Cash-Out Refinance to Buy Bitcoin: Break-Even Analysis
A cash-out refinance converts home equity into a lump sum of cash at a fixed interest rate — often for 30 years. For Bitcoiners with strong conviction and a long time horizon, this represents one of the most structured forms of leverage available: predictable monthly costs, no margin calls, and the ability to deploy a significant sum into Bitcoin at once.
The trade-off is closing costs, a permanently higher mortgage payment, and the reality that your home secures the debt. This page breaks down the math, the risks, and the break-even CAGR you need at current rates. For a personalized model using your actual mortgage balance and financial picture, use the SaylorScope calculator.
How Cash-Out Refinancing Works for Bitcoin Purchase
In a cash-out refinance, you take out a new mortgage for more than you currently owe and receive the difference as cash. Most lenders allow up to 80% loan-to-value (LTV), meaning on a $500,000 home you could borrow up to $400,000. If your existing mortgage is $250,000, that frees up $150,000 in cash (minus closing costs of 2-5%).
The key advantage over a HELOC is rate certainty. Your new mortgage locks in a fixed rate for the full term. If you refinance at 6.75%, that is your cost of capital for 30 years — no matter what the Federal Reserve does. This makes break-even modeling much cleaner because you know exactly what CAGR Bitcoin needs to achieve.
The disadvantage is inflexibility. You get one lump sum and you pay closing costs upfront. There is no revolving draw period. If rates drop after you refinance, you would need to refinance again (with another round of closing costs) to benefit. You also lose the ability to dollar-cost average — you are making a single, large entry into Bitcoin.
Break-Even CAGR Table: Fixed-Rate Cash-Out Refinance
With a fixed rate, your break-even CAGR is constant over time. The table factors in closing costs of 3% of the cash-out amount, which raises the effective cost of capital.
| Mortgage Rate | Effective Cost (w/ 3% closing) | BTC CAGR Needed (5yr) | BTC CAGR Needed (10yr) | Break-Even at 30% CAGR |
|---|---|---|---|---|
| 6.0% | ~6.6% | ~18% | ~11% | ~2.1 years |
| 6.75% | ~7.4% | ~20% | ~12% | ~2.4 years |
| 7.0% | ~7.6% | ~21% | ~13% | ~2.5 years |
| 7.5% | ~8.2% | ~22% | ~14% | ~2.7 years |
| 8.0% | ~8.7% | ~23% | ~15% | ~2.9 years |
Assumes lump-sum deployment at closing. Actual break-even varies with Bitcoin entry price and volatility. Use SaylorScope for precise modeling.
Pros and Cons
Advantages
- +Fixed rate locks in your cost of capital for 15-30 years
- +Large lump sum available — potentially $100,000+ for well-equitied homes
- +No margin calls or forced liquidation during Bitcoin drawdowns
- +30-year amortization keeps monthly payments relatively low per dollar borrowed
- +Predictable break-even math since rate does not change
Risks
- -Closing costs of 2-5% reduce your effective deployment
- -Permanently higher mortgage payment regardless of Bitcoin performance
- -No flexibility to draw incrementally — single lump sum entry
- -Home is collateral — missed payments risk foreclosure
- -If rates drop later, you are locked in (or must refinance again with more closing costs)
Risk Analysis: Drawdown Stress Test
A cash-out refinance creates a fixed, unavoidable monthly cost. Consider a $150,000 cash-out at 7% on a 30-year term: your additional monthly payment is approximately $998. Over one year, that is $11,976 in payments for your Bitcoin position.
50% Bitcoin drawdown: $150,000 position becomes $75,000. You have paid ~$12,000/year in additional mortgage payments. Recovery to break-even at 30% CAGR: ~3.5 years from the drawdown trough.
80% Bitcoin drawdown: Position drops to $30,000. Your annual mortgage increase ($12,000) represents 40% of the remaining position value. Full recovery at 30% CAGR: ~6 years from trough.
Cash flow test: Can your budget absorb an extra $998/month for years, even if Bitcoin is in a deep bear market? If the answer is not a confident yes, this strategy may be too aggressive for your situation.
Frequently Asked Questions
How does a cash-out refinance work for buying Bitcoin?
A cash-out refinance replaces your existing mortgage with a new, larger one. The difference between the new loan amount and your old mortgage balance is paid to you in cash, which you then use to purchase Bitcoin. For example, if your home is worth $500,000 and you owe $250,000, you might refinance to a $375,000 mortgage and receive $125,000 in cash (minus closing costs). You now have a larger mortgage payment but hold a significant Bitcoin position.
What are the closing costs on a cash-out refinance?
Closing costs typically range from 2-5% of the new loan amount. On a $375,000 refinance, expect $7,500-$18,750 in costs including origination fees, appraisal, title insurance, and recording fees. These costs reduce your effective Bitcoin purchase amount and must be factored into your break-even calculation. A $125,000 cash-out with $12,000 in closing costs means you are actually deploying $113,000 while paying interest on $125,000.
Is a cash-out refi or HELOC better for buying Bitcoin?
It depends on your priorities. A cash-out refinance gives you a fixed rate, providing certainty about your cost of capital for the entire loan term (often 30 years). A HELOC offers a lower initial rate but is variable and can rise. If you want predictability and plan to hold a lump-sum position long-term, the refi has an advantage. If you want flexibility to draw and repay incrementally, the HELOC is more versatile. SaylorScope can model both scenarios against your specific financial profile.
What happens to my mortgage payment after a cash-out refinance?
Your monthly mortgage payment will increase because you are borrowing more money, and potentially at a different rate than your original mortgage. If your original payment was $1,500/month and the refinance adds $125,000 at 7%, your new payment might be around $2,330/month. That additional $830/month is the ongoing cost of your Bitcoin leverage. You need Bitcoin to appreciate enough to justify that perpetual cash outflow.
Can I lose my home if Bitcoin crashes after a cash-out refinance?
You can lose your home if you fail to make mortgage payments, regardless of why. A Bitcoin crash does not directly trigger foreclosure, but if the increased mortgage payment strains your budget and Bitcoin is not liquid enough to cover the gap, you could fall behind on payments. The risk is cash-flow-based, not collateral-based. Make sure your monthly income comfortably covers the new, higher mortgage payment even if Bitcoin drops to zero.
Run Your Personalized Analysis
Input your mortgage balance, home value, income, and expenses. SaylorScope will model a cash-out refinance scenario with break-even timelines and drawdown stress tests specific to your finances.
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Disclaimer: This content is for informational and educational purposes only. It is not financial, investment, tax, or legal advice. Using leverage to purchase Bitcoin carries significant risk, including potential loss of your home. Always consult a qualified financial advisor before making leverage decisions. Past performance does not guarantee future results.