Cash-Out Refinance Calculator
Loans & MortgagesTap your equity with a new loan.
Value, mortgage, cash-out & costs
Enter a home value above zero to estimate a cash-out refinance.
Loan terms & limits
Itemized closing costs
Enter a home value above zero to estimate a cash-out refinance.
Formulas used
| Metric | Formula | Your value |
|---|---|---|
| New loan amount | payoff + cash-out | $0 |
| Net cash received | cash-out − closing costs | -$2,775 |
| New loan-to-value | new loan ÷ home value | 0.00% |
| Equity retained | (home value − new loan) ÷ home value | 0.00% |
| Monthly payment change | new payment − current payment | $0 |
| Refinance break-even | closing costs ÷ rate-and-term saving | N/A |
| Effective cost of cash | rate that prices net cash vs the cash-out payment | N/A |
Your inputs
| Input | Meaning | Your value |
|---|---|---|
| Current home value | What the cap is applied to | $0 |
| Existing mortgage balance | What the new loan first pays off | $0 |
| Current interest rate | Rate on the loan you're replacing | 7.000% |
| New interest rate | Rate on the new, larger loan | 6.500% |
| Cash-out amount | Gross cash you want to draw | $0 |
| Lender max LTV | Lender's cash-out ceiling | 80% |
Know what this estimate is based on
- Jurisdiction
- General model; U.S.-specific rules are identified on the relevant tool
- Scope and limitations
- Educational estimate only. A lender may use different compounding, day-count, eligibility, tax, insurance, escrow, fee, or rounding rules.
- Source links checked
- Jul 30, 2026
Built and regression-tested by Smart Tools Lab. It has not been individually reviewed by a licensed financial, tax, or legal professional.
How to use
- 01
Enter your home value, current loan balance, current rate, years remaining, and the new loan's rate and term — the model first computes a payoff of 280,537 (your 280,000 balance plus about 10 days of accrued interest) and stacks the cash-out on top of it.
- 02
Set the gross cash-out you want and your lender's maximum LTV. With a 500,000 home and 60,000 cash-out the new loan is 340,537, a 68.11% LTV — comfortably under the 80% cap and the 119,463 maximum cash-out the cap allows.
- 03
Open the Advanced panel to see the itemized closing costs (origination, appraisal, title, escrow, prepaid interest and reserves) that sum to 8,965; these are deducted from the proceeds, so the headline cash-out and the cash you actually pocket are not the same number.
- 04
Read the net-cash headline (51,035) first, then check the supporting outputs: the +173 payment change, the ~44-month rate-and-term break-even, the 8.13% effective cost of cash, and the equity you keep (31.89%).
Formula
Start with the payoff, not the balance: your 280,000 loan plus roughly 10 days of accrued interest comes to 280,537, the amount that actually retires the old mortgage on closing day. The new loan stacks the gross cash-out on top of that payoff, so 280,537 plus 60,000 equals a 340,537 loan at 6.5% over 30 years. Closing costs are then paid out of the proceeds rather than from your pocket: origination at 1% is 3,405, plus appraisal 600, title 1,100, escrow 500, recording 125, attorney 400, credit report 50, prepaid interest for 15 days 910, three months of property-tax escrow 1,500, and three months of insurance escrow 375 — totalling 8,965, which is 2.63% of the loan. The net cash you receive is therefore the cash-out minus those costs: 60,000 − 8,965 = 51,035. To measure leverage, the new loan is divided by the home value: 340,537 ÷ 500,000 = 68.11% LTV, up from a current 56.00%, leaving 159,463 of equity, or 31.89% retained. Because 68.11% is at or under the 80% threshold, no mortgage insurance applies. For payment, the old loan costs 1,979 a month and the new 340,537 costs 2,152, a change of only +173 — the rate dropping from 7.0% to 6.5% nearly offsets the larger balance. To isolate the refinance from the cash, a rate-and-term shadow refinances just the 280,537 payoff at the new terms, costing 1,773 a month and saving 206; closing costs ÷ that saving gives a break-even near 44 months (about 3.6 years), though part of that 206 comes from resetting the clock 25→30 years, not purely the lower rate. Finally, pricing the 51,035 net cash against the incremental payment stream via an APR solver yields an 8.13% effective cost of cash, above the 6.5% note rate because the costs consumed part of what you received.
Example
Picture a 500,000 home with a 280,000 mortgage at 7.0% and 25 years left. You want 60,000 in cash, so the calculator pays off the old loan at its true payoff of 280,537 — balance plus about 10 days of interest — and writes a new 340,537 loan at 6.5% over 30 years. The closing costs come out of the proceeds, not your wallet: origination, appraisal, title, escrow, recording, attorney, credit report, prepaid interest and tax and insurance reserves add to 8,965, so the 60,000 headline becomes 51,035 actually in hand. The leverage stays modest. The new loan is 68.11% of the home's value, comfortably under both the 80% cap and the 119,463 maximum cash-out that cap would allow, and you still keep 159,463 of equity — 31.89% of the house. Best of all, because the rate fell from 7.0% to 6.5%, borrowing 60,000 more raises the payment by only 173 a month, from 1,979 to 2,152. The rate-and-term shadow saves 206 a month and breaks even in about 44 months, with the honest caveat that some of that saving is the 25→30 year clock reset. If you used the 60,000 to retire credit-card debt at 18%, you would swap 900 a month of card interest for 325 of mortgage interest — a 575 monthly saving. On these numbers, a favorable cash-out.
Definitions
- Cash-out refinance
- Replacing your existing mortgage with a new, larger loan and taking the difference as cash. Here the old 280,537 payoff is rolled into a 340,537 loan, freeing 60,000 gross before costs.
- Payoff amount
- The exact sum that retires the old mortgage on closing day — the principal balance plus interest accrued since the last payment. In this scenario the 280,000 balance becomes a 280,537 payoff after about 10 days of accrued interest.
- Net cash received
- The money you actually pocket after closing costs are subtracted from the gross cash-out, because in a cash-out refinance the costs are paid from the proceeds. Here 60,000 − 8,965 = 51,035.
- Loan-to-value (LTV) cap
- The maximum the lender will lend as a share of the home's value, which limits how large the new loan — and therefore the cash-out — can be. At an 80% cap on a 500,000 home, the loan tops out at 400,000, capping cash-out at 119,463.
- Available equity
- The portion of the home's value you own outright, equal to value minus what you owe. You start with 220,000 of equity and, after taking 60,000 and absorbing costs, keep 159,463, or 31.89% of the home.
- Closing costs
- The lender, third-party, and prepaid charges to originate the new loan — origination, appraisal, title, escrow, recording, attorney, credit report, prepaid interest, and reserves. They total 8,965 here, 2.63% of the loan, and are deducted from your cash.
- Break-even
- How long the refinance's monthly saving takes to repay its closing costs, measured against a rate-and-term shadow so the cash-out is excluded. With 8,965 in costs and 206 of monthly saving, break-even is about 44 months — but part of that saving is the 25→30 year term reset, not the lower rate.
- Effective cost of cash
- The true APR of the cash you actually received, found by solving the incremental payment stream against the 51,035 net cash. It is 8.13% here — above the 6.5% note rate — because closing costs reduced the cash without reducing the payments.
Good to know
What a cash-out refinance really is
A cash-out refinance is not a loan added on top of your mortgage — it is a replacement of the mortgage itself with a new, larger one, where the gap between the two becomes cash in your hand. That single distinction drives everything else the calculator shows. To see the mechanic, follow the money in order. First comes the payoff: the amount that actually retires your current loan on closing day. It is not the balance you carry in your head but that balance plus the interest that has accrued since your last payment. With a 280,000 balance and about 10 days of accrued interest, the payoff is 280,537. The new loan is then sized to cover that payoff and to leave the cash you asked for on top, so 280,537 plus a 60,000 cash-out produces a 340,537 loan written fresh at 6.5% over 30 years. From that new loan, the closing costs are subtracted, and then what remains of the cash-out is yours. Because the costs are paid out of the proceeds rather than from your checkbook, the number you walk away with is smaller than the cash-out you requested. Here the 60,000 gross becomes 51,035 net once 8,965 of costs are removed. Holding all three figures in view at once — payoff, new loan, net cash — is the whole point. The payoff tells you what the old debt cost to extinguish, the new loan tells you what you now owe, and the net cash tells you what the deal actually delivered. Every other output on the screen is a way of judging whether that delivery was worth the new, larger obligation you took on to get it. Keep them straight and the rest of the analysis falls into place naturally.
How the LTV cap limits the cash you can take
The size of your cash-out is not a matter of preference; it is bounded by how much the lender will lend against the house. That ceiling is expressed as a loan-to-value cap — the largest the new loan may be as a fraction of the home's appraised value. On a 500,000 home with an 80% cap, the new loan cannot exceed 400,000. Subtract the 280,537 payoff that must be covered first, and the maximum gross cash-out you could possibly take is 119,463. The 60,000 in the default scenario sits comfortably below that line, which is part of why the deal looks healthy: you are using a little over half of your available headroom, not scraping the limit. The cap also explains why the calculator tracks your loan-to-value before and after. You begin at 56.00% — a 280,000 balance against a 500,000 value — and the cash-out lifts you to 68.11%. That figure matters for two separate reasons. It must stay under the lender's cap to be approved at all, and it must stay at or under 80% to avoid mortgage insurance, which is a different threshold that happens to share the same number here. Keep the two ideas apart: the cap is the lender's lending limit, while 80% is the insurance trigger. There is one risk the cap quietly introduces: the appraisal. Every figure above assumes the home is worth 500,000, but the lender lends against an appraised value, not your estimate. If the appraisal comes in low, the maximum loan shrinks with it, and the cash-out you planned on can evaporate. A home you valued at 500,000 that appraises at 460,000 drops your 80% ceiling from 400,000 to 368,000, cutting more than 30,000 from the cash you could draw. Treat the appraisal as the single largest source of uncertainty in the whole plan, and size your request with a margin so a modest miss does not collapse the deal.
Why net cash is less than the headline cash-out
The gap between the 60,000 you ask for and the 51,035 you receive is the closing costs, and in a cash-out refinance those costs are paid from the proceeds rather than out of pocket. That arrangement is convenient — you need no cash at the table — but it makes the headline number misleading unless you look past it. The total here is 8,965, which works out to 2.63% of the 340,537 loan. Opening the Advanced panel shows where it goes, and the breakdown is worth understanding because the items behave differently. Some are lender charges. Origination at 1% of the loan is the largest single line at 3,405; it is the lender's fee for writing the loan, and because it scales with loan size, a bigger cash-out makes it bigger too. Third-party services come next: appraisal 600, title 1,100, escrow 500, recording 125, attorney 400, and a credit report 50. These are largely fixed regardless of how much you borrow, so they weigh more heavily, in percentage terms, on a small cash-out than a large one. Then come the prepaid and reserve items, which are not really fees at all but money you would owe anyway, collected early. Prepaid interest of 910 covers the 15 days between closing and your first full payment. The property-tax escrow of 1,500 is three months of taxes set aside, and the insurance escrow of 375 is three months of premiums. You are not losing those reserves — they fund your own future bills — but they still come out of the cash you receive today. The practical lesson is to judge a cash-out by net cash, never by the gross. Two offers with identical cash-out figures can deliver very different amounts in hand once their cost structures differ, and the prepaid items can make a small cash-out surprisingly inefficient because the fixed costs do not shrink to match.
The payment comparison: a lower rate offsetting a bigger balance
The most counterintuitive result in the default scenario is that borrowing 60,000 more raises the monthly payment by only 173. The old loan of 280,000 at 7.0% with 25 years left costs 1,979 a month. The new loan of 340,537 at 6.5% over 30 years costs 2,152. You added more than 60,000 to the balance, yet the payment moved less than 9%. Understanding why is essential, because the same mechanic can run in reverse and hurt you. Two forces are pulling in opposite directions. The larger balance pushes the payment up, but the lower rate and the longer term both pull it down. The rate fell from 7.0% to 6.5%, which reduces the cost of every dollar of debt, not just the new dollars. And the term stretched from 25 remaining years back to a full 30, which spreads the principal over more months. Together those two reductions nearly cancel the cost of the extra 60,000, leaving only the small 173 increase. The takeaway is that a cash-out's payment impact depends far more on the direction your rate moves than on the size of the cash you take. The warning is the mirror image. If today's rates were higher than your existing rate — say you held a 5.5% loan and could only refinance into 6.5% — there would be no offsetting force. The larger balance, the longer term, and the higher rate would all push the payment up at once, and 60,000 of cash could raise your monthly cost by several hundred dollars rather than 173. In a rising-rate environment, a cash-out refinance can be an expensive way to access equity precisely because it re-prices your entire mortgage, not just the new money. Always compare the new rate to your current one before being charmed by a low payment change.
The rate-and-term shadow and the honest break-even
A cash-out refinance bundles two decisions into one transaction: a refinance of the debt you already owe, and a new borrowing of the cash. To judge the refinance fairly, you have to separate it from the cash, and that is what the rate-and-term shadow does. The shadow imagines refinancing only the 280,537 payoff at the new 6.5% over 30 years, with no cash-out at all. That shadow loan would cost 1,773 a month against your current 1,979, a saving of 206. Dividing the 8,965 in closing costs by that 206 monthly saving gives a break-even near 44 months — about 3.6 years. If you expect to keep the home and the loan longer than that, the refinance portion pays for itself. But the break-even deserves an honest caveat, and the calculator makes it on purpose. Not all of that 206 saving comes from the lower rate. Part of it comes from resetting the clock: you had 25 years left and the new loan runs 30, so the same principal is spread over 60 more months, which lowers the payment regardless of the rate. A break-even that leans on a longer term is partly an illusion of monthly comfort rather than a true cost saving, because you are paying for that comfort with more years of interest. Read the 44 months as a real but flattering figure. That brings up the lifetime trade-off the payment view hides. Total interest on the new loan is 434,336, while the remaining interest on the current loan would have been 313,695 — a difference of 120,642 more. It is tempting to call that the cost of refinancing, but it is not. It is the cost of borrowing more money over a longer term: you took 60,000 in cash and stretched the schedule back to 30 years, and more debt for more years naturally accrues more interest. The monthly comfort and the lifetime cost are two faces of the same decision, and a good cash-out plan weighs both rather than only the one on the screen this month.
Effective cost of cash: the true price of the money
The note rate on the new loan is 6.5%, but that is not what the cash actually costs you. The effective cost of cash, which the calculator solves at 8.13%, is a better number to internalize, and the gap between the two is one of the most useful things this tool teaches. The note rate prices the whole loan. The effective cost of cash prices only the incremental decision: the extra money you borrowed against the extra payment it created, solved as an APR. It answers the question that matters when you are deciding whether to take equity out at all — what am I really paying for this cash, per dollar, per year? The reason 8.13% sits above the 6.5% note rate is the closing costs. You borrowed enough to deliver 60,000 of cash-out, but 8,965 of that was consumed by costs before it reached you, so you received only 51,035. Meanwhile, the payments you owe are based on the full borrowed amount, not the reduced cash you got. You are servicing debt on money you never touched. When an APR solver reconciles the smaller cash received against the larger payment stream, the implied rate rises above the note rate, and 6.5% becomes an effective 8.13%. This figure is the honest benchmark for comparing the cash-out against alternatives. If another source of money — a personal loan, a card, or simply not borrowing — carries a cost above or below 8.13%, you now have an apples-to-apples comparison rather than being misled by the headline 6.5%. It also shows why small cash-outs can be inefficient: when fixed closing costs are spread over a smaller amount of cash, the effective cost climbs higher, because the same 8,965 of friction is eating a larger share of a smaller pie. The lower your cash-out relative to your costs, the more the effective cost diverges from the note rate.
Use case: debt consolidation
The most common and often the most defensible reason to take cash out is to retire high-interest debt, and the arithmetic can be striking. Suppose the 60,000 cash-out goes to pay off credit cards carrying 18%. At 18%, that balance costs 900 a month in interest alone. Folded into the mortgage at 6.5%, the same 60,000 costs about 325 a month in interest — a saving of 575 a month, or roughly 6,900 a year, purely on interest. When the rate spread is that wide, converting unsecured debt to mortgage debt can free up real monthly cash flow and shorten the road to being debt-free, especially if you keep paying the old card payment toward the new principal. But debt consolidation carries two traps that turn a smart move into a costly one. The first is behavioral. Paying off cards does not close them, and the single most common failure mode is running the balances back up — now you carry both the larger mortgage and fresh card debt, and you are worse off than before you started. Consolidation only works if it is paired with a genuine change in spending; otherwise it is a one-time relief that you will undo within a year or two. The discipline matters more than the math. The second trap is the nature of the debt you are creating. Credit-card debt is unsecured: if life goes wrong, the worst case is damaged credit and collections. Mortgage debt is secured by your home. By consolidating, you are moving the obligation from something that can never take your house to something that can. You may save 575 a month, but you have raised the stakes of falling behind. Stretching short-term card balances over a 30-year mortgage can also mean paying more interest in total even at the lower rate, unless you accelerate the payoff. Consolidation is powerful, but it should be entered with eyes open about both the behavior it requires and the collateral it puts at risk.
Use case: home improvement
Using cash-out proceeds to improve the home has a logic the other uses lack: the money may come back to you as value. When 60,000 funds a kitchen, a bath, or an addition, part of that spend can lift the appraised value of the house, which partly offsets the equity you withdrew. That is the appeal of borrowing against the home to invest back in the home — the asset securing the loan can grow because of the loan. But the calculator's lifetime numbers are a reminder that the financing is not free, and the project has to clear a real hurdle to be worth it. The hurdle is the long-term cost of the borrowed money. You are paying an effective 8.13% on the cash, and across a 30-year term the new loan carries 120,642 more total interest than leaving the mortgage alone. A 60,000 renovation financed this way will cost considerably more than 60,000 over its life. So the question is not whether the improvement is nice but whether its return — in resale value, in avoided repair costs, or in years of genuine use and enjoyment — justifies that financed cost. Improvements that reliably add value, like correcting deferred maintenance or modernizing a dated but central space, tend to clear the bar. Highly personal or luxury touches that the next buyer will not pay for rarely return their cost and are better treated as consumption than investment. There is also a timing advantage worth naming. Spreading a renovation over a 30-year mortgage keeps the monthly impact small — recall the payment rose only 173 in the default case — which makes a large project feel affordable. That affordability is real but can disguise the lifetime cost. The honest way to frame a cash-out renovation is to ask two questions together: can I carry the modest monthly increase comfortably, and does the project's lasting value justify paying for it over decades. A yes to both makes home improvement one of the strongest uses of equity; a yes to only the first is how people overspend on financed upgrades.
Use case: investment and emergency cash
Pulling equity to invest elsewhere or to build a cash cushion is the most situational use, and it sits on a spectrum from prudent to dangerous. The core idea is leverage: you are borrowing against a stable asset at an effective 8.13% in hopes of earning more than that somewhere else, or of holding cash against a future shock. Leverage amplifies outcomes in both directions, which is exactly why it deserves caution. If the money goes into something volatile — a concentrated stock position, a speculative venture, a property whose income is uncertain — you have converted secure home equity into an at-risk bet, and the bet now carries an 8.13% drag it must beat just to break even. When the investment falls, the debt does not; you still owe the larger mortgage on a smaller-feeling balance sheet. The emergency-cash version is gentler but has its own logic. Holding part of the 51,035 as a liquid reserve can be reasonable for someone with thin savings facing real uncertainty, because the cost of carrying that cushion is the effective rate, and the value is the resilience it buys. But borrowing at 8.13% to park money in a low-yield account is a slow, certain loss, so this only makes sense when the cushion genuinely prevents a worse outcome — missed payments, forced sale, high-interest emergency borrowing — rather than as idle insurance you may never need. The unifying discipline across both is to keep equity as a buffer rather than draining it. The default scenario leaves 159,463 of equity, 31.89% of the home, which is a meaningful margin against a price decline and a reason the deal is sound. Pulling equity to the cap for a volatile investment does the opposite: it strips the buffer at the very moment you are adding risk. The safest framing is that home equity is a poor source of speculative capital and a defensible source of last-resort liquidity, and the more volatile the destination, the less of your equity belongs there.
Risks and when to walk away
Every favorable number in the default scenario has a condition attached, and a cash-out turns bad when those conditions flip. Start with the rate. The whole reason the payment rose only 173 and the break-even held near 44 months is that the rate fell from 7.0% to 6.5%. If a cash-out would raise your rate instead, both of those advantages disappear: the payment climbs sharply and the break-even can stretch beyond any reasonable holding period. A refinance that increases your rate to access cash is one of the clearest signals to look at a HELOC or home-equity loan instead, since those leave your low first-mortgage rate untouched. Next is mortgage insurance. The deal here avoids it because the new LTV of 68.11% stays at or under the 80% threshold. Push the cash-out high enough that the loan crosses 80%, and insurance attaches as a recurring monthly cost that the effective-cost calculation does not include — quietly raising the true price of the cash. Then there is the clock. Resetting 25 years back to 30 is what made the payment comfortable, but it is also why the new loan carries 120,642 more total interest. Comfort now is paid for with years of interest later, and a cash-out that only looks good because of the longer term may not look good at all once that cost is counted. Finally, weigh the structural risks. If closing costs consume most of the cash — easy to do on a small cash-out where the 8,965 of mostly fixed costs dominates — the deal delivers little for the obligation it creates. If little equity remains afterward, you lose your buffer against a price decline. And underlying all of it is collateral: this debt is secured by your home, so the consequence of falling behind is not a damaged credit score but the loss of the house through foreclosure. Walk away when the rate rises, when break-even outlasts your stay, when costs swamp the cash, when the buffer is gone, or when the only thing making it work is a longer term you will quietly pay for. A cash-out is a strong tool used on a sound deal and a dangerous one used to paper over a weak one.
Frequently asked questions
How does a cash-out refinance actually work?
Your current mortgage is paid off and replaced by a single new, larger loan; the difference between the new loan and the old payoff is your cash. The 280,537 payoff plus 60,000 makes a 340,537 loan, and after 8,965 of closing costs come out of the proceeds you receive 51,035 net. Unlike a second loan, you keep just one mortgage payment.
How much cash can I actually take out?
The lender's LTV cap sets the ceiling. At an 80% cap on a 500,000 home, the new loan cannot exceed 400,000; subtract the 280,537 payoff and the maximum gross cash-out is 119,463. The 60,000 you requested is well within that, leaving plenty of equity untouched.
Why did my payment barely change when I borrowed 60,000 more?
Because the rate dropped from 7.0% to 6.5% at the same time. A lower rate on the whole balance offsets most of the cost of the larger loan, so the payment rises only 173, from 1,979 to 2,152. If your new rate were higher than your old one, borrowing more would push the payment up much more sharply.
What does the break-even number mean here?
It is how long the refinance's monthly saving takes to recover the 8,965 in closing costs, measured by a rate-and-term shadow that refinances only the payoff so the cash-out is excluded. That shadow saves 206 a month, giving a break-even near 44 months. Be honest about the caveat: part of that 206 comes from stretching 25 years back out to 30, not purely from the lower rate.
What is the effective cost of cash, and why is it 8.13% when my rate is 6.5%?
It prices the 51,035 you actually received against the extra monthly payment the cash-out creates, then solves for the APR. It lands at 8.13%, above the 6.5% note rate, because the closing costs shrank the cash you got without shrinking the payments you owe. It is the honest per-dollar price of the money in your hand.
How is this different from a HELOC or a home equity loan?
A HELOC is a revolving line you draw on and repay alongside your existing mortgage, while a home equity loan is a fixed second loan layered on top of it. A cash-out refinance instead replaces your first mortgage entirely with one larger loan, which is what this calculator models.
Is the cash taxable, and can I deduct the points or interest?
This tool does not model taxes. Cash-out proceeds are loan proceeds, not income, so they are generally not taxable, but whether the interest or points are deductible depends on how you use the money and on your jurisdiction's rules. Confirm your specific situation with a tax adviser.
When is a cash-out refinance a bad idea?
When it raises your rate instead of lowering it, when break-even stretches past how long you will keep the home, or when closing costs eat most of the cash. It is also weaker when little equity is left afterward or when the new LTV climbs above 80%, since mortgage insurance then adds a recurring cost on top of everything else.