FHA Cash-Out Rules and 203b Loans
FHA 203(b) loans do not permit borrowers to take more than $500 cash out during refinancing. In order to turn your home equity into cash, you should instead look into an FHA cash-out refinance, which allows borrower’s to finance up to 95% of the home’s value (LTV) for first mortgages up to $417,000, and up to 85% LTV for all other loans, and take the remaining home equity as cash.
Or, if you’re 62 years or older, you may want to consider an FHA reverse mortgage, in which you trade equity in your home in exchange for a series of monthly payments. However, FHA reverse mortgages are typically only available to borrowers who own most or all of their home.