The Quick Read: Yes, on the rules that decide the loan. VA’s cash-out requirements attach to the loan and to the lender that closes it, not to the channel you apply through. The net tangible benefit test, the 100% of appraised value ceiling, the appraisal and full underwriting are the same either way. What changes is who packages your file, which lenders see it, and whose credit overlays apply.
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.
What a first VA cash-out refinance actually is
A VA cash-out refinance replaces your current mortgage with a new VA-backed first lien. It can pull cash from your equity, or it can simply move a non-VA loan into the VA program. Across the wholesale programs Lendmire places files with, it refinances any loan type into VA, including conventional, FHA and USDA loans. Reach is up to 100% of the appraised value, and the financed funding fee counts inside that ceiling.
“First” can mean two things. It can be your first VA cash-out, or the first time you use VA benefits at all. A borrower moving a conventional loan into VA for the first time is a first-use borrower for funding fee purposes. That matters for the fee, covered below.
It is a replacement loan, not a second loan on top of the first. That is the main difference from a home equity loan or a HELOC. Your old mortgage is paid off, and the new loan carries a new balance, term and payment. VA’s cash-out page warns that closing costs can add up to thousands of dollars and tells borrowers to understand how the new loan amount relates to the home’s value.
Lendmire’s VA cash-out refinance program page lays out the product from the brokerage side. This article answers the narrower question in the title.
Who actually does what: bank versus broker
VA does not lend. VA guarantees a portion of a loan made by a private lender, and VA says you obtain the loan through a lender of your choice once you hold a Certificate of Eligibility. So every VA cash-out has a private lender at the end of it. The only question is how you reach that lender.
A bank takes your application, underwrites it under its own overlays, funds it and often services it. A broker takes your application, builds the file, and places it with a wholesale lender whose guidelines fit. The lender approves and funds. Lendmire is a broker: it arranges the loan and does not lend.
The CFPB explains that with a broker you pay a loan-specific fee for the broker’s services, and that some institutions act as both lender and broker, so you should ask whether a broker is involved in your loan.
| Item | Bank or direct lender | Broker |
|---|---|---|
| VA net tangible benefit test | Required | Required of the funding lender |
| 100% of reasonable value ceiling | Applies | Applies |
| Appraisal | Required, VA-assigned appraiser | Required, VA-assigned appraiser |
| Full underwriting | Yes | Yes, by the funding lender |
| Credit overlays | One lender’s | The chosen lender’s |
| Lenders that see your file | One | Several wholesale options |
| Who packages the file | The bank | The broker |
| Who funds and approves | The bank | The wholesale lender |
Nothing in the top four rows moves. A broker cannot waive a VA test.
The rules that follow the loan
The cash-out rule is 38 CFR 36.4306. It puts the net tangible benefit test on the lender of the new loan. It also caps the loan at 100 percent of the reasonable value. These rules came out of the interim final rule published in the Federal Register in December 2018, issued under the Economic Growth, Regulatory Relief, and Consumer Protection Act.
The net tangible benefit test has eight possible ways to pass. The loan has to meet at least one. One example is eliminating monthly mortgage insurance, which is why conventional and FHA borrowers often move to VA. VA loans carry no mortgage insurance of any kind. The test can also stop a refinance that makes no financial sense.
The lender must also give you a side-by-side comparison of the new loan and the old one: payoff, loan type and the other terms. Ask for it. A good file has that comparison in it from the start.
An appraisal is mandatory. Unlike an IRRRL, a cash-out requires an appraisal, a credit check and underwriting, and you must occupy the home afterward. VA’s Buyer’s Guide says a VA-approved appraiser sets reasonable value and the lender requests the appraiser from VA’s panel. The borrower does not pick, and neither does the broker. Anyone who says otherwise is describing a different loan.
Type I and Type II: the “cash-out” label misleads
Many first-timers assume “cash-out” means they must take cash. They don’t. VA Circular 26-19-05 defines two types.
| Feature | Type I | Type II |
|---|---|---|
| New loan vs. payoff | New loan, including fee, does not exceed payoff | New loan, including fee, exceeds payoff |
| Cash to borrower | None | Yes |
| Extra requirement | Fees recouped within 36 months | Net tangible benefit and loan cap |
| Typical use | Moving a non-VA loan into VA | Taking equity out |
The 36-month recoupment point for Type I comes from VA’s lender conference materials, which also confirm the “one of eight” benefit test structure. The same circular says a financed funding fee cannot push the loan past the cap.
The mechanical effect: a Type I with no cash out is a legitimate VA cash-out file. It is often the right one for a borrower whose goal is dropping mortgage insurance.
Seasoning, funding fee and the numbers that matter
Seasoning applies when the loan being refinanced is itself a VA loan. Across the wholesale programs Lendmire works with, the VA cash-out carries the same seasoning as the IRRRL: the later of 210 days from the first payment and the sixth payment. A conventional, FHA or USDA loan being moved into VA is a different case, since seasoning attaches to an existing VA loan.
The funding fee depends on prior VA use, not on how much equity you keep:
- Cash-out refinance, first use: 2.15%.
- Cash-out refinance, subsequent use: 3.3%.
- IRRRL: 0.5%.
VA News lists the fees and the exemptions. Veterans receiving compensation for a service-connected disability, and the other exempt groups, owe no funding fee. The fee can be paid in cash or financed. If financed on a cash-out, it still sits under the 100% ceiling, so it reduces cash to you dollar for dollar.
Wholesale programs Lendmire places VA loans with start at a 580 decision score. VA itself sets no minimum score. Lenders set floors, and those floors are overlays. Some lenders set a higher floor than others. That is a real place where channel matters (more on that next).
Underwriting runs on residual income, the money left each month after obligations. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table. The CFPB servicemember handout describes the same approach: lenders look at credit history and debt-to-income, and weigh compensating factors above 41%.
Where “same as a bank” bends
The rules are the same. The file path is not. Four differences show up in practice.
Credit overlays. A bank applies its own. A broker sends a file to the wholesale lender whose overlays fit it. A borrower with a thinner credit file or a higher debt ratio may clear one lender and stall at another. The broker’s value is matching, not bending.
Pricing access. A broker can see several wholesale lenders. A bank shows one set of terms. More options help only if you compare them on the same loan structure, covered below. This article states no rates or costs, because they vary by lender and borrower.
Fees. VA lets a lender charge a flat origination fee of up to 1% of the loan amount, and if the full 1% is charged, VA Circular 26-14-10 says the lender cannot also charge unallowable fees. The allowable list sits in 38 CFR 36.4313. How a broker’s compensation fits inside VA’s fee schedule is a question to put to any broker directly, in writing, before you apply. Ask how the broker is paid and where it shows on the Loan Estimate.
Servicing. The lender that funds the loan may not be the company you pay each month. That is true of banks and brokered loans alike, since loans are often sold. It is not a broker-specific risk.
One more point, and it is a quiet file killer: the first-timer who assumes the broker “orders” the appraisal. The lender requests the appraiser from VA’s panel. Nobody can steer it.
A few other edges:
- A refinance needs an existing lien. VA’s cash-out refinances a lien, so a home owned free and clear is a different transaction.
- You must occupy the home after the refinance.
- Some state homestead laws cap cash-out leverage. Check yours.
The step-by-step, by channel
1. Get your Certificate of Eligibility. You can pull it through a lender or on VA.gov. Both channels do this the same way.
2. Pick the structure. Type I or Type II, and whether any fee is financed. Settle this before comparing offers.
3. Submit the application. A bank takes it and keeps it. A broker takes it and places it with a wholesale lender.
4. Receive the disclosures. The Loan Estimate arrives, and the VA comparison of old and new loan should come with it. TRID applies, since this is a consumer mortgage.
5. Appraisal. The lender requests a VA-panel appraiser. A Notice of Value follows.
6. Full underwriting. Credit, residual income, property minimums and the net tangible benefit test, all run by the funding lender.
7. Closing. The Closing Disclosure shows the final numbers. Settlement reconciliation against the Loan Estimate is where surprises get caught.
How to compare offers fairly
Put two offers side by side only if they describe the same loan.
- Same type: Type I or Type II.
- Same funding fee treatment: financed or paid in cash.
- Same loan amount against appraised value.
- Same origination structure.
- Loan Estimates, not verbal quotes.
Then ask each channel the same questions. Who funds the loan? What are your credit floors? How is the broker paid? Is the funding lender the one that services it? What happens if the appraisal comes in under the number I need?
When a bank may fit, and when a broker may fit
A bank where you already keep deposits may suit a clean, simple file, since you deal with one institution start to finish. A broker may suit a file that doesn’t fit one lender’s overlays, such as a borrower near a credit floor, a higher debt ratio leaning on residual income, or someone who wants more than one lender looked at. Neither channel changes what VA requires.
What a first-timer should weigh before doing any of this: you give up your current loan’s terms, the new balance may be larger, and a financed funding fee reduces the cash you walk away with. VA’s own page makes the same point about understanding the new loan amount against the home’s value. If your goal is only to drop mortgage insurance, a Type I is worth asking about. If you want cash, the 100% ceiling and the appraisal set the limit.
Lendmire’s piece VA Cash-Out Refinance Checklist for a Veteran With a Low First Mortgage covers the file for borrowers who have a lot to give up. For an existing adjustable loan, see the criteria for an adjustable first mortgage.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms you qualify for the VA home loan benefit.
Net tangible benefit: A test showing the new loan helps you financially, in at least one of eight ways VA lists.
Type I / Type II: Type I does not exceed the payoff of the old loan; Type II does, so you receive cash.
Residual income: The money left each month after major obligations, the controlling test in VA underwriting.
Seasoning: A waiting period on an existing VA loan before it can be refinanced.
Overlay: A lender’s own rule stricter than the program’s minimum, such as a higher credit floor.
Funding fee: A VA fee that can be financed and is waived for exempt borrowers.
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. All program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
Frequently Asked Questions
Does a conventional-to-VA switch count as my first VA use?
Yes. A borrower moving a non-VA loan into VA for the first time is a first-use borrower, so the 2.15% cash-out funding fee applies unless an exemption does. Later VA cash-out refinances carry 3.3%. Veterans receiving compensation for a service-connected disability are exempt. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Do I have to take cash out?
No. A Type I refinance pays you nothing; the new loan, fee included, stays at or under the old payoff. The “cash-out” name describes the loan category. A Type II is the version that puts cash in your hands.
Does a broker set the VA credit score minimum?
No. VA publishes no minimum score. Lenders set their own floors, and the wholesale programs Lendmire places VA loans with start at a 580 decision score. A broker’s job is to match your file to a lender whose floor fits, subject to lender guidelines.
Who picks the appraiser?
Nobody on the borrower side. The lender requests an appraiser from VA’s panel, and the appraiser determines reasonable value. That is the same through a bank or a broker, and the result caps the loan at 100% of appraised value.
Is there a waiting period before I can refinance?
It applies when the loan you’re refinancing is a VA loan. The wholesale programs generally use the later of 210 days from the first payment and the sixth payment. A conventional or FHA loan being moved into VA isn’t held to that same seasoning on the old loan.
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 – Cash-out refinance loan
2. VA guarantees a portion of a loan made by a private lender
5. Federal Register interim final rule (Dec 17, 2018)
6. CRS – VA Home Loan Programs (R42504)
9. VA’s lender conference materials
11. CFPB servicemember handout
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 to Apply for a VA Cash-Out Refinance Step by Step · How to Get a VA Cash-Out Refinance on a Paid-Off Home · VA Cash-Out Refinance Criteria on a Paid-Off Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Required disclosures. Lendmire (NMLS# 2371349) operates as a licensed mortgage broker, not a direct lender or depository. The discussion in this article is general in nature and should not be relied upon as financial, legal, or tax advice — every investment scenario is unique and should be reviewed by a qualified professional. Any loan inquiry is subject to lender underwriting, and this article is not a commitment to lend or a guarantee of approval. Mortgage rates, loan terms, and program guidelines vary by borrower, property, and state, and may change without notice. Equal Housing Opportunity. Verify licensure at NMLS Consumer Access.