The Quick Read: Usually, yes. A cash-out refinance typically costs more than a regular refinance for four reasons. Conventional loans carry extra risk-based pricing. The new loan balance is larger. The program rules are stricter. VA loans charge a higher funding fee. How much more depends on your credit score, your loan-to-value ratio and the program. A strong file may see a small gap, and a high-leverage file may see a large one.
What Is the Difference Between the Two Loans?
A regular refinance, which brokers call a rate-and-term refinance, replaces your current mortgage with a new one. The new loan pays off the old balance and the closing costs. You walk away with only incidental cash back. A cash-out refinance replaces your mortgage with a bigger one and hands you the difference.
Loan-to-value (LTV) is the loan balance divided by the home’s value. It drives most of the cost difference.
Here is the picture. Say your home is worth a certain amount and you owe 50% of it. A regular refinance keeps you near 50%. A cash-out refinance might push you toward 75% or 80%. The lender now has less equity cushion behind the loan, and that is where the extra cost comes from.
Across the wholesale programs Lendmire works with, the rate-and-term lane runs to 95% LTV on a one-unit principal residence. The cash-out lane tops out at 80% on that same home. Every figure here is subject to lender guidelines and full file review. Lendmire is a mortgage broker, so lenders make the final decisions.
Why Does Cash-Out Cost More?
Four things stack on top of each other.
Risk-based pricing. Conventional loans are priced using loan-level price adjustments, or LLPAs. These are extra charges set by loan purpose, credit score and LTV. Fannie Mae’s Selling Guide says an LLPA applies to certain cash-out refinances based on LTV and credit score. It also says these stack on top of any other price adjustments in the transaction.
The adjustment is higher at lower credit scores and higher LTVs. It is also higher for cash-out than for limited cash-out. Fannie Mae’s LLPA matrix keeps separate grids for purchase, limited cash-out and cash-out loans.
A bigger balance. More borrowed means more interest over time. Fees tied to loan size scale up too. Your payment can rise even when the interest rate looks similar, because the new loan is larger.
Stricter rules. Cash-out needs more equity. It also needs seasoning, which is the waiting period before a lender will let you pull equity. The first mortgage you are paying off must be at least 12 months old. A borrower must also have been on title for 6 months, with exceptions for delayed financing, inheritance and legal awards.
Higher funding fees on VA. The VA charges a funding fee, a one-time charge built into the loan. A VA cash-out carries a higher fee than a streamline, and eligible veterans with qualifying service-related disability compensation are exempt. Confirm the current table on the VA funding fee page.
Where the Extra Cost Shows Up (and Where It Hides)
Most borrowers look for a line item labeled “cash-out fee.” They won’t find one. LLPAs aren’t printed as their own charge. Lenders generally pass them through as a higher rate or as upfront cost. That is how the industry works, not an official statement from Fannie Mae.
So two Loan Estimates can show similar fee lists, yet one loan costs more over time because the premium sits in the rate. This is the mistake that trips up many borrowers.
| Cost | Regular refinance | Cash-out refinance |
|---|---|---|
| Risk-based pricing | Lower grid | Higher grid |
| Loan balance | Roughly the old balance | Larger |
| Appraisal | Usually required | Required |
| Where it shows | Rate or upfront cost | Often buried in rate |
| Mortgage insurance | Above 80% LTV | Rarely applies at 80% cap |
Both loans share the ordinary refinance costs: origination, appraisal, title and taxes. Those don’t change much with loan purpose. The difference is the program-specific layer on top.
Think of it as two costs. The upfront cost is fees and one-time adjustments. The ongoing cost is the rate, the balance and the term. A cash-out raises the ongoing cost more than most people expect.
Does It Ever Cost About the Same?
Sometimes. The gap shrinks when three things line up: strong credit, low LTV and a clean file.
- Strong credit and low leverage. Pricing grids are gentle at the top of the credit range and at lower LTVs. A borrower who keeps the new loan well under the 80% cap may see a modest difference.
- Student loan payoff. Fannie Mae waives the cash-out LLPA when the proceeds pay off eligible student loans that meet its requirements.
- A wholesale lane above 80%. Across the programs Lendmire places files with, one lane reaches 89.99% LTV with no mortgage insurance. It requires a 680 score, a 50% ratio and a thirty-year fixed rate on a primary residence with a conforming balance. It carries its own six months of seasoning, and it is not written in Texas. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Mortgage insurance is the other piece. On a regular refinance above 80% LTV, mortgage insurance is required. It cancels at your request at 80% of the original value, and the servicer must end it at 78%. Typical published premiums run 0.58% to 1.86% of the balance annually. That is a range, not a quote. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
A regular refinance at 95% LTV can therefore carry a monthly cost that a cash-out at 80% does not. The headline answer is “usually yes.” The honest answer is that it depends on where each loan lands.
How Do the Loan Types Compare?
Government loans work differently. The cost story is not the same as conventional.
| Program | Cash back? | Appraisal? | Key cost feature |
|---|---|---|---|
| Conventional rate-and-term | Incidental only | Usually | Mortgage insurance above 80% |
| Conventional cash-out | Yes | Yes | LLPA grid, 80% LTV cap |
| FHA Streamline | No | No | Net tangible benefit test |
| VA IRRRL | No | No | 0.5% funding fee unless exempt |
| VA cash-out | Yes | Yes | Higher funding fee |
The FHA Streamline refinances an existing FHA loan with limited credit documentation. HUD says closing costs cannot be added to the new streamline loan amount. It also notes that some “no cost” refinances work by charging a higher rate.
“Streamline” describes the paperwork, not the price. The FDIC’s FHA summary says the savings come mostly from skipping a new appraisal. It also says no cash may be taken out. If you want cash from an FHA or VA loan, you are looking at a different program with a different cost.
The VA IRRRL is the VA’s streamline for an existing VA loan. It carries a 0.5% funding fee unless you are exempt, and the VA does not require its own appraisal. Seasoning is the later of 210 days and 6 payments.
Rolling Costs In: What It Does to Your Cash
Conventional and VA loans let you finance closing costs into the new balance. That avoids a check at the table. It has a price, though.
Financed costs raise the loan amount. A higher loan amount uses up room under the LTV cap. On a cash-out capped at 80%, every cost you roll in is cash you don’t receive. Say your cap allows a certain payout and you finance the costs. Your net cash shrinks by the same amount, and you pay interest on it for the life of the loan.
“No closing cost” refinances work the same way. The costs are built into the rate or the balance. They are not gone. HUD makes this point directly about the rate.
Cash-Out vs HELOC vs Keeping Your Loan
Cost is not just a comparison between two refinances. A third option leaves your first mortgage alone.
| Option | First mortgage | What changes |
|---|---|---|
| Cash-out refinance | Replaced | New balance, new terms |
| HELOC or home equity loan | Kept | Second lien added |
| Regular refinance | Replaced | New terms, little cash |
A cash-out refinance applies its new rate to the whole balance. Home equity loans and HELOCs, by contrast, leave the original first-lien mortgage in place. That matters most when your current loan is better than what a new one would be.
Lendmire has an article on how a cash-out refinance can cost less than a HELOC for a recent buyer. Lendmire’s cash-out refinance programs page lays out the loan options themselves.
How to Compare Offers
Skip the guesswork. Use the Loan Estimate, the standard form every lender must give you after you apply.
1. Ask for the same scenario twice. Request a regular refinance and a cash-out refinance on the same home, with the same credit and the same term.
2. Compare the rate first. The cash-out premium often hides there.
3. Check the loan amount. If financed costs are inside it, note how much cash you actually receive.
4. Look at mortgage insurance. A high-LTV regular refinance can carry it. A cash-out at 80% usually does not.
5. Compare against your current loan. Count the full cost of replacing it, not just the new fees.
Is the Extra Cost Worth It?
A cash-out makes sense only if the cost of getting the cash is lower than the cost of the debts it pays off. That cost includes origination fees, appraisal, title and taxes, plus the interest on the new balance.
It makes sense when:
- The cash replaces something more expensive, or funds a project that adds value.
- Your credit and equity put you in the gentle part of the pricing grid.
- Your current loan is not so good that replacing it costs you more than the cash is worth.
Skip it when:
- You only need a small amount and a second lien would leave your first mortgage alone.
- The new loan would push you toward the top of the LTV cap.
- You would be turning unsecured debt into debt secured by your home, which can put the home at risk of foreclosure if payments become unsustainable.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Loan-to-value (LTV): the loan balance divided by your home’s value.
LLPA: a loan-level price adjustment, an extra charge on conventional loans based on loan purpose, credit score and LTV.
Seasoning: the waiting period a lender requires before you can refinance or take cash out.
Rate-and-term refinance: a refinance that swaps your loan for a new one with only incidental cash back.
Funding fee: a one-time VA charge built into the loan, waived for exempt veterans.
Frequently Asked Questions
Are closing costs higher on a cash-out refinance?
Not by much. Origination, appraisal and title run about the same on both loans. The difference is the pricing layer: the LLPA on conventional loans, the VA funding fee, and the larger balance. Those often show up in the rate, not the fee list.
Are cash-out rates higher?
Typically, yes. The pricing grid for cash-out is higher than for limited cash-out at the same credit score and LTV. The gap widens as credit drops or LTV climbs. Compare Loan Estimates to see your actual difference.
Can I roll closing costs into a cash-out refinance?
Yes, on conventional and VA loans. The costs add to your balance and use up room under the LTV cap, so your net cash falls. HUD does not allow it on an FHA Streamline.
Is a cash-out refinance cheaper than a HELOC?
It depends on your current loan. A HELOC leaves the first mortgage in place, which helps when your existing loan is favorable. A cash-out replaces everything and applies new terms to the full balance.
How soon can I take cash out after buying?
Conventional cash-out generally requires the loan you are paying off to be at least 12 months old, with 6 months on title. A delayed financing exception covers some cash purchases. Programs and lenders differ, and all of it is subject to full file review.
Next Step
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. A good place to start is the Loan Estimates from both options, side by side.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
In about 30 seconds you can review financing options available for your home or investment property. No commitment required.
Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. Fannie Mae Selling Guide B2-1.3-03
2. Fannie Mae LLPA Matrix (Lender Letter LL-2023-01)
3. VA Funding Fee and Closing Costs
4. HUD FHA Streamline Refinance
5. FDIC FHA Streamline summary
This article is part of Lendmire’s cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Refinance a Cash-Out Refinance Again Later? · Does an Appraiser Know About Your Cash-Out Refinance? · Cash-Out Refinance for Homeowners Who Cashed Out Before
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.