A Cash-out refinance transaction is only permitted on owner-occupied Principal Residences. The property securing the cash-out refinance must have been owned and occupied by the Borrower as their Principal Residence for the 12 months prior to the date of case number assignment.
The maximum Loan-to-Value (LTV) for a Rate and Term refinance is:
• 97.75 percent for Principal Residences that have been owner-occupied for the previous 12 months, or owner-occupied since acquisition if acquired within 12 months, at case number assignment;
• 85 percent for a Borrower who has occupied the subject property as their Principal Residence for fewer than 12 months prior to the case number assignment date; or if owned less than 12 months, has not occupied the property for that entire period of ownership.
For additional information see Handbook 4000.1 II.A.8.d at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh