The Quick Read: The VA cash-out funding fee does not change because your loan is jumbo. The percentage depends on whether you have used the VA benefit before, not on loan size. On a cash-out refinance, that means 2.15% for first use and 3.3% for subsequent use, unless you are exempt. A bigger balance simply produces a bigger dollar fee.
“Jumbo” is a lender label, not a separate VA program. It means the loan is larger than the county conforming limit, the cap that applies to conventional loans backed by Fannie Mae and Freddie Mac. VA itself sets no such cap when you have full entitlement. This guide walks through the fee, the 100% ceiling, and the places where the general rule breaks.
What Does “Above the Conforming Limit” Mean for a VA Loan?
It means the new loan is bigger than what a conventional loan could reach in your county. For a VA borrower with full entitlement, that line carries no VA rule. The lender still decides whether to approve the amount. Program figures here are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
The conforming limit is set each year by the FHFA, the agency that oversees Fannie Mae and Freddie Mac. It varies by county. It is the trigger for “jumbo” on conventional loans. On VA loans, it is mostly a lender habit.
The history matters. A federal law took effect at the start of 2020 and removed the effective loan limits for VA-guaranteed loans. VA’s own Blue Water Navy FAQ says so directly. VA Circular 26-19-30 confirms the same law changed the maximum entitlement, the guaranty on larger loans, and the funding fee table.
Across the wholesale programs Lendmire places VA loans with, full entitlement means no VA loan limit. Those programs serve amounts up to $4,000,000 with full entitlement. Individual lenders may set their own caps below that, and the file still has to pass underwriting.
| Factor | VA loan above the limit | Conventional jumbo |
|---|---|---|
| Who sets the cap | Lender (full entitlement) | Lender |
| Mortgage insurance | None | Often required under 20% equity |
| Leverage | Up to 100% of value on cash-out | Typically lower |
| Fee | One-time VA funding fee | None, but other costs |
| Controlling test | Residual income | Debt-to-income and reserves |
How Is the VA Cash-Out Funding Fee Set?
The fee is a percentage of the new loan amount. Two things set that percentage: the loan purpose and whether you have used the VA benefit before. Veterans who receive compensation for a service-connected disability, and the other exempt groups, are not charged the fee.
That is the whole schedule for this loan type. Loan size does not appear in it. Neither does the county. You can confirm the current table on VA’s funding fee and closing costs page.
Here is the part that trips people up. On a purchase, a down payment lowers the fee. The tiers drop to 1.5% with five to under ten percent down, and 1.25% with ten percent or more. A cash-out refinance has no down payment, so those tiers do not apply. Equity in the home does not lower the cash-out fee.
So a bigger balance means a bigger dollar fee at the same percentage. Picture two borrowers, both on their first use of the benefit. One refinances a modest balance. The other refinances a jumbo balance. Both pay 2.15%. The second borrower’s fee is simply larger in dollars, in proportion to the loan.
Nothing about this is a price quote. The percentages are program mechanics, and the Loan Estimate you receive shows the actual figures for your file.
What Is the 100% Ceiling, and How Does the Fee Fit Inside It?
The new loan, including any financed fee, cannot exceed 100% of the home’s reasonable value as VA determines it. The fee counts toward that ceiling. Every dollar of fee you finance reduces the cash you can take out, dollar for dollar. Any piece of the fee that would push the loan past 100% must be paid in cash at closing.
The ceiling is not new, though many pages still describe the old one. The Federal Register rulemaking explains that Congress raised the cash-out cap to 100% in 2008, replacing an older 90% limit. If you read that VA cash-outs stop at 90%, that source is out of date.
Lenders can set tighter caps than VA does. Some stop below 100% as their own policy. That is a lender rule, not a VA rule. The wholesale programs Lendmire works with reach 100% of the appraised value including the financed fee, but each file still goes through lender review.
Here is how the pieces stack, in plain words:
1. The appraisal sets reasonable value. 2. The ceiling is 100% of that value. 3. The new loan equals your payoff, plus any cash you take, plus the financed fee. 4. If that total exceeds the ceiling, something has to give: less cash out, or the fee paid in cash.
A low appraisal hurts more at jumbo size. The ceiling shrinks with the value, and a larger share of your planned cash can disappear. Many homeowners model the cash-out against their own estimate of value. The appraisal is what counts.
Financing the Fee or Paying It in Cash?
You can finance the fee, pay it in cash, or have it waived if you are exempt. Financing keeps cash in your pocket at closing but raises the loan balance. That balance carries interest for as long as you hold the loan. Paying in cash does the opposite.
Neither option adds monthly mortgage insurance, because VA loans have none. The fee is a one-time charge. It is not an ongoing premium.
On a cash-out, financing has one more effect. Because the fee sits inside the 100% ceiling, a financed fee directly reduces your net cash. Paying the fee out of pocket leaves more room under the ceiling.
Think of it as a trade. Financing helps if you need every available dollar of proceeds and are comfortable with a larger balance. Paying cash helps if you want a smaller balance and have savings to spare. Neither is better for everyone. The right call depends on why you are refinancing, which is a conversation to have with a loan officer.
A larger financed balance also means a larger monthly payment. That matters for the underwriting test described below.
How Do Exemptions Change the Picture?
Exemptions can erase the fee entirely, which changes the math more than almost anything else. Veterans who receive or are entitled to disability compensation are exempt. So are certain surviving spouses and active-duty Purple Heart recipients. The exempt status shows on your Certificate of Eligibility (COE), the VA document that confirms your eligibility.
Timing matters. VA Circular 26-23-19 says exemption status should be settled before closing. It also says lenders should not tell a veteran to close now and request a refund later. Refunds depend on your effective date relative to closing and are not guaranteed.
Two cases deserve attention:
- Pending disability claim. If your COE says “Non-Exempt” but a claim is pending, VA tells lenders to request an updated COE before closing.
- Purple Heart evidence. Per Circular 26-19-30, proof must arrive on or before closing. Evidence that arrives afterward does not earn the waiver.
On a jumbo balance, being exempt is worth the most, because the fee being waived scales with the loan. If you think you might qualify, get it sorted before you apply.
Where Does the General Rule Break?
The “no limit” message holds only for full entitlement. It breaks in a few named situations.
Partial entitlement. If part of your entitlement is tied up in another VA loan, the guaranty is computed using the county conforming limit. A larger loan may then need extra equity or cash. This is the one place the county limit still matters. VA’s loan limits page explains the entitlement types, and a loan officer can walk through your specific numbers.
Existing VA loan on the same home. In a VA-to-VA cash-out, the entitlement tied up in the old loan carries into the new one. Whether that leaves you with full or partial entitlement depends on your file.
Refinancing a non-VA loan into VA. A cash-out refinance can replace any loan type with a VA loan, including FHA and conventional. For fee purposes, that is treated as a cash-out, and the cash-out schedule applies.
Lender overlays. Lenders may add their own rules on credit, reserves, or maximum cash-out. These are not VA requirements. VA sets no minimum credit score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders set a higher floor. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Net tangible benefit. A VA cash-out must show a net tangible benefit, meaning the refinance has to leave you better off in a measurable way. Lenders also must give you a loan comparison and a statement of the equity being removed. Removing equity can limit your options if you sell later.
Seasoning. The VA cash-out carries a seasoning requirement of the later of 210 days from the first payment and the 6th payment. That applies to the loan you are refinancing.
How Is a Jumbo VA Cash-Out Underwritten?
Residual income controls the decision. Residual income is what is left of your monthly income after taxes, debts, and housing costs. VA sets a required amount 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.
Underwriting runs in this order:
1. Entitlement check. The lender confirms full or partial entitlement from your COE.
2. Fee status. The lender relies on the exemption status shown on the COE.
3. Appraisal. VA’s process sets reasonable value, and the 100% ceiling follows from it.
4. Credit and income review. The lender reviews your credit against its decision-score floor, plus income and residual income.
5. Net tangible benefit and disclosures. You receive the loan comparison and the equity-removal statement.
6. Fee handling. The fee is financed, paid in cash, or waived. VA will not guaranty the loan until the fee is remitted, unless a statutory waiver applies, per VA Circular 26-21-11.
At jumbo size, the lender looks hard at the larger payment against your residual income. That is where many jumbo files succeed or stall. A higher balance with strong residual income can clear. A thin cushion may not, whatever the loan-to-value looks like.
Key Terms Defined
Full entitlement: Your complete VA guaranty is available because no prior VA loan is using any of it. With it, VA sets no loan limit.
Partial entitlement: Some of your guaranty is tied up in an existing VA loan, so county limits help set how much guaranty remains.
Reasonable value: The home’s value as VA determines it through its appraisal process. The 100% ceiling is measured against it.
Funding fee: A one-time VA charge, a percentage of the loan, that helps fund the program. It goes to VA, not to the lender.
Certificate of Eligibility (COE): The VA document that confirms your eligibility, entitlement, and funding fee status.
Net tangible benefit: A measurable improvement the refinance must give you, such as moving from an adjustable to a fixed loan.
What Does the Decision Look Like in Practice?
Start with three questions. Have you used the VA benefit before? Are you exempt? Is your entitlement full or partial? Those answers set the fee percentage, whether a fee applies at all, and whether the county limit matters.
Then check the equity math against the ceiling. If you finance the fee, plan on less cash. If the appraisal comes in low, plan on even less.
Before you commit, ask any lender these questions:
- Does your program cap cash-out below 100% of value?
- What credit floor do you set beyond VA’s rules?
- How do you treat my entitlement, full or partial?
- Is the fee financed, paid in cash, or waived on my file?
- How does residual income look at the loan size I want?
Common mistakes follow a pattern. Borrowers assume a bigger equity cushion lowers the cash-out fee. It does not. Others plan to claim an exemption refund after closing. VA discourages that route, and refunds are not guaranteed. Some count on an old 90% limit and underestimate their proceeds. Others forget the fee uses up room under the ceiling.
A genuine toss-up exists for borrowers choosing between financing the fee and paying it. The smaller balance is cleaner. The extra cash is flexible. Both are reasonable.
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. You can start with its VA cash-out refinance program page.
Frequently Asked Questions
Does a jumbo balance raise my VA cash-out funding fee percentage?
No. The percentage depends on whether this is your first or a later use of the benefit. On a cash-out, that is 2.15% first use and 3.3% after. A jumbo balance only makes the dollar amount larger, because the fee is a percentage of the loan.
Will a bigger down payment or more equity lower the cash-out fee?
No. Down payment tiers apply to purchases only. A cash-out refinance has no down payment, so equity does not reduce the fee. Your exemption status is what can remove it.
Can I roll the funding fee into the loan?
Yes, within limits. The fee can be financed, but the total loan cannot exceed 100% of reasonable value. Any portion above that must be paid in cash at closing. Financing it reduces your net cash dollar for dollar.
Does VA cap a cash-out loan at the county conforming limit?
Not with full entitlement. VA removed the effective loan limits for full-entitlement borrowers. With partial entitlement, county limits help compute the remaining guaranty, so extra equity or cash may be needed. Lenders also set their own caps, subject to full file review.
What if I think I qualify for the disability exemption but my COE says otherwise?
Ask your lender to request an updated COE before closing. VA tells lenders to do this when a claim is pending. Do not plan to close and claim a refund later, since refunds are not guaranteed.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
2. VA Circular 26-19-30 (Blue Water Navy Act)
3. VA funding fee and closing costs page
4. Federal Register: Revisions to VA Cash-Out Refinance Loans
5. VA Circular 26-23-19 (Funding Fee Exemption and Refund Procedures)
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: VA Cash-Out Occupancy Requirements on an Existing VA Loan · How to Choose a VA Cash-Out Lender for an Existing VA Loan · VA Cash-Out Cap Requirements for Reasonable Value and the Funding Fee
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.