Cash-Out Refinance Calculator
Enter your home value, current mortgage balance, desired cash-out amount, and new loan terms to see your new monthly payment, how much equity you can tap, the loan-to-value ratio, and exactly how many months until the refinance pays for itself. Compare total interest on both loans side by side.
What is a cash-out refinance?
A cash-out refinance replaces your existing mortgage with a new, larger loan. The difference between the new loan amount and your current balance is paid out to you in cash at closing. For example, if you owe $250,000 on a home worth $400,000 and you refinance into a $290,000 loan, you receive $40,000 in cash (minus closing costs). The cash can be used for home improvements, debt consolidation, education expenses, or any other purpose. Unlike a home equity line of credit (HELOC), a cash-out refinance gives you a fixed monthly payment and locks in the interest rate for the entire term.
How the loan-to-value ratio limits your cash-out
The loan-to-value ratio (LTV) is the new loan balance divided by the home value. Most conventional lenders cap cash-out refinances at 80% LTV, meaning you must keep at least 20% equity in your home after the refinance. If your home is worth $400,000 and you owe $250,000, the maximum loan under the 80% rule is $320,000, so you can take out up to $70,000 in cash (before closing costs). VA loans allow eligible veterans to exceed this limit and can finance up to 90% LTV. FHA cash-out refinances permit up to 80% LTV as well. If your requested cash-out pushes the LTV above the lender limit, you must either reduce the cash-out amount or wait until the home appreciates or your balance falls further.
Understanding the break-even point
Closing costs typically run 2-5% of the new loan amount, so a $290,000 refinance might cost $5,800-$14,500 upfront. If the refinance lowers your monthly payment, the break-even point tells you how many months of savings it takes to recover those costs. If your payment drops $200/month and closing costs are $6,000, break-even is 30 months (2.5 years). If you plan to sell or refinance again before that point, the refinance may not be worth it financially even if the rate is lower. You can eliminate the upfront break-even concern by rolling closing costs into the loan, but this increases your balance and total interest paid over the life of the loan.
Cash-out refinance vs HELOC vs home equity loan
All three let you tap home equity, but they work differently. A cash-out refinance replaces your first mortgage entirely; you get one new loan at one rate. A home equity loan is a second mortgage with a fixed rate and fixed payment layered on top of your existing mortgage. A HELOC is a revolving line of credit, also a second mortgage, with a variable rate and a draw period followed by a repayment period. Cash-out refinancing makes the most sense when current rates are at or below your existing mortgage rate, when you want a single, predictable payment, or when you need a large lump sum. If your current mortgage has a very low rate you do not want to disturb, a HELOC or home equity loan avoids resetting that rate on the entire balance.
LTV Ratio Guidelines for Cash-Out Refinancing
| LTV Range | Typical Outcome | PMI Required? |
|---|---|---|
| Below 60% | Best rates, easiest approval | No |
| 60% to 75% | Competitive rates, standard underwriting | No |
| 75.01% to 80% | Standard limit for most lenders | No |
| 80.01% to 90% | Harder to qualify; PMI or higher rate likely | Usually yes |
| 90.01% to 95% | Very limited lenders (FHA streamline or VA) | Yes |
| Above 95% | Rarely available; significant risk of denial | Yes |
Most conventional lenders and GSE guidelines (Fannie Mae, Freddie Mac) require LTV at or below 80% for cash-out refinances. Government-backed loans have different rules.
Frequently asked questions
What credit score do I need for a cash-out refinance?
Most conventional lenders require a minimum credit score of 620 for a cash-out refinance, though many prefer 680 or higher to offer competitive rates. FHA cash-out refinances allow scores as low as 580. VA cash-out refinances have no official minimum, but lenders typically require at least 620. A higher score not only improves approval odds but meaningfully lowers the interest rate you are offered.
How much equity do I need to do a cash-out refinance?
The standard requirement is that you retain at least 20% equity after the refinance, meaning the new loan cannot exceed 80% of the home value (the LTV limit). For a home valued at $400,000, you must keep at least $80,000 in equity, so the maximum new loan is $320,000. If you currently owe $250,000, you can take out up to $70,000 cash. VA-eligible borrowers can sometimes exceed 80% LTV with a VA cash-out loan.
Are closing costs for a cash-out refinance tax deductible?
Generally, the interest on the portion of the loan used to improve your home is deductible if you itemize. However, interest on cash used for personal expenses (vacations, car purchases, general debt consolidation) is not deductible under current U.S. tax law. Closing costs themselves are typically not deductible in the year you pay them, though mortgage points paid may be deductible over the life of the loan. Consult a tax professional for guidance specific to your situation.
Does a cash-out refinance hurt my credit score?
A cash-out refinance temporarily affects your credit score in two ways: first, lenders run a hard inquiry when you apply, which can lower your score by a few points; second, the new loan replaces your old one, potentially reducing the average age of your credit accounts. These effects are usually minor and temporary. On the upside, if you use the cash to pay down high-interest credit card debt, that can significantly improve your credit utilization ratio, which may raise your score.
How long does a cash-out refinance take?
Most cash-out refinances close in 30 to 45 days from application. The timeline depends on how quickly you submit documentation, the lender workload, and how fast the appraisal is scheduled. After closing, federal law requires a three-day right-of-rescission period for owner-occupied primary residences before funds are disbursed, so you typically receive the cash on the fourth business day after signing.
Can I do a cash-out refinance on an investment property?
Yes, but the rules are stricter. Investment properties often face a lower LTV cap (frequently 70-75% versus 80% for a primary residence), require a higher credit score, and carry higher interest rates due to the additional risk. Rental income can sometimes be counted toward qualifying income, but lenders may apply a vacancy factor.