How Much Cash Can You Take When Refinancing

How Much Cash Can You Take Out When Refinancing

If you’ve built equity in your home, a cash-out refinancecan turn part of that value into usable funds for big expenses or strategic investments. But the amount you can take out depends on multiple factors, from your home’s appraised value to your lender’s guidelines.

This guide breaks down the key considerations so you can understand your borrowing potential before applying.

Understanding Cash-Out Refinancing

A cash-out refinance replaces your existing mortgage with a new, larger loan. The difference between the new loan amount and your current balance is paid to you in cash at closing.

Example: If you owe $200,000 on your mortgage and refinance to a $260,000 loan, you’d receive $60,000 in cash (minus closing costs).

Factors That Determine How Much You Can Borrow

Several elements influence your maximum cash-out amount, including:

• Home’s current market valueas determined by an appraisal 
• Loan-to-value (LTV) ratio limitsset by your lender and loan program 
• Your remaining mortgage balance 
• Credit score and debt-to-income (DTI) ratio 
• Type of refinance program(VA, FHA, conventional, etc.)
  

Typical Loan-to-Value (LTV) Limits

Most lenders allow you to borrow up to a certain percentage of your home’s value:

• Conventional loans: Usually up to 80% LTV 
• FHA loans: Up to 80% LTV 
• VA loans: In some cases, up to 100% LTV for eligible borrowers 

If your Minnesota home is worth $300,000 and your lender’s LTV limit is 80%, you could borrow up to $240,000 total. Subtract your current loan balance to see the cash available.

How Home Equity Impacts Cash-Out Amount

Home equity is the difference between your property’s value and the amount you owe. The more equity you have, the more you can potentially access.

Formula:
Home Value – Current Mortgage Balance = Home Equity

A higher equity position often gives you more borrowing power and may result in better interest rates.

Program Differences: VA, FHA, and Conventional

The loan type you choose significantly affects your cash-out potential:

• VA cash-out refinance: May allow refinancing up to 100% LTV 
• FHA cash-out refinance: Generally capped at 80% LTV 
• Conventional cash-out refinance: Usually limited to 80% LTV 

Veterans and active-duty service members in Minnesota may find VA loans offer the most flexibility.

The Role of Appraisal Value

An appraisal determines your home’s current market value, which serves as the baseline for calculating your maximum loan amount. Improving your home’s condition before the appraisal can sometimes increase your potential cash-out.

Costs to Keep in Mind

When calculating how much cash you’ll receive, remember to subtract:

• Closing costs (appraisal, title, lender fees) 
• Prepaid property taxes and insurance 
• Any payoff amounts for second mortgages or liens

Smart Ways to Use Cash-Out Funds

While you can use the funds for nearly anything, high-impact uses include:

• Home improvements that boost value 
• Paying off high-interest debt 
• Funding education or career development 
• Emergency medical expenses 
• Starting or expanding a business

Start Your Cash-Out Refinance Today

Curious about how much equity you could turn into cash? At Refined Lending, we guide Minnesota homeowners through every step of the cash-out refinance process. Our team will help you calculate your borrowing potential, explore the best loan options, and secure competitive terms.

Contact Refined Lending today for a consultationand find out exactly how much cash you can access from your home.