The Quick Read: The solar payoff comes out of your equity, not on top of it. A VA cash-out refinance can reach 100% of the appraised value, including a financed funding fee. Your cash is whatever remains after the old mortgage, the solar balance, and closing costs are paid. A bigger solar balance means less cash to you, and the solar balance never raises the ceiling.
Here is the formula in one line. Maximum new loan equals the VA-appraised value times the allowed loan-to-value (LTV) ratio, which is the loan size as a percentage of the home’s value. Cash to you equals that new loan, minus the first-mortgage payoff, minus the solar payoff, minus costs.
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.
What Does the Formula Look Like in Practice?
Start with the ceiling, then subtract everything that has to be paid. The appraiser sets the value. The program sets the percentage. What is left after the payoffs is yours.
Across the wholesale programs we place VA files with, the VA cash-out reaches 100% of the appraised value. That includes the funding fee if you finance it. Lendmire’s VA cash-out refinance program page covers the program basics.
Here is a modeled picture with percentages only. Say a home appraises at a value we will call 100. The existing first mortgage is 60% of that value. The solar loan is 8%. A financed funding fee and costs together take another 3%. At a 100% ceiling, 100 minus 60, 8 and 3 leaves cash to you of roughly 29% of the value. Not every lender goes to 100%, so at a 90% ceiling the same file leaves about 19%. Those numbers are illustrative assumptions, not a quote.
Now thin the equity. Say the first mortgage is 90% of value and the solar loan is 8%. With the fee and costs at the same 3%, the payoffs plus fee and costs take roughly 101% of value, which is about 1% more than a 100% ceiling allows. No cash comes back, and the file falls short as written. You would need to bring money to closing, pay down the solar balance first, or skip the refinance.
Here is the catch for anyone who assumes solar added value. The payoff comes out of equity whether or not the appraisal gives the panels any credit.
Why Is the Ceiling Set by Value and Not by the Solar Balance?
The VA guaranty rule looks at the home’s reasonable value, never at what you owe on the panels. Under 38 CFR 36.4306, the new loan cannot exceed 100% of the reasonable value of the dwelling as the Secretary determines it. A VA program notice 26-19-05 tells lenders to divide the total loan amount, including the funding fee, by the appraiser’s reasonable value. If the result is over 100%, VA will not guarantee the loan.
Two practical consequences follow:
- A financed funding fee counts inside the 100%. It cannot push the loan above value.
- If you close above 100%, you pay the excess at closing. VA’s Circular 26-18-30 says the Veteran must pay the excess.
Is 90% a VA Cap on Cash-Out?
No. The 90% figure shows up in the regulation as one of the net tangible benefit tests. A new loan at 90% or less of reasonable value is one way to show the refinance helps you. It is not a ceiling VA imposes. Some lenders set a lower limit of their own as an overlay, which is a lender rule layered on top of VA’s. Those overlays differ from one lender to the next, so a file one lender trims might fit at another.
What Kind of Solar Debt Do You Actually Have?
Not every solar arrangement is a lien you pay off. Identify yours first, because the answer changes the whole file.
| Structure | What it is | At a VA cash-out |
|---|---|---|
| Secured solar loan | Loan with a lien on the equipment | Paid off through closing |
| Fixture filing | Lien recorded in land records | Paid off or subordinated |
| PACE | Assessment tied to property taxes | Needs lender and title review |
| Lease or PPA | A contract, not a lien | Buy out, assume, or leave in place |
| Unsecured solar loan | Loan with no collateral | Not a lien; counts as debt |
The CFPB’s solar financing report notes that some solar loans are secured, typically by a lien on the panels, while others are unsecured. Secured loans usually carry a UCC-1 filing. That is a public notice that a creditor has a claim on the equipment. The Treasury consumer advisory on solar warns that these liens can affect whether a buyer will want your home.
To find out which one you have, pull your solar contract and look for a security interest. Then ask the title company to search the county records. Title will find what you forget.
How Does the Loan Get Underwritten, Step by Step?
A cash-out refinance is full underwriting. It is not a streamline. Here is the sequence.
1. Identify the solar structure. Loan, lease, PPA, or PACE. Each is handled differently.
2. Gather documents. You need the solar agreement, a current payoff statement, any UCC-1 or fixture filing, and the first-mortgage payoff. Add any lease or PPA paperwork.
3. Order the VA appraisal. VA sets the reasonable value, and that value drives the ceiling.
4. Underwrite the file. The lender reviews credit, income, and residual income, which is the money left each month after major obligations and living costs. Residual income is the controlling test on VA loans. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
5. Test the net tangible benefit. The refinance has to help you in a way VA recognizes. The lender must also give you a loan comparison.
6. Resolve the lien. The solar creditor is paid in full through the closing agent. Any lien that stays must agree to sit behind the new VA loan. The VA loan has to be a first lien.
7. Close and disburse. Funds go out in order: first mortgage, solar creditor, costs, then you.
The wholesale programs we use start at a 580 decision score for VA loans. That is a program floor, subject to lender guidelines and full file review. VA itself sets no minimum score. Your certificate of eligibility (COE) from VA decides whether you are eligible at all.
What Does the Funding Fee Do to the Math?
It adds to the loan if you finance it, and it counts inside the 100%. On a cash-out refinance, the funding fee is 2.15% for first use and 3.3% for later use. Veterans receiving compensation for a service-connected disability, and the other exempt groups, pay none. VA’s funding fee page confirms it is a one-time payment on a VA-backed loan and that, for refinances, the rates do not change with your down payment.
Say the fee is financed on a home you are refinancing to the full 100%. The fee eats into the room you have for payoffs and cash. If you are exempt, that room goes to you instead. Ask your loan officer to show the file both ways.
How Does the Appraisal Treat the Panels?
It depends on who owns them. VA’s Chapter 12 guidance states that no value is given to leased equipment, including leased solar systems. Leased panels add nothing to the appraisal. For panels you own, the contribution depends on the appraiser’s read of the market. Treat any value as a bonus, not a plan.
The key point is this. The loan balance on the panels and the value the appraiser credits are two separate numbers. A $0 value and a large payoff is a bad combination for cash back, because the payoff still comes out of your equity.
Where Does the General Rule Break?
Several situations change the answer.
- Lease or PPA. A lease is a contract, not a lien to pay off. You can buy it out, take it over, or leave it. VA gives it no value. The payoff question only applies if you buy it out.
- PACE. The Treasury advisory says a PACE lien takes priority over your mortgage. The CFPB describes PACE as a loan secured by a property tax lien. Any PACE balance needs lender and title review before anyone can say how it fits.
- Installer mechanic’s lien. This is separate from the UCC-1. Title will find it, and it has to be cleared.
- Payoff larger than the system’s value. The balance still comes out of equity even when the appraisal credits the panels little or nothing.
- Non-VA first mortgage. A VA cash-out refinances any loan type into VA. A conventional or FHA first mortgage can move over. Seasoning, the waiting period after a loan starts, applies on the same terms the program sets.
- Occupancy. VA loans are for a home you live in. That is a primary residence loan.
Why Can’t an IRRRL Pay Off the Solar Loan?
The streamline is built to lower the cost of an existing VA loan, nothing more. The IRRRL, or Interest Rate Reduction Refinance Loan, refinances a VA loan with no VA appraisal and a funding fee unless you are exempt. It requires a net tangible benefit and seasoning of the later of 210 days from the first payment and the 6th payment. A cash-out can refinance any type of lien, and an IRRRL cannot. So if a solar lien needs to be cleared, the cash-out is the route.
The two loan types also test different things. The half-percent rate-reduction and fee-recoupment tests are IRRRL rules. They do not apply to a VA cash-out. A cash-out has to meet a net tangible benefit, which is one of VA’s listed benefits.
What Do Type I and Type II Mean Here?
Both are VA handbook labels based on payoff. In a Type I refinance, the new loan, including the funding fee, does not exceed the payoff of the loan being refinanced. In a Type II, it does exceed it. A refinance that clears a solar lien and puts cash in your pocket is Type II. Type II files get the full underwriting described above.
How Does This Change Your Monthly Budget and Equity?
Paying off the solar loan removes that monthly payment. The balance moves into the new mortgage and spreads across the longer term. That can raise the total interest you pay over time. The new loan is also larger.
Check your solar contract for prepayment terms before you plan around a payoff date.
Cash-out also shrinks your equity. The lender must give you an estimate of the dollar amount of home equity being removed, with an explanation that it may affect your ability to sell later. Read it. It is the clearest summary of what you are trading.
An uncleared solar lien can hold up title. If the solar company is slow to send a payoff statement or a release, start that request early.
Pay It Off First or Pay It at Closing?
The closing agent wires the payoff from your loan proceeds, and the new loan carries the balance. Paying it off yourself first makes sense when you have cash on hand and the new loan would otherwise run out of room. It also helps when equity is thin and every percentage point of value counts.
Which route is better depends on your cash and your equity. Paying early can rescue a thin file. It also drains cash you may want in reserve. Compare both with your loan officer before choosing.
What Paperwork Should You Collect?
- The solar loan agreement and a current payoff statement.
- The UCC-1 or fixture filing, if one exists.
- The title commitment.
- Any lease or PPA.
- The first-mortgage payoff statement.
- After closing, proof the creditor filed a UCC-3 termination, which formally ends the lien. Confirm it was recorded.
When Not to Do This
Skip it if your equity is thin and the solar payoff would leave nothing. Skip it if the refinance does not pass the net tangible benefit test. And skip it if you only want a lower payment on an existing VA loan, since the IRRRL is built for that.
Key Terms Defined
Reasonable value: The value VA sets through its appraisal, which controls the loan ceiling.
Funding fee: A one-time VA fee that can be financed and is waived for exempt veterans.
UCC-1: A public filing that tells others a creditor has a claim on specific equipment.
UCC-3: A filing that ends or amends a UCC-1, used after a payoff.
Subordination: An agreement by a lienholder to sit behind the new loan in priority.
Net tangible benefit: A requirement that the refinance help you in a way VA recognizes.
Frequently Asked Questions
Does a VA cash-out count the solar loan as part of the 100% limit?
The solar balance does not raise or lower the ceiling. The ceiling is 100% of reasonable value. The solar payoff is simply one of the amounts paid out of the new loan, so a larger balance leaves less cash to you.
Will the appraiser add value for my solar panels?
Not if they are leased. VA guidance gives no value to leased solar equipment. For panels you own, any value depends on the appraisal. Plan the file as if the panels add nothing, and treat any credit as extra.
What happens if I owe more than I can borrow?
The loan cannot exceed 100% of reasonable value, and any excess must be paid at closing. If the payoffs and costs outrun the ceiling, you can pay down the solar balance first, bring cash to closing, or skip the refinance.
Can I leave the solar lien in place instead of paying it off?
Sometimes. A lien that stays has to agree to sit behind the new VA loan, which must be a first lien. PACE needs lender and title review. Whether subordination is possible depends on the creditor and the lender’s guidelines.
Does seasoning apply if my current loan is not a VA loan?
Seasoning rules are set by the program and lender guidelines. A VA cash-out can refinance any loan type into VA. Ask your loan officer how seasoning applies to your current loan.
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. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend. For a related look, see Lendmire’s piece How Much a VA Cash-Out Lends When the Home Has a Solar Lien.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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
4. CFPB Issue Spotlight: Solar Financing
5. Treasury consumer advisory on solar
6. VA funding fee and closing costs
8. CFPB PACE proposed rule release
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 Much Cash a VA Cash-Out Lends Beyond an IRRRL Payoff · How Much a VA Cash-Out Lends When the Home Has a Solar Lien · How Much a VA Cash-Out Lends When a Spouse Lives Out of State
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.