FHA Cash Out Refinances Getting More Strict As Of April 1, 2009

FHA cash out refinances reduce to 85 percent April 1 2009If you’re in want of a cash out refinance, the most liberal cash-out program in town is about to make qualification more difficult. 


Effective April 1, 2009, the FHA is reducing the maximum loan-to-value on cash-out refinances by 10 percent, dropping the loan size limit from 95% of the home’s value to 85%.


In its official press release, the FHA days it’s making the change to “limit its exposure to undue risk”. 


It also lists the following cash-out requirements:



  • With less than 12 months since the purchase date, a home’s value cannot exceed its original purchase price — even if home improvements were made.
  • A homeowner must be current on his mortgage payments to qualify
  • A second, verifying appraisal may be necessary, depending on loan traits
  • Co-signers may not be added to the mortgage note in order to qualify

The last day to register a FHA 95% cash out refinance is Tuesday, March 31, 2009.  The loan does not need to be “locked” — only registered


So, if you know that a 95% cash out FHA refinance is in your future, talk to your loan officer before Wednesday morning about registration.

Post