# What will a cash-out refinance cost?

Computes the new loan, payment, and loan-to-value of a cash-out refinance, the most cash the lender’s limit allows, and how the payment and interest compare with the current mortgage.

- Page: https://www.acalculator.org/finance/cash-out-refinance-calculator
- JSON spec: https://www.acalculator.org/finance/cash-out-refinance-calculator.json
- Version: 8773804ec5d8

## Default answer

Example with the default inputs (Home value $450,000.00, Mortgage balance today $250,000.00, Current interest rate 5%, Months left to pay 300, Cash to take out $60,000.00, New interest rate 6.75%, New loan term (years) 30, Closing costs $9,000.00, Pay the closing costs Add to the loan, New loan start date September 30, 2026, Lender’s loan-to-value limit 80%) on the example date Wednesday, September 30, 2026: Taking $60,000.00 out of a $450,000.00 home makes a $319,000.00 loan at 6.75% that costs $2,069.03 a month.

## Inputs

| Key | Label | Description |
| --- | --- | --- |
| value | Home value | What your home is worth today, for example from an appraisal. |
| balance | Mortgage balance today | The principal you still owe on the current mortgage. |
| rate | Current interest rate | The fixed yearly rate on the current mortgage. |
| left | Months left to pay | The number of monthly payments left on the current mortgage. |
| cash | Cash to take out | The cash you want from the new loan. |
| newRate | New interest rate | The fixed yearly rate on the new loan. |
| newYears | New loan term (years) | The length of the new loan, for example 30 or 15 years. |
| costs | Closing costs | The fees and points to refinance. |
| roll | Pay the closing costs | Add the closing costs to the new loan, or pay them in cash. |
| start | New loan start date | The day the loan starts. The first payment is one month later. |
| limit | Lender’s loan-to-value limit | The most the new loan may be, as a percent of the home value. |

## Outputs

| Key | Label | Description |
| --- | --- | --- |
| newPayment | New monthly payment | The principal and interest payment on the new loan. |
| newLoan | New loan amount | Today’s balance plus the cash, plus the closing costs when they are added to the loan. |
| ltv | New loan-to-value | The new loan as a percent of the home value. |
| most | Most cash you can take out | The home value × the limit, minus today’s balance and any closing costs added to the loan. |
| oldPayment | Current monthly payment | The payment that repays today’s balance over the months left at the current rate. |
| change | Payment change | The new payment minus the current payment. |
| equity | Equity left | The home value minus the new loan. |
| newInterest | Interest on the new loan | All the interest the new loan charges. |
| oldInterest | Interest left on the current loan | The interest the current loan charges from today until it is paid off. |
| payoff | New loan paid off in | The month of the new loan’s last payment, when a start date is given. |

## Method

new loan = balance + cash (+ closing costs if added); loan-to-value = new loan ÷ home value; payment = L × r ÷ (1 − (1 + r)^−n), with r the rate ÷ 12 and n the months.

## Assumptions

- Both loans have fixed rates, and interest is charged monthly at the yearly rate ÷ 12.
- The current payment is the one that repays today’s balance over the months left.
- The lender’s limit applies to the new loan alone; no other loans are secured by the home.
- Tax, insurance, mortgage insurance, and any prepayment penalty are not included; nothing is rounded between months.

## Worked examples

1. value = $450,000.00, balance = $250,000.00, rate = 5%, left = 300, cash = $60,000.00, newRate = 6.75%, newYears = 30, costs = $9,000.00, roll = loan, limit = 80% gives newLoan = $319,000.00, ltv = 70.888889%, most = $101,000.00, newPayment = $2,069.03, oldPayment = $1,461.48, change = $607.55, equity = $131,000.00.
2. value = $400,000.00, balance = $200,000.00, rate = 4%, left = 240, cash = $120,000.00, newRate = 7%, newYears = 30, costs = $8,000.00, roll = cash, limit = 80% gives newLoan = $320,000.00, ltv = 80%, most = $120,000.00, newPayment = $2,128.97, change = $917.01. Source: Fannie Mae Eligibility Matrix: an 80% maximum loan-to-value for a cash-out refinance of a one-unit principal residence.
3. value = $300,000.00, balance = $90,000.00, rate = 0%, left = 180, cash = $30,000.00, newRate = 0%, newYears = 20, costs = $0.00, roll = loan, limit = 80% gives newLoan = $120,000.00, newPayment = $500.00, oldPayment = $500.00, change = $0.00, newInterest = $0.00, most = $150,000.00.

## FAQ

### How does a cash-out refinance work?

You replace your mortgage with a bigger one. The new loan pays off today's balance, and you get the difference in cash. With $250,000 owed and $60,000 taken out, plus $9,000 of costs added to the loan, the new loan is $319,000.

### How much cash can I take out?

Lenders cap the new loan at a percent of the home value. Fannie Mae's limit for a cash-out refinance of a one-unit home you live in is 80%. The most cash is the home value times the limit, minus today's balance and any costs added to the loan: 450,000 × 0.80 − 250,000 − 9,000 = $101,000.

### Why does my payment go up so much?

You borrow more, and often at a higher rate than your old loan, and the term may restart at 30 years. In the example, the payment rises from $1,461.48 to $2,069.03, $607.55 more a month.

### Is a cash-out refinance better than a HELOC or home equity loan?

A cash-out refinance replaces your whole mortgage, so if today's rates are higher than your current rate, you pay the higher rate on all of it. A HELOC or home equity loan keeps your first mortgage and borrows only the extra amount, usually at a higher rate on a smaller sum. Compare the total cost of each.

### What are the closing costs on a cash-out refinance?

Similar to any refinance: Freddie Mac puts them at about 3% to 6% of the loan principal. They are often added to the loan, which lowers the most cash you can take out.

### Does the break-even rule work for a cash-out refinance?

No. Freddie Mac notes that dividing the costs by the monthly saving does not work for a cash-out refinance, because the new loan is bigger. Compare the payment change and the new loan's interest instead.

## Sources

- Fannie Mae, Eligibility Matrix (cash-out refinance of a one-unit principal residence: maximum LTV/CLTV 80%). https://singlefamily.fanniemae.com/media/document/pdf/eligibility-matrix-december-10-2025
- Freddie Mac, Planning to refinance (the break-even rule does not work for cash-out refinances). https://myhome.freddiemac.com/refinancing/planning-to-refinance
- Freddie Mac, Understanding the costs of refinancing (about 3% to 6% of the loan principal). https://myhome.freddiemac.com/refinancing/costs-of-refinancing
- Amortized loan payment (annuity) formula: S. A. Broverman, Mathematics of Investment and Credit, chapter 3.