The Quick Read: A VA cash-out refinance replaces your current mortgage with a new VA-backed loan and lets you borrow against your home equity. You need a certificate of eligibility, you must live in the home, and you must pass full income and credit underwriting. The new loan, funding fee included, can reach 100% of the appraised value, subject to lender guidelines and full file review.
This page works as a checklist. Read it top to bottom before you talk to any lender. Each section gives you the gate, why it exists, and what to do if you do not pass it.
VA cash-out estimate
Seeded with an example value, a typical balance, and a round cash request at the first-use fee; change any field.
Editable benchmark: 7.40% as of October 15, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not a VA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the full-value VA cap with the first-use funding fee financed, a thirty-year term at the current Freddie Mac benchmark, and property taxes and insurance estimated at typical national rates. Every field is editable.
Illustrative estimate only — not a Loan Estimate, approval, quote, or commitment to lend. The rate field carries the weekly Freddie Mac thirty-year conventional benchmark, a market reference and not a VA cash-out refinance quote; a VA loan is priced by the lender at lock. The total loan, funding fee included, is capped at the program leverage on the reasonable value; the fee follows the tier chosen. The cash available is what the cap allows less the balances paid off and the fee, before closing costs, which are not included. The HELOC line is the line program’s combined loan-to-value ceiling applied to the same value and balance. Taxes and insurance are editable estimates. The debt-to-income figure is a guideline; residual income decides a VA file. Licensed in sixteen states for consumer mortgages.
The Checklist at a Glance
1. Confirm you have eligibility and get your certificate of eligibility (COE).
2. Confirm the home is your residence and the new loan will hold the first lien.
3. Check that your current loan has aged enough (seasoning).
4. Confirm the refinance gives you a net tangible benefit.
5. Estimate the equity the appraisal may support.
6. Review credit, income and residual income.
7. Understand the funding fee and whether you are exempt.
8. Gather documents and compare lenders.
9. Review the disclosures at application and at closing.
What Is a VA Cash-Out Refinance?
It is a new VA-backed loan that pays off your old one and can put cash in your hand. Per VA.gov, the new loan replaces your current one under different terms. It can take equity out, or it can refinance a non-VA loan into a VA-backed loan.
VA does not lend the money. A private bank, mortgage company or credit union makes the loan, and terms vary by lender. That is why VA tells borrowers to contact several.
This is not a streamline. A streamline skips the appraisal and most underwriting. A cash-out requires both. Lendmire’s VA cash-out refinance program page covers how the brokerage arranges these loans through wholesale lenders.
Is This the Right Loan for You?
Use a cash-out when you want to pull equity out, move a non-VA loan into VA, or do both. Skip it when you only want a lower payment on an existing VA loan. Another VA refinance path fits that better.
| Goal | Fits best |
|---|---|
| Take cash from equity | VA cash-out |
| Move a conventional or FHA loan into VA | VA cash-out |
| Lower the rate on an existing VA loan | VA streamline refinance |
| Borrow without replacing your first loan | Home equity product |
The last row is a real alternative.
Phase 1: Confirm Eligibility and Get Your COE
The certificate of eligibility is your proof of VA eligibility, and VA’s rules on service decide whether you hold one. You can get it through your lender, on VA.gov, or by mail. VA’s eligibility page lists VA Form 26-1880 as the mail-in request.
In practice, the lender usually pulls the COE for you. Ask for that early. It removes one item from your plate.
For active-duty service members, a spouse or dependent can satisfy the occupancy requirement, per VA Loan Guaranty.
Phase 2: The Property and Loan Gates
Four gates apply to the home and the loan you are replacing. Fail one, and you need a fix before you apply.
| Gate | What it means | If you don’t pass |
|---|---|---|
| Occupancy | You live in the home | A second home or rental does not fit this loan |
| Existing lien | A lien exists to refinance | A paid-off home generally does not fit the cash-out structure |
| Seasoning | Time and payments on the loan being replaced | Wait until the loan has aged |
| Net tangible benefit | The refinance must help you in a defined way | Restructure the loan or skip it |
Occupancy. VA requires that you live in the home being refinanced. If you are weighing a rental or second home, occupancy decides the leverage, and this program is built for the home you live in.
Existing lien. A cash-out refinances a lien against the property. The new loan must be secured by a first lien. The old lien can be a VA, FHA or conventional mortgage, current or delinquent.
Seasoning. Seasoning is a minimum time-and-payments test on the loan being replaced. Across the wholesale programs Lendmire places VA files with, the test is the later of 210 days from the first payment and the 6th payment. A loan modification can change how a lender counts it, so ask early.
Net tangible benefit. Every VA cash-out must show at least one net tangible benefit, or NTB. VA’s lender materials list benefits such as shortening the term, lowering the principal and interest payment, removing mortgage insurance, ending an adjustable rate, or refinancing a construction loan. A loan-to-value at or below 90% also counts. VA Circular 26-19-05 says the test applies to all cash-out loans. The lender must also give you required information no later than the third business day after application.
Type I vs. Type II: Why the Label Matters
VA sorts every cash-out into one of two types, and the type changes what the lender must certify.
| Type | Definition | Extra checks |
|---|---|---|
| Type I | New loan, funding fee included, does not exceed the payoff | NTB, seasoning, 36-month fee recoupment (VA-to-VA) |
| Type II | New loan, funding fee included, exceeds the payoff | NTB and seasoning |
Those definitions come from VA Circular 26-19-05. Type II is the one that actually hands you cash. Type I is closer to a restructuring.
A non-VA loan moving into VA skips the seasoning certification. A VA-to-VA refinance does not. That is a real edge when you hold a conventional or FHA loan today.
Phase 3: How Much Equity Can You Reach?
The new loan, including the financed funding fee, can reach 100% of the home’s appraised value. That is VA’s ceiling and the ceiling in the programs Lendmire places files with. The limit is measured against the reasonable value on the Notice of Value, which the appraiser sets.
Some lenders cap lower than VA does. If you hear “VA stops at 90%,” that is a lender choice, not a VA rule. Ask the lender whether any lender-specific cap applies and what it covers.
Three practical points:
- A low appraisal shrinks your cash. Equity is a number the appraiser decides.
- The home must meet VA minimum property requirements.
- With full entitlement, no VA loan limit applies. With remaining entitlement, a down payment may be required, so speak with a loan officer.
Phase 4: Credit, Income and Residual Income
VA sets no minimum credit score. VA says you must meet VA’s and your lender’s standards for credit and income. The wholesale programs Lendmire places VA loans with start at a 580 decision score. Some lenders set a higher floor, so a “no” from one lender is not a “no” from all of them.
Residual income is the controlling test. It is the money left each month after your taxes, debts and housing costs, measured against a VA table by family size and region. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
Expect full underwriting. Recent pay stubs are on VA’s list, and lenders add more.
Phase 5: Funding Fee and Costs
The VA funding fee is a one-time charge. You can finance it, but it counts toward the 100% ceiling. These are the parameters on a cash-out refinance:
| Use | Funding fee |
|---|---|
| First use | 2.15% |
| Subsequent use | 3.3% |
| Exempt veterans | Waived |
Veterans receiving compensation for a service-connected disability are exempt, along with the other exempt groups. Confirm your status early. It changes the loan amount.
There is no mortgage insurance on a VA loan. Other closing costs exist, and you will see them itemized on your Loan Estimate and Closing Disclosure. Compare those two documents line by line across lenders.
Phase 6: Gather Documents and Choose a Lender
Most lenders ask for the same core items. Bring these:
- Certificate of eligibility (or let the lender pull it)
- Recent pay stubs
- Mortgage statement for the loan being replaced
- Bank or asset statements
- W-2s and other personal-income documentation, where the lender requests them
- Photo ID
Situational items depend on your file. Self-employed borrowers usually add business documents. Disability-income recipients add award letters. A past bankruptcy or divorce adds the related paperwork.
When you compare lenders, ask four things: What is your seasoning count? What loan-to-value do you cap at? Do you add credit overlays? How is the funding fee shown?
Watch for misleading offers. VA warns that claims you can skip payments, or unusually low rates, may signal a bad offer. A mortgage broker works with several wholesale lenders, so comparing is part of the job.
Phase 7: Appraisal, Underwriting and Closing
The sequence runs in one direction: you apply, the lender orders the appraisal, underwriting reviews your credit, income and the Notice of Value, then you close.
On VA’s side, the lender must give you the cash-out comparison disclosure at application and again at closing. It compares the new loan amount with the payoff and shows how the old and new loans differ. Read it. It is the cleanest summary of what you are trading.
Before you sign, check four things:
- The new loan amount matches what you expected, funding fee included.
- The payoff of the old loan is correct.
- The cash to you matches your plan.
- The term and loan type are what you agreed to.
Your old loan is paid off at closing, and a new first lien takes its place. State law can limit cash-out in some states, so ask whether any restriction applies where you live.
A Worked Example
Say your home appraises at a value that supports a 100% loan-to-value ceiling. Your current mortgage is a conventional loan at roughly 60% of that value. The funding fee is financed at the first-use cash-out tier.
The fee sits inside the 100% ceiling, so it uses part of your available equity. Your cash is the ceiling, minus the old payoff, minus the financed fee, minus any other financed costs. Because the new loan exceeds the payoff, this is a Type II cash-out.
If you were exempt from the funding fee, that slice of equity would go to you instead. Exemption status moves the outcome more than most borrowers expect.
Why Applications Stall
| Problem | What to do |
|---|---|
| Recent loan has not seasoned | Wait for the count, or ask about the non-VA path |
| Low appraisal | Review the appraisal; ask about a reconsideration |
| Residual income short | Pay down debts or adjust the amount |
| COE missing | Request it through the lender or VA.gov |
| No clear NTB | Change the term or structure |
Key Terms Defined
Certificate of eligibility (COE): The VA document that proves you qualify for a VA home loan benefit.
Net tangible benefit (NTB): A defined improvement the refinance must give you, such as a shorter term or a lower payment.
Seasoning: The minimum time and payments a loan must have behind it before it can be refinanced.
Residual income: The money left each month after taxes, debts and housing costs.
Funding fee: The one-time VA fee on the loan, which can be financed and is waived for exempt veterans.
Type I and Type II: VA’s labels for whether the new loan stays at or below the payoff, or exceeds it.
Frequently Asked Questions
Can I do a VA cash-out refinance on a home with no mortgage?
Generally no. The program refinances a lien against the property, so a paid-off home does not fit the structure. A home equity product may suit that situation better.
Does the home have to be my primary residence?
Yes. For active-duty members, a spouse or dependent can satisfy occupancy.
Does a cash-out use up my entitlement?
It can, depending on your loan and the entitlement you have left. With full entitlement, no VA loan limit applies. With remaining entitlement, a down payment may be required, so speak with a loan officer about your file.
Can the funding fee be waived?
Yes, for veterans receiving compensation for a service-connected disability and the other exempt groups. If you are not exempt, the cash-out fee is 2.15% on first use and 3.3% after, and it can be financed.
Can I refinance a non-VA loan into a VA loan?
Yes. A conventional or FHA loan can move into a VA-backed cash-out, subject to lender guidelines and full file review. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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. Program details are subject to lender guidelines, and nothing here is a commitment to lend.
To see how a cash-out refinance fits the home you live in, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
1. VA.gov — Cash-out refinance loan
2. VA.gov — Eligibility for VA home loan programs
This article is part of Lendmire’s VA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can an Eligible Surviving Spouse Refinance With a VA Cash-Out? · Can a Veteran With a Low Mortgage Get a VA Cash-Out After a Listing? · Can a Veteran With a VA Loan Spend VA Cash-Out on Anything?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.