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Reduced Maximum LTV and CLTV on FHA Cash-Out Refinances Effective September 1, 2019

August 14, 2019


As a reminder, the maximum loan-to-value (LTV) and combined loan-to-value (CLTV) percentages will be reduced from 85% to 80% for all FHA cash-out refinance mortgages with case numbers assigned on or after September 1, 2019.
For borrowers seeking to combine a first and second lien, the maximum CLTV ratio for an FHA Rate and Term refinance is 97.75%.  Rate and Term refinance transactions may include the unpaid principal balance of any purchase money junior mortgage as of the month prior to mortgage Disbursement, and the unpaid principal balance of any junior liens over 12 months old as of the date of mortgage Disbursement. If the balance or any portion of an equity line of credit in excess of $1,000 was advanced within the past 12 months and was for purposes other than repairs and rehabilitation of the property, that portion above and beyond $1,000 of the line of credit is not eligible for inclusion in a Rate and Term refinance.
Please note: for open-end lines of credit CMS must utilize the maximum accessible credit limit of the subordinate lien to calculate the CLTV ratio.
Borrowers can also obtain higher LTVs through a Rate and Term refinance that meet the following seasoning requirements:

Seasoning Maximum LTV
Property acquired 12 months or more at case number assignment
  • 97.75 percent for Principal Residences that have been owner-occupied for previous 12 months at case number assignment.
  • 85 percent for a Borrower who has occupied the subject Property as their Principal Residence for fewer than 12 months prior to the case number assignment date.
Property acquired less than 12 months at case number assignment
  • 97.75 percent if the subject has been owner-occupied for the entire time since acquisition. LOE required addressing borrower immediately began occupying the property after acquiring it, and file documentation dated after the acquisition date must support the subject property as borrower’s address.
  • 85.00 percent if the subject has not been owner-occupied for the entire time since acquisition or if file documentation dated after the acquisition date does not support the borrower immediately took occupancy.

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