Cash-Out Refinance Calculator
Print| New Total Refinanced Loan Balance | $0.00 |
Tap into your accumulated home equity to fund major expenses or consolidate high-interest debt. Use this Cash-Out Refinance Calculator to compute your maximum cash-out proceeds based on an 80% Loan-to-Value (LTV) limit, factor in estimated closing costs, and calculate your new monthly mortgage payment.
The Formula for Cash-Out Refinancing
Calculating net cash proceeds and new monthly payments from a cash-out refinance requires determining maximum allowable loan limits and deducting current mortgage debt and closing fees:
Max Allowable Loan Amount = Home Fair Market Value × Max LTV % (typically 80%)
Gross Cash-Out Available = Max Allowable Loan Amount - Existing Mortgage Balance
Net Cash to Borrower = Gross Cash-Out Available - Estimated Refinancing Closing Costs
New Monthly Payment (PITI) = New Loan Amount × [r(1 + r)^n] / [(1 + r)^n - 1] + Monthly Taxes & Insurance
Where:
- Max LTV %: Maximum Loan-to-Value percentage allowed by lenders (standard cap is 80% for conventional loans, 85% for FHA, 100% for VA cash-out).
- Closing Costs: Refinancing closing fees typically range between 2% and 5% of the new total loan amount.
- r: Monthly interest rate on new refinanced mortgage (New APR / 12).
Cash-Out Refinance Equity & Payout Matrix
Refer to the lookup table below for net cash-out proceeds and estimated monthly payments across home values at an 80% LTV cap (assuming a 30-year fixed rate of 6.5% APR and 3% closing costs):
| Home Market Value | Existing Mortgage Balance | Max 80% LTV Loan Limit | Est. Closing Costs (3%) | Net Cash to Borrower (Bank Payout) | New Monthly Payment (P&I) |
|---|---|---|---|---|---|
| $350,000 | $200,000 | $280,000 | $8,400 | $71,600 | $1,770 / month |
| $500,000 | $280,000 | $400,000 | $12,000 | $108,000 | $2,528 / month |
| $650,000 | $350,000 | $520,000 | $15,600 | $154,400 | $3,287 / month |
| $800,000 | $450,000 | $640,000 | $19,200 | $170,800 | $4,045 / month |
Step-by-Step Cash-Out Refinance Example
Suppose a homeowner owns a house valued at $400,000 with an existing mortgage balance of $220,000, refinancing into a new 30-year fixed loan at 6.0% APR under an 80% maximum LTV limit:
- Calculate Max 80% LTV Loan Limit: $400,000 home value × 0.80 = $320,000 new maximum loan amount.
- Calculate Gross Cash-Out Available: $320,000 new loan limit – $220,000 existing mortgage payoff = $100,000 gross cash out.
- Deduct Estimated 3% Closing Costs: $320,000 new loan × 0.03 = $9,600 closing costs.
- Calculate Net Cash Payout to Borrower: $100,000 gross cash out – $9,600 closing costs = $90,400 net cash in bank.
- Calculate New Monthly Mortgage Payment (P&I): $320,000 financed over 30 years at 6.0% = $1,918.56 per month.
Frequently Asked Questions
What is the maximum Loan-to-Value (LTV) allowed for a cash-out refinance?
For standard conventional cash-out refinances, lenders cap maximum LTV at 80% (leaving 20% equity in the home). FHA cash-out refinances cap LTV at 85%, while VA loans allow up to 100% LTV for qualified veterans.
Is cash received from a cash-out refinance taxable income?
No, cash proceeds received from a cash-out refinance are considered loan principal rather than taxable income, meaning you owe $0 in federal or state income taxes on the cash payout.
How does a cash-out refinance compare to a HELOC?
A cash-out refinance replaces your entire existing primary mortgage with one single new primary loan. A HELOC (Home Equity Line of Credit) acts as a separate second mortgage, leaving your existing low-rate primary mortgage unchanged.
Are interest payments on a cash-out refinance tax-deductible?
Mortgage interest on cash-out refinance proceeds is tax-deductible only if the cashed-out funds are used to “buy, build, or substantially improve” the home securing the loan.