Cash-Out Refinance

mortgage

Also known as: cash-out refi, cash-out refinance

Updated · Written and reviewed by Konstantin Iakovlev

Detailed explanation

Example: $400K home, $200K existing mortgage, refinance to $300K — receive $100K cash at closing. Conventional cash-out limits: 80% LTV maximum. FHA cash-out: 80% LTV. VA cash-out: 90% LTV. Texas constitutionally limits to 80% LTV maximum + 12-day cooling-off period. Interest deductibility (TCJA 2017 restriction): only if used to "buy, build, or substantially improve" the home. Cash for college, debt consolidation, or vacation = not tax-deductible. Closing costs typically 2-5% of new loan amount.

Use these calculators to apply this concept

Related mortgage terms

PITI (Principal, Interest, Taxes, Insurance)

PITI is the four components of a typical monthly mortgage payment: Principal (loan paydown), Interest (lender fee), Taxe...

Private Mortgage Insurance (PMI)

PMI is insurance protecting the lender if you default on a conventional mortgage with less than 20% down. PMI premiums a...

Debt-to-Income Ratio (DTI)

DTI is the percentage of your monthly gross income that goes to debt payments. Lenders use front-end DTI (housing only ≤...

Amortization

Amortization is the gradual paying down of loan principal over time through scheduled monthly payments. Each payment inc...

Home Equity Line of Credit (HELOC)

A HELOC is a revolving credit line secured by your home equity. Like a credit card, you borrow against an approved limit...

← Back to glossary · Suggest an addition: [email protected]