Current cash-out refinance rates

Today’s cash-out refinance rates

While rates are not nearly as high as they were at their peak in 2023, they have yet to reach the lows that characterized the market in the pre-pandemic years. Looking ahead, 2025 is expected to be very similar to 2024; rates are largely expected to remain around the 6 percent mark. For this reason, to get the most competitive rate possible on a cash-out refinance, it's best to shop around and obtain quotes from several lenders.

How to get the best cash-out refinance rate

Because you’re taking out a bigger loan with a cash-out refinance, it’s all the more important to find the best possible rate. Here’s how:

• Review your credit. You won’t get the best interest rate possible if your credit score needs work. Well ahead of applying for a cash-out refinance, check your credit reports and scores. Many lenders allow you to qualify with a score as low as 620, but the best rates go to borrowers with a score of 740 or higher. Here’s more on how to improve your credit for a mortgage, plus bad-credit refinance options.
• Take stock of what you already owe. If you have other debt like a car loan or student loans, these factor into your debt-to-income (DTI) ratio. The lower your DTI ratio — ideally 45 percent or less — the better your chance of getting a lower rate. Keep in mind: You’d be getting a bigger mortgage with a cash-out refinance, so it might be harder to maintain a lower DTI. To find out yours, use our DTI calculator.
• Compare cash-out refinance loan types. Considering the different types of cash-out refinance loan options can also help identify the best choice for your situation. While eligibility varies by program, the options include FHA, VA and conventional cash-out refinances.

Cash-out refinance requirements

As with any mortgage, you must meet certain financial criteria to qualify for a cash-out refinance. Here are a few of the general requirements:

• Credit score: Most cash-out refinances require a credit score of 620 or higher.
• Debt-to-income (DTI) ratio: Your DTI is a measure of your monthly debt payments against your income. Most lenders limit your DTI ratio to no more than 45 percent for a cash-out refinance.
• Equity: You’re required to keep a minimum of 20 percent equity in your home. (The big exception to this is if you’re doing a VA cash-out refinance.)
• Six months to a year of payments on your current mortgage: You typically have to wait at least six to 12 months to refinance your mortgage after the original loan closed, though there could be exceptions.

How much cash can you get in a cash-out refinance?

Many lenders allow you to tap up to 80 percent of your home’s current value in a cash-out refinance. Conventional and FHA cash-out refinances are limited to 80 percent of your home’s value, but with a VA cash-out refinance, you can get up to 100 percent. USDA loans don’t allow for cash-out refinancing.

Should you do a cash-out refinance?

You can use money from a cash-out refinance however you want to, but some of the most common uses include:

• Doing home improvement and renovation projects
• Consolidating high-interest debt
• Paying for education
• Getting a down payment on an investment property

While there are valid reasons for a cash-out refinance, you should consider the pros and cons as well. They include:

Pros of cash-out refinance

• Access to cash: You can turn your equity into a liquid asset to cover home repairs, or pay for college tuition, or anything else you need it for.
• Home value increase: If you use a cash-out refinance to renovate your home with a kitchen remodel or an addition, for instance, you could grow your home's value.
• Lower interest rates: Mortgages come with lower interest rates when compared to credit cards, personal loans and other forms of debt. You can use a cash-out refinance to pay off this higher-interest debt, which could save you money on interest and better your credit score by lowering your credit utilization.

Cons of cash-out refinance

• Increased debt load: A cash-out refinance replaces your old mortgage with a new, larger mortgage. This means you’ll owe more, and could have a higher monthly payment.
• Closing costs: You’ll have to pay for some closing costs like you did for your original mortgage. For a cash-out refinance, the lender charges an appraisal fee, and might charge an origination fee, often a percentage of the amount you’re borrowing. With a cash-out, you’re getting a larger loan, so the origination fee reflects that.
• Foreclosure risk: Unlike credit cards and personal loans, mortgages are secured debt, with your home as collateral. If you’re unable to make your mortgage payments, your home will eventually be subject to foreclosure.

Meet our Bankrate experts

Written by: Andrew Dehan, Writer, Home Lending

I’ve covered mortgages, real estate and personal finance since 2020. At Bankrate, I’m focused on all of the factors that affect mortgage rates and home equity. I enjoy distilling data and expert advice into takeaways borrowers can use. Prior to Bankrate, I wrote and edited for Rocket Mortgage/Quicken Loans. My work has been published by Business Insider, Forbes Advisor, SmartAsset, Crain’s Business and more.

Read more from Andrew Dehan

Edited by: Laurie Richards, Editor, Home Lending

I’ve spent five years in writing and editing roles, and I now focus on mortgage, mortgage relief, homebuying and mortgage refinancing topics. I’m most interested in providing resources for aspiring first-time homeowners to help demystify the homebuying process. In 2021, I earned a Poynter ACES Certificate in Editing. I have an MA in English. 

Read more from Laurie Richards

Reviewed by: Greg McBride, CFA, Chief Financial Analyst, Bankrate

Greg McBride is a CFA charterholder with more than a quarter-century of experience in personal finance, including consumer lending prior to coming to Bankrate. Through Bankrate.com's Money Makeover series, he helped consumers plan for retirement, manage debt and develop appropriate investment allocations. He is an accomplished public speaker, has served as a Wall Street Journal Expert Panelist and served on boards in the credit counseling industry for more than a decade and the funding board of the Rose Foundation’s Consumer Financial Education Fund.

Read more from Greg McBride

Additional resources on cash-out refinancing

• BRRRR: How to use cash-out refinancing to invest in real estate
• Cashing out to pay for energy-efficient home improvements
• Do you have to pay taxes when you do a cash-out refinance?