A cash out refinance lets you replace your existing mortgage with a new, larger loan and pocket the difference in cash. That money can go toward home improvements, debt consolidation, tuition or other big goals. However, a bigger mortgage also changes your monthly payment and how much interest you will pay over time. This cash out refinance calculator shows how much cash you might be able to take out, how your payment could change and what happens to your home equity under different scenarios.
Cash Out Refinance Calculator
| Loan amount | Interest rate | Term (years) | Monthly payment | Total interest over term |
|---|
How this cash out refinance calculator works
This calculator is designed to answer three core questions: How much cash could I take out of my home, what would my new mortgage payment look like and how does the new loan compare with staying in my current mortgage? To do that, it uses a simple model based on your home value, current loan balance, interest rates, terms and a maximum loan to value limit.
First, you enter your home value and current loan balance. The difference between those two numbers is your estimated home equity. You then choose a maximum loan to value percentage, such as 80 percent. Many lenders limit cash out refinances to around 80 percent of your home’s value so that you keep at least 20 percent equity after refinancing. The calculator multiplies your home value by this percentage to estimate the largest new loan that would fit under that cap.
Next, you provide details about your current mortgage and your potential new loan. For the current loan, you enter the interest rate and years remaining. For the new loan, you enter the estimated rate and term you expect to choose, such as a new 30 year fixed mortgage. Using a standard mortgage formula, the calculator estimates your current monthly payment, your new monthly payment and the total interest cost for each loan over its full term.
You also enter an estimate of your closing costs. In many refinances, borrowers choose to roll at least part of their closing costs into the new loan instead of paying them all out of pocket. This calculator assumes that closing costs are financed up to the point your target loan to value limit allows. If there is not enough room under that limit to finance all your closing costs, the calculator estimates how much you might need to pay in cash at closing.
With those inputs, the tool estimates how much of the new loan goes toward three buckets:
- Existing balance paid off – how much of the new principal simply replaces your current mortgage balance.
- Cash to you – how much is left to pay out to you at closing as a lump sum, after closing costs and payoff of the old loan.
- Financed closing costs – how much of your estimated closing costs fits under your loan to value cap.
The main result card highlights estimated cash you could take out. The second card focuses on your monthly payment change, showing how the new payment compares with the old one and how your loan to value ratio shifts after refinancing. A horizontal bar chart visually breaks down how the new loan is used, with segments for paying off the old balance, cash to you and any financed closing costs.
Under the “See loan comparison” toggle, a details table lines up your current mortgage and the new cash out mortgage side by side. You can see loan amounts, interest rates, terms, monthly payments and total interest over the full term of each loan, plus a difference row that shows the change in each category. This makes it easier to see whether the cash you receive is worth any increase in payment or interest cost.
How much cash can you safely take out of your home?
The maximum cash you can take out in a refinance depends on three main factors: your home value, your current loan balance and the loan to value limit your lender uses. The higher your equity and the higher the allowed LTV, the more room there is for cash and closing costs. But more cash out also means a larger loan and higher risk if your income drops or home values fall.
A common rule of thumb is that many lenders limit cash out refinances to about 80 percent of your home’s value. That means you must leave at least 20 percent equity in place after the new mortgage. For example, if your home is worth $400,000 and your maximum LTV is 80 percent, the largest new loan allowed by that rule would be $320,000. If your current balance is $260,000, you have about $60,000 of “room” under the cap before closing costs.
The calculator uses these relationships to estimate how much cash might reasonably be available. It starts with the maximum new loan based on your home value and LTV limit, subtracts your current loan balance and then subtracts any financed closing costs. Whatever is left is the cash you could potentially receive at closing, before any tax considerations or lender specific adjustments.
| Item | Example amount |
|---|---|
| Home value | $400,000 |
| Maximum LTV (80%) | $320,000 |
| Current loan balance | $260,000 |
| Room under LTV cap | $60,000 |
| Estimated closing costs | $5,000 |
| Approximate cash available | $55,000 |
This example assumes closing costs are financed and that the new loan is exactly at the 80 percent LTV limit. In practice, your lender might use a slightly different cap, have specific rules for investment properties or condos or require adjustments for credit scores and debt to income ratios. Use the calculator to explore what happens if you lower your LTV limit, increase closing costs or change the new interest rate and term.
When a cash out refinance can be smart (and when it is risky)
A cash out refinance can be helpful when you have built substantial equity, can qualify for a competitive rate and have a clear, productive use for the funds. Common uses include paying for major home improvements, consolidating higher rate debt, covering large one time expenses or funding education costs. In these situations, the key is making sure the long term benefits of the refinance outweigh the extra interest and fees you will pay on a bigger mortgage.
For example, using cash out funds to renovate your kitchen and bathrooms might increase your home’s value and make it more comfortable to live in. Using cash out to pay off high rate credit card balances could lower your monthly interest expense and simplify your payments, as long as you avoid running those card balances back up again. The calculator helps you gauge whether the change in payment and total interest cost feels reasonable compared with the cash you receive.
On the other hand, a cash out refinance can be risky if you sharply increase your loan balance or move from a lower rate to a much higher rate just to access cash. You are stretching repayment of today’s spending over 20 or 30 years, and your home is on the line as collateral. If you lose your job, face medical bills or see home values decline, a larger mortgage could be harder to manage. Cashing out too much equity also reduces the cushion that protects you from being underwater if prices fall.
It is also important to compare a cash out refinance with alternatives such as a home equity loan, a home equity line of credit (HELOC) or a personal loan. Home equity loans and HELOCs let you borrow against your equity without replacing your existing mortgage, which might be attractive if your current rate is much lower than today’s market rates. A personal loan does not use your home as collateral but may carry a higher rate. The right choice depends on your credit, your budget and how long you expect to keep the debt.
Frequently Asked Questions (FAQs)
What is a cash out refinance?
A cash out refinance replaces your existing mortgage with a new loan that is larger than what you currently owe. At closing, the new lender pays off your old mortgage and gives you the difference in cash, minus any financed closing costs. Your new loan then has its own rate, term and payment schedule.
How much equity do I need for a cash out refinance?
Many lenders want you to keep at least 20 percent equity after a cash out refinance, which means they may limit your new loan to around 80 percent of your home’s value. Some programs may allow higher or lower limits based on your credit, property type and other factors. The calculator lets you experiment with different loan to value percentages to see how that changes your potential cash out.
Will my monthly payment always go up with a cash out refinance?
Not always, but it often does. Your payment depends on the new loan amount, interest rate and term. If you take out a lot of cash or move to a shorter term, your payment is likely to rise. If you are refinancing from a high rate to a lower rate and do not take much cash, your payment could go down even with a slightly larger balance. The calculator shows the estimated payment difference so you can see how sensitive it is to each input.
Is cash from a cash out refinance taxable?
In most cases, the cash you receive from a refinance is not taxed as income because it is borrowed money. However, tax rules around deducting mortgage interest can be different depending on whether you use the funds to improve your home or for other purposes. Because tax situations vary, it is important to confirm the details with a tax professional or trusted tax resource.
How is a cash out refinance different from a HELOC or home equity loan?
A cash out refinance gives you one new first mortgage that pays off your old loan and provides cash. A home equity loan is usually a separate, fixed rate second mortgage on top of your existing loan. A HELOC is a revolving line of credit secured by your home that you can draw on as needed, often with a variable rate. Each option has different fees, interest rates and repayment structures, so it is worth comparing them side by side before deciding.