Homeowners are sitting on roughly $35 trillion in home equity, according to CoreLogic. For many, that’s a tempting source of cash for renovations, debt consolidation, or a down payment on a second property. A cash-out refinance lets you tap that equity by replacing your current mortgage with a larger one and pocketing the difference. But the rate you’ll pay on that new loan is almost always higher than what you’d get on a straight rate-and-term refinance. The gap isn’t huge—usually a quarter to half a percentage point—but on a six-figure loan, it adds up. Here’s what actually drives cash-out refinance rates, how to compare offers, and when you should walk away.
How Cash-Out Refinance Rates Are Set (and Why They’re Higher)
Lenders price cash-out refinances higher because they’re riskier. You’re not just refinancing; you’re increasing your loan balance and pulling equity out of the home. If home values drop or you hit financial trouble, the lender has less cushion. To compensate, they add a risk premium. On average, expect a cash-out refinance rate to be 0.25% to 0.5% higher than a standard refinance rate for the same borrower and loan term. If your credit score is lower or your loan-to-value ratio (LTV) is higher, that premium can widen to 0.75% or more.
Government-backed loans have their own rules. FHA cash-out refinances allow up to 85% LTV and require both upfront and annual mortgage insurance premiums, which effectively raise your rate. VA cash-out refinances let eligible veterans borrow up to 100% of their home’s value, but they come with a funding fee that can be financed into the loan. USDA loans generally don’t offer cash-out refinancing.
Today’s Cash-Out Refinance Rate Landscape
As of mid-2025, average 30-year fixed cash-out refinance rates are running between 6.75% and 7.5% for borrowers with good credit (700+). That’s roughly 0.3% to 0.6% above the average rate-and-term refinance. For a $300,000 loan, that difference translates to about $60 to $100 extra per month. Over 10 years, you’d pay $7,200 to $12,000 more in interest just because it’s a cash-out loan.
But averages only tell you so much. Your actual rate depends on your credit score, LTV, loan amount, property type (primary residence vs. investment property), and the lender’s appetite for cash-out loans. Some lenders charge more for cash-out refinances above $400,000, for example. Others offer better pricing if you have a lot of equity. For a deeper look at how conventional refinance rates are moving, see our breakdown of conventional mortgage rates today.
How Your Credit Score Moves Your Cash-Out Rate
Credit score is the single biggest lever on your cash-out refinance rate. Here’s a rough idea of how pricing tiers break down for a 30-year fixed cash-out loan:
- 760+: Best available rates, often 6.5% or lower.
- 700–759: Rates around 6.75% to 7.0%.
- 640–699: Rates from 7.25% to 7.75%.
- Below 640: Rates above 8%, if you can qualify at all.
The difference between a 760 score and a 660 score can easily be 1% or more on a cash-out refinance. On a $250,000 loan, that’s $150 extra per month—$54,000 over 30 years. If your credit needs work, it’s worth spending a few months improving it before you apply. Our article on mortgage rates for excellent credit shows just how much a 760+ score can save you.
The Equity Math: When a Cash-Out Refinance Makes Sense
Most conventional lenders cap cash-out refinances at 80% LTV. Some allow 85%, but you’ll pay a higher rate. FHA cash-out loans max out at 85% LTV. VA cash-out loans go up to 100% LTV, but the funding fee (typically 2.15% to 3.3% of the loan amount) can be steep.
Here’s a concrete example. Your home is worth $400,000. You owe $200,000 on your current mortgage. That’s a 50% LTV. With an 80% LTV cap, you could take out a new loan of $320,000. After paying off the old $200,000, you’d pocket $120,000 in cash. But you’ll pay closing costs on the full $320,000—typically 2% to 5% of the loan amount—and your new interest rate applies to the entire balance.
One trap: resetting the clock. If you were 10 years into a 30-year mortgage, refinancing into a new 30-year loan means you’ll be paying interest for another three decades. That can cost far more than the cash you take out. A 15-year cash-out refinance has lower rates but much higher monthly payments. If you only need a modest amount, say $50,000, a home equity line of credit (HELOC) might be cheaper because you keep your low-rate first mortgage. FHA cash-out refinance rates follow a similar pattern to conventional but come with mortgage insurance premiums that push the effective cost higher; our guide to FHA mortgage rates today explains the details.
Shopping for Cash-Out Refinance Rates Without Getting Burned
Lenders don’t all price cash-out refinances the same way. Some add a flat 0.375% to your rate. Others charge more in points. A few barely mark them up at all. That’s why getting multiple quotes is non-negotiable. Aim for at least four or five lenders, including a credit union, a large bank, and an online mortgage broker.
When you compare offers, look at the annual percentage rate (APR), not just the interest rate. The APR includes lender fees, points, and mortgage insurance, so it gives you a truer picture of the cost. Also ask about lender credits: some lenders offer a higher rate in exchange for covering your closing costs. That can be a good deal if you plan to sell or refinance again within a few years. For a game plan on locking in the best possible rate, see our tips on the lowest mortgage rates available today.
Watch out for “no-cost” cash-out refinances. The costs don’t disappear; they’re either rolled into your loan balance or baked into a higher rate. Over time, that higher rate can cost you more than paying upfront.
How to Improve Your Chances of a Better Rate
A few strategic moves can shave hundreds off your monthly payment.
- Boost your credit score. Pay down credit card balances, dispute errors on your report, and avoid opening new accounts. Even a 20-point bump can move you into a better pricing tier.
- Lower your LTV. If your home value has risen, you might already have more equity. But if you can wait for values to climb further—or pay down your mortgage a bit—you’ll qualify for a lower rate.
- Add a co-borrower. If a spouse or partner has a stronger credit score, adding them to the loan can improve your pricing.
- Time the market. Mortgage rates fluctuate daily. While you can’t predict the exact bottom, keeping an eye on broader trends helps. Our analysis of mortgage rates and housing market trends can give you context on where rates might be heading.
A Real-World Example: Running the Numbers
Let’s say you and your partner own a home worth $500,000 and owe $250,000 on a mortgage with a 3.5% rate. You want $100,000 to remodel the kitchen and pay off some credit cards. A lender offers a cash-out refinance at 7.0% for a new $350,000 loan (70% LTV).
Your old monthly principal and interest payment was about $1,123. The new payment on $350,000 at 7.0% is $2,329—a jump of $1,206 per month. Over 30 years, that extra $1,206 adds up to $434,160 in additional payments. You get $100,000 in cash, but you’re paying more than four times that amount in extra interest.
Now compare that to a HELOC. If you can get a HELOC at 8.0% on $100,000 with a 10-year draw period, your interest-only payment would be about $667 per month. You’d keep your 3.5% first mortgage, and you could pay down the HELOC as your budget allows. For many homeowners, that’s a far better deal than a cash-out refinance—especially when their existing mortgage rate is well below today’s market rates.
Cash-out refinance rates matter, but they’re only one piece of the puzzle. The real question is whether borrowing against your equity at today’s rates is worth the long-term cost. Run the numbers for your own situation, compare at least a few loan types, and don’t let a lender rush you into a decision. Your equity took years to build—don’t give it away cheaply.