The Quick Read: It depends on which loan you used to buy. A VA cash-out is built for eligible veterans who live in the home and want to borrow against equity at high leverage with no monthly mortgage insurance. A conventional cash-out suits borrowers who have lower leverage needs, don’t have VA entitlement, or are not yet past VA’s seasoning clock. At month six, the clock on the loan you are paying off often decides the answer.
Side-by-Side
Here is how the two options compare at the six-month mark. Figures for the VA column come from the wholesale programs Lendmire places files with. Conventional details vary more by lender, so that column stays general.
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.
| Factor | VA Cash-Out | Conventional Cash-Out |
|---|---|---|
| Who it fits | Eligible veterans with a COE | Any qualified borrower |
| Leverage | Up to 100% of appraised value | Lower; set by lender and occupancy |
| Credit floor | 580 decision score at our wholesale programs | Usually higher; varies by lender |
| Mortgage insurance | None monthly | Possible at higher leverage |
| Upfront fee | Funding fee, unless exempt | Pricing adjustments, not a funding fee |
| Occupancy | You must live in the home | Primary, second home, or investment allowed |
| Seasoning | Applies if the loan being paid off is VA | Title and loan-age tests, varies by lender |
| Controlling test | Residual income | Debt-to-income and credit score |
Every figure here is subject to lender guidelines and full file review. None of it is a commitment to lend.
Why Month Six Is the Awkward Moment
Seasoning is the waiting period a lender or agency wants before you refinance. Two clocks matter. One is how long you have owned the home. The other is how old the loan you are paying off is.
The VA clock follows the loan. VA Circular 26-19-22 defines loan seasoning as the age of the loan being refinanced. If that loan is not seasoned by the refinance title-recording date, VA cannot guarantee the new one. Across the VA programs we place files with, the test is the later of 210 days from your first payment due date or your sixth monthly payment.
Take a VA purchase loan whose first payment is due about a month after closing. Six payments are not made until roughly month six, but 210 days is about seven months, and the later of the two controls. The 210-day mark therefore lands around month seven or later, so at month six a VA purchase loan is generally not yet old enough for a VA-to-VA cash-out. Extra payments can help you reach the sixth payment, but they don’t shorten the 210 days.
The conventional clock works differently. Agency guides generally look at time on title and sometimes the age of the existing loan. Exceptions exist for certain recent cash buyers. Fannie Mae’s cash-out refinance topic is the benchmark rule set, but individual lenders can add their own waiting periods. Ask before you assume.
When a VA Cash-Out Is the Better Fit
A VA cash-out is the stronger choice when three things line up. You hold a certificate of eligibility (COE), the home is your primary residence, and the loan being paid off is old enough or isn’t a VA loan at all.
That last point surprises people. Per the VA seasoning rule, the clock attaches to the age of the loan being refinanced. If you bought with a conventional or FHA loan, or paid cash, VA’s seasoning test generally isn’t the obstacle. Our team sees conventional borrowers move into VA cash-out regularly, and it is a real way to drop monthly mortgage insurance. The lender will still check its own overlays.
The leverage is the main draw. A VA cash-out reaches 100% of the appraised value, including the financed funding fee. It also refinances any loan type into VA. There is no monthly mortgage insurance, as VA’s cash-out page confirms.
The tradeoffs are real:
- Funding fee. It runs 2.15% on first use and 3.3% on later use for a cash-out, and it can be financed. Veterans who receive service-connected disability compensation, and other exempt groups, don’t pay it.
- Net tangible benefit. The new loan must benefit you in one of VA’s listed ways. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL, not the cash-out.
- Residual income. This is the controlling test. The 41% debt-to-income figure is a guideline, not a cap, but a higher ratio needs residual income well above the table.
- Entitlement. A cash-out uses entitlement. Ask a loan officer how much remains if you plan to buy again.
Our own VA cash-out refinance program page lays out how the product works at a glance.
When a Conventional Cash-Out Is the Better Fit
Conventional wins in a few clear situations.
You bought with a VA loan and need cash now. If month six has arrived and the VA clock hasn’t, a conventional cash-out may be the only cash-out route open. The cost is usually lower leverage and a higher credit bar. Whether the existing loan’s age blocks you depends on the lender.
You don’t have a COE. Conventional doesn’t care about military service. Anyone who meets the credit, income and equity tests can apply.
You want to keep your VA entitlement intact. Using a conventional loan leaves your VA benefit for a future purchase.
You need a different occupancy. VA requires you to live in the home. Conventional rules vary by occupancy type, and agency matrices set separate limits for primary homes, second homes and investment properties.
The downsides are straightforward. Leverage is lower, so you may reach less of your equity. At higher leverage, mortgage insurance can enter the picture. And cash-out loans carry pricing adjustments tied to leverage and credit score, so a lower credit score generally means a costlier loan. Lendmire’s piece on the best cash-out refinance program after six months of ownership seasoning on a conventional covers that side in more depth.
Month-Six Scenarios
Picture four buyers, all at month six.
Bought with a VA loan. VA-to-VA is generally not available. Your options are to wait for the later of the 210-day mark and the sixth payment, or to look at a conventional cash-out if you need money sooner.
Bought with a conventional loan. A VA cash-out may be open, since VA’s seasoning test targets VA loans. You also gain no-mortgage-insurance leverage if you are eligible. The lender still checks its own waiting period.
Bought with FHA. Treat it like the conventional case for VA purposes. An FHA payoff into VA is a common move, subject to lender guidelines.
Bought with cash. Both paths may be open sooner, and conventional has specific exceptions for recent all-cash buyers. Ask the lender how it treats time on title.
Use of Proceeds and Budget
Cash out means a bigger loan. The CFPB’s guide to using home equity warns that a cash-out refinance can stretch the time it takes to pay off your mortgage and can raise the monthly payment because a larger loan replaces the current one. The same guide notes that lenders typically want you to keep 10% to 20% of your home’s value as equity. Treat that as a general consumer rule, not a VA one. VA programs reach 100%, but having the ability to borrow that much is not a reason to.
A CFPB report on cash-out borrowers found that more than half of borrowers each year from 2014 to 2019 used the money to pay off other debts. Paying off cards with home equity only helps if the habit changes too.
Key Terms Defined
Seasoning: the waiting period before you can refinance, measured by loan age, time on title, or both.
COE (certificate of eligibility): the document from VA that confirms you qualify for a VA loan.
Funding fee: a one-time VA charge that can be financed into the loan and is waived for exempt borrowers.
Residual income: the money left each month after taxes, debts and basic living costs, which VA treats as the controlling test.
Net tangible benefit: VA’s requirement that the refinance help the borrower in a defined way.
Entitlement: the amount of VA guaranty you have available.
The Balanced Verdict
Neither loan wins on its own. A VA cash-out is the stronger tool when you are eligible, live in the home, and the loan you are paying off is either non-VA or old enough. You get high leverage and no monthly mortgage insurance, at the cost of a funding fee and some entitlement. A conventional cash-out is the stronger fallback when VA’s clock hasn’t run, you lack a COE, or you want your entitlement untouched. You get flexibility on occupancy and timing, usually at lower leverage.
At month six, the single most useful move is a call to a loan officer with three facts ready: which loan you used to buy, your closing date, and your first payment due date. That tells you which clock is still running.
Frequently Asked Questions
Can I do a VA cash-out six months after buying with a VA loan?
Generally not. VA’s seasoning test looks at the age of the loan being refinanced, and the 210-day mark from your first payment due date typically falls around month seven or later. Both the 210 days and the sixth payment must be met. Confirm your exact dates with the lender.
Can I move a conventional loan into a VA cash-out at month six?
Often yes, if you have a COE and live in the home. VA’s seasoning rule attaches to the loan being refinanced, so a non-VA payoff is generally not held up by it. Lenders may still add their own waiting periods, so ask first.
Does a VA cash-out have mortgage insurance?
No monthly mortgage insurance applies, per VA. A funding fee does apply unless you are exempt. Conventional cash-outs at higher leverage can carry mortgage insurance, depending on the lender.
Does a VA cash-out use up my entitlement?
It can, so talk with a loan officer about how much remains if you plan to buy another home with VA financing.
Is a bigger cash-out always better?
No. A larger loan can raise your payment and lengthen your payoff, as the CFPB warns. Borrow what the goal requires, not what the program allows.
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.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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. Fannie Mae Selling Guide B2-1.3-03
3. VA – Cash-out refinance loan
4. CFPB – Using home equity guide
5. CFPB: CFPB Report Finds Cash Out Mortgage Refinance Borrowers Improve Credit Scores
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 to Restore Entitlement Before a VA Cash-Out Refinance · How Lenders Underwrite a VA Cash-Out Refinance With No Mortgage · VA Cash-Out Refinance vs Conventional Cash-Out on Closing Costs
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
Compliance and disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage broker and is not a direct lender, depository institution, financial advisor, or tax professional. Content in this article is general market analysis and educational information — not financial, legal, or tax advice for any specific situation. Lendmire does not guarantee loan approval; every transaction is subject to underwriting by the funding lender. Mortgage pricing and loan program guidelines are subject to change at any time without notice and vary by borrower characteristics, property type, and state regulations. Lendmire complies with Equal Housing Opportunity. Licensure verification: NMLS Consumer Access.