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FHA Refinancing Loans: No Cash Out With An Appraisal


The FHA refinance loan options you have to choose from can include cash-out and no cash out refinance. The FHA has different rules for these types of refinancing; what are the basics of the FHA No Cash Out With Appraisal refinance loans?

Maximum Mortgage Loan Amount

The maximum you can borrower on a no cash out refinance loan with an appraisal is either:

97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or the amount of the existing debt. Whichever amount is lowest between these two will be used to calculate the FHA refinance loan amount.

Loan Amounts and UFMIP

FHA loan rules state, “The total FHA first mortgage is limited to 100% of the appraised value, including any financed upfront mortgage insurance premium (UFMIP)…Generally, the maximum mortgage may never exceed the statutory limit, except by the amount of any new UFMIP. However, the maximum mortgage may exceed the statutory limit on certain specialty products. Note: The borrower must comply with any appraisal requirements, including repairs, before the mortgage is eligible for insurance endorsement.”

Subordinate Liens
The FHA loan rules as presented in HUD 4155.1 Chapter Three say that a subordinate lien (including Home Equity Lines of Credit or HELOC for short) can “remain outstanding” but must be subordinate to the FHA loan. This is true when, according to Chapter Three:

  • FHA insured mortgage meets the eligibility criteria for mortgages with secondary financing outlined in HUD 4155.1 5.C, and
  • combined amount of the FHA-insured mortgage and the entire subordinate lien does not exceed the applicable FHA LTV ratios.
  • The lender must use the maximum accessible credit limit of the existing subordinate lien to calculate the Combined Loan-to-Value (CLTV) ratio

Refinancing As A “Buy Out”

Do FHA refinance loans allow the borrower to buy out a spouse or co-borrower? According to HUD 4155.1 Chapter Three, “When the purpose of the new loan is to refinance an existing mortgage in order to buy out an ex-spouse’s or other coborrower’s equity, the specified equity to be paid is considered property-related indebtedness, and eligible to be included in the new mortgage calculation. The divorce decree, settlement agreement, or other bona fide equity agreement must be provided to document the equity awarded to the ex-spouse or coborrower.”

For more information on this issue or related matters, contact the FHA directly at 1-800 CALL FHA.

Do you have questions about FHA home loans or refinance loans? Ask us in the comments section.

Joe Wallace - Staff Writer

By Joe Wallace

January 29, 2013

Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for for (8) years and is currently the Associate Editor for

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About was launched in 2010 by seasoned mortgage professionals wanting to educate homebuyers about the guidelines for FHA insured mortgage loans. Popular FHA topics include credit requirements, FHA loan limits, mortgage insurance premiums, closing costs and many more. The authors have written thousands of blogs specific to FHA mortgages and the site has substantially increased readership over the years and has become known for its “FHA News and Views”.

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