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Cash-Out Refinance vs HELOC Calculator

Need cash from your home? Compare replacing your mortgage with a larger cash-out refinance against keeping your mortgage and adding a HELOC. See monthly payments, closing costs, total interest over the years you’ll keep the loan, and the break-even point.

Updated By the Calcvera editorial team How we build & check our calculators

Your mortgage & options

Cash-out refinance

HELOC

Your results

Cheaper option

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Cash-out refi payment

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Mortgage + HELOC payment

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Interest + closing costs paid over time

How to use this calculator

  1. Enter your current mortgage: balance, interest rate and the years remaining.
  2. Enter the cash you need — for a renovation, debt payoff, tuition or another goal.
  3. Enter the cash-out refinance offer: rate, term and closing costs (usually 2%–5% of the new loan).
  4. Enter the HELOC offer: rate and any closing costs. Use the stress test to see what happens if the variable HELOC rate rises.
  5. Choose a time horizon — how long you expect to keep the loans before selling or refinancing — and compare.

Cash-out refinance vs HELOC: the key difference

A cash-out refinance pays off your current mortgage with a new, larger one and hands you the difference in cash. Your entire mortgage balance moves to the new rate. A HELOC is a second loan on top of your existing mortgage: only the cash you borrow carries the HELOC rate, and your first mortgage stays exactly as it is.

That makes your current mortgage rate the single most important input. If you locked in a rate of 2%–4% in 2020–2022, refinancing $280,000 of cheap debt to reach $60,000 of new cash can cost far more than the higher rate on the $60,000 alone.

Worked example: the low-rate lock-in

Riley owes $280,000 at 3.25% with 24 years left and needs $60,000. Offers: a 30-year cash-out refinance at 6.5% with 3% closing costs rolled in, or a HELOC at 8.25% with $750 in costs.

Over 10 yearsCash-out refinanceKeep mortgage + HELOC
New loan amount$350,515$280,000 + $60,000
Monthly payment$2,215$1,401 + $413 = $1,814
Interest + closing costs$223,013$127,377
Still owed after 10 years$297,153$248,955

Keeping the 3.25% mortgage and adding a HELOC saves about $95,600 over ten years, costs $401 less per month, and leaves Riley owing almost $50,000 less. The HELOC rate would have to rise a long way before the refinance won.

When a cash-out refinance wins

  • Your current rate is higher than today’s rates. If you’re paying 6.9% and can refinance at 6.25%, lowering the rate on the whole balance can beat a HELOC — in our tests that scenario saves roughly $15,000 over ten years.
  • You need a large sum for a long time and want a fixed rate rather than a variable HELOC rate.
  • You want one payment and can live with resetting the loan term.
  • You’d otherwise pay mortgage insurance that a refinance could remove (for example, FHA to conventional).

Side-by-side comparison

Cash-out refinanceHELOC
Rate typeUsually fixedUsually variable (Prime + margin)
Rate applies toThe whole new mortgageOnly the amount you draw
Closing costsAbout 2%–5% of the loanOften low or waived
Maximum borrowingUsually 80% LTVUsually 80%–90% CLTV
PaymentsOne fixed paymentInterest-only draw, then higher repayment
Best whenCurrent rate is above marketCurrent rate is below market

How the comparison works

Both routes are simulated month by month over your chosen horizon. The cash-out refinance creates one new loan equal to your balance plus the cash needed (plus closing costs if you roll them in) and amortizes it over the new term. The HELOC route keeps your current mortgage on its existing schedule and adds a HELOC for the cash: interest-only during a 10-year draw period, then amortized over 20 years.

Cost over horizon = interest paid during the horizon + closing costs Refinance loan (costs rolled in) = (balance + cash needed) ÷ (1 − closing cost %)

Principal you repay isn’t a cost — it reduces what you owe, which is why the “still owed” row matters too. The HELOC rate is held constant (plus any stress test); real HELOC rates move with the Prime Rate.

Frequently asked questions

Is a HELOC cheaper than a cash-out refinance?
Often, but not always. A HELOC usually has a higher rate than a first mortgage, but it only applies to the cash you borrow, and you keep your existing mortgage and its rate. A cash-out refinance replaces your whole mortgage at today’s rate and adds closing costs of roughly 2%–5%. If your current rate is well below today’s rates, the HELOC route is usually far cheaper.
When does a cash-out refinance make more sense?
When your current mortgage rate is higher than today’s refinance rate, when you need a large amount you’ll repay over many years and want a fixed rate, or when you want one predictable payment. The calculator shows the break-even point where one option becomes cheaper than the other.
Why does the refinance show a higher total cost even with a lower payment?
Resetting to a new 30-year term spreads payments out, so each payment is smaller — but you pay interest for longer and on a larger balance, and the closing costs are usually financed. Always compare total cost over the time you expect to keep the loan, not just the monthly payment.
What are typical closing costs?
Cash-out refinances generally cost about 2% to 5% of the new loan amount (appraisal, title, origination, recording and prepaid items). HELOCs often have low or waived closing costs, though some lenders charge an appraisal, annual fee or an early-closure fee.
Can I deduct the interest?
Mortgage and HELOC interest is deductible only on debt used to buy, build or substantially improve the home, only if you itemize, and within the $750,000 acquisition-debt limit. Cash taken out for other purposes, such as paying off cards, doesn’t qualify.

Sources

Key terms

About this calculator. Written and maintained by the Calcvera editorial team and last reviewed on September 25, 2026. Rules and figures are checked against the official sources listed above. Results are estimates for education — not financial, tax or legal advice. Found an error? Tell us and we'll fix it. Read our editorial policy.