How much can you actually pull out when you refinance?

How the 80% is actually calculated

The formula is: your home's current appraised value × 80%, minus what you still owe on your existing mortgage. What's left is your theoretical maximum. As an illustration (not a quote): a home appraised at $1,000,000 with $400,000 still owing gives a theoretical cap of $1,000,000 × 80% − $400,000 = $400,000.

That 80% isn't something any one lender decided on its own — it's because cash-out refinances in Canada can't carry mortgage default insurance (the kind CMHC and similar insurers provide, which only covers purchase mortgages, not refinances). Without that insurance backstop, lenders cap what they'll approve lower than they would for a purchase — purchases can go as high as 95%, refinances top out at 80%. That 15-point gap is exactly why.

That number needs a fresh appraisal to confirm

Your current value isn't whatever an online estimator spits out, and it isn't your property tax assessment either. Lenders work from a formal appraisal, and that's the number that actually counts.

The appraisal fee is usually on you, the amount varies by region and property type, and scheduling through to a result usually takes one to two weeks. The appraisal can come in higher or lower than you expected — if it's lower, the cash you can pull out adjusts down with it, which is worth being mentally prepared for.

Getting approved still means clearing the stress test

A cash-out refinance isn't “your home is worth more, so you get the money” — your income still has to clear the stress test, using the same standard applied to a purchase mortgage. Being an existing homeowner doesn't exempt you from this step.

That means even if your home's value has climbed a lot and the theoretical limit is high, the actual approved amount can still get capped by your income if it doesn't clear the stress test — independent of how much the home has appreciated. For what the stress test actually checks, there's a separate guide on what the mortgage stress test actually tests that goes through it in detail.

What you use the cash for isn't restricted

Once a cash-out refinance is funded, lenders generally don't restrict what you use it for — paying down higher-interest debt, renovations, giving family a lump sum, a down payment on an investment, business capital, all of these are common. What you use it for is your call.

How you use it does affect whether it's the right move for you, and that judgment varies person to person — this isn't the place to make that call for you. The one thing worth flagging: this money is your home equity converted to cash and folded into your mortgage principal, which extends your amortization or raises your payment. Run that against your overall finances before deciding, not after.

A HELOC is a different thing from a cash-out refinance

A cash-out refinance pulls the full amount out at once, merging it with your existing mortgage into one new, larger loan that starts accruing interest on the new principal from the day it's approved.

A HELOC (home equity line of credit) works differently — it's a credit line you draw from as needed, and the unused portion doesn't accrue interest, more like a large credit limit secured against your home. Both convert equity to cash, but they fit different situations: a one-time large expense (a renovation, paying off a debt) usually fits a cash-out refinance better; not knowing exactly when you'll need it and wanting flexibility fits a HELOC better. Some products combine both (a readvanceable mortgage), where your available credit line grows automatically as you pay down principal.

Common questions