Cash-Out Refinance Calculator
Calculate your new loan amount, cash received, and new monthly payment when doing a cash-out refinance on your home.
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How It Works
A cash-out refinance replaces your existing mortgage with a larger loan, giving you the difference in cash. It is commonly used for home improvements, debt consolidation, or major expenses. The trade-off is a higher loan balance and potentially higher monthly payments.
The Formula
Monthly Payment = P x r / (1 - (1 + r)^-n)
LTV = New Loan Amount / Home Value x 100
Variables
- P — New loan principal (current balance + cash out + closing costs)
- r — Monthly interest rate (annual rate / 12)
- n — Total number of monthly payments
- LTV — Loan-to-value ratio as a percentage
Worked Example
Your home is worth $400,000 and you owe $250,000. You take $50,000 cash out with $8,000 in closing costs. The new loan is $308,000 at 6% for 30 years, giving a monthly payment of $1,847. Your new LTV is 77%.
Practical Tips
- Most lenders cap cash-out refinances at 80% LTV, meaning you must retain at least 20% equity.
- Cash-out refinance rates are typically 0.125% to 0.5% higher than standard refinance rates.
- Using cash-out funds for home improvements may be tax-deductible under mortgage interest rules.
- Compare a cash-out refi to a HELOC: the HELOC may be cheaper if you only need short-term access to funds.
- Avoid using cash-out equity for depreciating assets like cars or vacations.
Frequently Asked Questions
How much cash can I take out?
Most lenders allow up to 80% of your home value minus your current balance. With a $400,000 home and $250,000 owed, you could access up to $70,000 (80% x $400,000 - $250,000).
Is cash-out refinance money taxable?
No. Cash from a refinance is loan proceeds, not income, so it is not taxable. However, the interest may be deductible if funds are used for home improvements.
What credit score do I need?
Most conventional cash-out refinances require a minimum credit score of 620, but scores of 700+ qualify for the best rates.
How long does a cash-out refi take?
A cash-out refinance typically takes 30 to 45 days from application to closing, similar to a standard refinance.
Can I do a cash-out refinance on an investment property?
Yes, but LTV limits are stricter (typically 70-75%) and rates are higher compared to primary residences.