The Quick Read: The best program depends on your situation, because VA sets the rules and private lenders offer the loan. A VA cash-out refinance replaces your current mortgage with a new VA-backed loan, and the new balance can reach 100% of the appraised value, funding fee included. The match comes down to your Certificate of Eligibility, how much equity you have, the age of your current loan, and the residual income in your file.
What Does “Best” Actually Mean Here?
“Best” is not a brand. VA does not make the loan; it guarantees a loan made by a private bank, mortgage company or credit union, per VA.gov’s cash-out refinance page. So the program rules are the same everywhere, and what changes is how each wholesale lender applies them.
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 is a mortgage broker, not a lender. It is licensed for consumer lending in 16 states and arranges VA loans through wholesale lenders. Lendmire’s VA cash-out refinance program page lays out the basics. In practice, across the wholesale programs this brokerage places VA files with, five questions decide whether a program fits:
- Do you hold a valid Certificate of Eligibility (COE)?
- Does the refinance pass the net tangible benefit test?
- Is your current loan VA-backed, and if so, is it seasoned?
- Does the appraised value support the new balance?
- Does your residual income clear the table?
If all five line up, most wholesale programs can work with the file. If one fails, the fix is usually a different structure, not a different lender.
How Does a VA Cash-Out Refinance Work, Step by Step?
The loan is underwritten like a purchase: credit, income, residual income and a COE. The steps run in a fixed order.
1. Eligibility. The lender confirms your COE. It also shows whether you are exempt from the funding fee.
2. Application and first disclosure. Lenders must run a net tangible benefit test on every cash-out. They must give you the required comparison information by the third business day after application, and again at closing, according to a VA program notice 26-18-30.
3. Classification. The lender compares the new loan, financed fee included, with the payoff of your current loan. That decides Type I or Type II.
4. Seasoning check. This applies only when you are refinancing an existing VA loan.
5. Net tangible benefit. The new loan has to be in your financial interest.
6. Appraisal. VA divides the total loan amount, funding fee included, by the reasonable value on the Notice of Value.
7. Full underwriting. Credit, income and residual income get reviewed.
8. Closing. You receive the second disclosure, and the loan is reported to VA.
Consumer mortgage timing rules apply, so you receive a Loan Estimate and a Closing Disclosure like any other home loan.
Type I vs. Type II: Where the Cash Actually Comes From
VA’s Circular 26-19-05 recognizes three refinance categories: the VA streamline refinance, the Type I cash-out and the Type II cash-out. The line between Type I and Type II is simple. In a Type I, the new loan amount, funding fee included, does not exceed the payoff of the loan you are replacing. In a Type II, it does.
So Type II is the version where you receive cash. Type I is the version where you swap your current loan, often a conventional, FHA or USDA loan, into a VA-backed one without taking cash out.
That distinction matters for the tests that apply. Type I carries a recoupment test, but only when it refinances an existing VA loan. VA’s conference materials describe a 36-month window to recover fees and charges. Type II has no separate recoupment test, because meeting the net tangible benefit requirement counts as recouping costs under the rule. Type II follows the cash-out rule at 38 CFR 36.4306.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms you qualify for a VA loan and shows any funding fee exemption.
Net tangible benefit (NTB): A test showing the new loan is in your financial interest; the loan must satisfy at least one of eight listed tests.
Seasoning: The waiting period on an existing VA loan before it can be refinanced into a new VA cash-out.
Residual income: The money left each month after your major obligations and living costs, measured against a VA table.
Recoupment: Recovering the refinance costs through savings, generally within a set window on Type I loans.
Funding fee: A one-time VA charge that can be financed into the loan unless you are exempt.
What Are the Loan Parameters Across the Wholesale Programs?
The envelope is consistent across the programs this brokerage works with, though every figure is subject to lender guidelines and full file review.
- Leverage: The cash-out reaches 100% of the appraised value, financed fee included. It can refinance any loan type into VA.
- Mortgage insurance: None of any kind, and there is no VA loan limit with full entitlement. With remaining entitlement, a down payment may be required, so speak with a loan officer about your situation.
- Credit: VA sets no minimum score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders set a higher floor.
- 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.
Those wholesale programs serve amounts up to $4,000,000 with full entitlement. That ceiling is a program feature, not a promise that your file reaches it.
How Does the Funding Fee Work on a Cash-Out?
The VA funding fee on a cash-out refinance is 2.15% on first use and 3.3% on later use. It is financeable, which means it can be added to the loan balance instead of paid in cash. It is waived for veterans receiving compensation for a service-connected disability and for the other exempt groups, and your COE shows your status.
Because the fee is financed, it counts toward the 100% value limit. A veteran who borrows to the cap leaves no room to add it. Plan the cash you want to receive with that in mind.
For comparison, the IRRRL carries a 0.5% fee. The fee is a mechanical part of the loan, not a price comparison between lenders, and the same schedule applies whichever lender places your loan.
Where the General Rule Breaks: Named Edge Cases
Seasoning on a VA-to-VA cash-out. If you are refinancing an existing VA loan, federal rules require that loan to be seasoned. Circular 26-19-05 sets the benchmark at 210 days. In the programs this brokerage uses, the standard is the later of 210 days from the first payment and the sixth payment. Forbearance can affect the clock, so your lender should walk through your payment history.
Non-VA payoff. If you are paying off a conventional, FHA or USDA loan, VA seasoning does not apply. Lenders may still add their own ownership or payment-history rules, and the net tangible benefit test still applies.
Funding fee exemptions. Certain borrowers are exempt from the VA funding fee, subject to lender guidelines. Exemption status can affect how much cash fits under the value cap.
Construction loans. Refinancing of construction-to-permanent loans is addressed under the VA’s cash-out rules, whether or not the principal amount changes.
Lender overlays versus VA rules. Some lenders and investors require seasoning more broadly than VA does. Investor eligibility standards for cash-outs are one reason overlays exist. This is where a broker earns its place, since overlays differ by lender and your file may clear one and not another.
Occupancy. This lane is for the home you live in. If you are asking about a rental or second home, occupancy decides the leverage, and that is a different conversation.
Do You Pass the Net Tangible Benefit Test?
Every cash-out has to satisfy at least one of eight tests listed in the rule. The first is eliminating monthly mortgage insurance, public or private. Others include a shorter term, a lower payment, higher residual income, converting an adjustable loan to a fixed one, and paying off a construction or repair loan. A new loan at or below 90% of value is also one of the eight.
That last point clears up a common misconception. There is no 90% cap anymore. The old limit was removed, and 90% survives only as one NTB test. Another misconception: a lower rate is not the only way to pass. Any one of the eight satisfies the rule. The full list is on the eCFR page for 38 CFR 36.4306.
What the Decision Looks Like in Practice
Picture a veteran with a conventional loan, a COE, and meaningful equity who wants to consolidate debt and fix a roof. The loan is non-VA, so no seasoning clock applies. The refinance probably passes NTB if it removes private mortgage insurance. The veteran receives cash in a Type II structure, the funding fee is financed, and no mortgage insurance carries forward.
Now picture a veteran who closed a VA loan a few months ago. Seasoning is the barrier here, so the answer is to wait, not to hunt for a different lender.
A third case: a veteran with a very low existing payment. Replacing that loan to get cash is a real tradeoff. The refinance may pass the tests and still be the wrong call, because the new balance, term and payment all change. The tests exist to keep the refinance from leaving you worse off, but they are a floor, not a verdict.
Here’s the catch with 100% financing: after a full-value cash-out, you may have almost no equity cushion. A dip in home values could leave you owing more than the home is worth. If you can meet your goal with less cash, taking less is usually safer.
Smart Uses and Not-So-Smart Uses of the Cash
Cash-out proceeds can pay off debt, cover school costs or fund home improvements, all purposes VA lists. The strongest uses build value or replace more costly debt with a sound plan to avoid re-accumulating it. Weaker uses spend equity on things that lose value quickly.
Be careful with debt consolidation. You move unsecured debt onto your home. If the spending that created the debt has not changed, the balance can return, and now your house backs the loan.
Beware of Unsolicited “VA Refinance” Offers
The CFPB and VA have issued a joint warning about unsolicited VA refinance offers that appear official and sound too good to be true. Per the CFPB and VA warning, escrow refund promises may deliver far less than advertised, and borrowers may be pressured to refinance only a month or two after closing their current VA loan. Regulators have also long been concerned about veterans being pushed to refinance repeatedly.
A legitimate refinance has to show a net tangible benefit, and you receive the required disclosures. Be wary of any offer that skips those steps or promises “no cost” results. Where those terms appear, the costs are typically built into the balance or the pricing, not erased.
How to Find the Right Fit Through a Broker
The right program depends on the file: your COE, current loan type, equity, credit profile, residual income and how much cash you actually need. A broker shops multiple wholesale lenders and matches the scenario to the program. Questions worth asking any broker or loan officer:
- Does my current loan need to be seasoned, and where is my clock?
- Which of the eight NTB tests does my refinance satisfy?
- How does the financed funding fee interact with the value cap?
- Does the lender add overlays beyond VA’s rules?
- What happens to my entitlement?
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 also read Lendmire’s piece Should a Veteran Use Home Equity Through a VA Cash-Out Refinance?.
Frequently Asked Questions
Is there such a thing as a VA home equity loan?
Not as a separate VA product. The VA route to equity is the cash-out refinance, which replaces your mortgage with a new VA-backed loan. A second mortgage on top of a VA loan would come from a non-VA source with its own terms.
Can I do a VA cash-out if my current loan is not a VA loan?
Yes. It refinances any loan type into VA, including conventional, FHA and USDA. VA seasoning applies only to VA-to-VA refinances, though a lender may add its own payment-history requirements, and the net tangible benefit test still applies.
How much can I borrow against my home?
Up to 100% of the appraised value, with the financed funding fee included in that figure, subject to lender guidelines. Your residual income, credit and entitlement decide whether your file reaches that level.
Does the funding fee apply to everyone?
No. It is 2.15% on first use of a cash-out and 3.3% after, and it can be financed. Veterans receiving compensation for a service-connected disability and the other exempt groups owe nothing, and your COE shows whether you are exempt.
Does VA set a minimum credit score?
No. The lender sets the floor. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders require more. 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 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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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
5. CFPB and VA warning on VA refinancing offers
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 a Veteran’s Family Qualify for a VA Cash-Out Refinance? · How to Refinance a VA Loan Under Streamline or Cash-Out Guidelines · VA Cash-Out Refinance Equity Requirements and Appraisal Rules
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.