Cash-Out Refinance:
Convert Your Equity to Cash

Maximum LTV by loan type: Conventional: 80%. FHA: 80%. VA: 100% (the most generous — veterans can cash out full equity). You must leave at least 20% equity (or 0% for VA). Example: $500,000 home × 80% = $400,000 max loan. If you owe $250,000: $400,000 - $250,000 = $150,000 cash (minus closing costs). The actual amount also depends on your credit score, DTI, and income. Lower credit scores may reduce the max LTV available.

Yes. A cash-out refinance replaces your entire mortgage — including your current rate. If you have a 3-4% rate from the low-rate era, a cash-out refinance at today's 6-7% rates would dramatically increase your interest cost on the entire loan balance. This is the #1 reason many homeowners choose a HELOC or home equity loan instead: you access equity while preserving your low first mortgage rate. Only do a cash-out refi if: you need to refinance anyway (your rate is already at market levels), the rate difference is minimal, or the cash-out benefit substantially outweighs the higher rate cost.

Only if the cash-out proceeds are used to "buy, build, or substantially improve" the home securing the mortgage. If you use the cash to pay off credit cards, fund college, or invest, the interest on the cash-out portion is not deductible. The interest on the portion that refinances your existing mortgage balance remains deductible (subject to the $750,000 total mortgage debt limit). Always consult a tax professional — the rules are nuanced and depend on how you actually spend the money.

Typically 30-45 days from application to closing — similar to a standard purchase or rate-and-term refinance. The process includes: application, documentation review, appraisal, underwriting, and closing. Cash-out refinances often take slightly longer than rate-and-term refinances because the additional cash-out adds risk that underwriters scrutinize more carefully. After closing, there's a mandatory 3-day right of rescission (for primary residences) before you receive the cash — you can cancel the loan within 3 business days of closing with no penalty.