Cash-out refinance seasoning rules differ by agency and by how the borrower acquired the property. Submitting a cash-out file before the seasoning clock expires is one of the most common reasons files get conditioned or declined after submission. Run through these rules at application.
Fannie Mae Cash-Out Seasoning
Fannie Mae requires the property to have been acquired at least 6 months prior to the note date of the cash-out refinance for primary residences and second homes. Investment properties also require 6 months seasoning. The delayed financing exception allows cash-out within 6 months if the original purchase was all-cash with no mortgage financing, but cash received cannot exceed the original purchase price plus documented closing costs.
Freddie Mac Cash-Out Seasoning
Freddie Mac requires a 6-month minimum seasoning period measured from the note date of the most recent first mortgage. One exception applies to properties that were free and clear for at least 12 months -- those may qualify for cash-out without a waiting period. Check LP findings, as Freddie may accept shorter history on some profiles with strong compensating factors.
FHA and VA Cash-Out Seasoning
- ✦FHA requires 12 months of mortgage payments before cash-out, not just 12 months of ownership
- ✦FHA also requires zero 30-day lates in the 12 months before the cash-out application
- ✦VA cash-out requires 210 days from the first payment date of the loan being refinanced, or 6 payments, whichever is later
- ✦USDA does not offer a cash-out refinance product
Aria can confirm the exact seasoning requirement for a specific program and flag delayed financing exception eligibility. Ask at vicariointel.com.
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