The Quick Read: It depends on three inputs: the appraised value, what is still owed on the home, and the costs that come out of the loan. VA allows a new loan up to 100% of the appraised value, including the financed funding fee. Your cash is the room left after the payoff, the fee, and closing costs. Only an eligible veteran, service member, or surviving spouse who lives in the home can use VA financing, subject to lender guidelines and full file review.
Can an Heir Use a VA Cash-Out at All?
Only if the heir has VA eligibility and will live in the home. Inheriting a house does not create VA eligibility. Your own certificate of eligibility (COE) from VA decides that. Without one, this loan is off the table.
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.
VA says you need a COE and must live in the home you are refinancing. VA also says a private bank, mortgage company, or credit union makes the loan. VA guarantees it. Here is the eligibility checklist:
- Veteran status or surviving-spouse status. A non-veteran heir cannot use VA. Some surviving spouses can, depending on how the veteran died and what the COE shows.
- A COE in your name. Entitlement belongs to the eligible person. A parent’s entitlement does not pass to a child.
- Occupancy. The home must be your residence. A rental or second home does not qualify for this loan.
- Title in your name. Lenders typically ask for a death certificate and a recorded deed, will, or probate order before they move forward.
- A credit and income profile that passes review. VA sets no minimum credit score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and residual income is the controlling test.
If a rental or second home is what you have in mind, occupancy decides the leverage, and this program is for the home you live in.
The Cash Formula, Step by Step
Your cash equals the new loan, minus the payoff of any existing liens, minus the financed funding fee, minus closing costs paid from proceeds. That is the whole formula. The ceiling on the new loan is 100% of the value on the VA appraisal, called the Notice of Value.
Federal regulation sets that ceiling at 100 percent of reasonable value. It also says the funding fee can be rolled into the loan. Any part that would push the loan above the ceiling is paid in cash at closing. So the fee sits inside the 100%, not on top of it.
Walk through it in order:
1. Start with the appraised value. An inherited home has no purchase price, so the appraisal is the only value that counts. The lender orders it.
2. Take 100% of that value. This is the most the new loan can be. Some lenders set their own lower caps, so your maximum may sit below it.
3. Subtract the payoff. That means any mortgage, tax lien, or judgment that must be cleared.
4. Subtract the funding fee if you finance it. More on that fee below.
5. Subtract closing costs paid from proceeds. Appraisal, title, recording, and prepaid items all come out here.
6. What remains is your cash.
You do not have to take the maximum. A smaller loan means less cash and a smaller balance.
What Shrinks the Check
Three things trim your cash: the funding fee, closing costs, and a lender’s own cap. The payoff comes first, but these are the ones people forget.
| Line item | What it depends on |
|---|---|
| Existing payoff | Any loan or lien still on the home |
| Funding fee | First or later use, and whether you are exempt |
| Closing costs | Appraisal, title, recording, prepaids |
| Lender cap | Whether the lender stops short of 100% |
| Appraised value | Condition, comparable sales, the appraiser’s read |
The funding fee deserves a closer look. For a cash-out refinance it is 2.15% for first use and 3.3% for later use. It is financeable. It is waived for veterans receiving compensation for a service-connected disability and for other exempt groups. If you are exempt, your cash goes up by the amount of the fee you would have paid. Confirm your status on your COE.
The appraisal is the other swing factor. A low appraisal lowers the 100% line, and your cash drops with it. This matters more on an inherited home, since nothing else anchors the value.
Three Worked Scenarios
These show how the formula bends. They use percentages of value, not prices.
Scenario one: a paid-off home. The heir owns the house free and clear. Nothing needs paying off, so the cash is the loan, minus the financed fee and closing costs. On paper, that is close to the full 100% of value less those items. Whether VA allows a cash-out when no lien exists is a question to settle first. Confirm this with a loan officer before you plan around it, because the answer shapes the whole file.
Scenario two: a home with a loan still on it. Say the home is worth 100% and the payoff is 40% of value. The room is 60% of value. Subtract the fee and the costs, and the rest is your cash. If the loan being paid off is a VA loan, seasoning applies: the later of 210 days from the first payment and the sixth payment. A non-VA loan does not carry that seasoning.
Scenario three: a sibling buyout. Two heirs hold title, and one wants to keep the home. The buyer’s cash from the refinance goes to buy out the other heir. Count the buyout as a use of the cash, not as extra cash. Title must be clear first, and title companies often will not insure during active probate. That is a practitioner point, not a VA rule.
Timing, Probate, and Title
VA sets no minimum ownership period for you. Seasoning attaches to a VA loan being refinanced, not to how long you have owned the house. This is the piece many heirs expect to be a one-year wait and is not.
The practical gate is title. Lenders need you on title with the paperwork recorded. That is why probate matters. If the estate is still open, expect delays on the title side, because a title insurer has to be willing to insure the transfer.
If a mortgage is still in place, a confirmed successor in interest can generally get servicing information from the servicer. That does not make you personally liable for the loan. Ask the servicer what it needs to confirm you.
Inherited cash is not the same as income. Lenders review your file on your own income and residual income, not on the equity you are pulling out.
The Net Tangible Benefit Test
A VA cash-out must show a net tangible benefit, meaning at least one of VA’s eight listed benefits. A new loan at or below 90% of reasonable value is one example. Moving from an adjustable rate to a fixed rate is another. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL, the streamline, and do not apply to the VA cash-out.
The Federal Register notice explains the old 90% cap was replaced because the statute allows loans up to 100% of reasonable value. Plenty of people still repeat the 90% rule, but it is out of date.
The lender must also give you an estimate of the equity you are removing and explain that it may affect your ability to sell later. Read it. Borrowing to 100% leaves no cushion. If prices slip, you could owe more than the home is worth.
VA Versus Other Ways to Get Cash From an Inherited Home
| Option | Leverage and fit |
|---|---|
| VA cash-out | Up to 100% of appraised value, no mortgage insurance, eligible veterans only |
| Conventional cash-out | Often lower leverage on a primary home, open to non-veterans |
| Home equity line or loan | Second lien, for owners with an existing first loan |
| Sale | Frees all equity, ends ownership |
A VA cash-out reaches more equity than most alternatives and carries no mortgage insurance of any kind. The tradeoff is the funding fee, the occupancy rule, and a bigger balance. A streamline will not give you cash, since the IRRRL only refinances an existing VA loan.
Key Terms Defined
- Certificate of Eligibility (COE): The VA document that confirms you can use the home loan benefit.
- Notice of Value: The VA appraisal result that sets the 100% line for the loan.
- Funding fee: A one-time VA charge that can be financed into the loan unless you are exempt.
- Seasoning: The waiting period on an existing VA loan before it can be refinanced with cash out.
- Net tangible benefit: A measurable gain VA requires the refinance to deliver.
- Residual income: What is left of your monthly income after debts and living costs, the controlling VA test.
- Successor in interest: An heir confirmed by the servicer as having an interest in the home.
Frequently Asked Questions
Can I get cash out of an inherited home with no mortgage on it using VA?
Possibly, but confirm it first. Sources conflict on whether VA allows a cash-out when no lien exists, and VA’s consumer page does not settle it. A loan officer can check lender and program rules against your file before you spend time on an appraisal.
Do I get 100% of the home’s value in cash?
No. The 100% is the ceiling on the new loan. The payoff, the funding fee if financed, and closing costs come out of it. Some lenders also set a cap below 100%, so your maximum may be lower.
Can a non-veteran heir use a VA cash-out?
No. VA financing needs an eligible veteran, service member, or surviving spouse with a COE. A non-veteran heir would look at conventional cash-out or another option instead.
Do I have to wait a year after inheriting the home?
VA has no minimum ownership period. Seasoning applies only when the loan being paid off is a VA loan. Lender and title requirements can still affect when you can move forward.
Can I refinance during probate?
Usually it is hard. Title insurers often will not insure while probate is active, and the lender needs you on title. Ask your estate attorney and a loan officer where the file stands.
What to Gather and Your Next Step
Start with these: your COE, the death certificate, the recorded deed or probate order, the latest payoff statement if a loan exists, and proof of income. A clean set of papers makes the cash estimate far more reliable.
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. Details on the VA cash-out refinance program are on Lendmire’s page. Every figure here is subject to lender guidelines and full file review, and none of it is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage broker licensed for consumer lending in 16 states. Lendmire arranges FHA, VA, conventional and jumbo purchase and refinance loans through wholesale lenders; every file is underwritten by the lender under the applicable program guidelines. 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. Federal Register: Revisions to VA Cash-Out Refinance
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 vs Conventional Cash-Out When the Cash Is Not Taxable Income · How Much Cash Comes Out of a VA Cash-Out Refinance on a Home You Own? · How to Restore Entitlement Before 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.