A cash-out refinance lets you replace your current mortgage with a larger one and pocket the difference in cash. If your home has gained value over the years, that equity is sitting there doing nothing until you tap it. This calculator shows exactly how much you can pull out — most lenders cap you at an 80% loan-to-value ratio — what your new monthly payment will be, and how many years it takes for the monthly savings from your lower rate to pay back the closing costs.
Slide the inputs and the result card updates instantly. You can stress-test a higher or lower interest rate, a longer or shorter term, and a different closing-cost estimate to see how each choice changes your break-even point.
How to Use
- Enter the Current Home Value — what the home would appraise for today, not what you originally paid. A low estimate here undersells the equity you actually have.
- Add your Remaining Mortgage Balance — the principal you still owe on the loan you plan to replace. You can find this on your most recent statement.
- Type your Current Monthly Payment (P&I). This is the payment on your existing loan today; the calculator uses it to work out whether the new loan lowers your monthly outlay.
- Set the New Interest Rate (APR) you are being quoted. If you have not locked a rate yet, test ±0.5% to see how sensitive your break-even is.
- Choose the New Loan Term — 30 years keeps the payment lowest, while 15 years builds equity faster and costs far less interest over time.
- Fill in Closing Costs, typically 2%–5% of the loan amount. These are the fees you pay out of pocket (or roll into the loan) to get the new mortgage.
- Adjust Max Loan-to-Value (LTV) only if your lender uses a non-standard cap. The default of 80% is the most common limit for conventional cash-out loans.
The result card shows your new loan amount, the cash you walk away with, your new monthly payment, the monthly savings versus today, and your break-even time — the point at which the rate savings have earned back the closing costs.
How the Math Works
Two things drive this calculator: the maximum loan the lender allows, and the standard mortgage payment formula.
First, the cash-out cap. Most lenders will not let you borrow more than 80% of your home's current value once the new loan is in place:
- Maximum loan = home value × (max LTV ÷ 100)
- Cash you receive = maximum loan − remaining mortgage balance
If your remaining balance is already above the 80% cap, there is no cash to pull out (and a refinance in that case would not be a true cash-out).
Second, the new monthly payment uses the same amortization formula every major lender and Fannie Mae uses:
M = P × r(1 + r)ⁿ / ((1 + r)ⁿ − 1)
Where P is the new loan amount, r is the monthly rate (the annual APR divided by 12), and n is the number of monthly payments (the term in years times 12). If the rate is 0%, the formula would divide by zero, so the engine simply splits the principal evenly across the months.
Finally, the break-even time compares what you save each month against what you paid to close the loan:
- Monthly savings = your current payment − your new payment
- Break-even years = closing costs ÷ monthly savings ÷ 12
If your new payment is higher than your old one, monthly savings are negative and there is no rate-based break-even — in that case you are refinancing purely to access equity, and you should weigh the new payment against what you are using the cash for.
Examples
Example 1 — A typical cash-out to fund renovations. A homeowner's home is worth $400,000, they owe $200,000, and their current payment (on a higher-rate loan) is $2,400. They refinance into a new 30-year loan at 6.0% with $6,000 in closing costs. The 80% LTV cap lets them borrow up to $320,000, so they walk away with $120,000 in cash. The new payment is about $1,919, saving roughly $481 per month. At that pace the $6,000 in closing costs is earned back in about 1.0 years.
Example 2 — Paying off high-interest debt. On a $500,000 home with a $250,000 balance and a $3,600 current payment, a new 15-year loan at 5.0% lets them borrow up to $400,000 and pull $150,000 out. The new payment is around $3,163, saving about $437 per month, with $7,500 in closing costs breaking even in roughly 1.4 years. Using that cash to wipe out 20% credit-card debt is usually the strongest argument for a cash-out refinance.
Example 3 — A high-value home. On a $1,250,000 home with a $500,000 balance and a $6,200 current payment, an 80% LTV cap supports a $1,000,000 new loan, releasing $500,000 of equity. At 5.5% for 30 years the new payment is about $5,678, saving roughly $522 per month; with $9,000 in closing costs the break-even point is about 1.4 years. High-balance "jumbo" cash-out loans sometimes carry stricter LTV limits, so confirm the cap with your lender.
FAQ
How much equity can I take out with a cash-out refinance?
Most conventional lenders cap the new loan at 80% of your home's current value, meaning you must leave at least 20% equity in the property. Your cash-out amount is that 80% loan minus your remaining mortgage balance. On a $400,000 home where you owe $200,000, the cap supports a $320,000 loan, releasing $120,000. Some programs and lenders allow 85% or more, but that usually comes with higher rates or fees.
Is a cash-out refinance worth it?
It is worth it when the new rate is lower than your current one (so you save monthly), the closing costs are recovered within a few years, and the cash is used for a productive purpose — home improvements that raise the value, paying off high-interest debt, or funding education. It is less attractive if the new payment is higher, you only plan to stay in the home a short time, or you are borrowing for consumable spending.
How is the break-even point calculated?
Divide your total closing costs by your monthly savings, then divide by 12 to convert months into years. For example, $6,000 in closing costs divided by $481 of monthly savings is about 12.5 months, or roughly 1.0 years. If you sell or refinance again before reaching break-even, the loan does not pay off for you.
Does a cash-out refinance hurt my credit?
It triggers a hard credit inquiry, which can cause a small, temporary dip in your score. Because you are opening a new, larger loan, your overall utilization and average account age may shift slightly. Most borrowers see their score recover within several months of on-time payments. Rate-shopping multiple lenders within a short window is typically counted as one inquiry.
What is the difference between a cash-out refinance and a home equity loan?
A cash-out refinance replaces your entire existing mortgage with one new, larger loan at a single rate and payment. A home equity loan or HEOC is a second loan that sits alongside your original mortgage, usually at a higher interest rate. Cash-out refinances often offer lower rates than second mortgages because they are the primary lien, but they require you to pay closing costs on the whole loan.
Can I do a cash-out refinance with no closing costs?
Some lenders offer "no-cost" refinances, but they usually cover the fees by charging a slightly higher interest rate or rolling the closing costs into the loan balance. That raises the amount you owe and can slow your break-even. Always compare the effective rate and total cost, not just the advertised fee line.
Disclaimer
This cash-out refinance calculator is provided for informational purposes only and does not constitute financial, lending, tax, or investment advice. Estimates are based on the inputs you enter and the standard amortization formula; actual loan amounts, LTV caps, rates, and closing costs vary by lender, credit profile, property type, and program. Cash-out proceeds may be taxable or affect other financial decisions. Always confirm your final terms and the impact on your equity directly with a licensed mortgage professional before refinancing.