The Quick Read: A VA cash-out on a New York co-op is not available under current rules, so a CEMA never comes into play. A co-op is shares in a corporation plus a proprietary lease, not real property, and VA-guaranteed loans cover real property. A veteran who owns a co-op has to look at other ways to tap equity. A veteran who owns a condo or a one-to-four unit home in New York can still use the VA cash-out, and that is where the CEMA question is real.
Why Is a Co-Op Different From Every Other Home?
A co-op owner does not hold a deed. The owner holds shares in a corporation and a proprietary lease that gives the right to occupy one unit. Military.com describes this structure and notes why VA borrowers have run into it in cities where co-ops make up much of the housing stock.
That one fact drives everything else here. A VA cash-out refinance replaces an existing loan secured by a lien of record on real property. A co-op loan is secured by stock and a lease. There is no recorded mortgage on the unit to replace.
The Congressional Research Service describes the VA-guaranteed “dwelling” as a home with up to four units, a single condominium unit, a manufactured home classified as real property, or a farm residence. Co-ops are not on that list.
Did VA Ever Guarantee Co-Op Loans?
Briefly, yes, on a trial basis. A pilot authority let VA guarantee loans to buy shares in a cooperative housing corporation. Rep. Malliotakis’ office says the pilot started in 2006, expired in 2011, and has not been renewed. Her release is advocacy, so read it as a statement of where the law stands plus a policy position.
The conclusion rests on the statute, the lapsed pilot, and the definition of a dwelling. Lenders on the VA side treat co-ops as outside the program.
Is There a Bill That Would Change This?
There is proposed legislation. H.R. 1803, the Fair Access to Co-ops for Veterans Act, would revive and make permanent VA’s authority to guarantee co-op share loans. Its latest recorded action is a subcommittee vote forwarding it to the full committee. Its status is still “Introduced.”
It is not law. Nothing in it changes what a lender can do today, and the bill’s terms could change before any vote. Do not plan a refinance around a bill. Check the Congress.gov page before you act, because status changes.
What Is a CEMA, and Why Doesn’t a Co-Op Use One?
A CEMA, a consolidation, extension and modification agreement, combines your existing mortgage with the new one into a single obligation. New York charges a mortgage recording tax when a mortgage on real property is recorded. With a CEMA, the tax applies only to the new money, not the whole balance. The New York Department of Financial Services explains the mechanics under Tax Law § 255.
Co-ops fall outside this. The NYC Department of Finance says in its mortgage recording tax report that mortgages on individual cooperative apartments do not carry the tax. No tax means nothing to reduce. A CEMA has no job to do on a co-op loan.
So “without a CEMA” is the normal state of affairs for a co-op, not a workaround. The question the title raises answers itself: you do not need one, and you cannot use one.
What Can a Veteran Co-Op Owner Do Instead?
The VA cash-out is closed to you on the unit you own. Your options sit outside the VA program. Co-op share loans are a separate kind of financing, secured by the shares and the proprietary lease, with their own lender guidelines, paperwork and building review. A share loan avoids the mortgage recording tax because there is no recorded mortgage. Each lender sets its own terms, so compare them directly.
Lendmire is a mortgage broker and arranges FHA, VA, conventional and jumbo loans through wholesale lenders. Co-op share-loan terms are not part of the VA parameters here, and availability depends on the lender and the property’s location, so ask a loan officer which options exist for your building before you assume anything.
Two cost points matter for the budget:
- Monthly maintenance and assessments sit on top of whatever loan payment you carry. Assessments can be significant, so ask the managing agent for the building’s current maintenance and any pending assessments.
- Building-level review is part of any co-op loan. The lender looks at the corporation, not only at you.
What Does a VA Cash-Out Look Like on a Condo or 1–4 Unit Home?
If you own a condo or a one-to-four unit home, the VA cash-out refinance program is on the table. Here is how the loan works across the wholesale programs Lendmire places files with. See the VA cash-out refinance program page for the full overview.
1. Confirm the property type. Read your title documents. A condo has a deed. A co-op has shares and a lease.
2. Confirm there is a lien of record. The VA cash-out refinances existing debt secured by a lien. The VA Lenders Handbook covers refinancing in chapter 6. A property with no existing mortgage is not eligible for this loan.
3. Check your certificate of eligibility. VA’s COE decides eligibility. Service requirements are VA’s rules.
4. Order the appraisal. The VA cash-out reaches 100% of the appraised value, including the financed funding fee, subject to lender guidelines.
5. Run full underwriting. Residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
6. Show a net tangible benefit. The refinance has to help you in a way the lender can document.
7. Meet seasoning. The loan carries seasoning of the later of 210 days from the first payment and the sixth payment.
8. For a condo, confirm the project. The condo project has to be VA-accepted. The lender confirms this. You cannot fix it yourself.
Every parameter here is subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Should a New York Condo Owner Use a CEMA?
This is the real CEMA decision, and it applies only to condos and one-to-four unit homes. You have two paths:
| Path | What happens | Recording tax |
|---|---|---|
| CEMA | Old and new mortgage combined | On new money only |
| Payoff and replace | Old loan paid off, new one recorded | On the full new loan |
A CEMA needs cooperation from your existing lender. If that lender does not cooperate, or the paperwork does not line up, the file falls back to payoff and replace. Ask early whether your current servicer will assign the old loan. The tax amount is a New York State and NYC matter, so confirm it with the title company rather than estimating it.
One caution. In the VA structure, the cash-out replaces the old loan with a new VA loan. Whether a CEMA fits depends on how the lender and title company structure the file. Treat it as a question for them, and raise it before the appraisal is ordered.
Where Does the General Rule Break?
Four edge cases come up.
Condo-ops. Some New York buildings are described as co-ops or condo-ops. How a unit is titled decides whether it is real property. Verify the title with a lender and a New York attorney before you spend money on an appraisal.
A VA loan on another property. If you own a co-op and also hold a VA loan on a different home, the co-op still cannot be guaranteed. Entitlement and occupancy questions are separate.
Manufactured homes. These qualify when state law classifies them as real property, per the Congressional Research Service.
Type I and Type II cash-outs. The handbook separates them, and they carry different requirements. A Type I loan does not exceed the payoff of the loan being refinanced, including the funding fee. Your lender will tell you which one your file is.
What Costs Should a Condo or Home Borrower Expect?
The VA funding fee can be financed. It is waived for veterans receiving compensation for a service-connected disability and for the other exempt groups. On a cash-out refinance it is 2.15% for first use and 3.3% for subsequent use. Because it is financed into the loan, it reduces the cash you walk away with.
VA cash-out refinances carry no mortgage insurance of any kind. 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. Full entitlement means no VA loan limit.
This is a consumer mortgage, so you receive a Loan Estimate and a Closing Disclosure. Read both against your own budget.
Key Terms Defined
CEMA: A consolidation, extension and modification agreement that merges old and new mortgages so recording tax applies only to new money.
Proprietary lease: The lease that gives a co-op shareholder the right to occupy a specific unit.
Lien of record: A recorded claim on real property, such as a mortgage.
Net tangible benefit: A documented improvement to the borrower’s position that justifies refinancing.
Residual income: The money left each month after major obligations, which is the controlling VA underwriting test.
Funding fee: A one-time VA charge that can be financed into the loan unless the borrower is exempt.
When Is a VA Cash-Out the Wrong Tool?
It is the wrong tool in three situations. First, your home is a co-op. Second, you have no existing mortgage or lien. Third, you only want a lower rate or a shorter term on an existing VA loan. That is an IRRRL, which has no cash out and carries a 0.5% fee unless exempt.
If cash is the goal and the property is a co-op, ask a loan officer what share-loan options fit your building. Do it before you pay for an appraisal. Ask whether the lender takes co-ops at all, what its building review looks like, and how the board approval process works.
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.
Frequently Asked Questions
Can I do a VA cash-out refinance on a co-op in New York?
No, not under current rules. VA guarantees loans on real property, and a co-op is shares plus a proprietary lease. The pilot that once allowed co-op share loans expired, and the bill to revive it is still proposed legislation.
Does a co-op loan need a CEMA?
No. A CEMA reduces mortgage recording tax, and individual co-op apartments do not carry that tax. There is nothing for a CEMA to reduce.
Can an IRRRL pull cash out?
No. The IRRRL refinances an existing VA loan to a lower rate or from adjustable to fixed. It has no cash out, no VA appraisal, and a 0.5% fee unless the borrower is exempt.
Does VA set a minimum credit score?
VA sets no minimum score. Lenders set their own. The wholesale programs Lendmire places VA loans with start at a 580 decision score, subject to lender guidelines and full file review.
What if my building is a condo-op?
It depends on how your unit is titled. If you hold a deed, it may be a condo and the VA cash-out may apply. Verify the title with a lender and a New York attorney first.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
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References
1. Military.com
2. Congressional Research Service, VA Home Loan Programs
3. Rep. Malliotakis press release
5. New York Department of Financial Services
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 on a Condo? · Can You Get a VA Cash-Out on a Duplex If You Live in One Unit? · Can a Veteran Get a VA Cash-Out on a Rural Home With Acreage?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.