Payment and Mortgage History
Compare the full payment and length of the debt.
Include mortgage insurance, taxes and homeowners insurance. List payments on debts you would pay off separately so you can see what changes.
HUD's rules for an FHA cash-out
HUD Handbook 4000.1 (update of August 12, 2026) sets these: the new loan, before any financed upfront premium, can be at most 80% of the appraised value, including any other liens; the home must have been your principal residence for the 12 months before the case number is assigned (an inherited home is the exception if you have not treated it as an investment property since you inherited it); every payment on all your mortgages must have been made within the month it was due for the last 12 months, or since you took out the mortgage if that is shorter, with at least six payments on the current loan; and a home with no mortgage can still be refinanced as a cash-out.
Keep financed fees straight
Put the gross loan, mortgage insurance treatment, closing charges and prepaids on separate lines. Do not count a financed fee in the balance and then deduct the same fee twice.
Consider the remaining term and risk
Compare total borrowing costs and how long you will owe the debt. Moving unsecured debt onto your home puts the home at risk if the mortgage cannot be paid. Refinancing alone does not solve an ongoing budget shortfall.
Describe mortgage history accurately
Provide recent payment information and describe any bankruptcy, foreclosure or forbearance. The lender checks your dates against HUD's rules. For an FHA cash-out, the payment-history rule applies however the file is underwritten.