Refinance into an FHA?

Question

Hello! I believe you cannot but wanted to double-check since I couldn't get a real answer out of my google searching... Can I purchase a house in cash and then refinance into an FHA loan? Thanks in advance.

Michael Dumler · Answer

@Benjamin Carver Yes you can. I believe FHA cash out allows you to refinance up to 80% of your home's value and often comes with higher rates than standard FHA loans. Also keep in mind, with FHA insured loans, you're responsible for mortgage insurance which inevitably raises your monhtly payment. I would go with a convetional cash out to avoid mortgage insurance payments. Hope this helps!

Audrey L. · Answer

In my experience, the FHA loan requires you to live in the property as your primary - and sometimes conducts audits. I would confirm that's not the case for an FHA refi. Just to be on the safe side...

Chris Mason · Answer

Got it. The FHA 3.5% down payment is for purchase mortgages, that doesn't mean they will let you do a cash out refi to 96.5% LTV.

Jeff Shumway · Answer

Benjamin, you can do a cash out refinance on a property owned free and clear. Here's the excerpt from FHA's guidelines. If you do a cash out refinance within 12 months of owning the property, your loan amount is limited to the LESSER of the appraised value or the sales price of property when you acquired it.

Benjamin Carver · Answer

@Chris Mason Well, I am buying a wholesale property with a private loan and then wanting to BRRRR it. Wanted to know if I could BRRRR into an FHA Loan as to get as much capital back as possible. But I see why it's wonky.

Chris Mason · Answer

There's not a lot on google because it's rarely done.

It's rarely done because it would rarely make sense.

What do you have going on that's wonky enough that you think an FHA cash out refi is the way to go?

Benjamin Carver · Answer

@Michael Dumler thank you!!! That was very helpful!

Refinance into an FHA?

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