Do HUD 232/223(f) Loans Permit Cash Out Refinancing?

HUD 232/223(f) Loans and Cash Out Refinancing

In general, HUD 232/223(f) loans do not permit cash out refinancing. However, some borrowers choose to get a conventional (non-HUD) loan that permits cash out, then quickly refinance their property with a HUD 232/223(f) loan. Traditionally, HUD’s ‘debt seasoning’ rules required that borrowers waited 2 years after taking out a loan on a property before securing HUD 232/223(f) refinancing. This was to ensure that a property had sufficient cash flow in order to be self-sustaining.

However, new HUD rules permit HUD 232/223(f) refinancing within two years of a borrower taking out a loan with cash out, albeit with stricter LTV requirements. These include:

  • 70% Maximum LTV, if a property used more than 50% of their cash out for project purposes (not equity distribution)

  • 60% Maximum LTV, if a property used less than 50% of their cash out for project purposes (and more than 50% for equity distribution)


To learn more about HUD 232 loans, fill out the form below to speak to a HUD/FHA loan expert.