The Quick Read: On a VA cash-out, the appraiser picks closed sales of similar homes, adjusts each one for differences, and reconciles them into a single reasonable value. That number caps the loan. The cap is 100% of the appraised value, with the financed funding fee counted inside it. A lower comp-driven value shrinks the cash you can take out, dollar for dollar.
How Does the Comparable-Sales Method Work?
The appraiser starts with closed sales and ends with one number. The steps in between decide how much cash you can take out.
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 relies on the sales comparison approach. Per the VA Lenders Handbook, Chapter 11, the appraiser must include at least three closed sales believed to be the best available, with comments supporting the choice. Comps are chosen for similar location and physical traits, not for sales price. The test is simple: would the comp compete with your home if both were on the market at the same time?
Then the appraiser adjusts. Each comp gets a plus or minus for differences in size, rooms, lot, condition, concessions and timing. After that, the adjusted values are reconciled into the reasonable value, which VA reports on the Notice of Value.
Not a Zestimate. Not an average of the neighbors’ asking prices. Closed sales only.
Key Terms Defined
- Comparable sale (comp): A recently closed sale of a similar home that the appraiser uses as evidence of your home’s value.
- Adjustment: A dollar change made to a comp’s price to account for a difference between that home and yours.
- Effective date: The date the appraisal’s value applies to, which is the date time adjustments are measured against.
- Reconciliation: The appraiser’s final step of weighing the adjusted comps into one value opinion.
- Reasonable value: VA’s term for the appraised value, shown on the Notice of Value, that caps the loan.
- Gross living area (GLA): The finished, habitable above-grade square footage the appraiser compares between homes.
How Are Comps Chosen on a Cash-Out?
The selection rules are the same as on a purchase, but a cash-out has no contract price to defend. The appraiser is not testing whether a sale price is justified. The appraiser is estimating what your home would bring.
Here is what the Handbook asks of comp selection:
- Recency: Sales within the last six months are preferred. Sales older than twelve months need an explanation from the appraiser.
- Distance: VA Circular 26-17-14 says VA sets no minimum or maximum distance. Comps should be as close as practical. In suburban or rural areas they can sit many miles away, and the appraiser must explain why they were used and why closer sales were not.
- Bracketing: VA’s fee-panel guidance says the best comps bracket your home’s size and value, with some above and some below.
- Adjustments: They should reflect how the market reacts to a difference. They should never be used to force a comp to fit.
The “within a mile” rule people repeat does not exist. A tight, recent set of comps is better, but distance alone is not a flaw.
How Does the Comp Grid Read, Line by Line?
The grid is a table with your home in one column and each comp beside it. VA’s own appraisal report training material shows the layout, including proximity, size, concessions and adjustments by line.
| Grid line | What it shows | What to check |
|---|---|---|
| Proximity | Distance from your home | Explained if far |
| Sale date | When the comp closed | Recent, with time adjustment |
| GLA | Finished above-grade space | Close to your home’s size |
| Concessions | Seller help on the comp | Adjusted downward only |
| Condition | Quality and upkeep | Matches your home’s actual state |
| Net adjustment | Sum of all plus and minus lines | Not extreme |
Three of these lines trip people up.
Concessions. Concession adjustments must go downward only. If a seller paid part of the buyer’s costs, the comp’s price is trimmed. A positive concession adjustment is not acceptable.
Time. Time adjustments reflect market change between the comp’s contract date and the appraisal’s effective date. In a rising market an older comp gets nudged up. In a falling one, down.
Condition. Your home’s condition on the grid is shown “subject to” completion of any repairs needed to meet VA’s Minimum Property Requirements. The grid assumes those repairs are done, so a needed repair can still be a condition of the loan even when it does not cut the value.
The appraiser should also comment on any adjustment that is large or not self-explanatory. VA’s fee-panel guidance flags adjusted comp values that spread widely apart. If your grid has a comp with big adjustments and no comment, that is a question worth raising.
How Does Value Connect to Your Cash?
The cap is 100% of reasonable value, and the funding fee sits inside it. VA Circular 26-19-05 defines the loan-to-value calculation: the total new loan, including any financed funding fee, divided by the reasonable value. VA will not guaranty a refinance above 100%.
Consider a home appraised at a given value, with an existing payoff and a funding fee financed into the loan. The new loan is the payoff, plus closing costs you roll in, plus the financed fee, plus the cash you want. All of it must fit under the reasonable value. Whatever room is left is your cash.
So if the appraiser’s number comes in lower, the room shrinks. Nothing else changes. The payoff does not move, and the funding fee is set by use and down payment tiers. Across the wholesale programs we place VA files with, the funding fee on a cash-out is 2.15% for first use and 3.3% for subsequent use, waived for exempt veterans, such as those receiving compensation for a service-connected disability. That fee counts toward the same 100% ceiling.
Two more points here. A lower value can also undo the net tangible benefit case. A cash-out must meet at least one of VA’s eight listed net tangible benefits, so a smaller loan can change whether the file works. And the half-percent rate-reduction and fee-recoupment tests are IRRRL rules. They do not apply to a VA cash-out.
What Is the Difference Between Type I and Type II?
Both types need an appraisal and a net tangible benefit. Per the circular, a Type I is a new loan, funding fee included, that does not exceed the payoff of the loan being refinanced. A Type II is the other kind: a new loan that exceeds that payoff, which is how a homeowner takes cash out. This article is about Type II, but the comp rules are identical for both.
A VA cash-out can also refinance a non-VA loan into a VA loan. The appraisal rules do not change with the loan you are paying off. By contrast, an IRRRL, which refinances an existing VA loan with no cash out, generally has no VA appraisal. That is why the cash-out is the one where comps matter.
Where Does the General Rule Break?
Edge cases are where a straightforward grid gets complicated.
Rural and thin-data properties. When few homes sold nearby, the appraiser may use distant or older sales and must explain each one. Fee-panel guidance also lets the appraiser explain why other sales were not used. If your home sits in a thin market, read those comments carefully.
Renovations and upgrades. The appraiser compares your home as it stands. A kitchen redo only counts to the extent comps show buyers pay for it. Keep a dated list of improvements, with what was done and when, to hand the appraiser or the loan officer before the visit.
Needed repairs. Because condition is shown subject to completion, a repair required by Minimum Property Requirements travels with the report. It is a loan condition, not just a value note.
Tidewater. The Tidewater process is built around a sales price. The appraiser tells the requester when estimated value will fall below the contract price. A cash-out has no contract price, and the pre-finalization comp window is a purchase tool, so treat it that way. On a refinance, the documented path is a Reconsideration of Value after the Notice of Value.
No escape clause. On a purchase, a low value can reopen price talks. On a refinance there is nothing to renegotiate. A low value simply lowers the ceiling. You take less cash, bring funds, or keep the loan you have.
What If the Value Comes In Low?
You have four moves, and they run from least to most effort.
1. Check the report for errors. Wrong square footage, wrong bedroom count, a missed feature, or a comp that is not comparable. Factual errors go back through the lender first.
2. Take less cash. If the comps are sound, the cleanest fix is a smaller loan sized to the value.
3. Request a Reconsideration of Value. VA’s Buyer’s Guide says the lender or agent supplies valid sales data supporting your opinion. VA staff then review the report, the new data, and VA’s own market data.
4. Keep the current loan. If the numbers no longer meet a net tangible benefit, staying put is a legitimate outcome.
A strong ROV package is made of closed sales, not listings. Each comp needs its address, sale price, sale date and gross living area. A comp that is better on location and physical traits than the ones in the report is worth more than three that are merely cheaper. Weak packages cite asking prices, sales too old, or homes with a different style or size.
Red Flags to Look For in Your Own Report
- Fewer than three closed sales, or any comp that is a listing rather than a sale.
- Comps older than twelve months with no explanation.
- Distant comps with no reason given, when nearer sales likely exist.
- A positive adjustment for seller concessions.
- Large net adjustments with no comment.
- A condition rating that does not match the home.
- Square footage or room counts that differ from your records.
One of these does not mean the value is wrong. Several together are grounds for a correction request or a ROV.
What Decisions Does This Leave You With?
The appraisal is not a negotiation. It is a ceiling. The practical choices are how much cash you need, whether that fits under the ceiling, and whether the refinance still makes sense if it does not.
Everything here sits inside the program’s envelope: 100% of appraised value including the financed fee, no mortgage insurance, no VA loan limit with full entitlement, and residual income as the controlling underwriting test. Wholesale programs we place VA loans through start at a 580 decision score. All of it is subject to lender guidelines and full file review. The appraisal fee is paid when the appraisal is ordered, and it is not refundable if the value disappoints. VA assigns the appraiser from its fee panel, so you do not pick one.
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. Lendmire’s VA cash-out refinance program page lays out the structure.
Frequently Asked Questions
Does the VA appraisal use the same comps a lender or Zillow would?
Not necessarily. VA assigns its own fee-panel appraiser, who selects closed sales and adjusts them on their own judgment. An online estimate is not evidence. The only way to change the appraiser’s number is through an ROV with better closed-sale data.
Can neighbors’ listings help my value?
No. The Handbook requires closed sales as comps. Listings and asking prices are not used. They may be included as supporting information in an ROV package if the property was listed, but they do not replace closed sales.
Does an appraisal come into play on a streamline refinance?
Generally no. An IRRRL refinances an existing VA loan without cash out and carries no VA appraisal. A VA cash-out always does, because the loan amount is capped by reasonable value.
Is the cap still 90% on a VA cash-out?
No. The VA cash-out reaches 100% of the appraised value, funding fee included. The appraised value still matters for eligibility, because a cash-out must meet at least one of VA’s eight listed net tangible benefits, and a lower value means a smaller loan that can change whether the file works.
Can I pick my own appraiser to get a higher value?
No. VA assigns a fee-panel appraiser through its system when the lender orders the appraisal. If you believe the value is wrong, the route is a Reconsideration of Value supported by closed-sale data.
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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References
1. VA Lenders Handbook, Chapter 11
2. VA Circular 26-17-14 (comparable sale location)
3. VA: Appraisal Report Practice
4. VA Circular 26-19-05 (cash-out refinance)
5. VA Home Loan Guaranty Buyer’s Guide
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 on a Fourplex · VA Cash-Out Refinance Rules After a Title Change · How Much Cash Comes Out of a VA Cash-Out Refinance With an Old Appraisal?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.