Cash-Out Refinance Calculator

What this calculator does

A cash-out refinance turns part of your home equity into a larger first mortgage. Enter the home’s value, the current balance, the cash you want, current and new rates, the new term, and closing costs that will be financed. The calculator reports the new principal, new payment, payment change, loan-to-value ratio, and interest cost.

This is a planning estimate. Lenders also review credit, income, debt-to-income ratio, property type, occupancy, title, and program-specific rules. The result does not quote a rate or promise an eligible cash amount.

How the math works

The new principal is:

New principal = current mortgage balance + cash delivered + financed closing costs

The payment then uses the standard amortization formula:

M = P x r(1 + r)^n / ((1 + r)^n - 1)

where P is the new principal, r is the monthly interest rate, and n is the number of payments. Loan-to-value is:

LTV = new principal / home value x 100

The calculator keeps cash delivered separate from financed costs so you can see what goes to you and what becomes part of the mortgage balance.

Worked example

Suppose a home is worth $450,000, the current mortgage balance is $280,000, and you want $40,000 cash. Assume $8,000 of financed closing costs, a new 6% rate, and a 30-year term:

• New principal: $328,000
• New LTV: 72.9%
• New principal-and-interest payment: about $1,967 per month
• Cash delivered before taxes or other transaction adjustments: $40,000

The payment comparison depends on your existing rate and payment. A new loan can lower the rate while still increasing the payment because the balance is larger. Compare this result with the HELOC calculator and home equity loan calculator, which can leave the existing first mortgage in place.

Cash-out refinance versus other equity products

The refinance calculator is useful for a rate-and-term refinance where you are not taking cash. A cash-out refinance replaces the entire first mortgage. A home-equity loan adds a fixed second payment, and a HELOC adds a revolving line that may have a variable rate and a payment jump after the draw period.

The CFPB has noted that paying non-mortgage debt with home-secured debt can reduce one payment while increasing foreclosure risk if the mortgage becomes unaffordable. Compare the total interest, not just the headline rate or monthly payment.

Common mistakes

1. Using the home’s highest estimated value. A lender uses an appraisal or approved valuation method, not an optimistic listing price.
2. Ignoring financed closing costs. Costs added to the loan earn interest for the new term. Enter them explicitly.
3. Comparing only the payment. Resetting a 30-year term can increase total interest even when the payment falls.
4. Treating the cash as free equity. The cash becomes debt secured by your home and reduces the equity available for a future sale or emergency.
5. Assuming the calculator sets lender limits. LTV, credit, DTI, cash-out seasoning, and program rules vary by lender and loan type.

Methodology and review

The model assumes a fixed-rate, fully amortizing new mortgage, no prepayment penalty, and closing costs financed into the new principal. It does not model taxes, insurance, points, prepaid escrows, title adjustments, lender-specific LTV caps, or tax deductibility. Reviewed July 20, 2026.