FHA Cash Out Refinance Calculator

FHA Cash Out Calculation:

\[ \text{Max Loan} = \min(\text{Home Value} \times 0.80, \text{Appraised Value}) \] \[ \text{Cash} = \text{Max Loan} - \text{Old Balance} \]

Max Loan (max borrow):

Cash Available:

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1. What is FHA Cash Out Refinance?

FHA Cash Out Refinance allows homeowners with FHA loans to refinance their mortgage and take out cash from their home equity. The maximum loan amount is typically limited to 80% of the home's value or the appraised value, whichever is less.

2. How Does the Calculator Work?

The calculator uses the following formulas:

\[ \text{Max Loan} = \min(\text{Home Value} \times 0.80, \text{Appraised Value}) \] \[ \text{Cash} = \text{Max Loan} - \text{Old Balance} \]

Where:

\( \text{Home Value} \) — Current market value of the home
\( \text{Appraised Value} \) — Official appraised value of the home
\( \text{Old Balance} \) — Remaining balance on the current mortgage
0.80 — FHA's maximum loan-to-value ratio for cash-out refinance

Explanation: The calculation determines how much you can borrow (up to 80% of home value) and how much cash you'll receive after paying off your existing mortgage.

3. Importance of FHA Cash Out Calculation

Details: Understanding your maximum loan amount and potential cash available helps in financial planning, home improvements, or debt consolidation decisions.

4. Using the Calculator

Tips: Enter your home's current market value, the appraised value (if known), and your current mortgage balance. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the maximum LTV for FHA cash-out refinance?
A: The maximum loan-to-value ratio is typically 80% of the home's value for FHA cash-out refinances.

Q2: Are there credit score requirements?
A: Yes, FHA cash-out refinances typically require a minimum credit score of 580, though some lenders may require higher scores.

Q3: What costs are involved in cash-out refinancing?
A: You'll typically pay closing costs (2-5% of loan amount), and there may be mortgage insurance premiums with FHA loans.

Q4: How often can I do an FHA cash-out refinance?
A: There's no set limit, but you must wait at least 6 months between FHA refinances and demonstrate a net tangible benefit.

Q5: Is the cash received taxable?
A: Generally no, cash from refinancing is considered a loan, not income. However, consult a tax professional for your specific situation.