Cash-out Refinance Calculator
Refinancing to Pull Cash Out, Not Just to Lower a Rate
A standard refinance replaces one mortgage with another at a better rate or term. A cash-out refinance does that too, but borrows more than the existing balance and hands the owner the difference in cash — funding renovations, debt consolidation, or anything else, secured against the home's equity rather than an unsecured loan. The tradeoff is a larger loan balance and, usually, a reset amortization clock.
The Formula
Cash Out = New Loan Amount − Current Mortgage Balance − Closing Costs
Lenders cap the new loan at a maximum loan-to-value ratio (commonly 80% for conventional cash-out refinances), which limits how much equity can actually be converted to cash regardless of how much equity exists on paper.
Where This Calculation Matters
- Funding a renovation without a separate loan — rolling renovation costs into a single first-mortgage rate is often cheaper than a personal loan or credit card.
- Consolidating higher-interest debt — replacing credit card or personal loan balances with mortgage-rate debt can cut total interest paid, though it converts unsecured debt into debt secured by the home.
- Comparing against a HELOC — a cash-out refinance replaces the whole mortgage at one rate, while a HELOC layers a separate, often variable-rate line on top of the existing mortgage; the right choice depends on the rate spread between the two.
- Checking feasibility before applying — running the LTV cap against current equity shows immediately whether enough cash-out capacity exists to justify the closing costs of a full refinance.
A Worked Example
A $450,000 home with a $220,000 current mortgage balance, refinancing to 80% LTV with 2% closing costs:
| Item | Amount |
|---|---|
| New loan amount (80% of $450,000) | $360,000.00 |
| Closing costs (2% of new loan) | $7,200.00 |
| Current mortgage balance paid off | $220,000.00 |
| Cash out to owner | $132,800.00 |
| New monthly payment (6.75%, 30 yrs) | $2,334.95 |
How to Use This Calculator
- Enter Current Home Value and Current Mortgage Balance.
- Adjust Max LTV % if your lender's cap differs from the 80% default.
- Enter Closing Cost % (defaults to 2%) for the new loan.
- Enter the New Interest Rate and New Loan Term for the refinanced mortgage.
- Select Calculate to see the cash-out amount and the new monthly payment.
Related Calculations
Check available equity before refinancing with the Home Equity Calculator, or compare against a line of credit instead using the HELOC Calculator.