Which is cheaper, a HELOC or cash-out refi?

It depends on rates, terms, and closing costs. A HELOC avoids large closing costs but often has a higher, variable rate; a refi may have a lower rate but resets your whole mortgage and adds closing costs.

When should I choose a cash-out refinance?

When current mortgage rates are at or below your existing rate and you want a single fixed payment. It's costly if it means giving up a much lower existing rate.

When is a HELOC the better choice?

When you want flexibility, only need to borrow part of the equity, want to keep a low existing mortgage rate, or want to avoid large closing costs.

How much equity can I borrow?

Most lenders let you borrow up to 80–85% of your home's value minus your existing mortgage balance, whether via a HELOC or a cash-out refinance.

HELOC vs Cash-Out Refinance Calculator

By the KalkWise Editorial Team Reviewed for accuracy Updated June 2026

What is the heloc vs cash-out refinance calculator?

In short

A HELOC and a cash-out refinance both tap home equity but cost differently. Borrowing $50,000 via a HELOC at 8.5% over 15 years costs about $492/month; a cash-out refi at 7% over 30 years with $6,000 closing costs costs about $373/month but stretches the debt longer. The calculator compares total cost to find the cheaper option.

Compares the monthly payment and total cost of a HELOC against a cash-out refinance, factoring in rates, terms, and refinance closing costs, to show which is cheaper.

How to use this calculator

1Enter the amount of equity you need to access.
2Enter the HELOC rate and repayment term.
3Enter the cash-out refi rate, closing costs, and term.
4See the monthly payment and total cost of each, and which saves more.

The formula

payment=P×r1−(1+r)−n

payment = P × r / (1 − (1+r)^−n); total cost = payment × n

P: — Loan principal (refi adds closing costs)
r: — Monthly rate = annual rate / 12
n: — Total months = years × 12
payment: — Amortized monthly payment

Worked example

The scenario

$50,000 needed; HELOC 8.5% / 15yr; cash-out refi 7% / 30yr with $6,000 closing costs.

gives

The result

HELOC: $492/mo, ~$88,600 total. Refi: $373/mo, ~$134,200 total. HELOC is cheaper overall.

Common use cases

Homeowners deciding how to fund a renovation or large expense.
Comparing the lifetime cost of a HELOC vs refinancing the whole mortgage.
Weighing a lower monthly payment against a higher total cost.

Limitations & assumptions

HELOCs usually have variable rates — this model assumes a fixed rate for comparison.
Does not account for losing a low existing mortgage rate when you cash-out refinance.
Ignores tax deductibility differences and prepayment behavior.

Frequently asked questions

A HELOC is a second loan (line of credit) on top of your existing mortgage. A cash-out refinance replaces your entire mortgage with a larger one and gives you the difference in cash.

Disclaimer: KalkWise calculators are provided for general informational and educational purposes only and do not constitute financial, investment, tax, or legal advice. Results are estimates based on the figures you enter and the assumptions described above. Actual outcomes will vary. Consult a qualified professional before making financial decisions.

Equity options