Cash-Out Refinance Requirements for 2025

July 21, 2025

What Is a Cash-Out Refinance?

Think of it as turning your home into your personal ATM (but way smarter). Replace your current mortgage with a larger loan and pocket the difference. Use the cash for home improvements, debt consolidation, or other financial needs while potentially securing better rates.

Universal Requirements

Credit Score: Most lenders require 620 minimum for conventional loans, though you’ll want 740+ for the VIP treatment (aka best rates). FHA loans accept 600 minimum, while VA loans typically prefer 620+.

Debt-to-Income Ratio: Your total monthly debts, including the new mortgage payment, generally cannot exceed 43% of your gross monthly income. Think of it as the financial equivalent of not overpacking your suitcase. Higher ratios may require six months of mortgage payment reserves.

Home Equity: You must retain at least 20% equity in your home after the cash-out refinance. This protects both you and the lender because nobody wants to be house-poor.

Your Three Main Options

Conventional Cash-Out is the crowd favorite, allowing you to borrow up to 80% of your home’s value with no mortgage insurance required. You’ll need at least six months of ownership (no house-flipping shenanigans here) and comprehensive income documentation including two years of tax returns and recent pay stubs.

FHA Cash-Out is the flexible friend that offers more forgiving credit requirements but requires mortgage insurance regardless of your down payment. Your home must be your primary residence for at least 12 months, and loan limits are $524,225 in most areas.

VA Cash-Out is exclusively for our military heroes and their families, allowing you to borrow up to 90% of your home’s value. There’s a funding fee of 2.15% to 3.3% but no mortgage insurance required because you’ve already served your country.

What’s Different in 2025

Lenders have gotten a bit pickier (think dating apps but for mortgages), requiring more comprehensive income and asset verification. Cash-out refinance rates typically run 0.125% to 0.5% higher than standard refinance rates. Conventional loan limits are now $806,500 in most areas, while standard FHA loan limits remain at $524,225.

Closing Costs and Timeline
Expect closing costs between 2-6% of your loan amount. At Intelliloan, many of our clients close seamlessly thanks to our streamlined process and experienced team who knows what they’re doing.

It is always important to consult with a mortgage professional as guidelines and requirements can change.

The Intelliloan Advantage

With over 30 years of experience and recognition as a top-10 lender, we provide transparent guidance tailored to your unique situation. Our 97% customer recommendation rate reflects our commitment to putting your needs first.

Ready to explore your options? Contact us today at 833-984-2471

Sources

Credit Score Requirements

The Mortgage Reports – “Cash-Out Refinance Guide: Requirements and Rates for 2025” (January 2025)
NerdWallet – “Cash-Out Refinance: How It Works and What to Know” (July 2023)
LendingTree – “Cash-Out Refinance: How It Works and When to Do It” (January 2025)

DTI Ratio Requirements

The Mortgage Reports – “Cash-Out Refinance Guide: Requirements and Rates for 2025”
NerdWallet – “Cash-Out Refinance: How It Works and What to Know”

Home Equity Requirements

Bankrate – “Cash-out refinance: What it is and how it works” (May 2025)
The Mortgage Reports – “Cash-Out Refinance Guide: Requirements and Rates for 2025”

2025 Loan Limits

LendingTree – “Cash-Out Refinance: How It Works and When to Do It” (January 2025)

VA Loan Specifics

Veterans United – “VA Cash-Out Refinance Overview, Rates and Requirements” (July 2025)
LendingTree – “Cash-Out Refinance: How It Works and When to Do It” (January 2025)

Rate Premiums