The Quick Read: A VA cash-out refinance can reach 100% of your home’s appraised value, while a conventional cash-out stops well short of that. The VA loan carries no monthly mortgage insurance, but it charges a one-time funding fee unless you are exempt. Conventional cash-out fits borrowers who are not VA-eligible or who need a smaller amount of cash. Every figure here is subject to lender guidelines and a full file review, and nothing is a commitment to lend.
The Honest Answer, Before the Details
A VA cash-out refinance is for veterans and eligible service members who want to take the most equity the system allows from a home they live in. It is also for people who want to move an existing non-VA loan into a VA-backed one. Conventional cash-out is for everyone else, and for VA-eligible borrowers who only need a modest amount of cash and want to keep more equity in the house.
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: 7.18% as of November 5, 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.
The two loans solve different problems. VA is built for maximum reach. Conventional is built for a more cautious cushion.
Most readers need these points up front:
- VA cash-out can reach 100% of appraised value, and the financed funding fee counts inside that ceiling.
- Conventional cash-out sets a lower leverage cap, so you leave more equity in the home.
- VA has no monthly mortgage insurance. Its cost is the funding fee, waived for exempt borrowers.
- VA decides on residual income, meaning the money left over each month after your obligations. Conventional leans on the debt-to-income ratio and credit score.
- Some lenders set their own caps below VA’s ceiling, so the maximum on paper is not always the maximum on offer.
Side-by-Side
| Factor | VA Cash-Out | Conventional Cash-Out |
|---|---|---|
| Maximum leverage | Up to 100% of appraised value | Capped well below 100% |
| Credit floor | VA sets none; wholesale programs start at a 580 score | Higher floor, set by guidelines |
| Mortgage insurance | None | Seldom in play at the lower cap |
| One-time fee | Funding fee, waived if exempt | None of that kind |
| Occupancy | Your primary residence | Primary, second home or investment, at different caps |
| Eligibility | Certificate of Eligibility required | Open to any qualifying borrower |
| Loan types it can replace | VA, FHA, USDA or conventional | Generally any existing mortgage |
| Underwriting focus | Residual income, with 41% DTI as a guideline | Debt-to-income and credit score |
| Seasoning | Payment history on the loan being replaced | Time on the existing loan and on title |
The conventional cap is deliberately described in words. Fannie Mae publishes its limits in its Eligibility Matrix, and those limits differ by occupancy, unit count and property type. Check the live matrix before you plan around a number.
How a VA Cash-Out Works
Start with what VA itself says. VA describes the cash-out refinance as a loan that replaces your current mortgage on new terms. You can use it to take cash from your equity or to move a non-VA loan into a VA-backed loan. You get it through a private lender, not from VA directly, and you need a Certificate of Eligibility (COE), the document from VA that confirms you qualify.
Lendmire’s VA cash-out refinance program page covers the program in more depth. The mechanics fit in a few lines.
- Leverage: The loan can reach 100% of the appraised value, and the financed funding fee sits inside that number.
- No mortgage insurance: There is no monthly insurance of any kind. With full entitlement there is also no VA loan limit. The wholesale programs Lendmire places VA loans with serve amounts up to $4,000,000.
- Credit: VA sets no minimum score itself. The wholesale programs start at a 580 decision score.
- 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.
- Net tangible benefit: The refinance has to give you a real benefit, and VA lists eight that qualify. The half-percent rate-reduction and fee-recoupment tests belong to the streamline (IRRRL) and do not apply to the VA cash-out.
- Seasoning: The loan being replaced must be “seasoned.” Under VA Circular 26-19-05, the first payment must have been made at least 210 days before closing, and six monthly payments must be on record.
The Funding Fee, Explained Plainly
VA charges a one-time funding fee on its loans. On a cash-out refinance, VA’s funding fee page notes that refinance fees do not change with your down payment. Veterans receiving compensation for a service-connected disability, and the other exempt groups, are not charged the fee. Your COE should show an exemption before closing.
The fee can be financed, and that matters at full leverage. Because the fee counts inside the 100% ceiling, it shrinks the cash you actually receive.
Picture a homeowner whose current loan equals 60% of the appraised value. A first-use VA cash-out at 100% would leave roughly 38% of value in cash after the 2.15% fee. That is before any other closing costs paid from proceeds. A subsequent-use borrower would see closer to 37%. These are modeled percentages, not a quote, and the real amount depends on the appraisal and the file. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The common misconception is “VA lets me take 100% of my equity as cash.” It does not. The 100% applies to the total loan, fee included.
When VA Cash-Out Is the Better Fit
VA wins on reach and on monthly cost structure. It tends to be the stronger choice in these situations:
- You need a large amount of cash. Debt consolidation, a big repair, or a major expense can need more equity than a conventional cap allows.
- Your equity is thin. If your balance is already high relative to value, a conventional cash-out may not leave room for any cash at all. VA’s higher ceiling can.
- You are moving out of another loan type. A VA cash-out can replace a VA, FHA, USDA or conventional loan. If you are carrying FHA mortgage insurance, switching into a VA loan removes the monthly insurance.
- You are fee-exempt. If you receive service-connected disability compensation, the funding fee is waived. That removes the main cost of the program.
- Your credit is rebuilding. The wholesale programs Lendmire places VA files with start at a 580 decision score. Many conventional programs ask for more.
- Your debt-to-income ratio is high but your cash flow is solid. Residual income, not a fixed ratio, controls VA underwriting.
The honest caveats matter here. Borrowing 100% of value leaves you with no equity cushion. If prices dip, or you need to sell, there may be nothing left after costs. A cash-out can also lengthen your payoff timeline and raise your monthly payment, as the CFPB’s guide to using home equity points out.
Why Your Lender May Stop Below 100%
VA’s rule is 100%. Anything lower is the lender’s own policy, often called an overlay. Across the wholesale programs Lendmire places VA loans with, the ceiling and the credit floor come from the program, but individual lenders in the market may cap lower or ask for a higher score. That is why two lenders can look at the same file and offer different maximums.
The appraisal also sets the real number. A low appraisal lowers the cap no matter what the program allows.
When Conventional Cash-Out Is the Better Fit
Conventional is the right tool in several situations, and it would be dishonest to pretend otherwise.
- You are not VA-eligible. No COE, no VA loan. Conventional is the straightforward path.
- You need a smaller amount of cash. If you want a modest sum and have plenty of equity, the leverage cap barely matters. You also avoid the funding fee.
- You have strong credit and a clean debt-to-income ratio. The conventional underwriting model rewards that profile.
- You want to protect your equity. A lower cap forces a cushion. Many homeowners are better off with that discipline.
- The property is not your primary residence. VA cash-out is for the home you live in. Conventional has separate, lower caps for second homes and investment properties, so occupancy decides the leverage.
- You only need a rate-and-term adjustment with a little cash. Fannie Mae also offers a separate “limited cash-out” product. It can reach high leverage but caps the cash you can take back at a small amount. Do not confuse it with full cash-out. The Selling Guide’s limited cash-out section lays out the differences.
Conventional also has its own seasoning rules. Expect the existing mortgage and your time on title to both matter. Manufactured homes get separate, more restrictive limits.
Worth Weighing Before Either One
A cash-out refinance replaces your existing mortgage. If your current loan has terms you like, you give them up to get the cash. A HELOC leaves your first mortgage untouched, which can be the better move when you need a smaller amount.
Entitlement is a VA-specific question. A new VA loan can affect the entitlement you have left for a later VA purchase. Talk to a loan officer about that before you commit, because the answer depends on your history.
Where does the cash go? Many borrowers pay down higher-cost debt, and that can help. The tradeoff is turning unsecured debt into debt secured by your home. Treat that as a deliberate decision, not a side effect.
Key Terms Defined
LTV (loan-to-value): The loan balance divided by the home’s appraised value, shown as a percentage.
Entitlement: The amount VA is prepared to back for you, which determines how much a lender can lend with no down payment.
Funding fee: The one-time VA charge that stands in for monthly mortgage insurance. It can be financed, and exempt borrowers do not pay it.
Residual income: What is left of your monthly income after taxes, debts and housing costs. VA sets a minimum by family size and region.
Overlay: A lender’s own rule that is stricter than the program’s.
COE (Certificate of Eligibility): The VA document confirming you qualify for a VA-backed loan.
The Balanced Verdict
If you are VA-eligible and need to reach deep into your equity, the VA cash-out is the only one of these two that gets you to 100%. It also skips monthly mortgage insurance. Add the funding fee to the cost side, and add a thin equity cushion to the risk side.
If you are not eligible, or you need a modest amount of cash, conventional cash-out is simpler and keeps more equity in your home. It has no funding fee, but it asks for stronger credit and a bigger cushion.
For VA-eligible borrowers who need only a little cash, conventional often fits better, though the choice can be close. VA’s lack of monthly insurance is attractive, but the funding fee is real unless you are exempt. Run both scenarios with the same appraisal before deciding.
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. Call 828-256-2183 to talk it through.
Frequently Asked Questions
Can I really borrow 100% of my home’s value with a VA cash-out?
Yes, on the program side, the loan can reach 100% of the appraised value. That total includes the financed funding fee, so your cash is less than your full equity. Individual lenders may set a lower cap, and the appraisal sets the real number.
Do I need an existing VA loan to do a VA cash-out?
No. A VA cash-out can refinance a VA, FHA, USDA or conventional loan into a new VA-backed loan. You do need a Certificate of Eligibility. If your current loan is a VA loan, seasoning applies: the first payment must be at least 210 days old, with six monthly payments made.
Is a VA cash-out the same as a VA streamline?
No. The streamline (IRRRL) refinances an existing VA loan without a VA appraisal and carries a 0.5% fee unless you are exempt. A cash-out takes equity and is fully underwritten, with an appraisal and a full credit review.
Does conventional cash-out require mortgage insurance?
Usually not at the lower leverage cap, because the conventional limit sits well below the level where most borrowers face it. The tradeoff is that you must leave more equity in the home. Check current Fannie Mae limits and your lender’s guidelines for your exact situation.
What credit score do I need for each?
VA sets no minimum score itself, and the wholesale programs Lendmire places VA loans with start at a 580 decision score. Conventional programs generally ask for more. Lenders may add their own floors, so the number depends on the lender, the property and the full file.
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. Fannie Mae Eligibility Matrix
2. VA.gov: Cash-out refinance loan
4. VA.gov: Funding fee and closing costs
5. CFPB: Using home equity guide
6. Fannie Mae Selling Guide: Limited cash-out refinance transactions
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: VA Cash-Out Refinance Requirements When Borrowing at a High LTV · Can You Get Approved for a VA Cash-Out Refinance as a Veteran? · VA Cash-Out Refinance vs Conventional Cash-Out Under VA Type 1 and Type 2 Refinance Rules
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.