A cash-out refinance replaces your existing mortgage with a larger one and hands you the difference in cash at closing. It is the most common way homeowners turn equity into money they can actually spend.
You keep one loan and one payment. What changes is the balance, the rate, and the term — which is exactly why the math deserves a careful look before you sign.
Most lenders let you borrow up to 80% of your home's value on a cash-out refinance. Subtract your current payoff balance and what is left is your cash.
Example: a $450,000 home at 80% is $360,000. If you owe $195,000, you could take roughly $165,000 out of your home before closing costs.
It makes the most sense when refinance rates are at or below your current mortgage rate, when you need a large lump sum at once, and when you want a fixed payment you can plan around.
If your existing rate is far below today's market, compare a HELOC or home equity loan first — those leave your low first mortgage untouched.
Run your own figures through the calculator. No credit check, nothing saved unless you ask.
Calculate my equityUsually up to 80% of the home's value minus your current mortgage payoff. Some lenders go to 85%, and VA cash-out programs can go higher for eligible borrowers.
No. Loan proceeds are not income. Interest may be deductible when the money is used to buy, build, or substantially improve the home — confirm with a tax professional.
Part of The Homeowner's Guide to Home Equity.
What cash-out refinance rates depend on, how they compare with regular refinance rates, and how to get a low rate on your cash-out.
A practical way to compare mortgage and refinance rates across lenders: APR, points, credit, and lock periods — so you can spot the genuinely low rate.
The break-even math behind a home refinance: how far rates need to fall, how long you need to stay, and when to skip it entirely.