The Quick Read: The VA maximum is 100% of the home’s appraised reasonable value, and that total includes the financed funding fee. Whether a given program actually reaches that ceiling depends on the borrower’s credit, residual income, and entitlement. The best program for your situation is the one whose lender guidelines match your file.
What Is a VA Cash-Out Refinance?
A VA cash-out refinance replaces your current mortgage with a new VA-backed loan. VA describes it as a way to take cash from home equity or to move a non-VA loan into a VA-backed one. VA guarantees the loan. A private lender funds it.
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.
Lendmire’s VA cash-out refinance program page covers the options Lendmire arranges as a mortgage broker through wholesale lenders. Lendmire does not lend. The home must be one you own and live in. This product is not for rentals.
Key Terms Defined
- Reasonable value: the value VA’s appraiser puts on the home. It is the denominator in every LTV calculation.
- LTV (loan-to-value): the total new loan, including any financed funding fee, divided by reasonable value.
- Net tangible benefit (NTB): a test showing the refinance is in the borrower’s financial interest.
- Residual income: what’s left of monthly income after debts, taxes, and living costs. It is the controlling VA underwriting test.
- Entitlement: the amount of guaranty VA gives you, which sets how much a lender can lend without a down payment.
- Seasoning: the waiting period before a VA loan can be refinanced.
How High Can the LTV Go?
The ceiling is 100%. A VA lender-call deck states that the refinancing loan’s LTV cannot exceed 100% of reasonable value for applications on or after February 15, 2019.
Across the wholesale programs Lendmire places VA files with, the cash-out reaches 100% of the appraised value including the financed fee. It refinances any loan type into VA. Those programs start at a 580 decision score. VA sets no minimum score of its own, so that floor is a lender guideline, and lenders may set a higher one.
Here’s the catch: the ceiling is not a promise. Some lenders stop below 100%. Credit, residual income, and entitlement all affect what a file can reach. All of it is subject to lender guidelines and full file review.
Where Does the 90% Figure Come From?
Many borrowers hear that VA caps cash-out at 90%. That’s a misreading. The 90% LTV is one of several net tangible benefit tests. A loan above 90% simply has to pass a different test. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Per the same VA deck, the tests include:
- eliminating monthly mortgage insurance
- a shorter loan term
- a lower monthly principal-and-interest payment
- an LTV at or below 90%
- refinancing an interim construction loan
- higher monthly residual income
- converting an adjustable loan to a fixed one
The loan must satisfy at least one. The federal regulation on net tangible benefit defines the concept as being in the borrower’s financial interest. The lender must give the borrower the test, and the loan has to pass it.
How the Loan Is Underwritten, Step by Step
1. Certificate of Eligibility. VA’s COE decides eligibility. Service requirements are VA’s rules.
2. Application and disclosures. The lender must provide the net tangible benefit information early and again at closing. A guaranty can’t be issued without those disclosures.
3. VA appraisal. It’s mandatory on a cash-out. The lender orders it, not you. The reasonable value on the resulting Notice of Value sets your LTV.
4. Net tangible benefit. The file must pass at least one test from the list above.
5. Seasoning, if refinancing a VA loan. The wholesale programs apply the later of 210 days from the first payment or the sixth payment.
6. Underwriting. Residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap. A higher ratio needs residual income well above the table.
7. Closing. The funding fee is a one-time charge. It can be financed or paid at closing.
Lenders issue a Loan Estimate and a Closing Disclosure on this consumer loan. VA itself requires no set number of cash reserves on a refinance. Any reserve rule is a lender choice.
How Does the Funding Fee Fit Inside the Ceiling?
The fee counts inside the LTV, so financing it reduces the cash available to you. Veterans receiving compensation for a service-connected disability, and other exempt groups, are not charged the fee, which leaves more of the ceiling available for cash or payoff.
Run it in percentages. Say the home appraises at 100% of reasonable value and the program reaches the full ceiling. A first-use borrower who finances the 2.15% fee has 2.15% less room for cash or payoff than an exempt borrower. Pay the fee at closing instead and the loan amount drops, but you bring cash. Exempt status can be the difference between taking more equity and taking less.
Type I vs. Type II Cash-Out Loans
| Factor | Type I | Type II |
|---|---|---|
| New loan vs. payoff | At or below payoff | Above payoff |
| Cash to borrower | None | The excess |
| Recoupment (VA-to-VA) | Applies | Does not apply |
| NTB test | Required | Required |
VA Circular 26-19-05 defines both types. Type I includes the funding fee in the comparison to the payoff. Type II is the true cash-out, where the new loan exceeds what you owe.
Recoupment means closing costs and fees must be earned back through lower monthly payments within 36 months. Per the federal regulation, the lender certifies that period to VA.
Where the General Rule Breaks
- Above 90% LTV. You need a different NTB test, such as a lower payment, shorter term, or higher residual income.
- Lender caps below 100%. Many lenders set their own cap below 100%, which is not a VA rule. Ask before paying for an appraisal.
- VA loan versus non-VA loan. Refinancing a VA loan into a cash-out triggers seasoning. A non-VA loan going into VA does not face VA seasoning.
- PMI exits. Leaving a conventional loan with monthly mortgage insurance can satisfy one NTB test on its own. VA-backed loans carry no mortgage insurance of any kind.
- Construction loans. The rules reach construction-to-permanent loans.
- Alterations and repairs. VA can guarantee these as a cash-out on a home you own and occupy.
- Entitlement. A cash-out may use entitlement that you’d otherwise save for a later purchase. With full entitlement, the programs Lendmire places have no VA loan limit and serve amounts up to $4,000,000. With remaining entitlement, a down payment may apply, so speak with a loan officer.
- IRRRL confusion. The IRRRL refinances an existing VA loan only, needs no VA appraisal, and returns no cash. A cash-out requires the appraisal and full underwriting. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
What Borrowing the Maximum Really Costs
VA’s own consumer messaging is blunt. A cash-out typically adds the cash to the loan, which raises the balance and total interest over time. It rarely lowers the monthly payment. Treat any offer promising cash plus a smaller payment with suspicion.
At 100% LTV, no equity cushion remains. If prices dip, selling could mean bringing cash to closing. The stronger play for many borrowers is taking only what a defined purpose needs, such as paying off high-cost debt or funding repairs. The full ceiling suits someone with a specific use for the equity and stable income. It’s wrong for someone treating equity as a savings account. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
Choosing the Best Program for Your Situation
No single program wins for everyone. A broker shops multiple wholesale lenders and matches the file to the program. The right fit depends on your credit profile, whether you hold full entitlement, whether you’re leaving a VA or non-VA loan.
Before committing, ask these questions:
- What is the maximum LTV this program allows on my file, in writing?
- Is the funding fee included in that LTV?
- What’s the minimum decision score?
- Which net tangible benefit test will my loan use?
- How does this affect my remaining entitlement?
Prepare your COE, mortgage statements, pay records, and details on any other liens. Ask for the Loan Estimate and compare it line by line.
Frequently Asked Questions
What is the maximum LTV on a VA cash-out refinance?
The VA ceiling is 100% of reasonable value, including the financed funding fee. Individual lenders may set lower limits, so the ceiling for your file depends on the program and your credit and income profile.
Do I need an appraisal?
Yes. A VA appraisal is mandatory on a cash-out refinance, and the lender orders it. The reasonable value it produces becomes the denominator for your LTV. This is one big difference from an IRRRL.
Can I refinance a non-VA loan into a VA cash-out?
Yes. VA allows a non-VA loan to be refinanced into a VA-backed loan, and the program reaches any loan type. VA seasoning applies only when you refinance an existing VA loan.
Is there a minimum credit score?
VA sets none. Lenders set their own. The wholesale programs Lendmire works with start at a 580 decision score, though lenders may require more, and approval is never assured.
Will the cash-out lower my monthly payment?
Rarely. Adding cash raises the balance, which usually pushes the payment up. A lower payment is possible mainly when you’re leaving a higher-cost loan or removing mortgage insurance, and it must be verified on your file.
Next Steps
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. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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
1. VA.gov — Cash-out refinance loan
2. VA: Aq42 Lender Call Jan2019
5. VA News — You could be losing thousands on your home loan
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: How a VA Lender Sequences VA Cash-Out Refinance Approval · VA Cash-Out Refinance Documentation Needed Before Approval · How to Time a Second VA Cash-Out Refinance on Your Primary Home
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.