How much cash can I actually pull out?

The formula is (home value × maximum LTV) minus your current loan balance minus closing costs. For conventional loans, maximum LTV is usually 80%. FHA allows up to 80%. VA cash-out can go to 100% for eligible veterans. On a $550,000 home with a $285,000 balance at 80% LTV, your max new loan is $440,000, which gives you $155,000 of gross cash minus ~$13,000 in closing costs = $142,000 net.

Is the cash I receive taxable?

No. Cash from a refinance is loan proceeds, not income — you have to pay it back, so the IRS doesn't consider it taxable. The interest you pay on the new loan is deductible only if the cash is used to 'buy, build, or substantially improve' the home. If you use the cash for a kitchen remodel, the interest is deductible. If you use it to buy a car or pay off credit cards, the interest on the cash-out portion is NOT deductible even though it's secured by your home.

When does cash-out refinancing make sense?

When the cost of borrowing via refi is lower than your alternative. A home equity line (HELOC) is usually cheaper for short-term needs because you only pay interest on what you draw and there are no/low closing costs. A cash-out refi makes more sense for large, one-time needs (renovation, debt consolidation, buying another property) where you want a fixed payment over 15–30 years. If current mortgage rates are higher than your existing rate, the math is much worse — you're refinancing your entire balance at the new higher rate just to access some equity.

What are the risks of a cash-out refi?

You're trading unsecured cash for secured cash. If you don't pay back your credit card, they can sue you but can't take your house. If you cash-out refi to pay off the credit card and then can't make mortgage payments, the bank forecloses. You've converted unsecured debt into home equity risk. You also reset your amortization clock — 15 years into a 30-year loan, you become 30 years away from payoff again. And if values fall, you can end up underwater more easily because your loan-to-value is higher.

Is a cash-out refi better than a HELOC?

Different tools for different jobs. Cash-out refi: fixed rate, fixed payment, all the money at closing, 30-year payoff, $5k-$15k closing costs. HELOC: variable rate, interest-only during draw, only pay interest on what you use, 10-year draw + 20-year repayment, $0-$500 in fees. Use refi if you need a lump sum now and want rate certainty. Use HELOC if you need flexibility — you're not sure when or how much you'll need. See our HELOC calculator for the specific payment math.

Cash-Out Refinance Calculator | How Much Can I Cash Out?

Cash-out refinancing: turning equity into cash

A cash-out refinance replaces your existing mortgage with a larger loan, and you take the difference home in cash. It's the primary way Americans access the equity in their homes — about $50 billion a quarter gets pulled out this way in a typical year. Done right, it can fund a major renovation, pay off high-interest debt, or seed a down payment on an investment property. Done wrong, it resets your mortgage clock, costs you thousands in closing fees, and converts flexible unsecured debt into secured debt that your home is collateral for.

This calculator gives you the three numbers that determine whether a cash-out refi makes sense: how much cash you'll actually net after closing costs, how much your monthly payment increases, and the true long-term cost of the cash (total interest you'll pay on the borrowed amount over the new 30-year term).

How the math works

Lenders cap cash-out refis at a maximum loan-to-value ratio. For conventional (Fannie/Freddie) loans, that cap is 80%. For FHA, 80%. For VA cash-out, up to 100% for eligible veterans. Jumbo lenders vary from 70% to 80%. Investment properties are usually capped at 70–75%.

The formula: maximum new loan = home value × max LTV. Subtract your existing loan balance and closing costs to get the cash you actually walk away with. On a $550,000 home with a $285,000 balance and 80% max LTV:

Maximum new loan: $440,000
Pay off existing: $285,000
Closing costs (3%): $13,200
Cash to pocket: $141,800

Closing costs typically run 2–5% of the new loan. Origination fees, appraisal ($500–$800), title insurance, recording fees, prepaid escrow, and sometimes discount points. On a $440k loan at 3%, that's $13,200 in fees — a meaningful haircut to the cash number you're targeting.

When cash-out refi makes sense

You have high-interest debt to consolidate.Credit card balances at 22% APR are brutal. Paying them off with a 6.5% mortgage cuts your interest cost by 70%. BUT — you have to have the discipline not to re-run the cards. The most common cash-out refi horror story is "I paid off my $40k credit card with a cash-out refi, then ran up the cards again, and now I have $80k of debt plus a bigger mortgage."

You're funding a renovation that adds value. If you can borrow at 6.5% to add a kitchen or second bathroom that increases the home's value by more than the cost of the renovation, the spread is free money plus the interest is tax-deductible. Run the cost-vs-value math in our renovation ROI calculator first.

You're buying an investment property. Using cash-out to seed a down payment on a rental is a classic real estate investor move. Your borrowed cash earns whatever the rental cash flow plus appreciation produces; your cost is the new mortgage rate. If the rental returns 9% and your rate is 6.5%, the 2.5% spread compounds over the hold period. See our BRRRR strategy calculator for the full investor version of this play.

When cash-out refi is a mistake

Your existing rate is much lower than current rates. If you locked a 3% mortgage in 2021 and cash-out refi rates today are 7%, you're paying 4% more on your entire balance just to access some equity. The effective cost of the cash is enormous. Use a HELOC instead — it keeps your first mortgage at the low rate and only charges you rate on what you draw.

You're buying depreciating assets.A car, a boat, a wedding, a vacation. These lose value while your mortgage compounds. Over 30 years, $40,000 of cash-out at 6.5% costs you about $90,000 in total interest. That's a very expensive way to finance something that's worth zero in ten years.

You're nearly at loan payoff.If you're 23 years into a 30-year loan, you have 7 years left of mostly-principal payments. A cash-out refi restarts the 30-year clock. You add another 23 years of total interest just to access some equity. Usually not worth it.

Texas has its own rules

Texas is the one state with constitutional protections on home equity lending that add unusual constraints to cash-out refinances. Notable rules: max 80% LTV (state constitutional limit, not just lender policy); 3% cap on total fees; 12-day mandatory waiting period after loan application; cannot refinance within 12 months of a previous cash-out. If you're in Texas, verify your lender documents comply with Section 50(a)(6) of the Texas Constitution.

Cash-out refi vs. HELOC vs. home equity loan

Cash-out refi. Replaces your first mortgage. Fixed rate (usually), fixed monthly payment, all cash at closing. Best for large one-time needs with a long payback horizon. Costs 2–5% of loan in closing fees.

HELOC. Second mortgage, line-of-credit structure. Variable rate (tied to prime). Interest-only during 10-year draw period. Only pay interest on what you draw. Best for uncertain or staged needs. $0–$500 in fees typically. See our HELOC calculator.

Home equity loan.Second mortgage, lump sum, fixed rate. Similar to cash-out refi but keeps your first mortgage untouched. Higher rate than first-lien but cheaper closing ($500–$2,500). Best when your first mortgage rate is much lower than current rates and you don't want to refinance it.

The true cost of the cash you pull out

This is the number most homeowners underestimate. When you pull $150,000 out of your home over a 30-year term at 6.5%, the total interest on that $150k portion is roughly $192,000. You're paying $192,000 to access $150,000 of cash. That's 1.28× the cash you received, and it's only the interest — principal is the $150k itself, so you're actually paying back $342,000 over 30 years.

Is that bad? It depends on what you do with the cash. If you invest at 10% and it grows to $2.6M over 30 years, the $192k of interest is trivial. If you spend it on a wedding, you've permanently destroyed $192k of future wealth for one day of celebration. The calculator above shows the total interest on the cash portion so you can weigh it against the return you'll get from deploying the money.

Timing: rates matter enormously

Cash-out refi rates are usually 0.25–0.50% higher than a standard rate-and-term refi. If you're already refinancing to lower your rate, adding cash-out is cheap. If your current rate is already lower than market, the penalty for doing cash-out instead of sitting still is substantial.

Run the numbers both ways. Compare the cash-out refi to a separate HELOC stacked on your existing low-rate first mortgage. The HELOC at a higher rate on a smaller balance often beats a cash-out refi at a lower rate on a bigger balance.

Related tools

Comparing just a rate-and-term refinance without cash out? Use our refinance savings calculator. See total current equity in our home equity calculator. Run HELOC vs. refi in our HELOC calculator. Check whether the remodel you're financing pays back in our renovation ROI calculator.

Cash-out refinance calculator