A cash-out refinance replaces your existing mortgage with a larger loan, giving you the difference in cash at closing. Homeowners with equity can use the funds for debt consolidation, home improvements, tax debt, foreclosure prevention, or business funding. Dream Financial Management connects you with 500+ lenders since 1994.
A cash-out refinance replaces your current mortgage with a new, larger loan. You receive the difference between your old loan balance and the new loan amount as a lump sum of cash at closing — tax-free. It's one of the most affordable ways to access your home equity.
Home Value
$500,000
Current Mortgage Balance
$250,000
Available Equity (80% LTV)
$150,000
New loan: $400,000 (80% LTV). Pay off old $250K. Receive $150,000 cash at closing — minus closing costs.
Most lenders require you to retain at least 20% equity after the cash-out refinance. For conventional loans, the max LTV is typically 80%. FHA cash-out allows up to 80% LTV. VA cash-out allows up to 100% LTV for qualified veterans.
Conventional cash-out typically requires 620+ FICO. FHA cash-out may allow scores as low as 500 with 10%+ down or 580+ with 3.5%. VA cash-out has no minimum score but most lenders want 580-620. Higher scores unlock better rates.
Most lenders cap total monthly debt at 43% of gross income. Some programs allow up to 50%. The new mortgage payment, plus all other debts, must fit within these limits.
If you recently purchased your home, most lenders require a 6-12 month waiting period before a cash-out refinance. FHA requires 12 months of ownership for cash-out.
Pay off high-interest credit cards, personal loans, and medical debt with tax-deductible mortgage interest at lower rates.
Renovate your kitchen, add an ADU, or make major repairs — increasing your home's value with lower-cost financing.
Use home equity to pay off IRS or state tax debt, avoiding ongoing penalties, interest, and aggressive collection actions.
Reinstate your delinquent mortgage or pay off arrears to stop foreclosure when traditional modification fails.
Finance your business expansion or startup with lower rates than SBA loans or business credit cards.
Understand the risks: foreclosure, negative equity, reset amortization, and closing costs before you refinance.
Dream Financial Management connects you with 500+ lenders to find the best cash-out refinance for your situation. Since 1994. Free consultation.