What's the max LTV on a cash-out refinance?

Conventional (Fannie/Freddie): 80% of home value for primary residence. FHA cash-out: 80% as of Sept 2019 (was 85%). VA cash-out: up to 100% (most generous, requires VA eligibility). Investment property or second home: typically 70-75%. The calculator caps the new loan at 80% — that's the conforming-conventional standard.

Why is the cash-out interest rate higher than a regular refinance?

Because the lender is taking more risk — the new loan is larger relative to the home value, and the borrower has weakened equity position. Fannie Mae adds 'loan-level price adjustments' (LLPAs) on cash-out refis: typically 0.25-1.25 points (paid upfront or baked into rate). Effective rate is usually 0.25-0.5% above a rate-and-term refi.

What's a 'good' use of cash-out equity?

Best uses (in declining order of justifiable): home improvement (returns equity + improves living, often tax-deductible per IRS Pub 936), debt consolidation if replacing 18%+ credit-card debt with 7% mortgage AND you have discipline not to re-rack the cards, emergency reserve buildup. Worst uses: depreciating assets (cars, boats), vacations, day trading, business gambles. The cash-out converts liquid debt to mortgage debt; only worth doing if the use case wins.

How is the breakeven calculated?

Breakeven months = closing costs ÷ monthly savings. If new payment is $200 lower and closing cost is $8,000, breakeven is 40 months — you'll be 3+ years before the savings exceeds the costs. If new payment is HIGHER, breakeven is infinite — you don't recover the closing costs through monthly savings; the cash-out itself has to justify the deal.

Is cash-out refi interest tax-deductible?

Partly — IRS rules (Pub 936, post-TCJA 2017): mortgage interest on cash-out used to BUY, BUILD, or SUBSTANTIALLY IMPROVE the home is deductible (up to the $750K combined cap). Cash-out used for ANYTHING ELSE (debt consolidation, college, business) is NOT deductible. Track the cash use separately if you want the deduction; mixed-use requires careful records.

What happens to my existing mortgage when I cash-out refi?

It's paid off at closing using proceeds from the new loan. Your old lender (or whoever owns your current servicing rights) receives the payoff, releases the lien on your home, and the new lender records a new lien. You stop paying the old loan and start paying the new. There's no overlap — only one mortgage at a time.

Can I cash-out refi if I'm underwater (owe more than home worth)?

No — cash-out requires equity to extract. If your loan balance exceeds 80% LTV, you can't pull cash out. You may be eligible for a rate-and-term refi only (just lowering the rate, not extracting cash) via Fannie's HARP-replacement programs if you have a Fannie or Freddie loan. Check eligibility at the FHFA or your servicer.

How long does a cash-out refi take to close?

Typical 45-60 days from application to funding. Faster if your appraisal comes back cleanly and your income/credit are verifiable; slower in markets with appraiser backlogs (often 8-10 weeks in hot markets). After funding, federal law requires a 3-day rescission period on primary-residence refis — you can cancel without penalty within 3 business days of closing.

What's the difference between cash-out refi and HELOC?

Cash-out refi: pay off old loan + start a new loan, single monthly payment, fixed rate typical. HELOC: keep old mortgage + add a second-position revolving credit line, variable rate typical, draw period (5-10 yr) then repayment. Cash-out refi is better for one-shot large expenses with predictable timing; HELOC is better for flexible-draw + irregular usage. HELOC closing costs are typically lower ($200-1500 vs $5K-15K).

Should I cash-out refi when rates are higher than my current rate?

Usually no — but it depends on the cash-out's use. If new rate is 7% vs current 4% and you need $50K for renovation, you're effectively borrowing $50K at 7%. Compare to a HELOC at 8-9% (variable) or personal loan at 10-12%. Cash-out refi can still win on rate even when refi is rate-disadvantaged. The 'why' for the cash matters more than the rate delta.

Are there alternatives to cash-out refi for accessing home equity?

Yes. (1) HELOC — revolving credit line, second position. (2) Home equity loan — fixed-rate second-position loan. (3) Reverse mortgage (age 62+) — non-recourse, no monthly payment required. (4) Sell-and-rent — fully captures equity, no loan needed. For most one-time uses with predictable amounts, a fixed home equity loan (option 2) costs less and risks less than a cash-out refi.

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Cash-Out Refinance Calculator — Net Cash + New Payment + Breakeven

Drop home value, current mortgage balance, current rate, the new loan amount you want, and the new rate — get the net cash to you (after closing costs), the new payment, the monthly Δ, and the breakeven months. Honest math on whether the cash-out actually wins.

Instant result
Private — nothing saved
Works on any device
AI insight included

Reviewed by CalcBold Editorial · Sources: Freddie Mac cash-out refi guidelines + IRS Pub 936 (mortgage interest deductibility) + Fannie Mae LLPA matrixLast verified May 15, 2026Methodology

Current home value

Use a recent appraisal or comparable-sales estimate. Cash-out is capped at 80% LTV on most conventional refis.

Current mortgage balance

Outstanding principal on your current loan. This is paid off at refi closing from the new loan proceeds.

Current rate

Your existing mortgage's APR. The bigger the gap between current and new rate, the easier the breakeven math.

Current term remaining

Years left on current loan. Refinancing into a NEW 30-year resets this — interest savings can be eaten if you extend term significantly.

New loan amount (cash-out included)

Total of new mortgage = old balance + cash-out you want. Capped at 80% of home value on most conventional cash-out refis.

New rate

Cash-out rates are typically 0.25-0.5% above straight rate-and-term refi. Pull an actual quote, not the advertised rate.

New term

30-year is the standard. Resetting from year 5 of 30 to a new 30-year extends total interest meaningfully.

Refi closing costs

Typically 2-3% of loan (vs 2-5% on purchase). Subtracted from your cash-out before payout.

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What is a Cash-Out Refinance?

A cash-out refinance replaces your existing mortgage with a larger mortgage, and the lender hands you the difference in cash at closing. If you have $200K remaining on a $500K home, you have ~$300K in equity. A cash-out refi could write you a new $350K mortgage — paying off the old $200K balance and giving you $150K in cash, less closing costs.

Unlike a HELOC (home equity line of credit) or a home equity loan, a cash-out refi replaces the existing mortgage entirely — so the new rate, term, and PMI status apply to your full balance, not just the new equity slice. That makes cash-out refis attractive only when (a) the new rate is at least 0.5% lower than the existing rate, or (b) you need a large lump sum that justifies the closing costs.

The LTV Cap is the Hardest Constraint

Lenders limit how much equity you can extract via cash-out:

Conventional (Fannie / Freddie): 80% LTV cap on most properties, 75% on second homes and investment properties.
FHA cash-out: 80% LTV cap (was 85% until April 2019).
VA cash-out: 100% LTV — the most generous cap, but requires VA loan eligibility.
Jumbo / non-conforming: 70-80% typically, lender-dependent.

The calculator caps your cash-out at the LTV ceiling for the loan type you select. If you ask for more, the calc shows the maximum allowable and the gap.

Common Mistakes

Comparing only the new rate to the old rate.Cash-out refis carry a 0.125%-0.5% rate premium versus rate-and-term refis at the same LTV. The new rate might be lower than your old rate AND higher than what you’d get on a rate-and-term refi.
Ignoring closing costs.Refinance closing costs run 2%-5% of the new loan amount. On a $350K new loan, that’s $7K-$17.5K — paid from the cash-out proceeds.
Cash-out to consolidate unsecured debt. Converts an unsecured credit-card balance (which can be discharged in bankruptcy) into a secured mortgage balance (which puts your home at risk). Make this trade only after exhausting other options.

Related Tools

Compare against a rate-and-term refi first — if you only need a lower rate, the standard refi is cheaper. Run the new payment through the mortgage calculator to see the full PITI, and check the closing cost calculator for the actual cash-required-at-closing.

Frequently Asked Questions

The most common questions we get about this calculator — each answer is kept under 60 words so you can scan.

What is a cash-out refinance?
A cash-out refinance pays off your existing mortgage AND gives you a chunk of cash from your home's equity. You're replacing one loan with a larger one. The difference (minus closing costs) is the cash you receive at closing. Most common uses: home renovation, debt consolidation, college costs, business investment, or emergency reserve.
What's the max LTV on a cash-out refinance?
Conventional (Fannie/Freddie): 80% of home value for primary residence. FHA cash-out: 80% as of Sept 2019 (was 85%). VA cash-out: up to 100% (most generous, requires VA eligibility). Investment property or second home: typically 70-75%. The calculator caps the new loan at 80% — that's the conforming-conventional standard.
Why is the cash-out interest rate higher than a regular refinance?
Because the lender is taking more risk — the new loan is larger relative to the home value, and the borrower has weakened equity position. Fannie Mae adds 'loan-level price adjustments' (LLPAs) on cash-out refis: typically 0.25-1.25 points (paid upfront or baked into rate). Effective rate is usually 0.25-0.5% above a rate-and-term refi.
What's a 'good' use of cash-out equity?
Best uses (in declining order of justifiable): home improvement (returns equity + improves living, often tax-deductible per IRS Pub 936), debt consolidation if replacing 18%+ credit-card debt with 7% mortgage AND you have discipline not to re-rack the cards, emergency reserve buildup. Worst uses: depreciating assets (cars, boats), vacations, day trading, business gambles. The cash-out converts liquid debt to mortgage debt; only worth doing if the use case wins.
How is the breakeven calculated?
Breakeven months = closing costs ÷ monthly savings. If new payment is $200 lower and closing cost is $8,000, breakeven is 40 months — you'll be 3+ years before the savings exceeds the costs. If new payment is HIGHER, breakeven is infinite — you don't recover the closing costs through monthly savings; the cash-out itself has to justify the deal.
Is cash-out refi interest tax-deductible?
Partly — IRS rules (Pub 936, post-TCJA 2017): mortgage interest on cash-out used to BUY, BUILD, or SUBSTANTIALLY IMPROVE the home is deductible (up to the $750K combined cap). Cash-out used for ANYTHING ELSE (debt consolidation, college, business) is NOT deductible. Track the cash use separately if you want the deduction; mixed-use requires careful records.
What happens to my existing mortgage when I cash-out refi?
It's paid off at closing using proceeds from the new loan. Your old lender (or whoever owns your current servicing rights) receives the payoff, releases the lien on your home, and the new lender records a new lien. You stop paying the old loan and start paying the new. There's no overlap — only one mortgage at a time.
Can I cash-out refi if I'm underwater (owe more than home worth)?
No — cash-out requires equity to extract. If your loan balance exceeds 80% LTV, you can't pull cash out. You may be eligible for a rate-and-term refi only (just lowering the rate, not extracting cash) via Fannie's HARP-replacement programs if you have a Fannie or Freddie loan. Check eligibility at the FHFA or your servicer.
How long does a cash-out refi take to close?
Typical 45-60 days from application to funding. Faster if your appraisal comes back cleanly and your income/credit are verifiable; slower in markets with appraiser backlogs (often 8-10 weeks in hot markets). After funding, federal law requires a 3-day rescission period on primary-residence refis — you can cancel without penalty within 3 business days of closing.
What's the difference between cash-out refi and HELOC?
Cash-out refi: pay off old loan + start a new loan, single monthly payment, fixed rate typical. HELOC: keep old mortgage + add a second-position revolving credit line, variable rate typical, draw period (5-10 yr) then repayment. Cash-out refi is better for one-shot large expenses with predictable timing; HELOC is better for flexible-draw + irregular usage. HELOC closing costs are typically lower ($200-1500 vs $5K-15K).
Should I cash-out refi when rates are higher than my current rate?
Usually no — but it depends on the cash-out's use. If new rate is 7% vs current 4% and you need $50K for renovation, you're effectively borrowing $50K at 7%. Compare to a HELOC at 8-9% (variable) or personal loan at 10-12%. Cash-out refi can still win on rate even when refi is rate-disadvantaged. The 'why' for the cash matters more than the rate delta.
Are there alternatives to cash-out refi for accessing home equity?
Yes. (1) HELOC — revolving credit line, second position. (2) Home equity loan — fixed-rate second-position loan. (3) Reverse mortgage (age 62+) — non-recourse, no monthly payment required. (4) Sell-and-rent — fully captures equity, no loan needed. For most one-time uses with predictable amounts, a fixed home equity loan (option 2) costs less and risks less than a cash-out refi.