The Quick Read: There is no single national dollar figure. The amount comes from a VA table that changes by region, family size and loan size, and a cash-out is tested against the new, larger payment. Most cash-outs land in the $80,000-and-above loan tier. A bigger loan means a bigger payment, and that leaves less money each month for the family. The table is a guide the lender weighs with credit, income and housing history. It is not an automatic pass or fail.
What Residual Income Means on a Cash-Out
Residual income is the money left each month after taxes, debts, job-related costs and the housing payment. That money pays for food, clothing, gas, utilities and everything else a family spends on. VA’s Lenders Handbook, Chapter 4 defines it this way, and the lender records the table amount on VA Form 26-6393, the Loan Analysis, as the balance available for family support.
A VA cash-out is typically fully underwritten, which is a key difference from the streamline refinance. The interest rate reduction loan (IRRRL) often involves limited underwriting, subject to lender and VA guidelines, so residual income rarely comes up there. On a cash-out, it is typically a controlling test.
Here is the catch that most online charts skip. The test runs on the new payment, not your current one. Borrow more, and the payment goes up. Residual income goes down by the same amount. Everything else in the file stays the same.
How the Loan Is Underwritten, Step by Step
Across the wholesale programs Lendmire places VA files with, the sequence is the same on nearly every cash-out. Here is how it runs.
1. Eligibility. The certificate of eligibility (COE) from VA decides whether you qualify. Service requirements are VA’s rules, not the lender’s.
2. Appraisal and value. The new loan is measured against the reasonable value VA sets on the Notice of Value. The VA cash-out reaches 100% of that value, including a financed funding fee. 38 CFR 36.4306 sets that 100% ceiling. Any lower cap is lender policy.
3. Funding fee. On a cash-out the fee is 2.15% for first use and 3.3% after that. It is waived for veterans receiving compensation for a service-connected disability and the other exempt groups. The fee can be financed, but any part that pushes the loan past 100% of value must be paid in cash at closing.
4. Net tangible benefit. The new loan must be in your financial interest. Typical paths include dropping monthly mortgage insurance, a shorter term, or a lower rate. The regulation also requires that fees and costs be recouped within 36 months. VA Circular 26-19-05 covers how the loan-to-value figure and the benefit test work.
5. Seasoning. If you are refinancing a VA loan, it must be seasoned. The test is the later of 210 days from the first payment or the sixth payment. A loan that is not seasoned at closing is not guarantee-eligible.
6. Income, debts and residual income. The underwriter totals your stable income, subtracts taxes and job costs, then subtracts the new housing payment and monthly debts. What is left is compared with the table.
7. Credit decision. Wholesale programs start at a 580 decision score. VA itself sets no minimum score. Lenders add their own floors, and some set a higher one.
The VA cash-out refinance program page lays out the leverage and entitlement side. The rest of this piece stays on the residual income test.
What the Table Depends On
Three things set your required amount.
- Region. The table has four regions: Northeast, Midwest, South and West.
- Family size. The count is people in the household, with some exceptions covered below.
- Loan size. The handbook splits the table at $79,999 and below versus $80,000 and above. Almost every cash-out lands in the higher tier.
The dollar amounts rise with each added person. They also rise with loan size. The tables rest on federal spending survey data about what families spend on essentials. The handbook is the only place to pull the exact numbers. Many lender sites print slightly different or dated versions, so check the handbook for your region and family size instead of relying on a chart you found elsewhere.
One warning on lookups. The lower-tier numbers get copied around the web more often. If a table shows a family of four needing a figure in the high hundreds, it is probably the under-$80,000 tier. A cash-out borrower should read the $80,000-and-above column.
Residual Income vs. DTI
These are two different tests built on two different bases.
| Test | Starts with | What it asks |
|---|---|---|
| Debt-to-income (DTI) | Gross monthly income | What share goes to debts? |
| Residual income | Income after taxes and job costs | How many dollars are left? |
The 41% DTI figure is a guideline, not a cap. A ratio above it needs residual income well above the table. The handbook’s standard compensating factor for DTI above 41% is residual income at least 20% over the table amount. So a family with a high ratio but a strong cushion can still work. A family with a modest ratio and a thin cushion may not. Lendmire’s piece How to Get a VA Cash-Out Above the DTI Guideline on Residual Income goes deeper on that case.
Counting Family Size Correctly
Wrong family count is one of the most common errors on a worksheet. The default is everyone who lives in the household and depends on the borrower. The handbook allows the lender to leave out people who are fully supported by verified income that is not counted in effective income. Two examples:
- A non-obligated spouse who has enough stable income of their own.
- A child who receives regular child support or foster care payments.
The handbook’s own example is a county or state stipend for two foster children. In that case a family size of two is used instead of four. A smaller family size lowers the table amount, so this can matter. It must be documented, though. A lender will not drop a person from the count on your say-so.
Going the other way, a new baby or a dependent parent who moves in raises the count. Tell the loan officer early.
Where the General Rule Breaks
Some situations move the number or change the test entirely.
- Military-facility reduction. The table amount is reduced by at least 5% for active-duty or retired servicemembers who will clearly keep using nearby military facilities, unless the local VA office sets a higher percentage. Read the table instructions in the handbook.
- Income that does not count. Temporary items such as VA education allowances, including the Post-9/11 GI Bill, and unemployment compensation are excluded from effective income.
- Rental-property reserves. If you own a rental and the file needs PITI reserves on it, cash-out proceeds cannot count as those reserves. The funds must already sit in your account before closing.
- IRRRL. Mostly exempt from underwriting. That is a program difference, not a loophole you can use on a cash-out.
- Type I and Type II cash-outs. VA treats cash-outs differently depending on how the new loan compares with the payoff. The Federal Register rule explains the split.
- Funding fee exemptions. Veterans who receive VA disability compensation, and some others, owe no funding fee. VA News lists the exempt groups. That cuts the loan balance, which helps the payment.
- Marginal numbers. If the family lands just under the table, the handbook says the lender weighs credit and prior housing-payment history. Inadequate residual income alone can still be grounds to decline, though.
A Family Scenario, Before and After
Picture a household of four with a steady income and a car loan and credit card payments. Their current mortgage payment leaves them comfortably above the table. They want cash out for a roof and to pay off the cards.
Walk through what changes in the file:
| Item | Before | After cash-out |
|---|---|---|
| Loan balance | Current | Larger (cash plus financed fee) |
| Housing payment | Current | Higher |
| Monthly debts | Car plus cards | Car only |
| Residual income | Starting level | Depends on net of the two |
Two forces pull in opposite directions. The larger loan raises the payment. Paying off the cards removes debt payments from the file. If the card payments were big, residual income can stay flat or even improve despite the larger mortgage. If the cash goes to a vacation or a new truck, only the payment grows and the cushion shrinks.
That is why the lender looks at what the cash does, not only how much of it there is. Underwriters count the debts you pay off at closing as gone. They do not count debts you plan to pay off later.
Working Backward: How Much Cash Can You Take?
Flip the question. Start with the table amount for your region and family size. Add 20% if your DTI will run above 41%. Then subtract it from the income left after taxes, job costs and other debts. What remains is the most the housing payment can be. A larger payment than that fails the test.
That ceiling, not the 100% value limit, is usually what stops a cash-out. Equity may allow it. The family budget may not. Borrowers with high equity who think the cap is the appraisal often find the cap is residual income. For what the borrower actually walks away with, see Lendmire’s piece How Much a VA Cash-Out Nets After the Funding Fee and Closing Costs.
If the Number Falls Short
Options a lender will review, subject to lender guidelines and full file review:
- Take less cash. A smaller loan means a smaller payment. This is the cleanest fix.
- Pay off debts at closing. Retiring installment or revolving accounts removes their payments from the file.
- Add qualifying income. Stable income from another borrower can raise the left-over amount.
- Check the family count. If someone qualifies for the exclusion, document it.
- Strengthen the credit story. The handbook allows lenders to weigh a clean credit and housing payment history on marginal files.
- Skip the financed fee if you are exempt. Confirm exemption status on the COE.
Each of these has trade-offs. A smaller cash-out may not cover the project. Paying off debt uses equity. Talk it through with the loan officer before the appraisal, not after.
What the Lender Will Ask For
Expect to provide income documents, credit authorization, asset statements, the COE, and details on every monthly debt and on any dependents or child care you pay. The file will also carry the appraisal and Notice of Value, the net tangible benefit worksheet, and the Loan Analysis on VA Form 26-6393.
Under TRID, which applies to consumer mortgages like this one, you receive a Loan Estimate and later a Closing Disclosure. The net tangible benefit information must be provided at the stages the lender is required to disclose it, including at closing, per VA Circular 26-18-30, and exact timing varies by file and lender.
Five-Minute Self-Check
Run this before you apply.
1. Write down your monthly take-home after taxes and job-related costs.
2. List every monthly debt that will remain after closing.
3. Estimate the new housing payment on the larger loan, including taxes and insurance.
4. Subtract steps 2 and 3 from step 1.
5. Compare the answer with the handbook amount for your region, family size and the $80,000-and-above tier.
If the answer is close, ask about the cushion rule. If it is well under, reduce the cash amount and run it again. This is a rough check, not a decision. The lender’s calculation controls.
Key Terms Defined
Residual income: The money left each month after taxes, debts, job costs and the housing payment.
Loan Analysis (VA Form 26-6393): The VA worksheet where the lender records the table amount and the underwriting result.
Net tangible benefit: The test that the new loan puts the borrower in a better position, such as a shorter term or the end of mortgage insurance.
Reasonable value: The value VA sets through its appraisal. It is the base for the 100% limit.
Seasoning: The waiting period after the first payment before a VA-to-VA refinance becomes eligible.
COE: The certificate of eligibility issued by VA that confirms service-based entitlement.
Frequently Asked Questions
Does a VA cash-out require residual income?
Yes. A cash-out is fully underwritten, and residual income is the controlling test.
Is there one minimum for the whole country?
No. The amount varies by region, family size and loan size. Most cash-outs fall in the $80,000-and-above tier, so read that column of the handbook table for your region.
What if my debt-to-income ratio is above 41%?
The 41% figure is a guideline. A higher ratio needs residual income well above the table. The handbook’s standard cushion is at least 20% over the table amount. The lender still weighs credit and housing history.
Does paying off debts with the cash help?
Often. Debts retired at closing drop out of the monthly total, which can offset a bigger mortgage payment. The result depends on how large those payments were compared with the payment increase.
Can I fail residual income and still be approved?
The table is a guide, not an automatic pass or fail. The lender weighs it with all other credit factors. Inadequate residual income alone can still be a reason to decline. Every outcome is subject to lender guidelines and full file review.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare the programs and the equity each one reaches. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit. For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
For the program’s current guidelines, see VA loan programs.
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References
1. VA Pamphlet 26-7 Chapter 4, Credit Underwriting
5. VA News: funding fee deduction and exemptions
This article is part of Lendmire’s VA Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How to Check Entitlement and Get Your COE Before a VA Cash-Out · VA IRRRL vs VA Cash-Out for a Veteran Who Wants a Little Cash · How Much a VA Cash-Out Nets After the Funding Fee and Closing Costs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.