FHA Cash Out Refinance Rates Compared

If you’re thinking about pulling equity out of your home with an FHA cash-out refinance, one of the biggest questions you’ll run into is: How do the rates compare to other refinance options, and what does that mean for you?

Cash-out refinance rates are rarely the lowest because you’re increasing loan risk by accessing equity but they are often more accessible to borrowers with moderate credit scores or limited equity.

This post breaks down how FHA cash-out refinance rates stack up against similar options, what affects the pricing, and how to make a smart choice instead of just chasing the lowest number.

When you compare FHA cash-out refinance rates, remember you’re not just comparing interest, you’re comparing loan structure, mortgage insurance, and long-term cost across several refinance types:

• FHA cash-out refinance
• Conventional cash-out refinance
• FHA streamline (no cash-out)
• Refinancing FHA to conventional

Each has a different risk profile, documentation level, and lender pricing, so rates are just one piece of the puzzle.

Comparing rates without understanding context can lead you downhill fast.

FHA cash-out refinance programs tend to have rates that are competitive with other government-backed options, but usually higher than conventional cash-out rates, especially for borrowers with stronger credit or more equity.

Because FHA insures part of the loan, lenders often price FHA cash-out loans slightly lower than high-LTV conventional cash-out loans but higher than streamline or rate-and-term refinances. Your exact rate depends on:

• Credit score
• Debt-to-income ratio
• Loan-to-value (LTV) after cash-out
• Local market conditions

That’s why when you’re considering this path, it’s smart to review FHA cash out refinance rules and limits before focusing on the rate alone, limits like the 80% LTV cap can affect how competitive your actual offer is.

One of the most common rate comparisons homeowners make is between FHA cash-out refinance and a conventional cash-out refinance.

Conventional loans typically offer lower interest rates when the borrower has solid credit and enough equity.

The trade-off is that conventional loan pricing is tighter about credit scores and LTV ratios meaning you might not qualify for the best conventional rate even if it exists.

FHA loans always include mortgage insurance, which doesn’t go away without refinancing out of FHA later.

Conventional cash-out loans may require PMI, but it can often be removed once enough equity is established.

So even if an FHA cash-out rate seems similar on paper, your total cost over time may tilt in favor of conventional especially if you compare the full long-term cost, not just the rate.

Some borrowers ask, “why not just do an FHA streamline instead?” The answer lies in purpose.

• FHA streamline refinance is designed to lower rate/payment with minimal documentation but it doesn’t allow cash out.
• FHA cash-out refinance lets you access equity but usually comes with a slightly higher rate because of the larger loan and the additional risk to lenders.

That’s why comparing FHA cash-out refinance rates to streamline refinance rates alone can be misleading, you’re comparing apples to oranges unless cash-out is your explicit goal.

An option many FHA homeowners consider once equity and credit improve is a refinance FHA to conventional loan.

This doesn’t directly offer cash out unless you choose a conventional cash-out, but it often results in lower overall rates and the potential to drop mortgage insurance later which can outweigh a slightly higher cash-out rate.

If your main goal is lower monthly payment or shorter term, a rate-and-term refinance (without cash out) can often offer a better rate than a cash-out option.

That’s critical when you’re comparing total cost and monthly savings.

Several factors influence where you’ll land in the rate spectrum:

• Credit score – higher scores = better pricing
• Equity after cash-out – lower LTV means stronger pricing
• Loan amount and property type
• Market conditions at application

Before locking in, it’s smart to understand what lenders look at for refinance approval so you know whether you’re being priced fairly or if improvements (like paying down debt or waiting for markets) might help.

Here’s a simple way to make rates meaningful:

1. Get personalized quotes – averages don’t tell your story.
2. Include PMI/MIP in your cost analysis – FHA always has insurance; conventional may drop it later.
3. Use a refinance calculator to test scenarios – rate, term, costs, and equity all matter.
4. Understand closing costs – sometimes a lower rate isn’t lower cost overall.

Comparing rates without costs is like comparing car prices without considering gas, insurance, or maintenance, it doesn’t give you the real picture.

When you look at FHA cash-out refinance rates compared to other refinance paths, you’ll often find they sit in the middle: not the cheapest (that’s usually conventional rate-and-term refinancing) and not the most expensive (some high-LTV conventional cash-out loans).

The value comes when you match the right rate to the right refinance purpose. Cash-out rates are only worth chasing when:

• You actually need the equity
• You compare total long-term cost, not just interest
• You consider how mortgage insurance affects your bottom line

If your only goal is a lower payment, a rate-and-term refinance (like an FHA streamline refinance) may beat a cash-out refinance on savings and cost, even with a comparable interest rate.