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Cash Out Refinance Credit Scores: Do You Qualify?

Find out the Minimums for Conventional, FHA, and VA Loans

Before you refinance to borrow cash from your home's equity, it is a good idea to know your credit score. That's because your credit score is one of the factors that help lenders like Freedom Mortgage determine if you qualify for a cash out refinance. Also, a higher score can usually allow us offer you a lower interest rate on your refinance.

We'll look at the credit score requirements for cash out refinances, explain how lenders evaluate your credit, and outline practical steps you can take to strengthen your score before applying.

Typical Minimum Credit Scores for Cash Out Refinances

Most lenders have an average range of credit scores they'll accept for cash out refinances, which could look like:

Conventional cash out refinance: 620–640 and up
FHA cash out refinance: 550–580 and up
VA cash out refinance: 550–620 and up

Credit scores of 700 and up are typically required to secure the best available interest rates, along with having at least 20% equity in the home.

Cash Out Refinance Credit Score Requirements at Freedom Mortgage

At Freedom Mortgage, the minimum score for a cash out refinance varies depending on the loan program. For example:

When you want a cash out refinance using a conventional loan, we can often accept a minimum credit score of 620.
When you want a VA loan cash out refinance, we can often accept a minimum credit score of 550.
When you want an FHA loan cash out refinance, we can often accept a minimum credit score of 550.

These minimum credit scores are lower than scores required by some other lenders. That's because we want to help as many homeowners as possible access the value of their home's equity to get low-interest cash for important investments, such as home renovations or paying down higher-interest debts. If you're a Freedom Mortgage customer, primary borrowers can check their credit score on our mobile app.

Ways to Boost Your Credit Score

If you're concerned your credit score may be too low for a cash out refinance, or if you want to improve your score to qualify for better rates, there are some steps you can take:

Make on-time payments: Payment history is the biggest factor in your credit score, so paying all bills on time can have a meaningful impact on your score.
Pay down credit card balances: Lowering your credit utilization ratio by reducing higher-interest balances can quickly help boost your score.
Avoid opening new credit accounts: Applying for new credit can trigger hard inquiries that temporarily lower your score.
Check your credit reports for errors: Reviewing your reports and disputing inaccuracies can help ensure your credit score reflects accurate, up-to-date information.
Keep older accounts open: A longer credit history can work in your favor, even if you don't use those accounts frequently.

Other Factors That Affect Cash Out Refi Approval

Your credit score isn't the only number considered when you want a cash out refinance. The bigger picture of your income and finances will be evaluated before lenders determine if you qualify to take equity out of your home.

Home equity: You'll need a substantial amount of home equity to qualify for a cash out refinance. A home appraisal may be necessary as part of your mortgage application to determine your home's fair market value and how much equity you have available.
Loan-to-value ratio (LTV): It's important to understand your loan-to-value ratio (LTV) because the maximum LTV of a cash out refinance has a big impact on the amount of money you may be able to borrow against your home's equity. Knowing how much you can borrow helps you better plan how to use your cash.
Debt-to-income ratio (DTI): Your debt-to-income ratio helps you estimate if your total monthly debt payments, including your mortgage payment after refinancing, are affordable. Lenders like Freedom Mortgage often consider your DTI before determining if you qualify for a cash out refinance.
Loan seasoning: Many lenders require your mortgage loan to be "seasoned," which means you've owned the home for a certain period of time, typically 6 months to a year. Loan seasoning also affects how often you can refinance.

Cash Out Refinance Credit Score FAQs

Understanding how your credit score affects a cash out refinance can help you prepare and set realistic expectations before applying.

Is It Hard To Get a Cash Out Refinance?

Getting a cash out refinance isn't necessarily hard, but requirements are often stricter than a standard refinance. Lenders typically look for higher credit scores, sufficient home equity, and stable income.

Does a Cash Out Refinance Hurt Your Credit Score?

A cash out refinance may cause a small, temporary dip due to a hard credit inquiry (and the extra debt you assume). But making on-time mortgage payments over time can help improve your score.

Can You Get a Cash Out Refinance With Bad Credit?

You may still qualify with a lower credit score, but your options are typically more limited. You may face higher interest rates or need stronger compensating factors to balance out the lower credit score, such as more equity or lower debt. Freedom Mortgage offers cash out refinance options to customers with less-than-perfect credit scores.

Final Thoughts: Cash Out Refinance Credit Scores

Your credit score plays a key role in determining whether you qualify for a cash out refinance and what terms you'll receive. Taking steps to strengthen your credit can improve your approval odds and potentially save you money over the life of the loan. Ready to see where you stand and how much money you can save? Get prequalified today to explore your cash out refinance options and take the next step.