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So. Let’s say you've built up substantial equity in your home, maybe $50,000 or $100,000, and you're thinking about using it. Perhaps you want to consolidate high-interest credit card debt, fund a major home renovation, or cover college tuition. Cash-out refinancing lets you access that equity by replacing your current mortgage with a larger loan and pocketing the difference. But here's the critical question: what credit score do you need to qualify?
The answer depends on multiple factors working together, your loan type, your lender's specific requirements, your overall financial profile, and the current lending environment in 2026. Understanding these credit score thresholds helps you evaluate whether cash-out refinancing makes sense for your situation right now or whether you should focus on credit improvement first.
Think of your credit score as a gatekeeper. It doesn't just determine whether you qualify for cash-out refinancing, it also controls what interest rate you'll receive, how much you can borrow, and ultimately how much the refinance costs you over its lifetime. A borrower with a 640 credit score might pay 1.5 percentage points more than someone with a 760 score. On a $300,000 loan, that difference translates to approximately $90,000 in additional interest over 30 years.
This comprehensive guide examines credit score requirements across all major loan types in 2026, explains how scores interact with other qualification factors, provides strategies for borrowers with less-than-perfect credit, and helps you determine whether now represents the right time to pursue cash-out refinancing based on your credit profile.
Conventional loans, those not backed by government agencies, typically require a minimum credit score of 620 for cash-out refinancing in 2026. This threshold represents industry-wide standards set by Fannie Mae and Freddie Mac, the government-sponsored enterprises that purchase most conventional mortgages from lenders.
However, the 620 minimum tells only part of the story. At precisely 620, you'll face significant restrictions. Most lenders require debt-to-income ratios below 36% when your score sits at this minimum. Your loan-to-value ratio after the cash-out likely cannot exceed 70 to 75%, meaning you need to maintain 25 to 30% equity. You'll also pay higher interest rates, potentially 0.75 to 1.25 percentage points above rates offered to borrowers with excellent credit.
Credit score tiers create increasingly favorable conditions as your score rises. Borrowers with scores from 640 to 679 see modest improvements in rate pricing and potentially higher loan-to-value limits up to 75%. Those with scores from 680 to 719 qualify for better rates and can maintain debt-to-income ratios up to 43 to 45% with compensating factors. Scores from 720 to 739 unlock near-prime pricing. Scores of 740 and above receive the best rates available, the lowest closing costs, and maximum flexibility on loan-to-value and debt-to-income ratios.
For example, consider a borrower with a 640 credit score seeking to refinance a $250,000 mortgage into a $300,000 loan for $50,000 cash-out. At 640, they might receive a 7.25% interest rate. A borrower with a 760 score on the identical loan could receive 5.875%. Over 30 years, the higher-score borrower saves approximately $82,000 in interest payments.
FHA loans backed by the Federal Housing Administration offer more accessible credit score requirements for cash-out refinancing. The FHA officially allows scores as low as 580 for cash-out refinances, making these loans attractive to borrowers who don't meet conventional loan thresholds.
In practice, however, many lenders impose higher minimums than the FHA floor. While the FHA permits 580, numerous lenders require 600 to 620 for cash-out refinances specifically, though they might accept 580 for rate-and-term refinances that don't involve taking cash out. This lender overlay reflects the additional risk cash-out refinances present compared to simple rate reductions.
FHA cash-out refinances come with specific requirements beyond credit scores. Your loan-to-value ratio typically cannot exceed 80%, meaning you need at least 20% equity remaining after taking cash out. Your debt-to-income ratio must stay below 43% in most cases, though some lenders allow up to 50% with strong compensating factors like substantial cash reserves or stable employment history.
The trade-off for lower credit score requirements includes mandatory mortgage insurance. FHA loans require both an upfront mortgage insurance premium of 1.75% of the loan amount and annual mortgage insurance premiums of 0.55 to 0.85% depending on your loan-to-value ratio and loan amount. On a $300,000 FHA cash-out refinance, you'd pay $5,250 upfront plus approximately $1,650 to $2,550 annually in mortgage insurance, costs that persist for the life of the loan unless you refinance to a conventional loan later.
VA loans available to eligible veterans, active-duty service members, and qualifying surviving spouses offer the most flexible credit requirements for cash-out refinancing. The Department of Veterans Affairs itself sets no minimum credit score requirement, leaving this decision to individual lenders.
Most lenders establish their own VA cash-out refinance minimums ranging from 550 to 620 depending on the institution. More lenient lenders accept scores as low as 550 to 580 for VA cash-out refinances, particularly for borrowers with strong compensating factors. Mid-range lenders typically require 600 to 620. Conservative lenders might mandate 640 or higher despite VA backing.
VA cash-out refinances provide unique advantages beyond flexible credit requirements. The VA allows loan-to-value ratios up to 90% in many cases, significantly higher than conventional or FHA programs. Some lenders even permit 100% loan-to-value for VA cash-out refinances to borrowers with excellent credit and substantial income. This means eligible veterans can potentially access all their equity while maintaining better interest rates than conventional borrowers with similar credit profiles.
VA cash-out refinances require payment of the VA funding fee, which varies based on your down payment, whether you've used your VA benefit previously, and your military service category. For most first-time VA loan users doing a cash-out refinance, the funding fee is 2.3% of the loan amount. For subsequent use, it increases to 3.6%. Disabled veterans with service-connected disabilities may qualify for funding fee exemptions. On a $300,000 VA cash-out refinance, the funding fee would be $6,900 for first-time users or $10,800 for subsequent use, though this can be rolled into the loan amount.
Your loan-to-value ratio represents the percentage of your home's value being financed by your mortgage. For cash-out refinancing, LTV limits determine how much equity you can access. Most conventional lenders cap cash-out refinances at 80% LTV, requiring you to maintain at least 20% equity after taking cash out.
Here's how this works in practice. If your home appraises for $400,000, an 80% LTV means you can borrow up to $320,000. If you currently owe $220,000 on your existing mortgage, subtracting that from $320,000 leaves $100,000 available as cash-out, minus closing costs typically 2 to 5% of the new loan amount.
LTV requirements interact with credit scores. Borrowers with scores above 740 might qualify for 80% LTV. Those with scores from 680 to 739 might face 75% LTV limits. Scores from 620 to 679 could be restricted to 70% LTV. FHA loans generally limit cash-out refinances to 80% LTV regardless of credit score. VA loans offer the most flexibility, sometimes permitting up to 90% LTV for qualified veterans with strong credit.
Your debt-to-income ratio compares your total monthly debt payments to your gross monthly income. Lenders use DTI to assess whether you can afford the new mortgage payment after refinancing and taking cash out. For cash-out refinances in 2026, most lenders require DTI ratios below 43 to 50% depending on your credit score and loan type.
Calculate your DTI by adding all monthly debt obligations, mortgage payment including property taxes and insurance, credit card minimum payments, auto loans, student loans, personal loans, and any other recurring debt. Divide this total by your gross monthly income and multiply by 100. For example, if your debts total $3,500 monthly and your gross income is $8,000, your DTI is 43.75%.
Cash-out refinances face stricter DTI limits than rate-and-term refinances because you're increasing your loan balance. While a simple refinance might accept 50% DTI with excellent credit, cash-out refinances typically cap at 43 to 45% for conventional loans. FHA allows up to 50% with compensating factors. VA loans can sometimes exceed 50% for qualified veterans with substantial residual income, the amount left after all major expenses.
Beyond meeting LTV ratios, cash-out refinancing requires sufficient home equity, meaning you've paid down your mortgage principal substantially, or your home has appreciated significantly since purchase. The minimum equity needed varies by loan type but generally requires at least 20 to 25% based on your home's current appraised value.
Seasoning periods, required ownership timeframes before cash-out refinancing, protect lenders from rapid equity extraction schemes. Conventional cash-out refinances typically require 12 months of ownership with on-time mortgage payments. FHA cash-out refinances mandate 12 months from closing on your current loan. VA loans require six months for most cash-out refinances. These waiting periods ensure you've established payment history, and the home's value reflects actual market conditions rather than inflated purchase prices.
According to FICO data from early 2026, the average American credit score stands at 715, down slightly from 717 in 2024 but remaining in the good credit range. This score exceeds the minimum requirements for all major cash-out refinance programs, conventional, FHA, and VA, suggesting most Americans with adequate home equity technically qualify based on credit alone.
However, averages mask significant variation. Approximately 24% of Americans have exceptional credit scores of 800 or above, positioning them for the best refinance rates available. Another 26% fall into the very good range of 740 to 799, still qualifying for competitive rates. About 21% have good scores of 670 to 739, meeting most requirements but paying slightly higher rates. The remaining 29% have fair or poor credit below 670, facing limited options or higher costs.
Credit scores vary substantially by age and generation. Baby boomers average 746, the silent generation 760, Gen X 709, millennials 691, and Gen Z 681 according to Experian's 2025 data. Older Americans benefit from longer credit histories and typically lower debt-to-income ratios as mortgages get paid down and income stabilizes. Younger borrowers building credit history and managing student loans face lower average scores despite often strong financial habits.
Credit scores demonstrate notable geographic patterns across the United States. Minnesota leads with an average score of 742, followed by Vermont at 737 and Wisconsin at 735. Southern states like Mississippi at 680, Louisiana at 682, and Alabama at 686 show lower averages. These regional differences correlate with income levels, employment stability, cost of living, and access to financial education.
Income significantly impacts credit scores. Low-income households, those earning below 80% of metro area median income, average credit scores of 658 according to Federal Reserve data. Middle-income households average around 710 to 720. High-income households typically score above 740. This income-score correlation reflects both access to credit and ability to manage debt successfully.
Credit scores directly determine the interest rate lenders offer on cash-out refinances. Rate pricing follows tiers, with each 20 to 40-point range receiving different pricing. As of late 2025 and early 2026, with average mortgage rates around 6.18 to 6.50% for 30-year fixed loans, cash-out refinance rates typically run 0.25 to 0.75 percentage points higher than rate-and-term refinances.
Here's how credit tiers typically translate to rates for cash-out refinances in early 2026. Scores of 760 and above might receive 6.375 to 6.625 percent. Scores from 740 to 759 might pay 6.500 to 6.750%. Scores from 720 to 739 could see 6.625 to 6.875%. Scores from 700 to 719 might face 6.875 to 7.125%. Scores from 680 to 699 could pay 7.125 to 7.500%. Scores from 660 to 679 might receive 7.500 to 7.875%. Scores from 620 to 659 could face 7.875 to 8.500% or higher.
These rate differences compound dramatically over 30 years. On a $300,000 cash-out refinance, a borrower with a 760 score at 6.50% pays approximately $1,896 monthly and $382,633 total interest over 30 years. A borrower with a 640 score at 8.00% pays approximately $2,201 monthly and $492,338 total interest. The lower-score borrower pays an additional $305 monthly and $109,705 total over the loan's life.
Credit scores also influence closing costs beyond interest rates. Borrowers with lower scores may face higher origination fees, increased lender fees, requirements for larger cash reserves, and mandatory rate locks to protect against score changes during underwriting. Total closing costs on cash-out refinances typically range from 2 to 5% of the loan amount.
On a $300,000 cash-out refinance, closing costs might total $6,000 to $15,000 depending on your location, lender, and credit profile. These include appraisal fees of $400 to $600, origination fees of 0.5 to 1.5%, title insurance and search fees of $1,000 to $3,000, credit report fees around $50, flood certification around $20, recording fees varying by county, and prepaid items like property taxes and homeowners insurance.
Payment history represents 35% of your FICO score, the single largest factor in credit scoring. Establishing perfect on-time payment records for at least six to 12 months before applying for cash-out refinancing can boost your score significantly. Even one 30-day late payment in the past year can reduce your score by 60 to 110 points depending on your overall credit profile.
Set up automatic payments for all credit accounts to eliminate missed payments. Pay at least minimum amounts by due dates, though paying full balances is ideal. If you have past late payments, time helps, their impact diminishes gradually over two years and falls off your report entirely after seven years. Focus on building new positive payment history to outweigh older negatives.
Credit utilization, the percentage of available credit you're using, accounts for 30% of your score. Lenders view high utilization as a sign of financial stress. Ideally, keep total credit card utilization below 30% of your combined limits, with below 10% even better for score maximization.
For example, if you have three credit cards with combined limits of $30,000, keep total balances below $9,000 for 30% utilization or below $3,000 for 10%. Pay down high balances before applying for refinancing. Request credit limit increases on existing cards to lower utilization ratios without changing spending. Avoid closing old credit card accounts, as this reduces available credit and can increase utilization ratios.
Approximately 25% of Americans have errors on their credit reports according to Federal Trade Commission studies. These errors range from accounts incorrectly showing late payments to fraudulent accounts you never opened. Disputing and correcting errors before refinancing can quickly boost your score.
Obtain free credit reports from all three bureaus, Equifax, Experian, and TransUnion, through AnnualCreditReport.com. Review carefully for inaccuracies including accounts that don't belong to you, incorrect payment statuses, duplicate accounts, outdated negative information beyond seven years for most items or ten years for bankruptcies, and incorrect credit limits. File disputes directly with credit bureaus online, providing supporting documentation. Bureaus must investigate within 30 days.
Cash-out refinancing provides powerful access to home equity for debt consolidation, home improvements, education funding, or other major expenses. However, qualifying requires meeting credit score thresholds that vary significantly by loan type and lender. Conventional loans typically require minimums of 620, FHA loans accept 580 to 600, and VA loans can go as low as 550 with some lenders.
Understanding that credit scores represent just one piece of the qualification puzzle helps you prepare comprehensively. Lenders evaluate your debt-to-income ratio, remaining home equity after cash-out, employment stability, income documentation, and overall financial profile. Strong performance in other areas can sometimes compensate for borderline credit scores, while weak performance elsewhere can disqualify borrowers with good scores.
The 2026 credit environment, with average scores at 715, positions most homeowners with substantial equity to qualify for cash-out refinancing if they meet other requirements. However, those with scores below 670 face higher costs and limited options, making credit improvement before applying potentially worthwhile despite delaying access to equity.
Remember that credit scores directly impact your refinancing costs through both interest rates and fees. A 100-point score difference can translate to $100,000 or more in additional interest over a 30-year loan. Investing time to boost your score by 40 to 60 points before refinancing often saves far more than the opportunity cost of waiting three to six months.
If your credit score falls below refinancing thresholds or you want better rates, focus on payment history perfection, credit utilization reduction below 30%, and error correction on credit reports. These three strategies deliver the fastest score improvements. Meanwhile, maintain stable employment, avoid new credit applications, and preserve your existing accounts to keep your credit profile strong.
Different lenders and loan types have different minimum credit scores for cash-out refinancing. Most lenders want you to have a credit score of 640 or higher for cash-out refinances, but most regular loans only need a score of 620 or higher. FHA cash-out refinances say that scores as low as 580 are fine, but in reality, most lenders want scores between 600 and 620. The VA doesn't have a minimum amount for cash-out refinances, but most banks do. This amount is usually between 550 and 620. These are not guarantees that you will be approved; they are just the lowest you can go. Just because you meet the minimum score doesn't mean you're automatically qualified. Lenders also look at your job history, debt-to-income ratio, home equity, and general financial stability. Your interest rates, terms, loan-to-value ratio, and debt-to-income ratio will all be better the higher your score is. If your score is below 620, you might want to look into FHA or VA loans if you meet the requirements. If not, you should work on improving your credit before you apply.
Yes, FHA loans can be refinanced with cash-out for people with credit scores as low as 580. It's hard to find lenders who will approve cash-out refinances with a credit score of exactly 580, though, because many set higher minimums of 600 to 620, even though FHA rules say they shouldn't. Your other qualifications also need to be good. For example, you need to have a debt-to-income ratio of less than 43%, at least 20% equity left after cashing out, stable employment for two years, and proof of income in the form of pay stubs and tax returns. People with bad credit will have to pay higher interest rates, which could be 1.0 to 1.5 percentage points more than rates for people with good credit. You will also have to fill out more forms and follow stricter loan-to-value limits of 75 to 80%. FHA loans also require you to pay for mortgage insurance. You pay 1.75% of the loan amount up front and every year until the loan is paid off. Veterans and people who are currently serving in the military can also get VA loans. Some lenders will accept 550 to 580 for VA cash-out refinances, which are better than FHA loans.
Credit scores have a big effect on the interest rates for cash-out refinances, and small differences can add up to tens of thousands of dollars over the life of the loan.Interest rates usually go up or down by 20 to 40 points on your credit score.Your rate could go up or down by 0.125 to 0.375 percentage points for each tier. For example, in early 2026, a borrower with a 760 score might get 6.50% on a cash-out refinance.A borrower with a 680 score would get 7.125%, and a borrower with a 640 score would pay 8.00%.On a $300,000 loan over 30 years, the difference between 6.50% and 8.00% is $109,705 in extra interest.The monthly payment goes up by $305, from $1,896 to $2,201.In addition to higher interest rates, lower scores also mean higher origination fees, bigger cash reserves, and stricter documentation standards.You could save a lot of money if you can raise your score by 40 to 60 points before refinancing.Use online mortgage calculators that show different interest rate scenarios to find out how much money you could save by waiting to get your credit score better.
Lenders don't just look at credit scores when they decide whether or not to approve a cash-out refinance.For cash-out refinances, most lenders want your debt-to-income ratio to be between 43% and 50%.This ratio tells you how much money you owe each month compared to how much you make. You can find out how much equity you can get by looking at the loan-to-value ratio.Cash-out refinances for regular loans usually can't go above 80% LTV, which means that 20% of the equity has to stay.The home equity itself has to be big; usually, you need at least $50,000 to $100,000 in total equity to make cash-out refinancing worth it after closing costs.Most lenders want to see two years of steady work or self-employment, along with tax returns that show income.This is because having a steady job and a good income history are very important.Most lenders want to see that you haven't missed any payments in the last year, so your payment history on your current mortgage is very important.You might need to save up some money, especially if you have a low credit score or a big loan.This proves that you can pay your mortgage for three to six months.There are different requirements for getting approval for different types of properties.For instance, investment properties have more rules than primary residences.Most of the time, how you plan to use the cash-out money doesn't matter when it comes to getting approved. However, some lenders are more likely to approve debt consolidation or home improvements than general spending.
How long it takes to raise your credit score depends on where you are now and what problems are hurting it.If you pay off your credit cards with high balances, your scores may go up in 30 to 60 days after the credit bureaus get the new, lower balances.Disputes, bureau investigations, and score updates can make it take 30 to 90 days to fix mistakes on credit reports.If you want to make up for late payments in the past, you need to make at least six to twelve months of perfect payments on time.It takes longer to get over really bad things.For seven years, foreclosures hurt scores, bankruptcies hurt scores for seven to ten years, and collections hurt scores for seven years.But the effects get weaker over time.It usually takes three to six months of focused work to raise your score from 580 to 620 to 680 to 700. This means paying off credit card debt to less than 30% of the limit, making all payments on time, and fixing any mistakes on their credit report.With aggressive balance paydown and a perfect payment history, people who start with scores between 640 and 660 could reach 700 or more in just three to four months.Make a timeline that makes sense for your specific credit problems and your ability to make improvements.A credit counselor can help you make plans and set deadlines that are right for you.
You should think about how quickly you can realistically improve your score, how badly you need the money, and how much you could save by getting a higher score.To find out how much you could save, compare the interest rates on your current score and a possible higher score.Then, multiply that by the amount of your loan and the length of time it will take to pay it off.If you can raise your score by 60 points in six months and save $100,000 over 30 years, it makes sense to wait unless you really need the money right away.But if you need money right away for time-sensitive opportunities, high-interest debt with an APR of 18 to 24%, or emergency home repairs, waiting may cost you more than you save by getting better rates.While you work on improving your credit, think about short-term solutions like home equity lines of credit, which may be easier to qualify for, personal loans for smaller amounts, or talking to your creditors to set up payment plans.If you need something that isn't urgent, like home improvements or debt consolidation at reasonable rates, waiting three to six months to improve your score is usually worth it.Paying off credit cards with less than 30% of their balance, making sure you always pay on time, and disputing mistakes on your credit report are all high-impact actions you should focus on to improve your credit. Check your score every month to see how you're doing, and then apply once you reach your goal level.
Before lending money, lenders usually look at credit reports from all three major bureaus: Equifax, Experian, and TransUnion. They then use the middle score.The lender will use 695 as your qualifying score if your three scores are 680, 710, and 695.With this middle-score method, you don't need all three bureaus to show high scores, but you also can't just rely on one high score if the others are below a certain level.When two married people apply for a loan together, lenders look at the lower middle score of the two borrowers.The lender uses 660 for qualification and rate pricing if one spouse has scores of 720, 730, and 740, with a middle score of 730, and the other spouse has scores of 650, 660, and 680, with a middle score of 660.This often leads to strategic choices about whether both spouses should apply or just the spouse with the better credit score, as long as they make enough money to qualify on their own.Your three scores can be different by 10 to 50 points because of small differences in when information is reported, how the scoring model works, and how each bureau weighs different factors.Check all three scores often and fix any problems on any report that is making your middle score lower.Some banks and credit card companies will give you free FICO scores from one bureau.Comprehensive credit monitoring services give you scores from all three.
If your credit score goes down between when you apply and when you close, it could hurt your cash-out refinance approval or change the terms of your loan.Lenders usually check your credit when you apply and again right before the closing to make sure your financial situation hasn't changed.If your score drops a lot, usually by 20 points or more, the lender may decide to reunderwrite, which means they will look at your qualifications again.Your application could be turned down if your score drops below certain levels.Your interest rate could go up if it goes down to a lower price level.Some common reasons why scores drop during the process are applying for new credit, running up credit card balances, missing payments on any accounts, or cosigning loans for other people.Don't apply for any new credit, like credit cards, auto loans, or personal loans, while you're refinancing.This will help keep your score from going down.Keep your credit card balances at the same level or lower than when you applied.Always pay your bills on time, no matter what. Don't close credit card accounts that you don't use, because this can raise your utilization ratios.Don't buy big things on credit or with cash advances.Don't sign loans for family or friends.Wait until after closing to make a big purchase.Most lenders say that you should keep your finances as stable as possible from the time you apply for a loan until the time you close, which usually takes 30 to 60 days.
It's hard to get a cash-out refinance if you have bad credit (scores below 620), but some loan programs and lenders can help.FHA cash-out refinances officially accept scores as low as 580, but you may have to look around at a lot of different lenders and work with FHA specialist lenders instead of big banks to find one that will work with you.VA cash-out refinances are the best choice for veterans and service members who qualify.Some lenders will accept scores between 550 and 580, especially if the borrower has low debt-to-income ratios, a lot of equity beyond the minimum, or a lot of cash reserves.Conventional loans don't usually approve cash-out refinances for people with credit scores below 620, so they aren't good for people with bad credit.If you have bad credit and want to refinance, you should be ready to make some big sacrifices.For example, your interest rates will be 1.5 to 2.5 percentage points higher than those of people with good credit. You will also have to provide a lot of paperwork, like multiple pay stubs, tax returns, and bank statements.You may also need to make larger down payments or reserves to make up for the credit risk.You could also raise your credit score six to twelve months before applying, look into home equity loans or HELOCs instead of cash-out refinancing (which sometimes have more flexible requirements), or add a co-borrower with better credit to your application.If you work with mortgage brokers who know a lot of lenders, they can help you find lenders who will work with people with bad credit.
If you check your credit score before applying for cash-out refinancing, you'll know how likely you are to qualify and what rates you might get.You can get your credit score for free in a lot of different ways.A lot of credit card companies give you free FICO scores from one bureau.You can find this feature on your credit card statements or online account portals.Customers of banks can often get free scores through the bank's mobile or online banking apps.You can get VantageScores from two different bureaus for free on Credit Karma and other sites.Most lenders use FICO scores, which can be 20 to 50 points different from VantageScores. You can get free credit reports from all three bureaus once a year at AnnualCreditReport.com, but you have to pay extra for scores.If you want to keep an eye on everything, you could pay between $20 and $40 a month for a service that gives you FICO scores from all three bureaus, credit monitoring, and identity theft protection.Check all three bureaus before refinancing because lenders use your middle score.Before you apply, check for any mistakes or things that aren't true that you can dispute.If your credit utilization is over 30%, think about paying off some of your balances.Look at your payment history to see if you've missed any payments in the last 12 to 24 months. Check the age of your oldest account.The longer your credit history, the better your scores will be.Give yourself at least 30 to 90 days between checking your score and applying.This will give you time to make any changes you need to make.
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