Cash-Out Refinance Calculator

The cash-out refinance calculator focuses on home equity. It estimates how much cash might be available when a homeowner replaces an existing mortgage with a larger new mortgage. That makes it different from the general refinance calculator, which compares old and new loan payments, and different from the HELOC payment calculator, which models a revolving home equity line. Here, the key constraint is loan-to-value: how much of the home’s value the lender is willing to finance after the refinance.

How the inputs work

Start with a realistic home value. A recent appraisal, broker price opinion, or conservative comparable-sale estimate is better than an optimistic guess. Enter the current mortgage balance that must be paid off. Then enter the lender’s maximum loan-to-value, often called assumed LTV. The calculator uses 80% by default because many cash-out programs limit first-mortgage cash-out near that level, but actual limits vary by loan type, occupancy, credit profile, property type, and lender.

The closing costs financed field represents costs that will be rolled into the new loan. Because the calculator finances them, those costs take room inside the LTV limit and reduce the net cash available. The desired cash out field tests a specific request. The calculator adds the current balance, closing costs, and desired cash to estimate the requested new loan, then checks whether that loan fits under the LTV cap. The interest rate and term drive the estimated new principal-and-interest payment.

Formula

Maximum new loan:

$\text{maximum new loan} = \text{home value} \times \text{assumed LTV}$

Maximum gross cash out:

$\text{maximum gross cash out} = \text{maximum new loan} - \text{current mortgage balance}$

Maximum net cash after financed closing costs:

$\text{maximum net cash} = \text{maximum gross cash out} - \text{closing costs financed}$

Requested new loan:

$\text{requested new loan} = \text{current mortgage balance} + \text{closing costs financed} + \text{desired cash out}$

Requested loan-to-value:

$\text{requested LTV} = \frac{\text{requested new loan}}{\text{home value}} \times \text{100}$

The payment uses the standard fixed mortgage formula:

$\text{payment} = \frac{\text{principal} \times \text{monthly rate}}{1 - (1 + \text{monthly rate})^{-\text{months}}}$

Worked example matching the default inputs

Assume a $500,000 home, a $300,000 current mortgage balance, an 80% assumed LTV, $6,000 of financed closing costs, and $75,000 desired cash out. The maximum new loan is:

$\text{maximum new loan} = \text{500,000 dollars} \times \text{80\%} = \text{400,000 dollars}$

Subtracting the current balance gives $100,000 of maximum gross cash out. After subtracting the $6,000 financed closing costs, the maximum net cash is $94,000. The requested new loan is:

$\text{requested new loan} = \text{300,000 dollars} + \text{6,000 dollars} + \text{75,000 dollars} = \text{381,000 dollars}$

The requested LTV is 76.20%, so the requested $75,000 cash out fits under the 80% cap. Equity after the requested refinance is $119,000 because $500,000 minus $381,000 equals $119,000. At 6.5% for 30 years, the estimated principal-and-interest payment on the requested loan is $2,408.18 per month.

Eligibility and cost factors

A cash-out refinance is not just a cash request. Lenders commonly review credit, income, occupancy, seasoning, appraisal value, existing liens, debt-to-income ratio, reserves, and program-specific LTV limits. The CFPB defines loan-to-value as a key cost factor because a higher LTV can change pricing and approval risk. Closing costs can include lender charges, points, title fees, government recording costs, prepaid interest, and escrow deposits. If the loan is a government-backed mortgage, program rules may differ from a conventional cash-out refinance.

Borrowers often compare cash-out refinancing with a line of credit calculator, the loan calculator, and the budget calculator. That comparison matters because a cash-out refinance may replace a low-rate existing mortgage with a higher-rate larger loan. If you only need a flexible line for intermittent expenses, a HELOC may preserve the first mortgage, though HELOC rates and payments can change.

Tips before using home equity

• Decide whether the cash use creates long-term value. Repairs, accessibility improvements, or debt restructuring have different risk than discretionary spending.
• Stress-test the new payment with taxes, insurance, HOA dues, and maintenance.
• Use a conservative home value before the appraisal is complete.
• Compare cash received with total interest over the new term, not just the first monthly payment.
• Keep emergency equity. Borrowing up to the limit leaves less cushion if home prices fall or selling costs are high.

Informational note

This calculator estimates LTV and principal-and-interest math only. It does not approve a loan, lock a rate, verify property value, or decide whether cash-out refinancing is better than a HELOC, home equity loan, or unsecured loan. Review official disclosures and consider independent advice before pledging home equity for new debt.

Sources

• CFPB Regulation Z, 12 CFR Part 1026 — current through 2026-07-09; APR, finance-charge, payment, disclosure and credit terminology; user-supplied illustrative loan formulas are not lender quotes.
• Calculation scope: The equations and assumptions described above are applied only to values entered in the form. No live rates, prices, tax rules, lender terms, or accounting classifications are fetched. Results are user scenarios, not quotes or prescribed classifications.