Cash-Out Refinance Calculator

Suppose your home is worth $450,000 and you still owe $250,000. You have $200,000 of equity, but you cannot borrow all of it. With the standard 80% loan-to-value cap, your new loan can be as large as $360,000 - so the most cash you could take is about $110,000 before closing costs. Pull $50,000 of that, and your new loan becomes $300,000. At 6.5% on a 30-year term, the new principal-and-interest payment is roughly $1,896 per month. That is exactly what this cash-out refinance calculator works out: how much cash you can actually receive, and what your monthly payment becomes after you do it.

How a cash-out refinance works

A cash-out refinance replaces your current mortgage with a new, larger one. The new loan pays off your old balance, and the lender hands you the difference - the "cash out" - at closing. Because the entire new loan is secured by your home, you are effectively converting some of your home equity into spendable cash while resetting your mortgage. The trade-off is a bigger balance, usually at today's rate, and a fresh loan term.

The cash-out refinance formula

The calculation has two parts - how much cash you can take, then what the new payment is:

where max LTV is usually 80%, L is the new loan amount, r is the monthly interest rate (annual rate ÷ 12), and n is the number of payments (years × 12). The cash you receive is whichever is smaller - the amount you request or the LTV-driven maximum.

How to use this calculator

You need just a few figures to get a realistic estimate. Work through the fields in order:

1. Home value: enter your home's current appraised or estimated market value. Lenders order a formal appraisal, so use a realistic figure rather than a hopeful one.
2. Current mortgage balance: the payoff amount you still owe. The calculator shows your equity and LTV as you type.
3. Cash you want to take out: the amount you are hoping to receive. If it exceeds the LTV cap, the calculator tells you and uses the maximum allowed.
4. New loan term and rate: pick the term (30, 20, 15 or 10 years) and enter a current quoted rate for the new loan.
5. Current rate and max LTV (optional): add your current rate to estimate your existing payment, and adjust the LTV cap if your loan program allows more than 80%.

The result shows your cash at closing, the new loan amount, the new payment beside an estimate of your current one, and your new loan-to-value. Remember to subtract closing costs to find your true net cash.

Who a cash-out refinance is for

Tapping home equity through a refinance can make sense for several situations:

• Homeowners funding renovations who want to reinvest in the property at a mortgage rate rather than a credit-card rate.
• Borrowers consolidating high-interest debt, replacing expensive credit-card or personal-loan balances with lower-rate, home-secured debt.
• People facing a large expense - education, a medical bill, or starting a business - who have substantial equity and limited cheaper options.
• Owners with a high existing rate who can lower their rate and take cash in one move.

It is usually a poor fit if your current rate is much lower than today's rates (a HELOC or home equity loan may be better), or if you would be using the cash for everyday spending you cannot repay.

Key cash-out refinance terms

• Equity: your home's value minus what you owe. Cash-out lets you borrow against part of it, not all of it.
• Loan-to-value (LTV): the new loan divided by the home value. The 80% cap is the most common limit for conventional cash-out loans.
• Cash out: the difference between your new, larger loan and your old balance - the money you walk away with.
• Closing costs: fees of roughly 2%-6% of the new loan (appraisal, title, origination) that reduce your net cash or get added to the balance.
• Mortgage insurance: if a cash-out pushes your LTV above 80% on a conventional loan, you may owe PMI - another reason the 80% cap matters.

Scenario 1: tapping equity for a renovation

Your home is worth $500,000 and you owe $300,000 at 3.5% with about 25 years left. You want $60,000 for a kitchen and roof. The 80% cap allows a $400,000 loan, so $60,000 is well within reach; the new loan becomes $360,000. At 6.5% on a fresh 30-year term, the payment is roughly $2,275 - up from your old payment because both the balance and the rate rose. The cash is cheap relative to a personal loan, but you have reset the clock and traded a 3.5% rate for 6.5% on the whole balance. For a low existing rate like this, a HELOC often costs less overall.

Scenario 2: hitting the LTV ceiling

You own a $300,000 home with $210,000 owed and want $60,000 in cash. The 80% cap limits the new loan to $240,000, so the maximum cash is only $30,000 - the calculator flags that your request exceeds the cap. To reach $60,000 you would need either a higher-LTV program (some VA cash-out loans go further) or more equity, which comes from paying down the balance or the home appreciating. This is the most common surprise borrowers run into: equity on paper is not the same as borrowable cash.

What changes the result the most

A few inputs dominate both your cash and your payment:

• Home value and current balance: together they set your equity and therefore your maximum cash under the LTV cap.
• Max LTV: moving from 80% to 85% can unlock tens of thousands more in cash, but may trigger mortgage insurance or a higher rate.
• New interest rate: on a 30-year loan, each 1% of rate moves the payment by roughly 10%-12%.
• New term: a 15-year loan raises the payment sharply but cuts total interest; a 30-year keeps the payment lower but costs much more over time.
• Closing costs: not shown in the headline cash figure, but 2%-6% of the loan can quietly erase a chunk of your proceeds.

Tips before you cash out

• Compare against a HELOC and home equity loan - if your current rate is low, a second loan often beats refinancing the whole mortgage.
• Subtract closing costs from the cash figure to see your real net proceeds before you commit.
• Consider a shorter new term to avoid stretching the balance over another 30 years of interest.
• Get a realistic value - a low appraisal shrinks your borrowing power and can derail the loan.
• Shop several lenders; rates, LTV limits and fees vary, and small differences add up over the life of the loan.

How much can you actually borrow? LTV limits by loan type

The 80% loan-to-value cap is the default for conventional cash-out refinances, but the ceiling moves with the loan program. Knowing your limit before you apply tells you whether the cash you want is even on the table:

• Conventional (Fannie Mae / Freddie Mac): typically up to 80% LTV on a primary residence. Investment properties and second homes are usually capped lower (often 70%-75%).
• FHA cash-out: also limited to 80% LTV, with FHA mortgage insurance premiums (both upfront and annual) added on top of the loan.
• VA cash-out: eligible veterans and service members can sometimes go up to 90% LTV or higher, which is why the calculator lets you raise the max-LTV field above 80%.
• Jumbo cash-out: for loan amounts above the conforming limit, lenders often cap LTV at 70%-80% and apply stricter credit and reserve requirements.

Set the max LTV field to match your program. Leaving it at 80% gives a conservative, conventional-style estimate; raising it shows the extra cash a VA loan might unlock - along with the larger balance and payment that come with it. If you only need the full PITI figure on the resulting loan, switch over to the Mortgage Calculator once you know your new loan amount.

Cash-out refinance requirements lenders check

Hitting the LTV math is necessary but not sufficient. Lenders also underwrite you as a borrower, and falling short on any of these can shrink your cash or sink the loan entirely:

• Credit score: conventional cash-out typically wants a score around 620 or higher, and the best rates go to scores of 740+. A weaker score can raise your rate or lower your allowed LTV.
• Debt-to-income (DTI): most programs look for a back-end DTI at or below 43%-50%. Because a cash-out adds to your balance and payment, it can push your DTI up - especially if you are not also retiring other debt with the proceeds.
• Equity cushion: you generally must keep at least 20% equity after the cash-out on a conventional loan, which is the flip side of the 80% LTV cap.
• Seasoning: many lenders require you to have owned the home (and sometimes held the current loan) for at least six to twelve months before a cash-out.
• Appraisal: a lender-ordered appraisal sets the value used in the LTV math. A low appraisal directly reduces your borrowable cash, so the value you enter here should be realistic rather than aspirational.

Is cash-out refinance interest tax-deductible?

Mortgage interest is only deductible when the borrowed money is used in specific ways, and a cash-out refinance is where homeowners most often get this wrong. Under current IRS rules for home-acquisition debt, interest on the portion of a cash-out used to buy, build or substantially improve the home that secures the loan can generally be deductible (subject to the overall mortgage-debt limit). Interest on cash used for other purposes - paying off credit cards, funding a car, covering tuition - is typically not deductible, even though the loan is secured by your house.

That distinction matters when you weigh a cash-out against unsecured borrowing: the "tax-advantaged" reputation of home-secured debt only fully applies when the money goes back into the home. The deduction also only helps if you itemize rather than take the standard deduction. This page does not model taxes - treat any deduction as a possible bonus, not a reason to borrow, and confirm your situation with a tax professional or IRS Publication 936.

The cash-out refinance process, step by step

From application to funded cash, a cash-out refinance usually takes 30 to 60 days. Knowing the sequence helps you plan around the timeline and the costs that land along the way:

1. Estimate first: use this calculator to confirm the LTV cap allows the cash you want and that the new payment is one you can carry.
2. Shop lenders: gather at least three Loan Estimates and compare rates, LTV limits and total closing costs - not just the headline rate.
3. Apply and document: submit income, asset and debt documentation so the lender can verify your DTI and credit.
4. Appraisal: the lender orders an appraisal; the appraised value finalizes your true maximum loan and cash.
5. Underwriting: the lender confirms you meet credit, DTI, equity and seasoning requirements and issues a Closing Disclosure.
6. Closing and rescission: you sign, and for a primary residence a federal three-business-day right of rescission applies - your cash is disbursed only after that window closes.

Scenario 3: consolidating high-interest debt

You owe $220,000 on a $400,000 home and carry $35,000 of credit-card debt at 22%. The 80% cap allows a $320,000 loan, so pulling $35,000 of cash is easily within reach, taking the new loan to $255,000. At 6.5% on a 30-year term, the new principal-and-interest payment is about $1,612. Swapping 22% card debt for roughly 6.5% home-secured debt can slash your interest cost and free up monthly cash flow. The catch: you have converted unsecured debt into debt backed by your home and stretched it over 30 years, so without discipline you can pay more in the long run and put the house at risk. Run the numbers, and only consolidate if you will not simply re-run the card balances.

Cash-out refinance vs. HELOC vs. home equity loan

All three let you tap equity, but they behave very differently. The right choice usually hinges on your current mortgage rate and how you want to draw the money:

• Cash-out refinance: replaces your entire first mortgage with one larger loan at one new rate. Best when today's rates are at or below your current rate, or when you want a single payment. Worst when your existing rate is far lower than current rates.
• HELOC: a revolving line of credit secured by your equity, usually with a variable rate. You draw only what you need and pay interest on the balance. It leaves your low first-mortgage rate untouched - estimate one with the HELOC Calculator.
• Home equity loan: a fixed-rate second loan paid out as a lump sum, also leaving your first mortgage alone. Predictable payments, but a second monthly bill on top of your mortgage.

A simple rule of thumb: if refinancing the whole mortgage would raise the rate on your existing balance, a HELOC or home equity loan is often cheaper overall, because you only pay the higher rate on the new money rather than on everything you owe. If your rate would stay flat or improve, the simplicity of a single cash-out loan can win.

Limitations and assumptions

This is a planning estimate, not a loan quote. Keep these assumptions in mind:

• It assumes a fixed interest rate for the new loan's full term and does not model adjustable-rate adjustments.
• The cash figure is before closing costs, points and prepaid items, which lower your net cash or get rolled into the balance.
• The "current payment" is estimated on a 30-year horizon at your current rate because the tool does not know your exact remaining term, so treat that comparison as a rough baseline.
• It does not include property tax, insurance or mortgage insurance - use the Mortgage Calculator for the full PITI payment.
• Your real rate, LTV limit and eligibility depend on credit, loan type, debt-to-income and a formal appraisal.

How it compares to related calculators

This page answers "how much cash can I pull and what is my new payment?" Other tools fit different questions:

• To estimate the full monthly payment with taxes, insurance and PMI, use the Mortgage Calculator.
• To check whether a rate-and-term refinance (no cash out) saves money, use the Refinance Calculator.
• To borrow against equity without replacing your first mortgage, use the HELOC Calculator.
• For a full payment-by-payment breakdown of the new loan, use the Amortization Calculator.
• To see how much home you could afford or how a down payment changes things, use the Home Affordability and Down Payment calculators.

Sources

• Consumer Financial Protection Bureau (CFPB) - What is a cash-out refinance?
• Consumer Financial Protection Bureau (CFPB) - Owning a Home: refinancing and mortgage basics.
• Consumer Financial Protection Bureau (CFPB) - What is private mortgage insurance (PMI)?