The Quick Read: The title’s premise needs a correction. The VA cash-out refinance has no “no tax returns” version, because a self-employed borrower is documented with returns. The real choice is between VA full documentation and a bank’s conventional cash-out, and the better fit depends on your equity, your credit, your service history and what your returns actually show. Every figure below is subject to lender guidelines and full file review, and none of it is a commitment to lend.
Here is who each option is really for. The VA route suits a veteran or service member who wants to reach the most equity, with no mortgage insurance, and whose returns show steady income. A bank suits an owner who does not have VA eligibility, or who has a strong credit profile and a lot of equity left after the cash-out. If your returns understate your income, neither one fixes that.
Key Takeaways
- VA cash-out reaches up to 100% of the appraised value, including the financed funding fee. It carries no mortgage insurance.
- An S-corp owner on either path is qualified on what the returns show. Aggressive deductions and a low salary shrink that number.
- The VA’s controlling test is residual income, which is the money left over each month after your obligations and living costs.
- Products that read deposits instead of returns sit outside the VA program. They are not VA-guaranteed.
Side-by-Side
This table compares the VA cash-out with a bank’s conventional full-documentation cash-out. Bank terms vary by lender and loan program, so the bank column is described in general terms. The VA column reflects the wholesale programs Lendmire places VA files with.
| Factor | VA Cash-Out | Bank |
|---|---|---|
| Leverage | Up to 100% of appraised value | Lower; varies by lender |
| Credit floor | 580 decision score on these programs | Often higher; varies |
| Mortgage insurance | None | Often required on thinner equity |
| Funding fee | 2.15% first use, 3.3% after | None |
| Occupancy | Your home (or spouse’s or dependent’s) | Varies by program |
| Documentation | Two years of returns, P&L, balance sheet | Returns or IRS transcripts |
| Eligibility | VA certificate of eligibility | No military requirement |
Two cells need context. The funding fee can be financed into the loan, and it is waived for veterans receiving compensation for a service-connected disability and for the other exempt groups. It counts toward that 100% limit. And VA itself sets no minimum credit score. The 580 comes from the wholesale programs Lendmire places VA loans with, so some lenders set a higher floor.
Why “No Tax Returns” Does Not Apply Here
Search for “VA cash-out no tax returns” and you will see the idea repeated. It likely traces back to the VA streamline, formally the interest rate reduction refinance loan (IRRRL). That product refinances an existing VA loan into a lower rate or from adjustable to fixed. It requires no VA appraisal, a 0.5% fee unless you are exempt, a net tangible benefit and a seasoning period. It does not pay you cash.
A cash-out is a different animal. It is fully underwritten. VA’s own description of the VA cash-out refinance loan says it can pull cash from your equity or move a non-VA loan into a VA-backed one. The same page warns that closing costs can add up to thousands of dollars. It tells you to understand how the new loan amount compares with the home’s value.
That warning matters more than it sounds. A cash-out replaces your whole existing mortgage. The new balance is larger, and the funding fee may ride along inside it.
The details of the Lendmire VA cash-out refinance program cover how the wholesale lenders treat entitlement, appraisal and seasoning. For now, the point is simple. VA has no shortcut on income for this loan.
What a VA Underwriter Asks an S-Corp Owner For
The VA Lenders Handbook sets the self-employed package in its credit underwriting chapter. For a corporation, that means:
- Signed federal business income documentation for the previous two years, with all schedules.
- A list of the stockholders and the interest each one holds.
- Your signed individual returns.
- A year-to-date profit and loss statement and a balance sheet.
For an S-corp, the business return is the Form 1120-S, with K-1s where they apply. Your accountant knows these forms. The underwriter reads them for a trend, not a single year.
The handbook treats self-employment income as generally stable once you have received it for at least two years. Under two years, income is generally not treated as stable. The exception is related prior employment or specialized training. A newer S-corp can still work if you ran the same kind of business as an employee before.
The handbook also lets depreciation count back toward effective income. It requires the underwriter to consider business losses. And it says what you reported to the IRS on a joint return is what must be used.
That last point catches S-corp owners. Many pay themselves a modest salary and take the rest as distributions. That can be good tax planning. It also means the income the returns show may be lower than the cash you actually take home. VA does not read your intentions. It reads the returns.
Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Residual Income Is the Real Test
Residual income is what remains each month after your debts, taxes and a set living allowance for your household size and region. The table VA uses sets the minimum.
The 41% debt-to-income figure is a guideline, not a hard cap. A ratio above it needs residual income well above the table. The CFPB’s VA home loan handout says the same thing in plain terms. Lenders look for compensating factors when credit is low and the debt ratio is over 41 percent.
For you, that cuts two ways. A business that shows strong, steady income can carry a higher ratio. A business with a declining trend, even across two full years of returns, gets a harder look.
When VA Cash-Out Is the Better Fit
VA wins in a handful of situations. Check whether yours is one of them.
You want the most equity. The VA cash-out reaches 100% of the appraised value, including the financed fee. Banks generally stop short of that. If you need a large amount, the gap can decide the whole question.
You want no mortgage insurance. VA loans carry none. Conventional cash-out loans often require it when your remaining equity is thin. On a high-leverage cash-out, that difference is meaningful.
Your credit is middling. The wholesale programs Lendmire works with start at a 580 decision score. Many conventional programs set a higher floor. A bruised credit history is a common reason a veteran lands in the VA lane.
You are refinancing a non-VA loan. VA confirms that a non-VA loan can be refinanced into a VA-backed loan. That includes a conventional or FHA loan you already hold.
Your returns are clean. Two years of consistent income, a salary you have not suppressed and a business that is growing make the underwriting straightforward. This is what the VA package is built to read.
The trade-offs are real, though. The funding fee is 2.15% on first use and 3.3% after, unless you are exempt. A VA cash-out also needs a net tangible benefit and the same seasoning as the IRRRL. And it applies only to a home you, a spouse or a dependent will occupy. If the home is a rental, occupancy decides the leverage, and VA is not the tool.
Net tangible benefit is a test that the refinance actually helps you. A cash-out that only adds cost does not pass.
When a Bank Is the Better Fit
A bank’s conventional cash-out has its own case.
You have no VA eligibility. Without a certificate of eligibility, VA is off the table. Not every S-corp owner has served in the military, and the service requirements are set by the VA.
You have a lot of equity and want little. If you are taking a modest slice of a home with deep equity, the extra leverage VA offers does not help you. A bank’s loan may carry no funding fee and no mortgage insurance at lower leverage.
You have strong credit and a long track record. A borrower with excellent credit and well-documented income may do fine at a bank. Conventional underwriters are comfortable with that profile.
You already bank with a lender that knows your business. An existing relationship does not change the rules. It can make the documents easier to gather.
The paperwork resembles VA’s. The Fannie Mae Selling Guide says a lender may use IRS-issued transcripts of your individual and business returns for the most recent two years. It must also prepare a written evaluation of your personal income, including business income or loss. So a bank is not an escape from traditional personal-income documentation. It is the same test under different rules.
Two Meanings of “Bank”
Many S-corp owners use “bank” to mean two things. One is the depository, where your business checking lives. The other is the lender, which decides on your loan. They can be the same institution, but they do not have to be.
Your depository matters for one reason. The profit and loss statement that supports your file should match the deposits in the account. Keep business and personal money separate. Pay yourself on a regular schedule, and document distributions. A tidy account makes the P&L easier to support.
What about products that read deposits instead of returns? They exist, but they are not VA loans and not VA-guaranteed. They also do not carry the program’s borrower protections. This article stays with the VA-versus-bank decision.
A Scenario in Percentages
Take a veteran who owns an S-corp and lives in a home worth a fixed amount. She owes a modest share of it. Her returns show steady income and a consistent salary for three years. She wants to cash out a meaningful slice of equity. She is not exempt from the funding fee.
On the VA path, she can reach up to 100% of the appraised value, including the financed fee. No mortgage insurance applies. She pays the funding fee, which can be financed.
At a bank, her leverage ceiling is lower and mortgage insurance may apply. The documents look much the same.
If she wants the most cash and has the eligibility, VA fits. If she wants a small amount from a home with deep equity, the bank may cost less. The test is the total cost on the Loan Estimate, not the label.
Now change one fact. Her returns show a sharp income drop in the latest year, because she bought equipment and took the depreciation. VA allows depreciation to count back. A bank’s rules may differ. The answer can flip based on what the underwriter is willing to add back.
Common Mistakes
- Assuming revenue qualifies. Underwriters analyze income from the returns, not gross sales.
- Suppressing salary right before applying. The returns lock in the lower number.
- Treating the IRRRL as a cash-out. The streamline is rate reduction only. It pays no cash.
- Skipping the seasoning check. A cash-out carries seasoning and a net tangible benefit. Both can delay or block a refinance.
- Ignoring the occupancy rule. VA cash-out is for a home you or a family member will occupy.
The Balanced Verdict
Choose VA if you are eligible, want maximum equity and prefer no mortgage insurance. Your returns need to show stable income, and you need to accept the funding fee unless you are exempt. Choose a bank if you lack eligibility, want a modest cash-out from deep equity or have strong credit and a long record.
Neither option skips the returns. If your tax filings understate what the business earns, the honest fix is time or a conversation with your accountant. A workaround is not the fix.
Key Terms Defined
Residual income: The money left each month after your debts, taxes and a set living allowance. VA treats it as the controlling test.
Funding fee: A one-time VA charge that can be financed into the loan, waived for exempt veterans.
Net tangible benefit: A test that the refinance actually improves your position.
Seasoning: A waiting period that must pass on your existing loan before you can refinance it.
Frequently Asked Questions
Does VA offer a cash-out loan without traditional personal-income documentation for a self-employed borrower?
No. The VA Lenders Handbook calls for signed federal business returns, individual returns and a P&L for self-employed borrowers. A product that skips returns would fall outside the VA program. That kind of loan would not be VA-guaranteed.
How many years of S-corp history does VA want?
Two years is the benchmark. Self-employment income is generally treated as stable after two years. With less history, the lender may weigh related prior employment or specialized training. Each file is reviewed on its own facts.
Does a low S-corp salary hurt a VA cash-out?
Yes, it can. VA uses what you reported to the IRS, so a modest salary and large distributions may show less income than you actually take. Depreciation can count back toward income under the handbook. Talk with your accountant before the returns are filed, not after.
Can I use VA cash-out on a rental or second home?
No. Occupancy decides the leverage, and VA cash-out applies to a home that you, a spouse or a dependent will occupy.
Is the VA funding fee always charged?
No. It is 2.15% on first use and 3.3% after for a cash-out, and it can be financed. It is waived for veterans receiving compensation for a service-connected disability and for the other exempt groups.
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. Call 828-256-2183 to talk through your file.
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 – Cash-out refinance loan
2. VA Lenders Handbook, Chapter 4
3. CFPB – VA home loans handout
4. Fannie Mae Selling Guide B3-3.5-01
This article is part of Lendmire’s VA Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: How Much a VA Cash-Out Releases With a Disability Rating · Can You Do a VA Cash-Out in Year One of an Existing VA Loan? · VA Cash-Out Occupancy Requirements on an Existing VA Loan
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosure information. Lendmire is a state-licensed mortgage brokerage under NMLS# 2371349. Lendmire is not a depository institution, direct lender, or financial advisor — all loans referenced are placed through wholesale lender partners and are subject to each lender's underwriting standards. This article is provided for general informational purposes and is not a commitment to lend, nor does it constitute financial, legal, or tax advice. Loan programs, terms, rates, and qualification standards change without notice and depend on borrower profile, property type, and the state in which the subject property is located. Equal Housing Opportunity provider. NMLS Consumer Access: nmlsconsumeraccess.org.