"Can I Do a Cash-Out Refinance on a Home I Just Inherited, or Do I Have to Wait Six Months?"

A lot of clients who inherit a home hear "six months on title" from the first lender they call, right when a repair or a family payout can't wait.

Yes, the six-month wait before a cash-out refinance, a new mortgage bigger than what you owe that pays you the difference, is waived for a home you inherited, at both Fannie Mae and Freddie Mac.

Being on title means your name is on the deed as an owner. I'm Jeff Moran, a mortgage broker in Bluffton, South Carolina, originating since 1996, licensed in fifteen states, NMLS #483943, through C2 Financial Corporation. The estate, the deed and probate are your attorney's work, and what happens to the mortgage on a home you inherit covers the loan that may already be on it.

The six-month rule on a cash-out refinance

How a cash-out refinance works walks through the mechanics, and the home equity hub compares it with a second mortgage and a home equity line of credit.

Normally, at least one person on the loan has to have been on title for six months before the new loan pays out, according to Fannie Mae's guide. Fannie Mae says there is "no waiting period" when the lender documents that the person on the loan "acquired the property through an inheritance or was legally awarded the property." A home awarded in a divorce is covered by the same sentence. Freddie Mac's guide lists "Inheritance or legal award" as an exception to its own six months.

The exception removes the waiting period and leaves every other requirement in place. Your income, your credit and the appraisal are reviewed the same way they are on any cash-out refinance.

Showing the lender you inherited the home

Neither guide lists the exact papers, and both leave the choice to the lender. Your lender will tell you which estate papers it needs, and the attorney handling the estate is the person who has them, so it helps to ask early. The new loan also needs the home to be in your name, and your attorney handles how and when the deed moves out of the estate.

Cash-out limits on an inherited home

The limit comes from the loan-to-value ratio, the new loan as a percent of what the home appraises for. This table is from Fannie Mae's Eligibility Matrix, effective August 5, 2026, for loans run through its automated underwriting system.

How you will use the home	Units	Maximum loan, as a percent of value
Your primary residence	1 unit	80%
Your primary residence	2 to 4 units	75%
A second home	1 unit	75%
An investment property	1 unit	75%
An investment property	2 to 4 units	70%

So the same inherited home supports a larger cash-out loan if you move into it than if you rent it out. Your debt-to-income ratio, your monthly debts as a percent of your monthly income, still has to work, and how debt-to-income works covers it.

Cash-out refinance versus buying out your siblings

If you inherited the home with your brother and sister and you are keeping it, the new loan pays your brother and sister for their shares, and you don't receive any of that money. Both agencies treat that as a different loan: Fannie Mae calls it a limited cash-out refinance, and Freddie Mac calls it a special purpose cash-out refinance and waives its joint-ownership requirements for people who inherited. Buying out a co-owner with a special purpose cash-out refinance walks through that loan.

So if every dollar beyond the old mortgage and the closing costs goes to your siblings, the buyout rules apply. If you also want money for the roof, the loan is a cash-out refinance, with the ceilings above and the inheritance exception to the six months.

If there is still a mortgage on the home

If the home has a mortgage, Fannie Mae's guide wants it to be at least 12 months old before a cash-out refinance pays it off, and a mortgage your parent took out years ago clears that on its own.

If the old mortgage is in your parent's name and you were never on it, Freddie Mac's guide normally requires someone on the new loan to have been on the old one, and it lists an inheritance as an exception. Before you pay that mortgage off, it helps to look at its rate, because keeping an inherited mortgage can be the better plan when its rate is well below today's.

If the home came to you through your parent's revocable living trust, a trust your parent could change while alive, buying a home in a revocable living trust covers how a trust and a mortgage fit together.

FHA cash-out on an inherited home

HUD's FHA handbook allows a cash-out refinance only on a home you live in as your principal residence, and it says an heir is not required to have lived there for a minimum period first. That holds as long as the home has not been treated as an investment property since the inheritance. If you rent the home out after inheriting it, FHA wants 12 months of you living there first.

An example, with invented numbers

Dana and her numbers are made up to show the mechanism.

Dana inherits her father's home with no mortgage on it, and it appraises at $400,000. She moves in and wants $60,000 for the roof. On Fannie Mae's matrix, a one-unit primary residence cash-out refinance is capped at 80% of value.

Appraised value (made up)                          $400,000
Maximum cash-out loan, primary residence, 80%      $320,000

Now say Dana inherited the home with two siblings who each agreed to take $100,000 for their share.

Paid to sibling one                                $100,000
Paid to sibling two                                $100,000
                                                   --------
Buyout, before closing costs                       $200,000
Roof, for Dana                                      $60,000
                                                   --------
Total before closing costs                         $260,000

With the roof money in it, the loan is a cash-out refinance, and $260,000 plus closing costs fits under the $320,000 ceiling. Without it, every dollar goes to her siblings and the loan follows the buyout rules instead.

Your next step

Rate & Best Fit prices a cash-out refinance for your own scenario, using the home's value, the amount you have in mind and how you will use it. You can choose a rate option that works best for you, and that selection can change as we go.

If you would rather talk it through first, you are welcome to call me at (843) 765-0000 or email jeff@solverya.com. Please have an idea of the home's value, the amount you want, whether anyone else inherited a share, and the name of the attorney handling the estate.

Nothing here is legal advice, and nothing here is a loan approval, a denial or a commitment to lend. How the home passes from the estate to you is a question for your attorney, and whether a file meets a lender's requirements is a question for the lender.

Common questions

Do I have to wait six months to cash-out refinance a home I inherited?

No. When you inherit a home, Fannie Mae and Freddie Mac both waive the six months, as long as your lender documents the inheritance.

How much can I cash out on an inherited home?

Fannie Mae allows up to 80 percent of the appraised value on a one-unit home you live in, and 75 percent on a one-unit second home or investment property. Your income and credit still have to qualify.

Is buying out my siblings on an inherited home a cash-out refinance?

Not when every dollar beyond the old mortgage and closing costs goes to your siblings, because the lenders call that a limited cash-out or special purpose cash-out refinance. If you also take money for yourself, it's a regular cash-out refinance.

Can I do an FHA cash-out refinance on an inherited home I just moved into?

Yes, if you have not rented it out since you inherited it, because FHA does not require an heir to have lived in the home for a minimum period first. If it was rented out after the inheritance, FHA wants 12 months of living in it first.

Does the six-month rule apply if my parent's home was in a living trust?

Fannie Mae counts the time your parent's trust held the home toward the six months, if the trust was set up for you as the main person who gets the home. Your attorney can tell you how the home passes out of the trust.