Maximum Loan-to-Value (LTV) for FHA Refinance Loans

The maximum LTV for an FHA refinance loan varies depending on the type of refinance and the borrower’s circumstances.

Key Facts

  1. For no cash-out rate-and-term refinances, the maximum LTV is 97.5% for owner-occupied principal residences. However, if the borrower has occupied the property for fewer than 12 months or has owned it for less than 12 months and has not occupied it for the entire period of ownership, the maximum LTV is 85%.
  2. Cash-out refinance loans have an 85% loan-to-value ratio.
  3. Simple refinances have a maximum mortgage loan-to-value ratio of 97.75% for principal residences and 85% for HUD-approved secondary residences.
  4. Streamline refinances have a maximum base loan amount that is the lesser of the outstanding principal balance of the existing mortgage as of the month prior to mortgage disbursement or the original principal balance of the existing mortgage.

No Cash-Out Rate-and-Term Refinances

For no cash-out rate-and-term refinances, the maximum LTV is 97.5% for owner-occupied principal residences [1]. However, if the borrower has occupied the property for fewer than 12 months or has owned it for less than 12 months and has not occupied it for the entire period of ownership, the maximum LTV is 85% [1].

Cash-Out Refinance Loans

Cash-out refinance loans have an 85% loan-to-value ratio [1]. This means that the borrower can borrow up to 85% of the appraised value of the home.

Simple Refinances

Simple refinances have a maximum mortgage loan-to-value ratio of 97.75% for principal residences and 85% for HUD-approved secondary residences [1].

Streamline Refinances

Streamline refinances have a maximum base loan amount that is the lesser of the outstanding principal balance of the existing mortgage as of the month prior to mortgage disbursement or the original principal balance of the existing mortgage [1].

Conclusion

The maximum LTV for an FHA refinance loan depends on the type of refinance and the borrower’s circumstances. Borrowers should consult with a lender to determine the maximum LTV that they are eligible for.

Sources

  1. FHA Refinance Loan Maximum Mortgage Calculation
  2. FHA Cash-out Refinance Mortgages
  3. FHA Cash-Out Refinance | Rates & Guide 2024

FAQs

What is the maximum LTV for an FHA refinance loan?

The maximum LTV for an FHA refinance loan varies depending on the type of refinance and the borrower’s circumstances. For no cash-out rate-and-term refinances, the maximum LTV is 97.5% for owner-occupied principal residences. However, if the borrower has occupied the property for fewer than 12 months or has owned it for less than 12 months and has not occupied it for the entire period of ownership, the maximum LTV is 85%. Cash-out refinance loans have an 85% LTV. Simple refinances have a maximum LTV of 97.75% for principal residences and 85% for HUD-approved secondary residences. Streamline refinances have a maximum base loan amount that is the lesser of the outstanding principal balance of the existing mortgage as of the month prior to mortgage disbursement or the original principal balance of the existing mortgage.

What is an FHA refinance loan?

An FHA refinance loan is a loan that is backed by the Federal Housing Administration (FHA). FHA refinance loans can be used to refinance an existing mortgage into a new loan with a lower interest rate, a shorter loan term, or both.

What are the benefits of an FHA refinance loan?

There are many benefits to refinancing an FHA loan, including:

    • Lower interest rate
    • Shorter loan term
    • Lower monthly payments
    • Cash out the equity in your home

What are the requirements for an FHA refinance loan?

To qualify for an FHA refinance loan, you must meet the following requirements:

    • Have a FICO score of at least 580
    • Have a debt-to-income ratio of less than 43%
    • Have at least 20% equity in your home

How do I apply for an FHA refinance loan?

To apply for an FHA refinance loan, you will need to contact a lender that offers FHA loans. The lender will provide you with an application and will guide you through the application process.

What are the closing costs for an FHA refinance loan?

The closing costs for an FHA refinance loan will vary depending on the lender and the amount of the loan. However, you can expect to pay between 2% and 5% of the loan amount in closing costs.

How long does it take to close on an FHA refinance loan?

The time it takes to close on an FHA refinance loan will vary depending on the lender and the complexity of the loan. However, you can expect the closing process to take between 30 and 60 days.

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