Duane Buziak answers the question directly: the top debt consolidation mortgage products are the conventional, FHA, and VA cash-out refinances, the home equity loan, the HELOC, and non-QM cash-out loans for self-employed borrowers. Each one converts home equity into cash that pays off higher-rate debt, usually credit cards, personal loans, or auto loans, and leaves you with one payment secured by your house.
That last part is the trade-off. Consolidation moves debt rather than erasing it, and a lower payment does not automatically mean a lower total cost. Florida’s lack of a state income tax helps in one practical way: more of your gross income reaches your bank account, so any debt-to-income ratio (DTI, your monthly debt payments divided by gross monthly income) leaves you more room to breathe. The six products below differ mainly in what they do to your existing first mortgage.
By Duane Buziak, NMLS #1110647, a Florida-licensed mortgage broker serving clients statewide.
1. Conventional Cash-Out Refinance
A cash-out refinance replaces your current first mortgage with a larger one and sends the difference to you, or directly to your creditors at closing. It is the broadest consolidation product because it works for most credit profiles that have equity. Agency conventional cash-out on a primary home is generally capped at 80% loan-to-value (LTV, the loan balance divided by the home’s value). Some programs reach higher in certain cases, subject to qualification. Check the current conforming limits on FHFA.gov, since they are updated annually.
For example, imagine a $450,000 Florida home with a $240,000 first mortgage at 3.5% and $45,000 of card and personal loan debt. The monthly payment on the first mortgage is about $1,078, and suppose the minimum payments on the other debts total about $1,350, so you pay about $2,428 a month combined. A new $285,000 loan at an assumed 6.5% on a 30-year term is about $1,801 in principal and interest. That is a $627 monthly improvement at 63% LTV. If closing costs run an assumed 3% ($8,550), the break-even is about 14 months. These are illustrations, not quotes.
The common mistake is ignoring what you give up. Your 3.5% rate on $240,000 disappears, and the term resets to 30 years, so the debt you roll in may cost more in total interest than it did on the cards if you keep the loan for decades. Your homestead status carries over, but confirm the new escrow figures, and remember the Florida Statute 196.031 homestead exemption (up to $50,000 off assessed value) still depends on you keeping the property as your permanent residence. Before you commit, it also helps to review the top things to know before refinancing your mortgage.
To put it into practice:
- Start with a soft pull mortgage check. Duane Buziak’s NoTouch Credit Pull is an eligibility review that uses a soft inquiry, so it does not affect your score the way a hard inquiry does at formal application.
- Confirm your home value, balance, and LTV.
- List every debt you want paid at closing, with balances and rates.
- Compare closing costs against monthly savings using the CFPB mortgage calculator.
Measure three things: monthly savings, break-even months on closing costs, and total interest over the years you realistically expect to keep the loan.
2. FHA Cash-Out Refinance
The FHA cash-out refinance is government-insured, with more flexible credit standards than conventional loans. As of 2026, it is generally capped at 80% LTV, and it carries both an upfront and an annual mortgage insurance premium. Confirm current limits and premiums in the HUD Handbook 4000.1 resources on HUD.gov, because these figures can change.
Consider an illustrative borrower with a mid-600s credit score and card balances near their limits. Conventional pricing may be steep or unavailable for that profile, while FHA may approve it with a workable rate. The insurance premium is the cost of that flexibility, and it is the reason FHA is not simply the easier option for everyone.
The common mistake is choosing FHA out of habit when your credit is strong enough for conventional. You can end up paying mortgage insurance you did not need, which is why it pays to know how to avoid mortgage insurance on a Florida home loan. Another mistake is comparing only interest rates. FHA’s rate may look lower while the all-in payment, once insurance is added, is higher.
To put it into practice:
- Verify the cash-out limits and premium schedule on HUD.gov before you run numbers.
- Ask for a conventional and an FHA quote on the same debts and the same loan amount.
- Have Duane Buziak run both through his Dare to Compare process. That is a side-by-side comparison of the same debts and equity across different programs, showing payment, cost, and rate next to each other instead of one quote at a time.
Measure the all-in monthly payment, mortgage insurance included, against the conventional quote. Also measure how many years the premium will last relative to how long you plan to keep the loan. If your score later improves, a future refinance can remove the insurance, but that adds a second set of closing costs.
3. VA Cash-Out Refinance
Eligible veterans and service members can refinance and take cash to pay debts without monthly mortgage insurance. Because there is no monthly premium, the payment on a VA cash-out can come in lower than an FHA or conventional loan at the same balance. The cost shows up elsewhere: the VA funding fee, a one-time charge that can be financed into the loan. As of 2026, rates and exemptions, including exemption for veterans receiving VA disability compensation, are listed on the VA.gov funding fee page. The program’s cash-out terms are on VA.gov.
For example, imagine a Florida veteran with a $260,000 VA loan who wants to consolidate $30,000 of debt. If the first-use funding fee is 2.15% and is financed, the new balance is about $296,400, which includes roughly $6,400 of fee. That fee is part of the true cost of the consolidation, and it matters whether you would have been better served by a smaller second lien.
The common mistake is giving up a very low existing VA rate without comparing a second lien. If your current rate is far below today’s market, a cash-out refinance can raise the cost of your whole balance to fund a small amount of debt.
To put it into practice:
- Request your Certificate of Eligibility through VA.gov.
- Confirm the funding fee that applies to you, including any exemption.
- Compare the cash-out refinance with a second lien if your current rate is low.
Measure net monthly savings after the funding fee is counted, and compare the new rate against the old rate. Florida’s absence of a state income tax also helps here, because VA underwriting looks at residual income after expenses, and more of your pay stays in your account.
4. Home Equity Loan
A home equity loan is a fixed-rate second lien: a second mortgage that sits behind your first and pays you a lump sum. Your first mortgage stays untouched, which matters most when its rate is well below today’s market. You get a fixed payment and a set payoff date, so there is less ambiguity than with a revolving line.
To see why this can win, suppose you have a $240,000 first mortgage at 3% and need $40,000 to clear cards. A cash-out refinance would put $280,000 at an assumed 6.5%, or about $18,200 in first-year interest. Keeping the first mortgage and adding a $40,000 second at an assumed 9% gives a blended rate of (240,000 × 3% + 40,000 × 9%) ÷ 280,000, or about 3.86%. That is roughly $10,800 in first-year interest. The assumed rates are illustrative, but the method is real, and it often favors the second lien when the first rate is very low.
The most common mistake is running the cards back up after payoff. The cards then carry balances again on top of a new lien, and the home carries the risk of both. Consolidation only works if the spending pattern behind the debt has changed. One practical safeguard is to leave the cards open but out of your wallet, or to lower their limits if you cannot trust yourself.
To put it into practice:
- Request fixed-second quotes with a soft credit pull mortgage pre-approval, so you can compare without a credit hit.
- Calculate the blended rate and compare it against the cash-out rate.
- Confirm the combined LTV across both liens.
- Check second-lien closing costs against the same costs on a full refinance.
Measure the blended interest rate across both liens and your total monthly housing plus debt payments.
5. HELOC
A home equity line of credit (HELOC) is a variable-rate revolving line secured by the home. For the first stretch, the draw period, you can borrow and repay freely, often with interest-only payments. After that comes the repayment period, when you pay principal and interest on the balance. It suits borrowers who want to retire debts in stages, or whose debt balance is uncertain.
The risk is payment shock. Imagine paying off cards using draws of $40,000 total at an assumed 8.5%. Interest-only, the payment is about $283 a month. When a 10-year repayment period begins and the balance has not come down, the payment becomes about $496, an increase of about 75%, and a rate rise would push it higher still. That is an illustration, not a quote. Understanding what’s driving mortgage rates in Florida right now helps you judge how much variable-rate risk you are taking on.
The common mistake is paying only interest throughout the draw period and then facing that jump. Pay down principal on a schedule you set yourself, even when the lender’s minimum allows less.
To put it into practice:
- Review the index, margin, and rate caps.
- Read the draw and repayment terms, including any minimum draw or fees.
- Look up your flood zone on the FEMA Flood Map Service Center. A property in a high-risk zone may require flood insurance, which adds to the monthly cost.
- Set a payoff schedule that clears the balance before repayment begins.
Measure principal reduction each quarter, and the payment amount at the start of the repayment period. If the balance is not falling, the HELOC is working as a credit line, not as consolidation.
6. Non-QM Cash-Out Refinance
Non-QM (non-qualified mortgage) loans use alternative documentation, such as bank statements, in place of tax returns. They fit self-employed borrowers whose deposits are strong but whose taxable income looks small after write-offs. Because the underwriting is more individual, the rate and costs are usually higher than the agency options. For a deeper look at how these programs work, see these non-QM mortgage loan options in Florida.
Imagine a Florida contractor with $18,000 in average monthly deposits and only $4,500 of monthly taxable income after deductions. On bank statements, with an assumed 50% expense factor, qualifying income might be $9,000. If the contractor pays $2,200 for housing plus $1,100 for card and truck payments, DTI is about 36.7%. After a cash-out loan clears those debts and housing rises to $3,000, DTI is about 33.3%. Florida’s lack of a state income tax also means business owners keep more of what they earn, which helps cash flow after payoff.
The common mistake is using non-QM when an agency loan would qualify at lower cost. Some self-employed borrowers can qualify conventionally, so always test that first, starting with these self-employed mortgage options.
To put it into practice:
- Gather 12 to 24 months of bank statements, along with your business license and proof of ownership.
- Have Duane Buziak compare programs across hundreds of wholesale lenders, since terms vary widely.
- Weigh the non-QM cost against the agency option, including any prepayment terms.
Measure the rate and cost difference versus the agency quote, and your DTI after payoff.
How the six products compare side by side
- Conventional cash-out: replaces the first mortgage; generally up to 80% LTV; fixed or adjustable; no government insurance, though private mortgage insurance rules depend on the loan; fits borrowers with solid credit; main risk is losing a low first-mortgage rate.
- FHA cash-out: replaces the first mortgage; generally up to 80% LTV as of 2026; fixed; upfront and annual mortgage insurance; fits mid-credit borrowers; main risk is paying insurance you did not need.
- VA cash-out: replaces the first mortgage; no monthly mortgage insurance; funding fee unless exempt; fits eligible veterans and service members; main risk is giving up a very low VA rate.
- Home equity loan: adds a second lien with a fixed rate and fixed term; keeps the first mortgage; fits borrowers with a low first rate; main risk is running balances back up.
- HELOC: adds a variable-rate revolving line with a draw and a repayment period; keeps the first mortgage; fits staged payoff; main risk is payment shock.
- Non-QM cash-out: replaces the first mortgage using alternative documentation; usually higher rate and cost; fits self-employed borrowers; main risk is overpaying when an agency loan would qualify.
Questions Florida homeowners ask about consolidating debt with a mortgage
What are the top mortgage products for debt consolidation?
The top products are conventional, FHA, and VA cash-out refinances, home equity loans, HELOCs, and non-QM cash-out loans. The right one depends on your first-mortgage rate, credit, equity, and how you document income.
Does a cash-out refinance erase my debt?
No. It moves the debt into your mortgage. You pay it back over a longer term, and total interest can rise even when your monthly payment falls.
Is a cash-out refinance or a home equity loan better for consolidation?
It depends on your current rate. If your first mortgage rate is far below today’s, a second lien often costs less overall. If your rate is near market, a cash-out refinance can be simpler.
Will comparing options hurt my credit?
Not at the start. A soft pull mortgage review, such as Duane Buziak’s NoTouch Credit Pull, is a no credit hit mortgage application step. A hard inquiry comes only when you choose to move forward.
How much equity do I need?
Most cash-out loans leave you with at least 20% equity, because agency programs generally cap at 80% LTV. Second liens depend on combined LTV across both loans.
Can self-employed Florida borrowers consolidate debt?
Yes. Agency loans work if your tax returns support the income. If not, non-QM bank statement loans may qualify you, usually at a higher cost.
Is a HELOC safe for debt consolidation?
It can be, with discipline. The variable rate and the interest-only draw period create payment risk, so set a payoff schedule that clears the balance before repayment begins.
What happens if I cannot pay after moving credit card debt into my mortgage?
Your home becomes the collateral. Unpaid card debt can damage credit, but missed mortgage payments can lead to foreclosure, so be sure the new payment fits your budget with room to spare.
Where to start: compare the cash-out refinance against a second lien
Begin with a mortgage pre-approval without hard pull. Bring your current first-mortgage rate, your balance, and an honest estimate of your home’s value, then ask for a cash-out refinance quote and a second-lien quote side by side. The comparison usually settles the question quickly. A low first rate points toward a second lien, while a near-market rate points toward a refinance. VA, FHA, and non-QM then come into play based on your eligibility, credit, and income documents.
Your dream home in Florida is closer than you think, so let’s turn your homeownership goals into reality with a personalized mortgage solution designed for your unique journey. Get your credit-safe consultation today and discover the loan options that fit your life, backed by trusted guidance every step of the way.