The Quick Read: A VA cash-out refinance has two separate gates. Seasoning applies to the loan you are paying off, when that loan is a VA loan. The funding fee depends on whether this counts as your first use or a later one. Restoring your entitlement does not change the age of the old loan. Your Certificate of Eligibility and your lender confirm which fee tier applies.
Seasoning and the funding fee get lumped together because both show up at the same point in the file. They are unrelated tests. One asks how old the loan you are replacing is. The other asks how many times you have used the benefit. Restored entitlement touches the second question and leaves the first alone.
This guide walks through the mechanics in order. It also names the edge cases where the general rule bends. Across the wholesale programs Lendmire places VA files with, these are the spots that trip up borrowers who already hold a VA loan. The page covers the VA cash-out refinance program as it works for a home you live in.
Key Terms Defined
Seasoning is the age test on the loan being refinanced. VA wants proof that the old loan has been around long enough and paid on time.
Entitlement is the amount of guaranty VA backs for you. Using it on a loan ties it up until the loan is paid off or the benefit is restored.
Restored entitlement means VA has made your used entitlement available again. This usually follows a payoff.
First use and subsequent use describe how many times you have used the VA loan benefit. The funding fee tier turns on this.
Net tangible benefit is the requirement that the new loan must leave you financially better off in a way VA recognizes.
Reasonable value is the value VA’s appraiser assigns to the home. It sets the ceiling on the new loan.
What Is a VA Cash-Out Refinance?
A VA cash-out refinance replaces your current mortgage with a new VA-backed loan and lets you borrow against your equity. The new loan can reach 100% of the home’s appraised value, and that figure includes any financed funding fee. It can pay off any loan type, VA or not.
The rules come from federal law and VA’s regulation. Under 38 CFR 36.4306, the loan cannot exceed 100% of the reasonable value VA determines. It must also provide a net tangible benefit, and the lender must give you a test showing that benefit.
You must also live in the home. VA’s cash-out loan page says you need a Certificate of Eligibility, you must meet credit and income standards, and the home must be your residence. That page also warns that closing costs can add up to thousands of dollars.
How Does the Loan Get Underwritten, Step by Step?
The deal works through the same checks in roughly the same order. Here is the sequence.
1. Identify what is being paid off. The type of loan decides whether VA seasoning applies. A VA loan triggers it. A non-VA loan generally does not.
2. Pull the COE and entitlement status. The Certificate of Eligibility shows what you have used and what remains.
3. Run the seasoning check if a VA loan is being paid off. The lender needs a payment ledger or a credit supplement.
4. Deliver the net tangible benefit test and the cash-out disclosures.
5. Order the VA appraisal. Reasonable value sets the ceiling. The total loan, financed fee included, is divided by that value.
6. Underwrite credit, income and residual income. Residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap, and a higher ratio needs residual income well above the table.
7. Request the guaranty. VA’s system determines the cash-out type and checks for a benefit.
On the wholesale side, the programs Lendmire works with start at a 580 decision score. VA itself sets no minimum score, so that floor is lender-side. Every figure here is subject to lender guidelines and a full file review. Nothing here is a commitment to lend.
How Does VA Seasoning Work?
Seasoning is measured on the old loan, counted from its first payment due date, not from the closing date. VA Circular 26-19-22 says the loan is seasoned when two conditions are both met at the closing of the refinance. The first payment due date must be at least 210 days earlier, and six consecutive monthly payments must have been made.
Both halves matter. Waiting 210 days without six payments on record does not pass. Six payments inside a shorter window does not pass either. The later of the two controls, which matches how the wholesale programs read it.
VA’s own example shows the arithmetic. A loan closed on March 8 had its first payment due May 1. After six consecutive payments, it was seasoned on November 27. Notice that the clock started at the due date in May, not at the March closing.
Who actually gets a seasoning check?
VA’s cash-out guide requires a seasoning certification when the loan being paid off is a VA loan. When a non-VA loan is being refinanced into VA, the guide lists a net tangible benefit and disclosures, with no seasoning step. A non-VA loan can still carry timing rules on the lender side. Those are overlays, not VA requirements.
Why does the rule exist?
Seasoning is federal law, not a lender preference. VA’s interim final rule described the statute as directing VA to define net tangible benefit, recoupment and seasoning for cash-outs. VA’s Inspector General described the purpose as stopping unnecessary serial refinancing. One audited loan failed because it closed about three weeks short of the 210-day mark.
How does the lender prove it?
In an audit, VA looks for a payment ledger or a credit bureau supplement. Have one ready. A borrower who cannot show six consecutive payments has a problem no matter how many days have passed.
What Decides the Funding Fee on a Cash-Out?
The funding fee on a VA cash-out is 2.15% for first use and 3.3% for subsequent use. VA News confirms both figures. The down payment never changes them. The reduced tiers for 5% or 10% down apply to purchases, not refinances. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The fee is a one-time charge paid to the VA program. It exists because VA loans carry no down payment requirement and no monthly mortgage insurance. It is not a lender fee, and the lender’s own charges are separate.
| Situation | Cash-out funding fee |
|---|---|
| First use of the benefit | 2.15% |
| Subsequent use | 3.3% |
| Veteran with a service-connected disability rating paid compensation | Waived |
| Other exempt groups listed by VA | Waived |
You can pay the fee at closing or finance it into the loan. Financing it raises the balance. The balance must still fit under the 100% reasonable-value ceiling, so a large financed fee can cap how much cash you take out.
What Does Restored Entitlement Change?
Restoration changes how much entitlement you have available. It does not reset the age of the loan you are paying off, and it does not change the seasoning rules. The two tracks stay separate.
There are two common routes. The first is a full restoration after you sell the home and pay off the loan. The second is a one-time restoration when you have paid off the VA loan but still own the home. The instructions for VA Form 26-1880 describe this second path as one-time only. That form frames it around buying another home as a primary residence.
| Route | What happens | Limit |
|---|---|---|
| Sell and pay off | Entitlement can generally be restored | Home is no longer owned |
| Pay off, keep the home | One-time restoration | Once only |
VA usually learns of a payoff on its own, though proof of payment is sometimes needed. A lender reading your COE will show what is available. For a regular cash-out where a prior VA loan is paid in full, lenders also treat the payoff as a basis for restoration. Your loan officer confirms the exact path against current VA guidance.
Does restoration reset the fee tier?
This is where online pages contradict each other. Some say a restored entitlement still counts as subsequent use. Others say the opposite. VA’s published pages say only that the cash-out fee depends on first versus subsequent use, and they do not clearly settle the restoration question.
So the honest answer is that your COE and your lender confirm which tier applies. Do not plan your cash-out numbers around an assumed reset. Ask for the tier in writing before you decide.
Where Does the General Rule Break?
Several edge cases change the answer. These are the ones that come up most often on real files.
Which date starts the clock. An earlier VA circular counted from the date the first payment was made. Circular 26-19-22 counts from the first payment due date. A later statute clarified the point. Older advice online may use the wrong date.
Forbearance months. VA guidance says CARES Act forbearance periods cannot count toward seasoning on cash-outs that refinance a VA loan. A borrower who paused payments may have fewer qualifying months than the calendar suggests.
Different loan types. Some sources describe different seasoning tests for different cash-out types. The lender confirms the exact test from current VA guidance, so lean on that rather than on a blog.
A non-VA payoff. When you refinance a conventional or FHA loan into VA, there is no VA seasoning certification. VA still requires at least one recognized net tangible benefit. Critics of the rule note that standards are lighter for non-VA payoffs than for VA-to-VA loans.
Thin equity. Borrowing to 100% of reasonable value leaves no cushion. VA’s page urges borrowers to understand how the new loan relates to the home’s value. A financed fee eats into the same ceiling.
Occupancy. A cash-out requires you to live in the home. A restored-entitlement purchase, by contrast, needs the new home to be a primary residence.
What Does the Decision Look Like in Practice?
Picture a veteran with a VA loan on a home they live in. They paid it down, kept the home, and want cash for repairs. Seasoning applies, because a VA loan is being paid off. The fee tier depends on whether this counts as a first or later use, and the COE answers that.
Say another veteran sold a prior home, restored entitlement, and bought a new one with a VA loan. A year later they want to cash out. The new loan has its own first payment date, so seasoning counts from that date. The fee tier still depends on the use count, so the lender confirms it.
Consider a third borrower with a conventional loan on a home they occupy. No VA seasoning step applies when refinancing into VA. The net tangible benefit test and the disclosures do. The decision there is mostly about the 100% ceiling and the funding fee.
| Your situation | Seasoning check? | Fee tier | Verify |
|---|---|---|---|
| Paying off a VA loan, first use | Yes | 2.15% | Payment history |
| Paying off a VA loan, prior use | Yes | 3.3% | COE and use count |
| Paying off a non-VA loan | Generally no | Per use count | COE |
| Disability-exempt veteran | Per loan type | Waived | Exemption proof |
A fair question is whether a VA cash-out or a conventional cash-out is the better fit. It is a real toss-up in some files, since the VA option reaches higher leverage but carries a funding fee.
If seasoning is not met, the lender cannot get the guaranty. A closing date may need to move, or the loan may need to wait. That is a timing problem you can see coming, so check the first payment date and payment history before you apply.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Common Misconceptions
“Seasoning is a lender overlay.” It is a federal requirement for VA-to-VA refinances.
“It is 210 days from closing.” The count starts from the first payment due date on the old loan.
“A bigger down payment cuts the cash-out fee.” It does not. Reduced tiers are for purchases.
“Restoration is automatic and unlimited.” The no-sale route is a one-time exception.
“Forbearance months count.” VA guidance says they cannot count toward seasoning.
“The funding fee is a lender fee.” It goes to the VA program.
Frequently Asked Questions
Does restoring my entitlement restart the 210-day seasoning clock?
No. Seasoning measures the age of the loan being paid off, counted from its first payment due date. Restoration changes your entitlement balance, not the age of any loan. A new loan, however, has its own clock that starts from its own first payment.
Is the cash-out funding fee lower if I restored my entitlement?
Your COE and lender confirm that. VA publishes a first-use tier and a higher subsequent-use tier for cash-out refinances. Get the tier confirmed before you rely on it.
Can I roll the funding fee into the loan?
Yes. The fee can be financed or paid at closing. A financed fee raises the balance, and the total must still sit within 100% of reasonable value. A large financed fee can reduce the cash you take out.
Does seasoning apply if I am paying off a non-VA loan?
Generally no. VA’s guide lists seasoning only for VA loans being paid off. You still need a net tangible benefit and the required disclosures. A lender may apply its own timing rules on top.
What if I am a few weeks short of seasoning?
VA cannot guarantee an unseasoned refinance, so the title-recording date generally has to move. VA’s Inspector General found one loan that failed by about three weeks. Count from the first payment due date and confirm six consecutive payments.
Next Step
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. Lendmire is a mortgage broker, so the answer depends on lender guidelines and a full review of your file.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. VA cash-out refinance loan page
5. VA News: funding fee who pays
6. VA Form 26-1880 instructions
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 Much a VA Cash-Out Releases on Restored or Partial Entitlement · Can You Use VA Cash-Out for the Next Home on Partial Entitlement? · How to Use a VA Cash-Out With Partial or Restored Entitlement
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.