Cash-Out Refinance Calculator: Estimate Your New Payment

A cash-out refinance replaces your current mortgage with a larger one and gives you part of the difference in cash; approval and available cash depend on lender requirements, your finances, home value, and existing mortgage balance. This calculator estimates principal-and-interest payments on the new loan: enter its amount, APR, and term to see the monthly payment and total interest, not how much cash a lender will approve.

Formula

The calculator uses the standard fixed-rate, fully amortizing loan payment formula. It calculates the monthly payment as p × r ÷ [1 − (1 + r)−n], where r = APR ÷ 1,200 and n = years × 12. Total interest is the rounded monthly payment multiplied by the number of payments, minus the loan principal.

• p is the new mortgage principal in dollars.
• APR is the annual percentage rate entered as a percent.
• r is the monthly rate as a decimal.
• n is the number of monthly payments.

Worked Example

Using the defaults—$20,000 principal, 8% APR, and a five-year term:

1. Monthly rate: 8 ÷ 1,200 = 0.0066667.
2. Number of payments: 5 × 12 = 60.
3. Payment: $20,000 × 0.0066667 ÷ [1 − (1.0066667)⁻⁶⁰] = $405.53 per month, rounded to cents.
4. Total interest using the rounded payment: $405.53 × 60 − $20,000 = $4,331.80.

Assumptions

• The rate remains fixed for the entire term.
• Payments are made monthly, at the end of each period.
• Interest compounds monthly at APR divided by 12.
• The estimate excludes closing costs, taxes, homeowners insurance, mortgage insurance, escrow, and any fees or prepaid items.
• This is general educational arithmetic, not financial advice. The result is an estimate; the lender’s disclosure gives the exact figures.

How Cash-Out Refinancing Works

In a cash-out refinance, the borrower takes out a new mortgage that pays off the existing mortgage and, where permitted by the lender’s terms, exceeds the payoff amount. The difference may be disbursed to the borrower after applicable costs and adjustments. The new mortgage is secured by the home, just as the prior mortgage was.

For example, suppose a home is valued at $300,000 and its mortgage payoff is $180,000. A lender might assess the application using its own loan-to-value limit, property valuation, and other requirements. The $120,000 difference is not automatically available cash: the new loan may be capped below the home’s value, and closing costs or other liens can reduce proceeds. This calculator does not estimate eligibility or cash proceeds; it estimates payments for a loan amount you supply.

Requirements Lenders May Assess

There is no single universal requirement set. Lenders establish criteria, and requirements can differ by loan type and the borrower’s circumstances. Common assessment areas include:

• Equity and loan-to-value ratio: The lender considers the home’s appraised or otherwise accepted value, the new loan amount, and any other loans secured by the property. A lower loan-to-value ratio generally means more equity remains, but the lender sets the applicable limit.
• Credit history: A lender may review credit reports and scoring information as part of its underwriting. Do not assume one score guarantees approval or a particular rate.
• Income and employment: Documentation may be requested to evaluate income, its source, and whether payments can be supported. Self-employed applicants may be asked for different records.
• Debt and payment obligations: Existing monthly debts may be considered alongside income. The lender determines how it calculates obligations and what documentation it needs.
• Property and title: The lender may require an appraisal or other valuation, confirmation of ownership, and a title review to identify liens or claims that affect the transaction.
• Occupancy and loan details: The home’s use, the requested amount, and the mortgage product can affect the conditions and documents required.

These are possible underwriting factors, not promises of approval, fixed thresholds, or a complete checklist. Ask the lender handling the application for its current written requirements and a detailed estimate of costs.

Costs, Cash Proceeds, and Common Misunderstandings

The cash-out amount is not simply the home’s value minus the old mortgage. A rough planning calculation is: new loan amount minus the existing mortgage payoff, other liens paid off, and transaction costs. The exact settlement statement can include additional adjustments, so the amount actually disbursed may differ from an early estimate.

Also, the payment shown here is principal and interest only. A real mortgage payment may include taxes, homeowners insurance, mortgage insurance, or escrowed costs. Closing costs may be paid separately or included in the new loan, depending on the transaction. If costs are financed, the principal rises, which changes the payment and total interest.

A lower monthly payment does not necessarily mean a lower total borrowing cost: extending the repayment term can mean paying interest for more months. Conversely, comparing only the APR or payment can miss fees, loan duration, and the amount of cash received. Compare written loan estimates using the same loan amount and term where possible, and check what each quote includes.

Using the Calculator

Enter the proposed new mortgage balance—not just the cash you hope to receive—as the loan amount. Include any existing mortgage payoff, financed costs, or other amounts that will be part of the new principal. Use the APR and term supplied for the specific estimate you are examining; the defaults are examples, not current market information.

The result is useful for understanding how principal, rate, and term affect scheduled principal-and-interest payments. It cannot determine your home’s value, lender-specific maximum loan-to-value ratio, approval, cash available at closing, or actual fees. Those figures must come from the relevant lender and transaction documents.

Frequently Asked Questions

What credit score is required for a cash-out refinance?
There is no one score that applies to every lender and mortgage product. A lender evaluates credit as part of its full underwriting and can explain the criteria for the application.

How much cash can I get from a cash-out refinance?
It depends on the lender’s valuation, its permitted loan-to-value limit, the mortgage payoff, other liens, and transaction costs. The difference between home value and debt is not automatically available as cash.

Does a cash-out refinance increase my mortgage payment?
It can, but the result depends on the new principal, APR, term, and costs. A longer term can lower the scheduled monthly payment while increasing the time over which interest accrues.

Are closing costs included in this calculator?
No. The calculator covers principal and interest only. If costs are financed, include them in the new loan amount to estimate their effect on the payment; obtain actual cost figures from the lender.

Is a cash-out refinance the same as a home equity loan?
No. A cash-out refinance replaces the existing mortgage with a new mortgage. A home equity loan is generally a separate loan secured by home equity, so its balance and payment are in addition to the existing mortgage. Specific terms vary by lender.

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in p | New loan amount | $ | 20000 | 1 | 100000000
in apr | Interest rate (APR) | % | 8 | 0.01 | 100
in yrs | Loan term | years | 5 | 0.0833 | 50
out pmt | Monthly payment | $ | p * (apr / 1200) / (1 - (1 + apr / 1200) ^ -(yrs * 12)) | 2
out int | Total interest | $ | pmt * yrs * 12 - p | 2