It’s a very common FHA refinance loan question, but “How soon can I refinance an FHA loan?” doesn’t have a single answer. Much depends on two important things-what kind of FHA refinance loan you’re interested in, and how long you’ve lived in the home to be refinanced.
If you are interested in an FHA cash-out refinance loan, page 409 of HUD 4000.1 has rules you should know:
“Cash-out refinance transactions are only permitted on owner-occupied Principal Residences. The Property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence for the 12 months prior to the date of case number assignment.”
That would seem to hint that one year is the minimum time you can own the home before applying for an FHA refinance loan and get cash out. Let’s examine what HUD 4000.1 says a bit further down in the same section:
“The Mortgagee must review the Borrower’s employment documentation or obtain utility bills to evidence the Borrower has occupied the subject Property as their Principal Residence for the 12 months prior to case number assignment.” That line makes things a bit clearer-the lender needs to see that you have occupied the home for a minimum of 12 months before the new FHA refinance loan case number has been assigned.
What else does HUD 4000.1 say on this subject? In addition to a maximum LTV of 85% for cash-out refinancing, HUD 4000.1 adds, “The Mortgagee must document that the Borrower has made all payments for all their Mortgages within the month due for the previous 12 months or since the Borrower obtained the Mortgages, whichever is less. Additionally, the payments for all Mortgages secured by the subject Property must have been paid within the month due for the month prior to mortgage Disbursement.”
As you can see, FHA loan rules are clear when it comes to cash out refinancing. No cash out refinancing loans have different requirements for the length of time you can own the property before refinancing. We’ll cover that topic in another blog post.