The Quick Read: The waiver follows you, not the loan program. If you are exempt, you pay no funding fee on a VA cash-out refinance, a VA streamline refinance, or a purchase loan. The exemption comes from your status, such as receiving VA compensation for a service-connected disability. So the best program for your situation depends on whether you need cash and what loan you hold today. Everything here is subject to lender guidelines and full file review.
Does the Waiver Belong to a Program or to You?
It belongs to you. The funding fee is a one-time charge on most VA loans. Federal law sets who is exempt, and no lender or loan type can add you to that list or take you off it. The statute is 38 U.S.C. § 3729. VA also lists the exemption categories on its funding fee and closing costs page.
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: 7.24% as of October 29, 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.
That means “which program waives the fee?” is the wrong question. The useful questions are these:
- Am I exempt right now?
- Do I need cash out of my equity?
- Is my current loan already a VA loan?
Answer those three and the program mostly picks itself.
Key Terms Defined
Funding fee: A one-time charge VA loans carry to help fund the program. You can pay it at closing or finance it into the loan.
Exempt: Excused by law from the funding fee because of your status, not because of the loan type.
Certificate of Eligibility (COE): The VA document that confirms you can use the benefit. It can also show whether you are exempt from the fee.
The VA streamline refinance: The Interest Rate Reduction Refinance Loan (IRRRL), VA’s streamline refinance for borrowers who already have a VA loan.
Residual income: The money left each month after major obligations and living costs. On VA loans, it is the controlling test.
Net tangible benefit: A real, measurable gain from refinancing, such as moving from an adjustable to a fixed structure.
Who Qualifies for the Waiver?
Exempt groups are set by statute. Per VA’s published list, they include:
| Who | What typically proves it | Common catch |
|---|---|---|
| Veteran receiving compensation for a service-connected disability | VA award letter, COE | Pending claims do not count yet |
| Veteran eligible for compensation but receiving retirement or active-duty pay instead | Rating decision, COE | Needs a rating on file |
| Surviving spouse receiving Dependency and Indemnity Compensation (DIC) | DIC award, COE | Not every surviving spouse qualifies |
| Service member with a proposed or memorandum rating before closing | The rating document | Must exist before closing |
| Active-duty Purple Heart recipient | Evidence before closing | Timing matters |
Confirm the exact wording before you rely on it. Rules can change, and VA is the authority here, not a lender and not this article.
One common myth deserves a correction. People assume only veterans rated 100% disabled are exempt. In practice, the test is whether you receive or are entitled to compensation for a service-connected disability. The rating percentage is not the gate. VA decides the details, so check your own record.
How Do You Confirm Your Status?
Start with the COE. It is the proof document, and a lender will look at it. Here is the order that works across the files I see:
1. Request or pull your COE through VA. The COE can show your funding fee exemption status.
2. Gather your award letter. If you receive disability compensation, keep the current letter handy.
3. Check the COE against the letter. If one says exempt and the other does not, fix that before you apply.
4. Tell your loan officer up front. The broker or lender should confirm the exemption shows on your file.
5. Look at the fee line on your Loan Estimate. If you are exempt, the funding fee line should read zero. Check it again on the Closing Disclosure.
If your COE is wrong, VA corrects it, not the lender. Better to find that out before you are under contract on a refinance.
What If Your Claim Is Still Pending?
A pending claim does not make you exempt. That is the line most people trip over.
You have a few options:
- Wait for the decision if the refinance is not urgent. An award before closing can change your fee status.
- Close now and ask about a refund. VA has said a refund may be possible if compensation is awarded later. Confirm how that works before you plan around it.
- Look at a proposed or memorandum rating. For service members, one issued before closing can create exemption.
The tradeoff is simple. Waiting costs time, and closing early may mean paying or financing a fee you later hope to recover. Neither path is free of risk, and a refund is not something to count on without confirming it first.
Which VA Refinance Route Fits an Exempt Borrower?
Here is where the “best program” question gets answered. Once the fee is zero, the fee difference between programs disappears. What is left is purpose.
| Your situation | Route that usually fits | Why |
|---|---|---|
| Have a VA loan, want a lower rate or adjustable-to-fixed | IRRRL | No VA appraisal, no cash out |
| Need cash from equity | VA cash-out refinance | Reaches 100% of appraised value |
| Hold an FHA, USDA, or conventional loan, want VA | VA cash-out refinance | Moves any loan type into VA |
| Have a VA loan and need cash | VA cash-out refinance | The IRRRL does not pay out cash |
For a non-exempt borrower, the IRRRL’s 0.5% fee against the cash-out’s 2.15% on first use (3.3% after) is a real reason to pick the streamline. For an exempt borrower, that gap is gone. If you need the cash, the cash-out is not penalized for being more expensive.
The decision then comes down to your goals. Here is what I mean in practice. Say you hold a conventional loan with monthly mortgage insurance and want to consolidate some debt. A cash-out into VA can address both, because VA loans carry no mortgage insurance of any kind. Now say you already hold a VA loan and only want a different structure. The streamline is the simpler tool.
You can read how Lendmire’s mortgage brokers approach this on the VA cash-out refinance program page.
What Do the Numbers Look Like Side by Side?
Here are the verified fee tiers on the programs I place. Remember that exempt borrowers pay none of them.
| Loan | Fee if not exempt | Fee if exempt |
|---|---|---|
| VA cash-out, first use | 2.15% | Waived |
| VA cash-out, subsequent use | 3.3% | Waived |
| IRRRL | 0.5% | Waived |
Financing the fee adds it to your balance. You then carry it, and pay interest on it, for the life of the loan. An exempt borrower skips that entirely. On a cash-out, which has the highest fee tiers, the waiver is worth the most.
Exempt does not mean free of closing costs. Appraisal, title, and other third-party and lender charges still apply. The waiver removes one line, not the whole statement.
Lendmire’s piece Best VA Cash-Out Refinance Program With the VA Funding Fee Added to the New Loan walks through the non-exempt side in more detail.
How Is a VA Cash-Out Underwritten?
A cash-out is fully underwritten, unlike the streamline. Across the wholesale programs I place files with, that means:
- Credit: VA sets no minimum score. The wholesale programs I use start at a 580 decision score.
- Residual income: This 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.
- Appraisal: A VA appraisal sets the value. The cash-out reaches 100% of that value, including any financed fee.
- Seasoning and benefit: The same seasoning as the IRRRL applies: the later of 210 days from the first payment and the sixth payment. The refinance also needs a net tangible benefit.
The VA Lenders Handbook covers refinance rules in its chapter on refinancing. Lenders overlay their own rules on top, so the same file can read differently across programs. This is a good reason to shop a scenario across more than one wholesale lender.
For amounts, the wholesale programs serve loans up to $4,000,000 with full entitlement. With remaining entitlement instead of full, a down payment may be required, so speak with a loan officer.
Is Cash-Out Worth It for an Exempt Borrower?
Sometimes. This one is a genuine judgment call, and the waiver should not decide it alone.
The case for it: the waiver means no VA funding fee for exempt borrowers, and VA cash-out can offer access to equity up to 100% of value without monthly mortgage insurance. That is a strong set of features if you need cash for a defined purpose.
The case against: cash-out raises your balance and can reset your term. You trade equity for debt. If your existing VA loan has a structure you like, taking cash out may cost more than the waiver saves. An exempt borrower with a good loan and no real need for cash should think hard before touching it.
A home equity loan or line is another way to reach equity without replacing the first mortgage. Whether that beats a cash-out depends on what your current loan looks like. If you would give up a favorable first loan to get cash, a second lien may fit better. If your current loan is not one you want to keep, the VA cash-out can replace it and pay out cash at once.
What About Future Use of Your Benefit?
The fee tiers depend on first use versus subsequent use. A non-exempt borrower who has used the benefit before sees the higher 3.3% tier on a cash-out. An exempt borrower does not pay either one.
Still, a cash-out is a use of the benefit, and it can affect your entitlement for later loans. If you plan another VA purchase down the road, ask your loan officer how this refinance will affect remaining entitlement. The answer depends on your file.
Where Does the General Rule Break?
The waiver is simple in concept. These cases are where files go sideways:
- Surviving spouses. The exemption is tied to receiving DIC. Being a surviving spouse alone does not guarantee it.
- Retirement pay. Veterans who are entitled to compensation but take retirement pay instead can still be exempt. The rating has to exist.
- Purple Heart. Evidence has to be on file by closing for active-duty recipients. Check VA’s page for how it applies to veterans.
- Non-veteran co-borrowers. A spouse on the loan does not change your exempt status, but it does add credit and income to the file. Ask how the lender treats that.
- Status after closing. If a rating arrives later, ask about a refund. Do not assume.
- Moving a non-VA loan. Only a cash-out can refinance a non-VA loan into VA. The IRRRL requires an existing VA loan.
What Should You Do Before You Apply?
Run through this list:
1. Pull your COE and read the funding fee status line.
2. Find your current award letter.
3. Decide whether you need cash, or only a different structure.
4. Identify your current loan type.
5. Ask your broker to confirm the exemption will show on the Loan Estimate.
6. Compare more than one wholesale lender’s overlays on credit and residual income.
A broker can shop that last step for you. That is the real answer to “best program.” The best VA cash-out program for your situation depends on your credit profile, your equity, your property, and how your income reads against the residual table. The lenders that write the file differ on those points.
Myths Versus Facts
| Myth | Fact |
|---|---|
| One refinance program waives the fee | Your status does |
| Only veterans with the highest disability rating qualify | The compensation entitlement matters, not the percentage |
| Exempt means no closing costs | Other costs still apply |
| The fee is negotiable | Set by law |
| A pending claim counts | It does not, but a refund may be possible later |
Frequently Asked Questions
Can a lender waive the funding fee for me?
No. Federal law sets the exemptions, and a lender cannot grant or deny one. A lender can only confirm your status from your COE and VA records. If your status is wrong on file, VA is the place to fix it.
Is the fee waived on a cash-out refinance as well as an IRRRL?
Yes, if you are exempt. The exemption follows you across VA loan types. The waiver is worth the most on a cash-out because that loan carries the highest fee tiers, though lender guidelines and full file review still apply.
Does the waiver mean I pay no closing costs?
No. It removes only the funding fee. Appraisal, title, and other charges still show up on your Closing Disclosure. Treat any “no closing costs” claim with caution. Those costs are usually built into the balance or the loan terms.
What if I receive my disability award after I close?
VA has said a refund may be possible when compensation is awarded later. Check the current wording on VA’s funding fee page and ask your loan officer how it applies to your loan before you plan around it.
Can I refinance my FHA or conventional loan into a VA loan?
Yes, through a VA cash-out refinance, which refinances any loan type into VA. That can remove mortgage insurance, since VA loans carry none. The refinance requires a net tangible benefit, and the loan must meet the seasoning rules, subject to lender guidelines.
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.
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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Informational only. Not a Loan Estimate, approval, or commitment to lend. Program availability and eligibility are subject to lender guidelines, credit approval, property review, and underwriting.
References
2. VA – Funding fee and closing costs
3. VA Lenders Handbook (Pamphlet 26-7)
This article is part of Lendmire’s VA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: Can You Get Approved for a VA Cash-Out Refinance as a Veteran? · VA Cash-Out Refinance Requirements on a Home You Own · VA Cash-Out Refinance Requirements Twice in a Row
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.