Fact Checked
FHA Cash-Out Refinance (FACOP) in 2026: Rates, Requirements, and How It Compares to Conventional Cash-Out
Most FACOP searches turn up rate tables, but the real qualification question is different: what HUD requires versus what your lender adds on top. Separating that federal floor from lender overlays is what determines whether you clear the file. I walk borrowers through this split most days.
Key Takeaways
- HUD's FACOP floor is an 80% loan-to-value cap, cut from 85% specifically to reduce insurance-fund risk.
- A 500 credit score technically qualifies, but most lenders overlay stricter minimums on top of HUD's rules.
- FHA cash-out applies the same rules at any age; a HECM reverse mortgage is the separate 62+ product.
- Conventional cash-out allows up to 97% LTV in limited form, versus FHA's flat 80% true cash-out cap.
- Upfront and annual mortgage insurance premiums can make FHA more expensive despite its looser credit floor.
What FACOP Actually Means
FACOP is HUD's internal shorthand for the FHA cash-out refinance program, and the name causes more confusion than it resolves. FACOP is a standard FHA-insured refinance where you borrow more than you currently owe and take the difference in cash at closing, using the same rulebook as any other FHA loan. If you're searching "fhacashout" expecting a distinct offering with different terms, it's the same program under a different label. The real question is whether your file meets FHA's cash-out requirements, and those requirements come straight from HUD's Single Family Housing Policy Handbook.
The Floor Versus the Overlay
Circumstances vary from one borrower to the next, but the confusion I run into on FACOP is typically the same one: people read HUD's minimums and assume that's what they'll get approved for. HUD's handbook sets a nationwide floor, and individual lenders require more on top of it, almost without exception. AmeriSave's loan officers walk borrowers through both layers upfront, so a quoted credit score or LTV is never mistaken for a federal guarantee.
HUD's floor includes a minimum decision credit score of 500. If your score falls in the 500-579 range, you're capped at a maximum 90% loan-to-value, while a score of 580 or higher opens up FHA's standard maximum financing terms. What a specific lender will actually approve is a separate question, and a stricter one. If you're sitting at a 500 score with thin reserves, that's a very different underwriting conversation than if you're at 580 with a clean payment history, and I'd rather have that conversation with you upfront than let a HUD number set expectations your file can't clear. The number on HUD's page marks where eligibility starts, and your lender's own underwriting decides where it actually ends.
The other half of the floor is loan-to-value: FACOP caps the new loan, including any cash out, at 80% of the home's appraised value. That cap used to sit at 85%, until HUD lowered it to reduce risk in the FHA insurance fund. If your home appraises at $400,000, your new FHA loan caps at $320,000, with your existing mortgage balance coming out of that figure before you see any cash. That 80% number is HUD's rule, not your lender's; I mention that distinction because it's the one piece people get wrong first.
The Senior Question, Answered Directly
A meaningful share of FACOP searches include some version of "for seniors." I hear this one a lot, and the accurate answer is that HUD never built a separate lane for it: there's no senior-specific FHA cash-out refinance program; standard FACOP rules, the same 500-score floor and the same 80% LTV cap, apply the same way regardless of age. If you're 62 or older, the floor doesn't move just because you hit that birthday. What does exist, and what you might actually be asking about if you landed here searching "for seniors," is the Home Equity Conversion Mortgage, a reverse mortgage that works fundamentally differently: with a HECM, you don't make monthly principal and interest payments, and the loan is repaid once the home is sold or no longer occupied as a primary residence. If you're 62 or older, the real choice is between a standard cash-out refinance, which still requires payments, and a HECM, which doesn't. I'd rather spend five minutes making sure you're asking about the right product than have you qualify for one and realize a few months later you wanted the other.
How FHA Cash-Out Stacks Up Against Conventional
Every borrower's finances look different, and this comparison is where those differences show up directly in the numbers. FACOP and a conventional cash-out refinance solve the same problem through different rules, and neither one is the objectively "better" program; the right fit depends on which floor you're standing on. Fannie Mae requires at least one borrower to have held title for 6 months before the new loan disburses, and its limited (rate-and-term) cash-out refinance allows up to 97% loan-to-value, well above FHA's flat 80% cap on true cash-out. That's HUD's floor doing the opposite of what it does on credit score: strict on equity access, looser on who qualifies to get in the door.
The contrast plays out like this. If you've got strong credit and 30% equity built up, FHA cash-out doesn't make sense; conventional gets you more cash out and skips FHA's mortgage insurance entirely, so paying for FHA's flexibility would mean paying for something you don't need. But if you're carrying a 505 credit score and 15% equity, conventional cash-out isn't reachable at all, and FHA's lower entry bar is the only door open to you right now. It's the same transaction and the same goal, but the right answer changes depending on where you're standing.
Total Cost Is a Qualification Factor Too
It's easy to treat credit score and LTV as the whole qualification story and skip past cost, but I'd put mortgage insurance in that same conversation, because it's usually the charge that catches borrowers off guard. FHA charges an upfront premium of 1.75% of the base loan amount, financed into the loan, plus an annual premium of 0.55% for most borrowers, reduced by 30 basis points from the prior 0.85% level. That premium exists regardless of your score or your lender; HUD bakes it into the floor itself. Conventional loans only require mortgage insurance above 80% LTV, so if you stay under that threshold, you avoid the premium altogether, and if you've got strong credit and more than 20% equity, you may qualify more cheaply through conventional cash-out despite FHA's friendlier credit floor. AmeriSave's loan officers run both scenarios before recommending either path, since the qualification floor and total cost picture rarely point to the same answer, and I'd rather show you both numbers than let a lower credit bar make the decision for you.
Current FHA loan limits also set a ceiling regardless of equity: $541,287 for a one-unit property nationwide, rising to $1,249,125 in high-cost areas. That's another federal floor set by HUD, fixed regardless of what your lender is willing to offer, so it's worth confirming before you build a cash-out number in your head.
It really depends on your situation, but the path through all of this is the same one: find out what HUD actually requires, then what your specific lender adds on top of it, and run the FHA-versus-conventional math before you pick a program instead of after. Get those answers upfront and there's nothing left to surprise you at closing, whether that's a lender overlay you didn't expect, a mortgage insurance premium you didn't budget for, or a loan limit that caps your file lower than your equity would otherwise allow. That's the path I walk borrowers through every time this question comes up.
HUD, Mortgagee Letter 2019-11: reduced the FHA cash-out refinance maximum loan-to-value from 85% to 80%, effective for case numbers assigned on or after September 1, 2019.
Fannie Mae Selling Guide, "Cash-Out Refinance Transactions" (B2-1.3-03): supports the 6-month title-seasoning requirement cited in the conventional cash-out comparison.
Fannie Mae Selling Guide, "Limited Cash-Out Refinance Transactions" (B2-1.3-02): supports the 97% maximum loan-to-value figure for conventional limited cash-out refinances.
HUD, Mortgagee Letter 2023-05, "Reduction of Annual Mortgage Insurance Premium Rates": supports the annual FHA mortgage insurance premium reduction from 0.85% to 0.55%, effective for mortgages endorsed on or after March 20, 2023.
HUD, FHA Single Family Housing Policy Handbook 4000.1: supports the 500 minimum credit score floor and the 90% maximum loan-to-value cap for borrowers scoring 500-579.
HUD, "HUD's Federal Housing Administration Announces 2026 Loan Limits" (HUD No. 25-145): supports the current FHA loan limit floor of $541,287 and ceiling of $1,249,125, effective for case numbers assigned on or after January 1, 2026.
HUD, FHA Single Family Housing Policy Handbook 4000.1, Appendix 1.0, Mortgage Insurance Premiums: supports the 1.75% upfront FHA mortgage insurance premium figure.
Jerrie leads sales operations in the Dallas-Fort Worth region for AmeriSave, where his entire mortgage career has been spent since being recruited into the industry at age 18. Licensed as a Mortgage Loan Originator in 37 states, he specializes in making complicated loan options accessible and helping borrowers understand what matters most in their individual situations. He brings deep regulatory knowledge and a client-centric approach honed through progression from entry-level to upper management, including successfully onboarding and training 70 people from a closed Cleveland office.
Frequently Asked Questions
Yes, FACOP is simply an FHA-insured refinance used for a cash-out transaction rather than a purchase or rate-and-term refinance. It draws on the same HUD handbook, mortgage insurance structure, and underwriting framework as any other FHA loan. The term is shorthand HUD uses internally for a transaction type within the existing FHA program, with the same eligibility rules as any other FHA loan.
HUD's floor and your lender's actual approval standard are two different numbers, and both matter. HUD's floor is a 500 minimum decision credit score, though scores in the 500-579 range cap out at 90% maximum loan-to-value. A score of 580 or higher opens up FHA's standard maximum financing structure. HUD's minimum isn't the same as what an individual lender will approve, since most lenders apply their own overlay requirements on top of the federal floor based on their own risk tolerance.
Your appraised value and your existing balance are two separate numbers that both factor into the answer. No, you can't borrow up to 100%. FHA cash-out refinances are capped at 80% of the home's appraised value, a limit HUD lowered from 85% specifically to reduce risk in the FHA insurance fund. Your new loan amount, including any cash you receive, can't exceed that threshold. Any existing mortgage balance is paid off from within that cap before remaining equity converts to cash, which is why appraised value drives how much you can actually access.
No, there's no senior-specific FACOP variant, and FHA cash-out refinance rules apply the same way regardless of your age. The FHA-insured product designed specifically for homeowners 62 and older is the Home Equity Conversion Mortgage, a reverse mortgage that works differently by not requiring monthly principal and interest payments. If you're 62 or older, treat FACOP and a HECM as two distinct products, each with its own rules.
Your credit and how much equity you're standing on decide which program actually costs less for you. The two programs differ most on loan-to-value limits and mortgage insurance. FHA caps true cash-out at 80% LTV and requires an upfront and annual mortgage insurance premium regardless of equity position. Conventional cash-out through Fannie Mae allows up to 97% LTV in limited form, and conventional loans only carry mortgage insurance above 80% LTV. If you've got strong credit and high equity, you'll often find conventional cash-out less expensive, while if you're earlier in a credit rebuild, FHA's lower credit floor is the one that fits.
FHA loan limits vary by county rather than applying as one flat number nationwide. The nationwide floor for a one-unit property is $541,287, and the ceiling in high-cost areas is $1,249,125. These limits apply to the total FHA loan amount, including any cash-out portion, so they cap how large a FACOP loan can be regardless of your appraised value or equity built. Confirming your area's limit early is worth doing.