How much equity do I need for a cash-out refinance?

Usually at least 20%. Most conventional cash-out refinances cap the new loan at 80% of the home's value, so you must keep 20% equity after taking cash. VA cash-out refinances can sometimes go higher.

How do I calculate cash-out refinance equity?

Multiply your home's value by 0.80, then subtract your current mortgage balance — that's roughly the cash you could take. Example: an $400,000 home at 80% is $320,000; minus a $250,000 mortgage leaves about $70,000 of cash-out room.

How much equity do I need to refinance?

Q: How much equity do I need to refinance?

It depends on the type. A rate-and-term refinance (changing your rate or term, no cash out) can often be done with as little as 3–5% equity, and some government programs allow even less. A cash-out refinance usually requires you to keep at least 20% equity — an 80% loan-to-value cap.

Q: Can I refinance with no equity?

Sometimes. Government streamline refinances (FHA Streamline, VA IRRRL) can refinance with little or no equity and sometimes while underwater, because they reuse your existing loan. A conventional rate-and-term refinance typically wants at least 3–5% equity, and a cash-out refinance needs about 20%.

Reviewed by the HomeEquityWise Editorial Team · Last updated June 2026 · How we calculate these numbers

It depends entirely on which kind of refinance. If you're just changing your rate or term (a rate-and-term refinance) and taking no cash, you can often qualify with as little as 3–5% equity — and government streamline programs allow even less, sometimes while underwater. If you want to pull cash out (a cash-out refinance), you generally need to keep at least 20% equity, an 80% loan-to-value (LTV) cap. So the honest answer is: very little for one, a lot for the other.

Rate-and-term refi: as little as 3–5% equity (no cash taken).
Streamline refis (FHA Streamline, VA IRRRL): little or no equity, sometimes underwater.
Cash-out refi: usually keep 20% — an 80% LTV cap.
Cash-out room = (home value × 0.80) − mortgage balance.
Model a cash-out with the cash-out refinance calculator.

Two refinances, two very different bars

People ask "how much equity do I need to refinance" as if there's one number — but a refinance is either keeping your loan balance roughly the same or growing it, and lenders treat those very differently.

Rate-and-term refinance (little equity needed)

Here you replace your mortgage to get a better rate or a different term, without taking cash. Because the loan amount barely changes, lenders are comfortable with thin equity — typically 3–5% for a conventional refi. And streamline programs reuse your existing government loan with minimal underwriting: an FHA Streamline or VA IRRRL can refinance with little to no equity, sometimes even when you owe more than the home is worth, because the goal is simply a lower payment.

Cash-out refinance (20% equity needed)

Here you take a new, larger mortgage and pocket the difference. Most conventional cash-out refinances cap the new loan at 80% of the home's value, so you must leave 20% equity behind. (VA cash-out refinances can sometimes exceed 80%.) The cash you can pull is that 80% ceiling minus what you currently owe.

Worked example (cash-out)

Your home is worth $400,000 and you owe $250,000. At the 80% cap, the new loan can be up to $320,000; subtract the $250,000 you owe and you could take about $70,000 in cash while keeping the required 20% equity. Owe more than $320,000 and there's no cash-out room until you pay down or the home appreciates.

Equity thresholds at a glance

Refinance type	Equity you need	Why
FHA Streamline / VA IRRRL	Little to none	Reuses existing loan; payment-reduction focus
Conventional rate-and-term	~3–5%	Loan amount barely changes
Cash-out refinance	~20% (80% LTV)	New, larger loan; lender keeps a cushion

Don't forget the rate trade-off

Having enough equity is only half the decision. A cash-out (or any) refinance replaces your whole mortgage at today's rate — so if you hold a low older rate, refinancing just to reach equity can cost more than it's worth. In that case a HELOC or home equity loan that sits on top of your existing mortgage is often smarter. Run both before deciding.

Frequently asked questions

How much equity do I need to refinance?

Rate-and-term: as little as 3–5% (streamline programs even less). Cash-out: usually 20% — an 80% LTV cap.

Can I refinance with no equity?

Sometimes — FHA Streamline and VA IRRRL can refinance with little or no equity, occasionally while underwater, because they reuse your existing loan.

How much equity for a cash-out refinance?

Usually at least 20%. Most conventional cash-out refis cap the new loan at 80% of value; VA cash-out can sometimes go higher.

How do I calculate cash-out room?

Home value × 0.80, minus your mortgage balance. A $400k home at 80% is $320k; minus a $250k mortgage ≈ $70k of cash-out room.

Educational only — not financial advice. LTV caps and program rules vary by lender and loan type; compare at least three offers. See our methodology.