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How the maximum is calculated
Max new loan = home value × max LTV. Max cash = max loan − current balance − closing costs (if paid from the loan). Conventional cash-out refinances of a one-unit primary home are generally capped at 80% LTV, FHA cash-out also at 80%, and VA cash-out can go higher for eligible borrowers. Your lender and appraisal set the final number.
Cash available by home value (80% LTV, $8,000 costs)
| Home value | Owe $200k | Owe $300k | Owe $400k |
|---|---|---|---|
| $350,000 | $72,000 | — | — |
| $450,000 | $152,000 | $52,000 | — |
| $550,000 | $232,000 | $132,000 | $32,000 |
| $650,000 | $312,000 | $212,000 | $112,000 |
| $800,000 | $432,000 | $332,000 | $232,000 |
Cash-out vs HELOC vs home equity loan
A cash-out refinance replaces your whole mortgage, so it only makes sense if the new rate on the full balance is acceptable. If your current rate is far below today's, a HELOC or home equity loan borrows only the extra and leaves the cheap first mortgage alone. Example: refinancing $250,000 at 3% up to $400,000 at 6.75% raises the 30-year payment from $1,054 to $2,594.
Risks
Your home secures the loan. Cash-out lowers your equity, can add years of payments, and missed payments can lead to foreclosure. Using it to pay off cards turns unsecured debt into debt secured by your house.
Example rates are for comparison only, not offers or current quotes. Your rate depends on credit, loan-to-value and lender.
Sources and assumptions
- LTV = loan ÷ appraised value.
- Fannie Mae Eligibility Matrix (cash-out LTV limits)
Related
Frequently asked questions
How much cash can I take out in a refinance?
Usually up to 80% of the home's appraised value minus what you owe, minus closing costs if they come out of the loan.
Is a cash-out refinance a good idea?
It can be if the new rate on the whole balance is reasonable and the cash goes to something that holds value. If your current rate is much lower, a HELOC or home equity loan is often cheaper.
Is cash-out refinance money taxable?
No. It is borrowed money, not income. Whether the interest is deductible depends on how the money is used under IRS rules.