See how much equity you can borrow, your new payment, and whether a cash-out refinance makes sense for you.
Your Cash-Out Refinance
—
Cash Available
—
New Loan Balance
—
New Monthly Payment
Current equity—
Equity after cash-out—
Remaining LTV—
Max cash-out at chosen LTV—
⚠️ Your requested cash-out exceeds your lender's max LTV. The maximum available amount is shown above.
How Cash-Out Refinancing Works — and When It Makes Sense
A cash-out refinance replaces your existing mortgage with a larger loan, and you receive the difference in cash at closing. You're essentially converting home equity into liquid funds — at mortgage interest rates, which are typically lower than personal loans or credit cards.
The 80% LTV Rule
Most conventional lenders cap cash-out refinances at 80% loan-to-value (LTV). On a $425,000 home, 80% LTV = $340,000 maximum new loan balance. If you owe $285,000, you can cash out up to $55,000 before closing costs. VA loans allow up to 90% LTV for eligible veterans; FHA cash-out is capped at 80% as well.
Common Uses — and Which Actually Build Wealth
Home renovations that add value (kitchens, bathrooms, additions) are widely considered the strongest use of cash-out equity — the improvement can offset or exceed the added debt. Debt consolidation from high-interest credit cards is another popular use, though it converts unsecured debt to secured debt, putting your home at risk if you fall behind. Using cash-out proceeds for vacations or consumer purchases is generally inadvisable — you're borrowing at 30-year terms for short-term spending.
The Cost You're Adding
Every dollar you cash out adds to your loan balance and accrues interest over the full loan term. A $50,000 cash-out on a 30-year loan at 6.75% costs roughly $66,000 in interest alone — meaning you're paying $116,000 total for $50,000 in cash. Compare this to the break-even point and your planned use of the funds before proceeding. See our guide on lowering your mortgage rate to minimize the interest cost on the new balance.
Cash-Out Refinance FAQ
How much can I cash out when refinancing?
The maximum cash-out amount depends on your home's appraised value, your current loan balance, and your lender's maximum LTV ratio. Most conventional lenders allow up to 80% LTV. On a $425,000 home with an $285,000 balance, the maximum new loan at 80% LTV is $340,000 — so you could cash out up to $55,000 before closing costs. VA loans allow up to 90% LTV for eligible borrowers, making more equity accessible.
Is a cash-out refinance a good idea for home improvements?
It can be, especially for renovations with strong ROI — kitchen remodels, bathroom upgrades, and additions typically return 60%–80% of their cost in added home value. The advantage is that mortgage rates are substantially lower than home equity loan or HELOC rates for most borrowers. The risk is that you're adding to your principal balance and extending your repayment timeline. Always model the full interest cost, not just the monthly payment.
Does a cash-out refinance hurt your credit?
A cash-out refinance affects your credit the same way any new mortgage application does: a hard inquiry (typically -5 points temporarily) and a new account that initially lowers your average account age. However, paying off credit cards with cash-out proceeds can dramatically improve your credit utilization ratio, which often offsets the negative impact. Most borrowers see their credit score stabilize or improve within 6–12 months.
What's the difference between cash-out refinance and a HELOC?
A cash-out refinance replaces your entire mortgage with one new, larger loan at a fixed rate. A HELOC (Home Equity Line of Credit) sits on top of your existing mortgage as a second lien, with a variable rate and a revolving draw period. HELOCs are more flexible for ongoing expenses; cash-out refinances make more sense when you want a fixed rate and a lump sum. If you like your current mortgage rate, a HELOC preserves it while still giving you access to equity. Use our full mortgage refinance calculator to compare scenarios.