Our mortgage cash-out refinance calculator can help you estimate what your new monthly payments will be on your new mortgage. Start by inputting your home’s current value and the outstanding balance on your existing mortgage. You’ll also need to share your credit score range, how much cash you plan to take out, your loan term and estimated mortgage interest rate. You can view current rates on LendingTree’s mortgage refinance page.
There are other advanced details you can input into the calculator, including:
- Homeowners association fees
- Homeowners insurance premium
- Property taxes
The more information you share, the better your mortgage payment estimate. Once you’ve calculated your payment amount, take some time to compare cash-out refinance offers from multiple lenders.
Cash-out refinance FAQs
What is a cash-out refinance?
A cash-out refinance involves refinancing your existing mortgage into a new loan that is larger than your current outstanding loan balance. This allows you to take the difference between your old loan and new loan in cash. The cash you receive can be used for any purpose, such as debt consolidation, home renovations or an investment property purchase.
For an in-depth explanation of cash-out refis, read our explainer on how a cash-out refinance works.
When does it make sense to get a cash-out refinance?
First and foremost, you’ll need a significant amount of equity in your home to get a cash-out refinance. Some reasons a cash-out refi might make sense include:
- Buying an investment property
- Consolidating high-interest debt
- Making improvements to your home
- Paying college tuition and fees
- Starting a business
If you’re planning to use your equity to cover personal expenses, such as a luxury car, vacation or wedding, a cash-out refinance might not make sense. It’s better to save up for those types of purchases rather than incurring more debt.
How much equity do you need for a cash-out refinance?
The equity requirement depends on what type of cash-out refinance you’re borrowing. Conventional and FHA lenders allow you to borrow up to a maximum 80% loan-to-value (LTV) ratio. VA lenders allow a 100% LTV for cash-out refinances originated before Nov. 1, 2019; the limit drops to 90% LTV after that date. Your LTV ratio is the percentage of your home’s value that is financed by the loan.
For example, if your house is worth $200,000 and you owe $100,000 on your existing mortgage, you have $100,000 in available equity. Keeping the maximum 80% LTV ratio requirement in mind, you may borrow up to an additional $60,000 with a cash-out refinance. To calculate this, multiply your home’s value by 80% ($200,000 x 0.80 = $160,000) and subtract your outstanding loan balance from that amount ($160,000 – $100,000 = $60,000).
Who qualifies to get a cash-out refinance?
To qualify for a cash-out refinance, you must meet the following general requirements:
- Have at least a 580 credit score for FHA loans or 620 for conventional loans. There’s no minimum credit score for VA loans. However, the higher your score for any of these loan types, the better your chances of approval.
- Have a debt-to-income ratio of 43% or lower, though some lenders may go as high as 50% in some cases. Your debt-to-income ratio is the percentage of your gross monthly income used to make monthly debt payments.
- Have a new home appraisal completed to verify your property’s value and confirm your available equity.
- Have asset, employment and income documentation, such as bank statements, pay stubs and tax returns.
How much does a cash-out refinance cost?
Just as it was the case for your original mortgage, there will be closing costs for your mortgage refinance. The typical cost ranges from 3% to 6% of your new loan amount. Common closing costs include an application fee, appraisal fee, flood certification fee, origination fee and title search and insurance, among other expenses. You can get an estimate of all these costs by plugging in your current and new mortgage terms into our cash-out refinance calculator above.
What’s the difference between a standard and limited cash-out refinance?
A standard cash-out refinance is typically reserved for those mortgage borrowers who have significantly more than 20% equity built in their home, since the maximum LTV ratio you’re allowed to have with a cash-out refinance is 80% in most cases.
A limited cash-out refinance allows for very small amount of cash back to the borrower. The limit is either 2% of the loan amount or $2,000, whichever is less.
How can I find the best cash-out refinance lender?
You’ll need to shop around to find the best cash-out refinance lender for you. Be sure to not only check with your existing lender, but gather refinance quotes from at least two other lenders. Ask for referrals from family and friends and check lender reviews.
Pay attention to the rate you’re quoted, plus your estimated closing costs. Additionally, think about how long you plan to stay in your home. If you’re moving soon after your refinance, it might not make sense to go through the process of replacing your existing mortgage. Make sure you enter your best offers into our cash-out refinance calculator above to compare offers and help you pick the best deal.
What are the alternatives to a cash-out refinance?
The main appeal of a cash-out refinance is the ability to borrow against your home equity. You can also do this through a home equity loan or home equity line of credit (HELOC).
A home equity loan is an installment loan that typically has a fixed interest rate. You receive the money in a lump sum and repay it in fixed monthly payment amounts, which include principal and interest, over a predetermined loan term.
A HELOC works like a credit card. It’s a revolving credit line with a variable interest rate. You make payments based on what you borrow, plus interest.
Your home serves as collateral for both home equity loans and lines of credit, so failure to repay what you borrow can lead to foreclosure.