The Quick Read: VA sets no minimum credit score for a cash-out refinance. The lender sets the credit standard, and every cash-out gets full underwriting of credit, income, employment and assets. The wholesale programs Lendmire places VA loans with start at a 580 decision score, subject to lender guidelines and full file review. Having a VA loan already adds two checks on top: the payment history on that loan and the seasoning of the loan being paid off.
What Does a VA Cash-Out Refinance Actually Do?
A VA cash-out refinance replaces your current mortgage with a new VA-backed loan and pays you the difference in cash. VA describes it as a new loan on different terms that can take cash from equity or move a non-VA loan into a VA-backed loan.
VA’s eligibility test has three parts, and all must be true:
- You qualify for a Certificate of Eligibility (COE).
- You meet VA’s and your lender’s standards for credit, income and other requirements.
- You will live in the home being refinanced.
The loan can reach 100% of the appraised value, including the financed funding fee. Across the wholesale programs Lendmire works with, there is no mortgage insurance. With full entitlement, there is no VA loan limit. Details on the VA cash-out refinance program sit on Lendmire’s program page.
Don’t confuse this with the VA streamline refinance. The VA streamline refinance refinances an existing VA loan with no VA appraisal and generally no credit underwriting. It is not a cash-out product. Proceeds generally can’t go to the borrower, with one narrow exception for energy-efficiency improvements. A cash-out gets the full credit review described below.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms your service qualifies you and shows how much entitlement you have available.
Entitlement: The amount VA guarantees to the lender. An existing VA loan ties up part of it until that loan is paid off.
Residual income: The money left each month after the mortgage, debts, taxes and work costs. It is the controlling test in VA underwriting.
Debt-to-income (DTI) ratio: Your monthly debts divided by gross monthly income. VA treats 41% as a guideline, not a cap.
Seasoning: The age of the loan being paid off. It must be old enough before a VA-to-VA cash-out can be guaranteed.
Net tangible benefit (NTB): A defined, real benefit to the veteran from the new loan. Without one, the refinance doesn’t qualify.
Who Sets the Credit Requirement, VA or the Lender?
The lender sets the score floor. VA does not publish a minimum credit score. The federal consumer-finance regulator’s servicemember handout on VA loans points the same way: VA’s own materials describe no fixed credit-history minimum. The VA Lenders Handbook, Chapter 6, requires full credit underwriting on cash-out refinances.
So the standard works in layers.
| Layer | Who decides | What it covers |
|---|---|---|
| VA rules | VA | COE, occupancy, seasoning, net tangible benefit, underwriting method |
| Lender standard | Wholesale lender | Score floor, payment history, derogatory items |
| Your file | You | Payment record, balances, income stability, equity |
Across the wholesale programs Lendmire places VA loans with, the floor starts at a 580 decision score. Some lenders set a higher floor, and some cap cash-out leverage below what VA allows. That is a lender choice, not a VA rule. Two veterans with the same score can get different answers because the score is only one input.
How Does an Existing VA Loan Change the Credit Review?
Your history on the loan you’re refinancing becomes the most important part of your credit file. Underwriters read the mortgage payment record closely, because it shows how you handled this exact obligation.
Two things follow from that.
Payment ledger. Under VBA Circular 26-19-05, lenders must get a payment ledger from the servicer when the loan is within its first year. Older loans are verified through the credit file and servicer records. Either way, late payments on the current loan get attention.
Seasoning. A VA-to-VA cash-out is ineligible for the guaranty if the loan being paid off isn’t seasoned. In the program parameters Lendmire works with, that means the later of 210 days from the first payment and the sixth payment. Think about seven months and six payments, and no less. This applies only to VA-to-VA refinances. It does not apply when a non-VA loan is refinanced into VA. The circular is an older source, so the lender will confirm current wording.
A delinquency on the existing loan is a bigger problem. A refinance of a loan that is 30 or more days past due draws extra review under the Lenders Handbook.
What Parts of the Credit File Matter Most?
Mortgage lates matter most, then recent derogatory items, then balances and inquiries. Underwriters rank these differently than a score does.
| Credit item | Why it matters | What to do |
|---|---|---|
| Mortgage payment history | Direct record on the loan being refinanced | Avoid any late payment before applying |
| Collections, judgments | Show unresolved obligations | Document payoff or resolution |
| Bankruptcy or foreclosure | Lenders look at time elapsed and what has happened since | Gather dates and discharge papers |
| Revolving balances | Add to monthly debt and DTI | Pay down cards before the file goes in |
| Recent inquiries | Signal new debt | Explain any new accounts in writing |
Lender waiting periods after a bankruptcy or foreclosure vary, so ask before you assume you’re in or out. A score above the floor doesn’t rescue a file with a recent mortgage late, and a modest score can work with a clean mortgage record and strong residual income.
How Do Debt-to-Income and Residual Income Work Together?
Residual income controls. DTI is the secondary check. Per VA Handbook Chapter 4, DTI is a guide that shouldn’t automatically trigger approval or rejection on its own.
The 41% figure is the standard in 38 CFR 36.4340. Above it, the file needs justification from the underwriter’s supervisor. The common mistake is reading the residual-income cushion backwards. When residual income exceeds the guideline by at least 20%, the extra scrutiny on a ratio above 41% goes away. It is not an added requirement you must meet.
Across the wholesale programs Lendmire places files with, a ratio above 41% needs residual income well above the table. Compensating factors named in the Handbook include:
- Excellent credit history
- Conservative use of consumer credit
- Minimal consumer debt
- Long-term employment
- Significant liquid assets
- Equity in the refinance
- Little or no increase in shelter expense
- High residual income
- Satisfactory homeownership experience
One cash-out issue deserves a flag. Taking cash out can raise the payment, and a higher payment shrinks residual income. On a file already above 41%, that’s where it tightens.
What Is the Net Tangible Benefit Test?
The new loan has to benefit you in a defined way. Cash alone isn’t the test. The qualifying list in VA’s rules includes things like removing monthly mortgage insurance, a shorter term, lower principal and interest, higher residual income, or paying off a construction loan. A lower interest rate is one of those benefits, but a cash-out often raises the loan balance, so the lender checks the test against your specific numbers.
For the full list and the Type I and Type II cash-out rules, the VA Lenders Handbook Chapter 6 is the authority. In practice, a Type I loan, where the new balance doesn’t exceed the old payoff, carries extra tests on a VA-to-VA refinance. A Type II loan, where you receive equity cash, carries the net tangible benefit test too. Your loan officer will tell you which one your file is.
How Much Can You Borrow, and What Does It Cost?
VA’s limit is 100% of the appraised value, funding fee included. Some lenders cap cash-out lower by choice, which is the overlay issue.
The funding fee on a cash-out refinance is 2.15% for first use and 3.3% for subsequent use, per VA’s funding fee page. A down payment doesn’t lower the refinance fee. The fee can be financed. Veterans receiving compensation for a service-connected disability, and the other exempt groups, don’t pay it. These are program figures, subject to lender guidelines, and not a price quote.
If you still carry an active VA loan on another home, partial entitlement can limit the guaranty. Paying off the existing VA loan with the cash-out retires it and frees up that entitlement. With reduced entitlement, a cash-out at full value works differently, which Lendmire’s piece on a veteran with reduced entitlement covers.
Cash-Out or IRRRL: Which Fits Your Credit?
Credit is the dividing line. The IRRRL generally skips credit underwriting and the appraisal, unless the loan is 30 or more days past due. The cash-out does neither.
| Factor | Cash-out | IRRRL |
|---|---|---|
| Credit review | Full underwriting | Generally none |
| Appraisal | Yes | No VA appraisal |
| Cash to borrower | Yes | Generally no |
| Funding fee | 2.15% first use, 3.3% after | 0.5% unless exempt |
| Loans it can refinance | Any loan type | Existing VA loans only |
If you need cash and your credit is clean, the cash-out fits. If you only want to switch from an adjustable loan to a fixed one and your credit has slipped, the IRRRL may be the easier path. The two products serve different goals.
Where the General Rule Breaks
Some edge cases change the answer.
- Occupancy. The cash-out needs you to live in the home. An IRRRL has different occupancy rules.
- Manufactured homes. A veteran who used VA only for a manufactured home still pays the first-use fee on a later loan, per VA’s funding fee page.
- Homestead states. Some states limit how much equity you can pull out by law. Ask your loan officer if that applies.
- Thin credit. A thin file may still work with strong residual income.
- Recent late payment. A late on the current mortgage is the hardest to overcome, because it speaks to the exact debt being refinanced.
What Does the Decision Look Like in Practice?
Picture three veterans, each with an existing VA loan.
Strong mortgage record, mid-range score. Every mortgage payment on time, balances moderate, a score just above the lender’s floor. The clean history carries the file. Residual income decides the rest.
One recent mortgage late. The score is fine, but the late sits on the exact loan being refinanced. The lender will want a letter of explanation and may require more time with on-time payments first.
High DTI, strong residual income. The ratio runs above 41%. With residual income well above the table and compensating factors documented, the file can still be reviewed favorably. Approval is never certain, and it depends on the lender.
Before applying, gather the COE, recent pay records, two years of employment history, asset statements and your mortgage statement. Pay down revolving balances, avoid new credit, and don’t miss a mortgage payment. Review your credit report for errors.
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.
Frequently Asked Questions
Does VA set a minimum credit score for a cash-out refinance?
No. VA publishes no score floor, and the lender sets one. The wholesale programs Lendmire places VA loans with start at a 580 decision score. Some lenders set higher floors. All of it is subject to lender guidelines and full file review.
Do I need to wait before refinancing my VA loan into a cash-out?
Yes, for a VA-to-VA cash-out. The loan being paid off must be seasoned: the later of 210 days from the first payment and the sixth payment. Think about seven months. Seasoning doesn’t apply when a non-VA loan is refinanced into VA.
Is 41% debt-to-income a hard cap?
No. It is a guideline. VA treats residual income as the controlling test. A ratio above 41% needs stronger residual income and compensating factors, and the underwriter has to justify it.
Can an IRRRL give me cash instead?
Generally no. The IRRRL is for lowering the rate or moving from adjustable to fixed. Proceeds generally can’t go to the borrower, apart from a narrow energy-efficiency exception. For cash, you need the cash-out refinance.
Will paying off my existing VA loan restore my entitlement?
A cash-out that retires the old VA loan frees the entitlement tied up in it. The Lenders Handbook is the authority here, and your COE shows what you currently have available. Speak with a loan officer about your specific numbers.
For your own numbers, 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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References
1. VA.gov – Cash-out refinance loan
2. CFPB’s servicemember handout on VA loans
3. VA Lenders Handbook, Chapter 6 portal
5. VA Handbook Chapter 4, Credit Underwriting
7. VA.gov – Funding fee and closing costs
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: Can a Veteran Get a VA Cash-Out While a Divorce Is Pending? · VA IRRRL vs VA Cash-Out for a Veteran Who Wants a Little Cash · VA Cash-Out Credit Score Requirements for Lender Overlays and LTV
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.