What Is a Cash-Out Refinance?
A cash-out refinance replaces an existing mortgage with a new, larger one and pays the borrower the difference in cash. The new loan has its own rate, term, and closing costs, and lenders limit how much equity can be taken out, usually by capping the loan-to-value ratio.
Example
A home worth 400,000 with a 200,000 balance could be refinanced into a 280,000 loan (70% LTV); after the old loan is repaid, about 80,000 minus closing costs is paid out.
Compared With a HELOC
A cash-out refinance replaces the first mortgage; a HELOC or home equity loan is added alongside it.
🧮 Calculate It Yourself
Put Cash-Out Refinance into practice with these free calculators — no sign-up, nothing stored.
🔑
Home Equity Calculator
Find your current home equity and estimated borrowing capacity.
Calculate →
🏠
Mortgage Calculator
Estimate your monthly mortgage payment including taxes, insurance, and PMI.
Calculate →
🏡
Closing Costs Calculator
Estimate the one-time costs due when you close on a home purchase.
Calculate →
🔗 Related Terms
More Home Buying Terms
- Adjustable-Rate Mortgage (ARM)
- Appraisal Gap
- Assessed Value
- Bridge Loan
- Closing Costs
- Closing Disclosure
📖 Browse all glossary terms or explore all free calculators.
Last updated: September 27, 2026. This definition is for general educational purposes only. It is not financial, investment, tax, legal, or medical advice, and it does not recommend any product or course of action. For decisions about your own situation, consult a qualified professional.