HELOC vs Cash-Out Refinance Calculator
Enter your home value, mortgage details, and the cash you need — this calculator compares a HELOC and a cash-out refinance side-by-side, showing monthly payments, total interest, and which option saves you more money over time.
- Single monthly payment — simpler to manage
- Fixed rate = predictable payments for life
- Can lock in a long amortization (15–30 yr)
- Potentially lower rate than HELOC
- High closing costs (2–5% of new loan)
- Restarts your amortization clock
- Loses your original low rate if rates rose
- Full lump sum — can't draw incrementally
- Keeps your existing mortgage untouched
- Minimal closing costs (<$500 typical)
- Revolving: draw only what you need
- Interest-only payments during draw period
- Variable rate — payments can rise
- Two separate monthly payments to track
- Lender can freeze/reduce the line
- Payment shock when repayment begins
HELOC vs Cash-Out Refinance: Which Is Right for You?
A HELOC (Home Equity Line of Credit) and a cash-out refinance are the two most common ways American homeowners tap equity — but they work very differently. A cash-out refinance replaces your entire existing mortgage with a new, larger loan; you receive the difference as a lump sum at closing. A HELOC is a separate revolving credit line that sits alongside your existing mortgage, letting you borrow as needed up to a pre-approved limit. According to the CFPB, choosing between them depends primarily on your existing rate, how much cash you need, and how you plan to use it.
As of 2026, average 30-year refinance rates sit around 6.75–7.25% while HELOC rates track prime + a margin, typically 7.5–9.5% (Freddie Mac Primary Mortgage Market Survey). This rate gap has narrowed significantly since 2021 — making the decision much more nuanced than simply "refis are cheaper."
How the Calculations Work
This calculator uses standard amortization math for both options.
Cash-Out Refinance: The new loan amount equals your current mortgage balance plus the cash you need plus estimated closing costs (2–5% of the new loan, per CFPB). Monthly payment is computed using the standard mortgage formula at the new rate and term. Total interest is the difference between total payments and the loan principal.
HELOC: Your existing mortgage continues unchanged. During the draw period (5–10 years), the HELOC requires interest-only payments on the full drawn balance: monthly = cash_needed × (heloc_rate / 12). After the draw period, the outstanding balance amortizes over a standard 20-year repayment period. Total HELOC cost combines remaining mortgage interest plus draw-period interest plus repayment-period interest.
The combined monthly payment shown for HELOC = existing mortgage payment + HELOC interest-only payment during the draw period (the higher-cost scenario for comparison purposes).
Key Decision Factors
Keep your rate or restart? If your current mortgage rate is below today's market (say, 3.5% from 2021), a cash-out refi forces you to refinance that entire balance at 7%+ — dramatically increasing your total interest cost. A HELOC leaves your original low-rate mortgage untouched. Freddie Mac data shows borrowers with sub-4% mortgages typically save $40,000–$80,000 in total interest by choosing a HELOC.
Closing costs matter. A $350,000 cash-out refi at 3% closing costs = $10,500 upfront. A HELOC typically costs $0–$500. For smaller cash needs, the HELOC's lower entry cost often wins even if its rate is higher.
Rate certainty vs flexibility. Cash-out refis offer a fixed rate for the full term — protection against rate increases. HELOCs are variable; if the Fed raises rates, your HELOC payment rises too. However, if you plan to repay the HELOC quickly (within 2–3 years), rate risk is limited.
Eligibility Requirements (2026)
For a cash-out refinance: lenders generally require a minimum 620 credit score, maximum 80% LTV after the cash-out, and a debt-to-income ratio below 45%. For a HELOC: minimum credit score 620–680 (typically higher), maximum combined LTV of 80–85% (primary mortgage + HELOC), and verified income. Both require a full appraisal in most cases.
Sources: CFPB Consumer Financial Protection Bureau (consumerfinance.gov), Freddie Mac Primary Mortgage Market Survey (freddiemac.com). Last updated: April 2026.