What’s a cash-out refinance?

Cash-out refinancing is a type of mortgage refinancing that allows you to convert your home equity into cash. It replaces your existing home mortgage with a new, larger loan, and at closing, pays you the difference between the new mortgage amount and the balance on your previous loan.

So if the remaining balance on your mortgage is $150,000 and your home is worth $250,000, you have $100,000 in equity. You could refinance your mortgage for $200,000 and receive $50,000 in cash at closing. You can use the funds for things like home improvements, paying off debt or other financial needs.

 

See how you could benefit.

Access your equity.

Use the equity in your home to pay for home improvements, college tuition or a down payment on a second home.

Consolidate your debt.

Use the money to pay off high-interest debt, such as credit cards, personal loans and auto loans.

Find affordable options.

Choose from a variety of loan options to find one that matches your financial goals.

What you should know about a cash-out refinance.

When considering a cash-out refinance, it’s important to keep in mind things like your mortgage rate and the amount of home equity you have.

Credit score

Your credit score helps determine the rate you’ll get. When it comes to refinancing, the higher your score, the better. If you’re a U.S. Bank customer, you can check your credit score for free with our tool.

Check your score

Rates

Cash-out refinancing might make sense for you if interest rates are lower than when you took out your mortgage. Though the rates on a cash-out refinance may be slightly higher than they are for a traditional refinance due to the added risk of your loan amount increasing.

See current refinance rates

Closing costs

A cash-out refinance comes with closing costs comparable to your first mortgage. Typically, you can expect to pay between 2% and 5% of the loan amount. So on a $200,000 home loan refinance, you could pay between $4,000 and $10,000 in closing costs.

Learn about closing costs

Home equity

As a general rule, you should have at least 20% equity in your home before you refinance. You can calculate your home equity by subtracting the amount you owe on your mortgage from the amount your home is worth. For example, if your home is valued at $250,000 and you owe $150,000 on your mortgage, you have $100,000 in equity.

Explore rates for popular refinance options.

Conventional fixed-rate refinance loans

No interest rate changes

Conventional 30-year term
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FHA refinance loans

Lower credit score requirements

FHA 30-year term
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VA refinance loans

Option to make $0 down payment for military members

VA 30-year term
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The rates shown are current as of $date.

These rates are based on some standard assumptions as described below.1 Learn more about interest rates and annual percentage rates (APRs).2 Plus, see an estimated conforming fixed-rate monthly payment and APR example.3

Consider your other mortgage refinance options.

When it comes to refinancing, a cash-out refinance isn’t your only choice.

A traditional refinance is a low-cost option that can lower your monthly payment or allow you to pay off your home sooner.

See all refinance rates

Want to use home equity to fund a major purchase without refinancing?

A home equity loan or a home equity line of credit might be just what you’re looking for. They’re great ways to pay for things like home improvements, tuition, big events and more.

Home equity loan

Better if you have a one-time expense

  • Fixed interest rates
  • Predictable repayment schedule
  • Terms up to 30 years4

Home equity line of credit

Better for ongoing access to funds as needed5

  • Rates typically lower than credit cards
  • Flexible repayment options
  • Option to lock in a fixed rate
See home equity options

Mortgage refinance calculator

See how much you could save with our mortgage refinance calculator.

Not sure what your home improvement project could cost?

Answer a few quick questions about your project to get an estimate of the cost and your potential return on investment.

Get an estimate

Get answers to frequently asked cash-out refinance questions.

A cash-out refinance allows you to refinance your mortgage and borrow money at the same time. You apply for a new mortgage that pays off your existing one (and any liens on your property) and withdraw a portion of your home’s equity as a lump sum.

No. The cash you collect from a cash-out refinance isn’t taxed. The money you receive is essentially a loan you are taking out against your home’s equity, and is not considered income.

A cash-out refinance typically takes 30 to 45 days to complete. However, the length of time may vary depending on the size of your property, how complicated your finances are and how long it takes to complete your appraisal and inspection.

A cash-out refinance lets you negotiate new mortgage terms, and at the same time, borrow funds for one-time expenses. A home equity loan allows you to borrow against the equity in your home and pay it back with a steady repayment schedule. Choosing a cash-out refinance or home equity loan comes down to the terms that are best for you and your situation.

A VA cash-out refinance is specifically designated for active or retired members of the military and eligible surviving spouses. It’s a government-backed loan that allows you to replace your current mortgage with a new one under different terms and also borrow cash from the equity in your home. It comes with additional benefits too, like low or no equity options, no mortgage insurance requirement and flexible qualification guidelines.

An FHA cash-out refinance differs from a conventional cash-out refinance in that the Federal Housing Administration insures your new mortgage. With mortgage insurance, your lender is protected against any loss if you fail to pay your mortgage. And because lenders take on less risk, they’re able to offer you more options. Other benefits include a consistent rate and flexible qualification guidelines for qualified borrowers.

Explore articles and resources on home improvement tips and refinancing

Should I refinance my mortgage?

See if you should refinance

What’s the refinance process?

Learn how to refinance

When is the right time to refinance?

Decide when to refinance

Explore home improvement loans.

Compare home improvement loans

Calculate your home improvement costs.

Calculate your project cost

Cash-out refinance vs. home equity loans and lines of credit

Learn more about your options

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Disclosures

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, Home Equity and Credit products are offered through U.S. Bank National Association. Deposit products are offered through U.S. Bank National Association. Member FDIC.

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  1. The rates shown above assume you have a FICO® Score of 740+ and at least 25% equity for a conventional fixed-rate loan, an adjustable-rate mortgage (ARM) loan or a jumbo loan, at least 3.5% equity for an FHA loan and no equity for a VA loan. They also assume the loan is for a single-family home as your primary residence and you will purchase up to one mortgage point. Mortgage points, or discount points, are a form of prepaid interest you can choose to pay up front in exchange for a lower interest rate and monthly payment. One mortgage point is equal to about 1% of your total loan amount, so on a $250,000 loan, one point would cost you about $2,500. Connect with a mortgage loan officer to learn more about mortgage points.

  2. Annual percentage rate (APR) represents the true yearly cost of your loan, including any fees or costs in addition to the actual interest you pay to the lender. The APR may be increased after the closing date for adjustable-rate mortgage (ARM) loans.

  3. Conforming fixed-rate estimated monthly payment and APR example: A $464,000 loan amount with a 30-year term at an interest rate of 6.500% with borrower equity of 25% and no discount points purchased would result in an estimated monthly principal and interest payment of $2,933 over the full term of the loan with an annual percentage rate (APR) of 6.667%.

    Estimated monthly payment and APR calculation are based on borrower equity of 25% and borrower-paid finance charges of 0.862% of the base loan amount. If the borrower equity is less than 20%, mortgage insurance may be required, which could increase the monthly payment and the APR. Estimated monthly payment does not include amounts for taxes and insurance premiums and the actual payment obligation will be greater.

  4. Home Equity Loan: As of March 15, 2024, the fixed Annual Percentage Rate (APR) of 7.65% is available for 10-year second position home equity installment loans $50,000 to $99,999 with loan-to-value (LTV) of 60% or less. Rates may vary based on LTV, credit scores or other loan amount. In order to receive the lowest rate advertised, a set-up of automatic payments from a U.S. Bank personal checking or savings account is required but neither are required for loan approval. Customers in certain states are eligible to receive the preferred rate without having automatic payments from a U.S. Bank personal checking or savings account. Loan payment example: on a $50,000 loan for 120 months at 7.65% interest rate, monthly payments would be $597.43. Payment example does not include amounts for taxes and insurance premiums. The monthly payment obligation will be greater if taxes and insurance are included and an initial customer deposit may be required if an escrow account for these items is established. Home equity loans not available for properties held in a trust in the states of Hawaii, Louisiana, New York, Oklahoma and Rhode Island. Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Property insurance is required. Other restrictions may apply.

  5. Home Equity Line of Credit: The Annual Percentage Rate (APR) is variable and is based upon an index plus a margin. The APR will vary with Prime Rate (the index) as published in the Wall Street Journal. As of November 6, 2023, the variable rate for Home Equity Lines of Credit ranged from 8.95% APR to 13.10% APR. Rates may vary due to a change in the Prime Rate, a credit limit below $50,000, a loan-to-value (LTV) above 60% and/or a credit score less than 730. A U.S. Bank personal checking account is required to receive the lowest rate, but is not required for loan approval. Customers in certain states are eligible to receive the preferred rate without having a U.S. Bank personal checking account. The rate will never exceed 18% APR, or applicable state law, or below 3.25% APR. Choosing an interest-only repayment may cause your monthly payment to increase, possibly substantially, once your credit line transitions into the repayment period. Repayment options may vary based on credit qualifications. Interest-only repayment may be unavailable. Loans are subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rates and program terms are subject to change without notice. Credit line may be reduced or additional extensions of credit limited if certain circumstances occur.

    An early closure fee of 1% of the original line amount, maximum $500, will apply if the line is paid off and closed within the first 30 months. Property insurance is required. Other restrictions may apply. An annual fee of up to $75 may apply after the first year and is waived or discounted with an existing U.S. Bank Platinum Checking Package or with enrollment in our Smart Rewards Program. Annual fees are assessed based on the tier in our Smart Rewards Program on your HELOC anniversary date. Please refer to your Smart Rewards terms and conditions for more information on tier assignment.

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The rates shown above are the current rates for the purchase of a single-family primary residence based on a 45-day lock period. These rates are not guaranteed and are subject to change. This is not a credit decision or a commitment to lend. Your final rate will depend on various factors including loan product, loan size, credit profile, property value, geographic location, occupancy and other factors.

To lock a rate, you must submit an application to U.S. Bank and receive confirmation from a mortgage loan officer that your rate is locked. An application can be made by calling 888-291-2334, by starting it online or by meeting with a mortgage loan officer.

Minnesota properties: To guarantee a rate, you must receive written confirmation as required by Minnesota Statute 47.206. This statement of current loan terms and conditions is not an offer to enter into an interest rate or discount point agreement. Any such offer may be made only pursuant to subdivisions 3 and 4 of Minnesota Statutes Section 47.206.