned the property.
a) The loan is limited to a combined LTV (FHA insured first mortgage and any subordinated lien) of 85% of the appraised value, provided you have owned the property for at least one year. Note that manufactured homes have other restrictions.
b) If the property was purchased less than one year preceding the application date, the LTV/CLTV (85%) for the mortgage amount must be calculated using the lesser of the appraised value or the original sales price of the property.
c) The property that is security for the refinanced mortgage may be a 1-4 unit property.
d) The property must be owner-occupied. Non-owner occupant co-borrower may not be added in order to meet FHA's credit underwriting guidelines.
e) Properties owned free and clear may be refinanced as cash-out transactions.
f) 3-4 unit properties are required to pass the self sufficiency test and have a minimum of 3 months reserves after closing.
g) Properties acquired by inheritances within the past 12 months are eligible for a cash-out refinance transaction provided they have been occupying the property as their primary residence since the inheritance. We must document the acquisition by the borrowers via inheritance.