Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The Quick Read: VA publishes no minimum credit score for a cash-out refinance, so a 740 is neither required nor decisive. It is a strong file, and it clears the score floors lenders typically set. It does not replace the other tests: residual income, the appraisal, net tangible benefit, seasoning and occupancy. Every figure here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
Key Takeaways
- VA sets no score floor. Lenders do, and the wholesale programs Lendmire places VA loans with start at a 580 decision score.
- A 740 helps with pricing and overlays. It does not override income, value or property tests.
- The new loan can reach 100% of the appraised value, including the financed funding fee.
- Seasoning and a net tangible benefit apply. The half-percent rate-reduction and fee-recoupment tests do not.
- Cash-out raises your balance. Decide whether you should, not only whether you can.
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.
What Does a 740 Score Actually Do?
A 740 puts you comfortably above the score floors lenders set, and it can improve how a file is priced. It does not change what VA requires. VA does not lend directly; you go through a private lender, and VA’s cash-out refinance page says you must meet both VA and lender standards for income and credit.
Across the wholesale programs we place VA files with, the floor starts at a 580 decision score. Some lenders set a higher floor of their own. That gap is why two lenders can look at the same 740 and respond differently on overlays.
Think of the score as the door, not the room. It gets the file looked at seriously. Then underwriters check whether the income, the home and the loan structure hold up.
What Is a VA Cash-Out Refinance?
It is a new VA-backed loan that replaces your current mortgage. You can take cash from your equity, or you can refinance a non-VA loan (conventional, FHA or USDA) into a VA-backed loan. Details are on Lendmire’s VA cash-out refinance program page.
The program reaches 100% of the appraised value, and that includes the financed funding fee. It carries no mortgage insurance and, with full entitlement, no VA loan limit. Most of the guarantee works the way a purchase does. The wholesale programs we use serve loan amounts up to $4,000,000 with full entitlement. Every figure here varies by lender and program — guidelines, property type, leverage, and credit profile all apply.
You live in the home. This is an owner-occupied program. If the property is a rental or second home, the answer is short: occupancy decides the leverage, and this program is for your residence.
How Is the Loan Underwritten, Step by Step?
Full credit underwriting applies, and the steps run in a fixed order.
1. Eligibility. You need a Certificate of Eligibility (COE). VA’s rules decide who is eligible, and the lender can usually pull it for you.
2. Application and disclosures. The lender gives you a comparison of your old and new loan terms at application and again at closing.
3. Appraisal. A VA appraisal is mandatory for a cash-out. It sets reasonable value, which sets your ceiling.
4. Underwriting. The lender verifies income, debts, assets and credit.
5. Net tangible benefit. The new loan must satisfy one of VA’s eight listed benefits.
6. Seasoning check. This is required for VA-to-VA refinances.
7. Closing. You receive a Closing Disclosure, then the guaranty is issued.
The rules behind the 100% ceiling and the benefit test come from a VA program notice 26-19-05. It states that VA will not guaranty a refinance when the loan-to-value ratio (the loan balance divided by the home’s appraised value) exceeds 100%.
Which Tests Does a 740 Not Override?
Residual income is the controlling test. It measures the money left each month after debts, taxes and living costs. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
A 740 cannot create residual income. A borrower with great credit and heavy monthly obligations can still get stuck here. It’s the most common surprise for strong-credit files.
Here is how a strong score meets each requirement:
| Requirement | What a 740 changes | Common snag |
|---|---|---|
| COE | Nothing | Missing or outdated certificate |
| Credit | Clears typical floors | Recent lates or collections |
| Income and DTI | Nothing | Ratio above the guideline |
| Residual income | Nothing | Thin monthly cushion |
| Occupancy | Nothing | Property is not your residence |
| Appraisal | Nothing | Value comes in low |
| Seasoning | Nothing | Too few payments made |
Credit reports can also hold surprises. A high score can coexist with a recent late payment or a collection, and underwriters read the whole report, not just the number.
How Much Cash Can You Take Out?
Up to 100% of the appraised value, with the financed funding fee counted inside that number. If the appraisal comes in lower than you expected, the usable equity shrinks with it.
Some lenders cap the loan below 100% as their own overlay. Some borrowers assume that 90% is a program ceiling, but it is not: 90% of value is one of the net tangible benefit tests. Keeping the loan at or below 90% of value satisfies one test. Above 90%, the file must meet a different one, such as moving from an adjustable-rate loan to a fixed-rate loan or eliminating monthly mortgage insurance. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
State rules, such as homestead limits in some states, can add their own limits on cash-out.
What Is the Funding Fee?
It is a one-time VA fee that you pay on a refinance unless you are exempt. It can be financed into the loan or paid at closing, and either way it counts toward the 100% cap. Per VA’s funding fee page, it applies when you refinance unless you meet exemption requirements.
For a cash-out refinance, the fee is 2.15% on first use and 3.3% after that. Veterans receiving compensation for a service-connected disability, and the other exempt groups, do not pay it. A 740 score does not lower this fee. Credit tier does not change it.
Where Does the Usual Rule Break?
Five edge cases come up regularly.
VA-to-VA versus non-VA-to-VA. Seasoning applies to a VA loan being refinanced. We apply the later of 210 days from the first payment and the sixth payment, and the cash-out carries a net tangible benefit too. Lenders may apply seasoning more broadly as an overlay.
The rules that are not cash-out rules. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL (the streamline for existing VA loans). They never apply to the VA cash-out. Plenty of articles mix them up.
IRRRL contrast. The IRRRL refinances an existing VA loan, including a move from adjustable to fixed, with no VA appraisal and a 0.5% fee unless exempt. It does not refinance other liens. Cash-out can pay off any loan type.
Entitlement. If you have used some of your entitlement, the new loan interacts with what remains, and a down payment may be required. Speak with a loan officer about your situation.
Alteration and repair. VA can guarantee a cash-out refinance used for alterations and repairs to a home you own and occupy.
What Does a 740 Borrower’s Decision Look Like?
Picture a homeowner with a 740 score, a VA loan, and substantial equity. Their appraisal supports a loan near 100% of value. They want cash to pay off credit cards and fix the roof.
Credit and equity are not the question. The questions are these. Does residual income pass with the larger balance? Does the net tangible benefit test pass? Has the existing VA loan been seasoned long enough?
Then comes the “should I” part. VA News warns that a cash-out typically adds the cash to your loan, raising the balance and the interest paid over time. It also says a lender who promises both a lump sum and a lower payment than your original loan deserves caution. The same article notes that fees may be paid from loan proceeds, so you may not need cash at closing.
If your current loan carries a low rate, moving all of it into a new loan to reach a smaller pot of cash is worth a hard look. If you are consolidating high-cost debt or financing a repair that adds value, the case gets stronger.
How Should You Prepare Before Applying?
A 740 is solid, but small moves still help.
- Pull your credit reports and dispute errors.
- Pay card balances down before the lender pulls credit, since utilization moves scores.
- Avoid new credit applications during the process.
- Gather pay stubs, W-2s, tax returns and bank statements. Full underwriting means full documentation.
- Request your COE or ask the lender to do it.
- Write down what the cash is for. Some lenders ask for a letter of explanation.
Compare lenders on the Loan Estimate, the standard form every lender must give you, rather than on the score discussion. Two lenders approving the same 740 can show different overlays and costs.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms your eligibility for a VA loan.
Net tangible benefit: A test showing the new loan measurably improves your position, using one of VA’s eight listed benefits.
Residual income: The money left each month after debts, taxes and living costs.
Seasoning: The waiting period VA applies before you can refinance a VA loan, measured from the first payment and number of payments made.
Funding fee: A one-time VA charge on the loan, financeable and waived for exempt borrowers.
Entitlement: The amount of guaranty VA provides on your loan, which affects how much you can borrow without a down payment.
Frequently Asked Questions
Does a 740 credit score guarantee a VA cash-out approval?
No. Approval depends on the whole file. Residual income, the appraisal, net tangible benefit, seasoning and occupancy all still apply. A 740 clears typical score floors, but the lender must verify everything else, and approval is subject to lender guidelines.
Does VA require a minimum credit score for cash-out?
VA publishes no minimum score. Lenders set their own floors. The wholesale programs Lendmire places VA loans with start at a 580 decision score, while some lenders set higher floors. A 740 sits well above the floors you are likely to meet.
Can I refinance a conventional or FHA loan into a VA cash-out?
Yes. The VA cash-out refinances any loan type into a VA-backed loan. Seasoning applies when the loan being refinanced is a VA loan. You still need a COE, a VA appraisal and full underwriting.
Will my 740 score lower the funding fee?
No. The fee depends on use and the loan type, not credit. On a cash-out it is 2.15% on first use and 3.3% on later use. Exempt borrowers, such as veterans receiving service-connected disability compensation, pay nothing.
Will a cash-out lower my monthly payment?
Rarely. The cash is added to your balance, so the balance and interest over time usually rise. VA News cautions against offers that promise both cash and a lower payment than your original loan.
Next Step
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.
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
3. VA.gov – Funding fee and closing costs
4. VA News – “You could be losing thousands”
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: Best VA Cash-Out Refinance Program Without Monthly PMI · Best VA Cash-Out Refinance Program With VA Residual Income Requirements · Can a Veteran’s Family Qualify for a VA Cash-Out Refinance?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.