Cash-Out Refinance vs HELOC Calculator

This cash-out refinance vs HELOC calculator puts two ways of tapping home equity side by side. Option A replaces your mortgage with a bigger one and hands you the difference. Option B keeps your current mortgage and adds a home equity line of credit (HELOC). You see the monthly payment for each, including how the HELOC payment changes when its draw period ends.

How to use this calculator

Use your latest mortgage statement for the current loan, then enter one cash-out offer and one HELOC offer.

• Home value. Use a cautious estimate. The lender’s appraisal decides the real number.
• Cash you want. Enter only what you need. A smaller amount keeps more equity as a cushion.
• Cash-out rate, term and costs. Freddie Mac notes cash-out refinances generally carry a slightly higher rate than a regular refinance.
• HELOC rate and periods. The CFPB says draw periods often last about 10 years and repayment periods 10 to 20 years.

How it is calculated

Payments use the standard loan formula M = P × r(1+r)^n / ((1+r)^n − 1), with r as the monthly rate and n as the number of payments.

1. Current payment = M on your balance, current rate and years left.
2. Cash-out loan = balance + cash + cash-out closing costs.
3. Cash-out payment = M on the cash-out loan, rate and term.
4. HELOC draw payment = cash × HELOC rate ÷ 12 (interest-only).
5. HELOC repayment payment = M on the cash amount, HELOC rate and repayment years.
6. Option B during draw = current payment + HELOC draw payment.
7. Option B during repayment = current payment + HELOC repayment payment.
8. Loan-to-value after cash-out = cash-out loan ÷ home value. Combined loan-to-value with HELOC = (balance + cash) ÷ home value.

Assumptions: you draw the full cash amount at once, the HELOC rate stays the same, HELOC up-front costs are zero, and all figures are principal and interest only.

Worked example

The table shows how the comparison shifts when one input changes.

What your result means

When your current rate is well below the cash-out rate, the HELOC route usually costs less each month, because only the new money carries the higher rate. When rates are close, a cash-out refinance can win and also gives you one fixed payment.

Rules that change the answer:

• Cash-out limits. For a one-unit main home, Freddie Mac caps cash-out refinances at 80% of value, and HUD Mortgagee Letter 2019-11 sets the same cap for FHA. HELOC limits are set by each lender.
• Timing. Fannie Mae generally requires the mortgage being paid off to be at least 12 months old and a borrower to have been on title for six months.
• HELOC terms. The CFPB HELOC booklet explains that some plans require a balloon payment at the end, and lenders can freeze or reduce a line if your home’s value falls.
• Taxes. IRS Publication 936 allows deducting the interest only when the money buys, builds or substantially improves the home, and only if you itemize.

Common mistakes

• Comparing the cash-out payment with only the HELOC’s interest-only payment and forgetting the jump at repayment.
• Forgetting that a cash-out refinance reprices your entire balance, not just the new cash.
• Ignoring the extra years a new 30-year loan adds.
• Borrowing the maximum because you can, leaving no equity cushion if values dip.
• Leaving out HELOC fees such as annual, inactivity or early termination fees.

Related guides and tools

Read cash-out refinance vs HELOC for the full comparison, when to refinance your mortgage for rate-and-term refinances, and how much closing costs are for the fees involved.

Check how much you can borrow with the home equity calculator, test a plain refinance with the refinance break-even calculator, or see your payoff path in the amortization schedule calculator.