The Quick Read: Applying means getting your Certificate of Eligibility, choosing a private lender, supplying income and credit documents, ordering a VA appraisal, passing full underwriting, and closing a new first-lien loan that pays off the old one. The loan can reach 100% of the appraised value, but only if the lender’s own limit allows it. The financed funding fee counts inside that 100%.
Is This the Right Loan for You?
Run through this short checklist before you apply:
- You hold, or can obtain, a Certificate of Eligibility (COE).
- You live in the home. This is a primary-residence program.
- You want cash from equity, or you want to move a non-VA loan into a VA loan.
- You can accept a larger balance in exchange for cash.
- If your current loan is a VA loan, it has aged enough to pass the seasoning test.
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: 7.32% as of October 22, 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 describes the cash-out refinance as replacing your current loan with a new VA-backed loan on different terms. VA does not make the loan. A private lender does, and VA guarantees it.
What “Full Value” Actually Means
Full value means the new loan, including the financed funding fee, may reach 100% of the home’s reasonable value as VA determines it. That is the ceiling VA sets. It is not a promise from every lender.
Under 38 CFR 36.4306, the funding fee can be rolled into the loan. Any portion that would push the loan past 100% of reasonable value must be paid in cash at closing. Across the wholesale programs Lendmire places VA files with, the 100% figure is reachable, though a lender or program can set a lower cap. Lendmire’s piece Can a Veteran Get a VA Cash-Out Refinance for the Full Home Value? goes deeper on that gap.
Here is how the cap works in practice. Take the total new loan, add the financed fee, and divide by the appraised value. If the answer is above 100%, the excess comes out of your pocket at the table.
The Steps, in Order
Step 1: Get your Certificate of Eligibility
Your loan officer can often pull it for you. You can also request it through VA directly.
Step 2: Choose a lender and apply
VA does not lend, so you apply to a private lender or a mortgage broker who places the loan with one. A broker such as Lendmire arranges VA loans through wholesale lenders and does not lend itself. The advantage of a broker is access to more than one lender’s guidelines on a single application. The tradeoff: the lender still makes the final decision. Lendmire’s piece Wholesale Broker vs Retail Lender for a Full-Value VA Cash-Out lays that out.
For a cash-out, you should receive two disclosures soon after applying: a loan comparison statement and an equity statement showing how much home equity you would be removing. VA’s report to Congress on disclosures puts the deadline at 3 business days after application. Because this is a consumer mortgage, you also receive the standard Loan Estimate and Closing Disclosure.
Step 3: Gather documents
VA does not publish one fixed list, so requirements vary by lender. Expect the following:
- Your COE.
- Recent pay stubs, W-2s and other personal-income documentation if you are salaried.
- Tax returns and business records if you are self-employed.
- Award letters if you receive retirement or disability income.
- Bank statements and a current mortgage statement.
- Homeowners insurance information.
Step 4: The appraisal
VA determines “reasonable value” through its appraisal process, and that number sets your 100% ceiling. A low appraisal shrinks the maximum loan directly. If the appraisal comes in under your expectation, your options are to take less cash, bring cash to closing, or wait and reapply.
Step 5: Full underwriting
A cash-out gets full underwriting, unlike an IRRRL, which generally skips the appraisal and heavy underwriting. Residual income is the controlling test: the money left each month after taxes, debts and housing costs, measured against VA’s table for your family size and region. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
Across the wholesale programs Lendmire works with, the decision-score floor is 580. VA itself sets no minimum score, and some lenders set a higher floor. Every figure here is subject to lender guidelines and full file review.
Step 6: Net tangible benefit and seasoning
Two checks happen before closing, and the lender runs both.
Step 7: Closing
The new first-lien loan pays off your old lien. Proceeds beyond the payoff and costs come to you as cash.
| Step | Who acts | What comes out of it |
|---|---|---|
| COE | You or loan officer | Entitlement confirmed |
| Application | You and lender | Disclosures issued |
| Documents | You | Complete file |
| Appraisal | VA-assigned appraiser | Reasonable value |
| Underwriting | Lender | Credit and residual income decision |
| Closing | Title and lender | Old loan paid, cash released |
The Two Tests Unique to VA Refinances
Net tangible benefit. The new loan must be in your financial interest. It must meet at least one of eight conditions listed in the regulation, such as removing mortgage insurance, shortening the term, lowering the payment, raising monthly residual income, or sitting at or below 90% of reasonable value. The lender also has to give you an estimate of the equity being removed and explain how that may affect your finances, per the annual CFR text of the rule.
Seasoning. This applies only when the loan being paid off is a VA loan. Under VA Circular 26-19-22, the first payment due date must be at least 210 days before closing, and six consecutive monthly payments must have been made. Both tests have to be met.
Where the General Rule Breaks
Type 1 versus Type 2. A Type 1 cash-out is one where the new loan is at or below 100% of the payoff of the loan being refinanced, meaning little or no cash out. Type 1 VA-to-VA refinances carry an extra test: fees and costs must be recouped within 36 months through lower regular monthly payments.
Non-VA payoffs. Moving a conventional or FHA loan into a VA loan counts as a cash-out refinance even if you take no cash. Seasoning does not apply because the old loan is not VA.
Occupancy. You must live in the home. Rental or second-home plans do not fit this program; occupancy decides the leverage.
Funding fee exemptions. Veterans receiving compensation for a service-connected disability and certain other groups are exempt from the fee.
State limits. Some states restrict cash-out on homesteads. Ask your loan officer about your state.
IRRRL confusion. An IRRRL cannot put cash in your hand. Do not mix its rules into a cash-out.
If your existing loan is VA and has reduced entitlement from a prior use, the picture changes again.
What the Funding Fee Does to Your Numbers
The cash-out funding fee is 2.15% on first use and 3.3% on later use, waived for exempt veterans. The reduced fee tiers for larger down payments do not apply to refinances, per VA Circular 26-23-06. Confirm the current schedule on VA’s funding fee page before you apply.
Because the fee can be financed, it raises your balance. If your home’s value leaves room under 100%, rolling it in reduces your cash out. If you are already at the cap, you pay the fee in cash. Picture a homeowner whose payoff, closing costs and fee together come to 97% of the appraised value: that homeowner nets cash equal to roughly 3% of value, and no more.
Costs and Tradeoffs Worth Weighing
A cash-out adds the cash amount to your loan, which raises the balance and the interest paid over time. VA News warns that a cash-out rarely lowers your monthly payment, so be skeptical of any offer promising both cash and a lower payment. Full value also leaves little or no equity cushion. If prices dip, you could owe more than the home is worth.
This loan fits when the cash retires higher-cost debt or funds something with lasting value, and when moving a non-VA loan into VA removes mortgage insurance. It fits less well when you only need a small amount and a different product, like a second lien, would do. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
When you compare offers, compare like with like. Include taxes and insurance on both sides. The CFPB’s action against a VA refinance lender involved comparing a new payment that left out taxes and insurance against an old one that included them.
Mistakes That Stall an Application
- Starting without a COE or with incomplete entitlement details.
- Assuming the lender’s cap equals VA’s 100%.
- Not checking seasoning on an existing VA loan.
- Leaving a debt off the application that shows on credit.
- Overlooking the funding fee when estimating cash.
- Trusting a mailer that looks official. CFPB and VA warned about solicitations promising very low rates, thousands in cash back, skipped payments and no out-of-pocket costs.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms your service eligibility and shows your entitlement.
Reasonable value: The home’s value as VA determines it through its appraisal, which sets the 100% ceiling.
Net tangible benefit: The test showing the new loan serves your financial interest.
Seasoning: The minimum time and payment history required on an old VA loan before you can refinance it.
Residual income: What remains each month after taxes, debts and housing costs, measured against VA’s table.
Funding fee: The one-time VA charge, reviewable and waived for exempt borrowers.
Frequently Asked Questions
Do I have to already have a VA loan to use this?
No. A homeowner with a conventional or FHA loan can refinance into a VA-backed loan under this program. It is treated as a cash-out even if you take no cash. Seasoning applies only when the loan being paid off is a VA loan.
Does a VA cash-out always reach 100% of the home’s value?
No. VA’s ceiling is 100% of reasonable value, with the financed funding fee counted inside it. Lenders can set lower caps, so ask each one for its maximum before you apply.
Can I use the cash for anything?
Generally yes, for any purpose the lender accepts. The loan must be a first lien, and the net tangible benefit test must still pass.
What if the appraisal comes in low?
The maximum loan drops with it. You can take less cash, pay the gap at closing, or hold off. Your payoff, closing costs and funding fee still have to fit under the cap.
Does a surviving spouse qualify?
Certain surviving spouses can hold VA eligibility and may be exempt from the funding fee. The COE decides, so request it first.
If you are weighing a cash-out refinance against keeping the loan you have, Lendmire can help you compare programs and the equity each one reaches through its VA cash-out refinance program, subject to lender guidelines and full file review. Nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. 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. VA: Report on Document Disclosure and Consumer Education
6. VA Circular 26-23-06, Exhibit B
8. CFPB NewDay USA order (archive)
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 Refinance an Existing VA Loan After a Divorce or Inheritance · 15-Year Refinance vs Extra Payments on an Existing VA Loan · VA IRRRL vs Full Refinance on a VA Loan After Home Value Rose
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.