How much cash can I actually take out?

Take your home value, multiply by the programme cap, and subtract what you still owe. Conventional and FHA both stop at 80%, VA reaches 90%, second homes and investment property sit at 75%, and jumbo is often 70%. On a $640,000 home with $380,000 owed, the conventional maximum loan is $512,000 and the cash released is $132,000 — before closing costs come off it. The cap governs the loan rather than the cash, which is why a larger existing balance leaves less available even when the equity is identical.

Why do the closing costs take so much of my cash?

Because they are calculated on the whole new loan, not on the money you are taking out. Refinancing $380,000 into $512,000 at 3% costs $15,360 whether you release $132,000 or $15,000 — the fee follows the loan size. On the larger figure that is 11.6% of the cash; on a small cash-out it can exceed the cash entirely. The break-even on these numbers sits near $11,753, and below that you would be paying to receive less than you paid.

Is a cash-out refinance cheaper than a second mortgage?

It depends almost entirely on the rate you already hold. A cash-out replaces the whole first mortgage, so if yours is well below today’s rates you are repricing money you borrowed cheaply — and on the worked example that repricing is 52% of the total cost, more than the interest on the cash itself. A second mortgage or a line of credit charges a higher rate but only on the new money, leaving the first alone. Where your existing rate is at or above the cash-out rate, that argument disappears and the refinance is usually simpler.

How long must I own the home before I can do this?

Conventional requires six months of ownership from the deed recording date, and separately the first mortgage itself must be twelve months old — which catches people who refinanced recently. FHA wants twelve consecutive on-time payments. VA works to a 210-day rule. Seasoning is a hard gate: no amount of equity, income or credit gets around it. The one common exception is delayed financing, which lets a cash buyer recover their funds without the wait.

Did FHA reduce the cash-out limit?

Yes, and a fair number of sources still have the old figure. Mortgagee Letter 2019-11 cut the maximum loan-to-value from 85% to 80%, effective for case numbers assigned from 1 September 2019, in order to strengthen the equity position on these loans. Anything quoting 85% is out of date by seven years. FHA cash-out is also limited to owner-occupied primary residences, so it is not a route for pulling equity from a rental.

Why is my cash-out rate higher than a normal refinance?

Lenders price leverage, and a cash-out increases it — you are borrowing more against the same property, which raises the loss if things go wrong. The pricing adjustments on a cash-out are the steepest of any refinance type and they bite hardest below a 720 credit score, where the gap against a rate-and-term refinance can reach one and a half to two points in adjustments alone. If your credit sits below 700 it is worth pricing FHA alongside conventional, because the flatter insurance structure sometimes produces a cheaper package overall.

Should I take a fresh thirty-year term?

It lowers the payment, which is the appeal, and it costs a great deal, which is the catch. On the worked example a thirty-year term rather than the twenty-three remaining adds $189,484 of interest — more than the entire cash-out itself. That is a separate decision from taking the cash, and worth making deliberately rather than accepting it as the default option a lender presents. If the payment on the remaining term is affordable, matching it keeps the cost of the cash far lower.

Are there special rules in Texas?

Texas has the strictest cash-out rules in the country, under Section 50(a)(6) of its constitution. The maximum is 80% regardless of loan type, only conventional loans qualify — FHA and VA cash-out are prohibited outright — total fees are capped at 2% of the loan, and there is a mandatory twelve-day wait between application and closing. If your property is in Texas, treat any general guidance including this page as a starting point and confirm the specifics with a lender licensed there.

Is the interest tax deductible?

Only the portion used to buy, build or substantially improve the home securing the loan. If you refinance $380,000 and take $132,000 to renovate that property, the interest on the whole balance may qualify. Take the same $132,000 to consolidate credit cards or pay tuition and that portion does not, even though the loan is secured on your house — the use of the funds decides it, not the security. Keep records of what the money was spent on, since the burden of showing it falls on you.

What are the risks of pulling equity out?

You are converting ownership into debt, and the consequences are asymmetric. A larger balance against the same property means a price fall pushes you toward negative equity sooner, and it is secured on your home rather than unsecured. If the money is being used to clear other debts, note that it moves obligations that could not take your house onto a loan that can — and the well-documented failure is that the cleared balances rebuild while the mortgage remains. None of that makes it wrong, but it should be a considered decision rather than an easy one.

Cash-Out Refinance Calculator

Two questions decide whether a cash-out refinance makes sense, and the headline rate answers neither. The first is how much you can actually take. Every programme caps the new loan as a share of the value — 80% conventional, 80% FHA since the 2019 rule change, 90% for VA, 75% on second homes and in...

WHAT YOU HAVE

HOME VALUE ($)

BALANCE OWED ($)

YOUR RATE NOW (%)

YEARS LEFT ON IT

THE NEW LOAN

CASH WANTED ($)

NEW RATE (%)

TERM (YRS)

COSTS (%)

CASH IN YOUR HAND

$116,640

$132,000 released against the 80% cap, less $15,360 of closing costs — which are charged on the whole $512,000 loan rather than on the cash, so they take 11.6% of it. Your payment goes from $2,159.90 to $3,354.93.

NEW LOAN

$512,000

NEW LTV

80.0%

PAYMENT

+$1,195.02

Every dollar you receive costs $2.62 over the life of the loan. That is $305,517 of cost for $116,640 of cash. The largest part of it is not the cash at all — 52% is repricing the $380,000 you already owed, moving it from 4.250% to 6.850%. That portion buys you nothing; it is the toll for reaching the equity this way.

Repricing costs more than the money you are borrowing. $159,629 to move the existing balance against $130,528 of interest on the $132,000 you actually wanted. When the numbers fall this way, a second mortgage or a line of credit is usually cheaper, because both leave the first mortgage alone.

The figures above hold the term at the 23 years you had left. Taking a fresh 30-year loan instead adds $189,483 of interest on top — that is the cost of restarting the clock, and it is a separate decision from taking the cash. It lowers the monthly payment, which is why it is easy to accept without noticing.

Home value

$640,000

Owed now

$380,000

Current loan-to-value

59.4%

Conventional cap

80%

Largest new loan

$512,000

Cash released

$132,000

Closing costs

$15,360

Cash in hand

$116,640

Repricing the old balance

$159,629

Interest on the new money

$130,528

Total cost

$305,517

Cost per dollar received

$2.62

This is an estimate, not a quote. Cash-out refinances are priced worse than rate-and-term ones because lenders see more risk in the leverage, and the adjustment is particularly harsh below a 720 credit score. Texas has its own rules under Section 50(a)(6) — an 80% cap regardless of loan type, a 2% limit on fees, a twelve-day wait, and no FHA or VA cash-out at all. And this converts equity into debt secured on your home, so it is worth being clear about what the money is for before signing.

THE CASH

The cap applies to the loan, not to the cash. Every programme limits the new balance as a share of the value, and your existing mortgage is paid out of that first. So two people with the same equity can release very different amounts depending on how much of it is already borrowed against.

Live calculation · updates as you type

Created with❤️byeaglecalculator.com

HOW TO USE

1
Enter the value and what you still owe. The gap between them is your equity, but the amount you can release is smaller — the programme cap applies to the whole new loan, and your existing balance comes out of it first.
2
Pick the programme you would actually use. The spread is wide: VA reaches 90% where jumbo may stop at 70%, and on the same house that is a six-figure difference in what you can take.
3
Leave the cash field empty to see the maximum, or enter a figure to model taking less. Watch what happens to the cost per dollar when you ask for a small amount — the fees do not shrink with it.
4
Look at the cost breakdown rather than the payment. If repricing your existing balance is the biggest slice, the cash is not what is expensive — the method of reaching it is.

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Last updated: August 1, 2026 · FHA cap per Mortgagee Letter 2019-11 · Cost measured over the term left on the existing loan · Estimate only, not a quote.