Cash-Out Refinance Calculator
A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference in cash. Useful for consolidating high-interest debt or funding a renovation — but only when the math works. Enter current loan balance, home value, new rate and the cash you want out, and the calculator shows your new monthly payment, cash at closing after fees, and the break-even month where savings beat closing costs.
How a cash-out refi is calculated
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1
Enter current mortgage
Remaining balance, current rate, remaining term. This is the baseline you're comparing against.
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2
Enter home value and cash out
Lenders cap cash-out LTV at 80% for conventional, 85% for some VA and jumbo. If you ask beyond that, you'll need a different product.
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3
Enter new loan terms
New rate, term (15 or 30 years typical), closing costs (2-5% of loan amount).
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4
Compare and break even
New payment, cash received, total interest difference, and the month at which cumulative savings exceed closing costs.
How cash-out is calculated
- Current balance: $240,000
- Home value: $400,000
- Max new loan at 80% LTV: $320,000
- Available cash: $320,000 − $240,000 − closing costs ≈ $72,000 (after $8,000 in closing costs)
Example worked out
- Current mortgage: $240,000 at 4.5% APR, 22 years remaining, payment $1,475/month
- New loan: $320,000 at 6.5% APR, 30 years, payment $2,022/month
- Closing costs: $8,000 (rolled into loan or paid at closing)
- Cash received: $72,000 (if closing costs rolled) or $80,000 (if paid separately)
Trade-off: $547 higher monthly payment, $72,000 cash in hand. Total interest over the life of the loan jumps significantly because you’ve extended the term and increased the balance.
When cash-out refi makes sense
- Consolidating high-interest debt: credit card at 22% → mortgage at 7% saves a lot of interest.
- Home improvement that raises value: new kitchen, roof, addition. Some return on investment via the property.
- Education costs: mortgage rate beats most private student loan rates.
- Investment capital: only if the expected return meaningfully exceeds the mortgage rate after tax.
When it usually doesn’t
- Everyday spending: you’re trading short-term cash for 30 years of interest.
- Buying a depreciating asset (a car, a boat) at mortgage length — paying for a car over 30 years is a bad deal even at mortgage rates.
- When current rate is meaningfully lower than new rate: you’re paying extra interest on the old balance too, not just the new cash.
- When you’re planning to move in 2-3 years: closing costs may not amortise before you sell.
Rate-and-term vs cash-out
Standard refinance (rate-and-term) just lowers your rate or shortens term. Cash-out adds a larger loan amount — and cash-out refi rates are typically 0.125-0.5% higher than rate-and-term refi.
Tax consideration (US)
Interest on cash-out refi is only deductible if proceeds are used to buy, build or substantially improve the home. Using cash to pay off credit cards or tuition? That portion of interest is not deductible under current IRS rules.
Frequently Asked Questions
Most lenders require you to leave at least 20% equity after cashing out. On a $400k home, maximum new loan is typically $320k. VA loans can go higher (up to 100% LTV in some cases).
Cash-out refi replaces your mortgage with a larger one at a fixed rate. HELOC is a separate revolving line of credit, usually at a variable rate, secured by remaining equity. HELOC keeps your original low-rate mortgage intact — often the better choice when existing rates are much lower than refi rates.
Typical range. Shop multiple lenders — some offer no-closing-cost refis in exchange for a slightly higher rate. Calculate total cost over your likely ownership to decide.
Monthly savings = old payment − new payment (if lower). Break-even months = closing costs / monthly savings. If the new payment is higher (common for cash-out), the “savings” are in debt consolidation or use of cash — break-even needs a different framing.
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