How a cash-out refinance works
A cash-out refinance replaces your current mortgage with a new, larger loan. The new loan pays off your old mortgage, and you receive the difference, minus closing costs, in cash.
How much cash can you get?
Lenders limit the new loan to a percentage of your home's value, called the loan-to-value (LTV). For a conventional cash-out refinance, 80% is a common maximum. FHA cash-out loans are typically capped at 80% as well, and some VA lenders allow 90% or more. Your credit, income and the property can lower these limits.
What it costs
Closing costs on a refinance often run around 2% to 6% of the loan amount, and are commonly rolled into the new loan or taken out of your cash. Because the new loan starts a fresh term, you may also pay more interest over time, even if the monthly payment looks manageable.
Ask each lender for a Loan Estimate so you can compare rates, fees and the total cost side by side.
When it may or may not make sense
- It may make sense when today's rates are similar to or lower than your current rate, or when you want one loan with one fixed payment.
- Think twice if your current rate is much lower than today's rates. Refinancing moves your entire balance to the new rate. A HELOC or home equity loan would keep your existing mortgage.
- Know your timeline. Many lenders require you to have had your current loan for a period, often 6 to 12 months, before a cash-out refinance.
Frequently asked questions
How much cash can I get from a cash-out refinance?
Typically your home value times the lender's maximum LTV (often 80%), minus your current balance and closing costs. The calculator above does this math for you.
Will my interest rate change?
Yes. A cash-out refinance replaces your mortgage, so your whole balance moves to the new loan's rate.
Are closing costs added to the loan?
They can be rolled into the new loan or deducted from your cash at closing. Either way, they reduce what you walk away with.
How long does a cash-out refinance take?
It often takes several weeks from application to closing, depending on the lender, appraisal and paperwork.
Is the cash taxable?
Money from a refinance is a loan, not income, but tax rules on interest deductions vary. Ask a tax professional about your situation.
About this calculator
This calculator uses standard loan formulas and the numbers you enter. It runs in your browser, doesn't check your credit and doesn't save anything unless you choose to request options. Results are estimates for education only. Lenders set their own limits, rates and fees.
For independent guidance, see the Consumer Financial Protection Bureau's homebuying resources.