FHA cash-out: equity is available—but ownership, occupancy and mortgage history control the transaction.
Cash-Out is the FHA refinance category used when the borrower withdraws equity or when proceeds are not limited to the permitted purposes of a no-cash-out refinance.
Principal residence
FHA Cash-Out financing is tied to principal-residence eligibility. The lender must document the required occupancy history under the current Handbook rather than treating an investment property as an ordinary FHA cash-out.
Title / ownership
The borrower must have legal title and satisfy FHA's required ownership history for the applicable maximum mortgage. Recent acquisition, inherited interests and transfers of title require transaction-specific analysis.
Mortgage payment history
When an existing mortgage is present, FHA applies current payment-history requirements. A recently delinquent mortgage can affect cash-out eligibility even when the property has substantial equity.
Appraisal and equity
Cash-Out requires an appraisal and is subject to FHA's maximum-mortgage/LTV rules. The existence of equity does not mean FHA will insure a loan up to all of that equity.
Free-and-clear property
FHA's definition of Cash-Out includes equity withdrawal where no mortgage currently exists. A free-and-clear property can therefore still be an FHA cash-out transaction; title, occupancy and maximum-mortgage requirements still apply.
Official FHA policy baseline
Primary source: HUD/FHA Single Family Housing Policy Handbook 4000.1, Update 18, revised August 12, 2026. FHA identifies Cash-Out, Rate and Term, Simple and Streamline as refinance types. Section 203(k) rehabilitation refinances remain in Mortgage Navigator's separate future renovation-loan section.