Effective April 1st, in a temporary move to curb its exposure to risk, the Federal Housing Administration (FHA) will only approve cash-out refinancing for borrowers who:
have a minimum one-year history of timely payments; and
have a minimum of 15% equity in their property, up from the current 5% requirement.
The more stringent equity requirement is motivated by an increase in the number of borrowers who never make a single payment. The population of these “instant default” borrowers nearly tripled since the past year and quadrupled for borrowers who refinanced their loans.
Re: “FHA to Tighten Standards for Cash-Out Refinancing” from the Washington Post