Why are cash-out refinance rates higher?
The agencies' cash-out price adjustments, what moves your rate, and what the premium costs.
Private by design. Your numbers stay on this device.
Educational estimates only. Not financial, tax, or lending advice.
Are cash-out refinance rates higher than regular refinance rates?
Usually, yes. Fannie Mae and Freddie Mac charge extra price adjustments on cash-out loans, set by credit score and loan-to-value, and lenders pass them on as a higher rate or as points. That premium is often small next to the larger cost of a cash-out refinance: the new rate applies to your whole balance, including what you already owed.
Why do cash-out refinances cost more?
The agencies that buy most mortgages charge more to take one, and lenders pass the charge on.
Most conventional loans are sold to Fannie Mae or Freddie Mac. Both charge the lender a fee on each loan, called a loan-level price adjustment, that depends on the borrower’s credit score, the loan-to-value ratio and the purpose of the loan. Fannie Mae’s LLPA matrix gives cash-out refinances a grid of their own, and at the same score and LTV its charges are higher than the ones for purchase loans and for a rate-and-term refinance. Freddie Mac prices cash-out loans the same way through its credit fees.
The lender recovers that fee in one of two ways: a higher rate, or points you pay at closing. The agencies charge more because you leave the closing table owing more and holding less equity than before, and they treat that as a higher risk of loss.
What decides your cash-out refinance rate?
Mostly your loan-to-value and credit score, on top of where rates are that week.
Loan-to-value is the factor you control most directly. The adjustment steps up as the new loan grows against the home’s value, and Fannie Mae’s eligibility matrix caps most cash-out refinances of a one-unit primary home at 80% LTV. Its Selling Guide adds two timing rules: at least one borrower must have been on title for six months, and the mortgage being paid off must be at least 12 months old. The cash-out refinance calculator shows your new LTV and how much cash fits under the cap.
Credit score sets the row of the grid you land in, and lower scores pay more at every LTV. Points move the rate too: paying them buys the rate down, and taking a lender credit pushes it up. Whether buying it down pays off depends on how long you keep the loan, which the discount points guide works through.
For the market itself, the Freddie Mac Primary Mortgage Market Survey® put the 30-year fixed average at 7.24% for the week of Oct 29, 2026. That survey tracks conventional loans for home purchases, so it is a benchmark and not a cash-out quote. More weeks are on our mortgage rates page.
What does a higher cash-out rate cost?
In this example the premium adds $60.74 a month. Re-pricing the balance you already owed adds $364.87.
| Rate | Principal and interest | Interest in the first 10 years |
|---|---|---|
| 7% | $2,395.09 | $236,335.21 |
| 7.25% | $2,455.83 | $245,417.70 |
| 7.5% | $2,517.17 | $254,522.71 |
The rates are illustrative, not quotes. 7% stands for the same loan without a cash-out adjustment. The new loan is the $300,000 still owed plus $60,000 in cash, an LTV of 72%. Closing costs are left out.
Each quarter point adds about $61 a month on this loan, and over the first ten years the 7.5% loan charges $18,187.50 more interest than the 7% one. That is worth shopping for, though here it is the smallest of the three costs.
Before the refinance, the borrower owes $300,000 at 3.5% with 22 years left and pays $1,631.04 a month. At 7.25% the new payment is $2,455.83, which is $824.79 more. Of that, $399.18 is the $60,000 itself at 7%. Another $364.87 comes from moving the $300,000 already owed off 3.5% and onto a new 30-year loan at 7%. The cash-out premium is the last $60.74.
So when your current rate is low, the first question is whether to refinance the first mortgage at all. A HELOC or a home equity loan leaves it in place and charges its rate only on the cash. The cash-out refinance vs HELOC comparison runs both side by side, and the low-rate refinance guide covers the cases where a cash-out still wins. The payment comparison above also stretches 22 remaining years to 30, which lowers the payment and adds interest; the calculators count that using the net-cost method in our methodology.
How can you get a lower cash-out refinance rate?
Take less cash, compare Loan Estimates from the same day, and look past the rate.
Taking less cash lowers your LTV, and dropping into a lower band is the cheapest improvement available, since it needs no change to your credit. If you are close to a band edge, a few thousand dollars less can move you below it.
The CFPB recommends that you request Loan Estimates from several lenders and compare them. Get them on the same day, since rates move daily, and check the points and lender credits on page 2 next to the rate. The APR calculator turns a rate and its fees into one number you can compare, and the refinance calculator shows whether the whole refinance comes out ahead over the years you expect to keep it.