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.
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)