The Quick Read: Yes, if VA issues you a Certificate of Eligibility, the home is your primary residence, and the loan passes full underwriting and an appraisal. Active-duty service members and veterans can both qualify, and a spouse or dependent can occupy the home for an active-duty borrower. Beyond those gates, the loan must also give you a “net tangible benefit,” and lenders add their own credit and documentation standards on top of VA’s.
Who Can Use This Program
Both active-duty service members and veterans can use a VA cash-out refinance. Eligibility comes from the Certificate of Eligibility (COE), and VA decides it. Lenders do not decide it. Some surviving spouses can also qualify through the COE.
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: 7.24% as of October 29, 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 differs between the two groups is mostly paperwork and occupancy. Here is how the paths compare.
| Factor | Active-duty | Veteran |
|---|---|---|
| Eligibility proof | COE from VA | COE from VA |
| Occupancy | Spouse or dependent may occupy | Borrower occupies |
| Income documents | Current pay and duty status | Employment, retirement, or VA benefits |
| Common snag | Deployment or PCS timing | Entitlement from a prior VA loan |
VA is also not the lender. As VA explains, you get this loan through a private bank, mortgage company, or credit union. A cash-out refinance can replace your current loan, take equity out, or refinance a non-VA loan into a VA-backed one. That last option matters if you hold a conventional or FHA loan today.
Lendmire’s VA cash-out refinance program page lays out how the program fits alongside other options. Lendmire is a mortgage broker, so it arranges these loans through wholesale lenders rather than lending directly.
What Does It Take to Get Approved?
Approval comes down to six gates, and the order matters. A stall at any one of them stops the file, so it helps to know them before you apply.
1. The COE. You can get it through a lender, on VA.gov, or by mail. Without it, nothing moves.
2. Occupancy. The home must be a primary residence. VA’s home loan program is built for homes you occupy.
3. Credit and income. VA’s materials call for satisfactory credit and enough income for the expected monthly obligations.
4. Equity and appraisal. A VA appraisal sets the “reasonable value” of the home.
5. Net tangible benefit. The new loan has to be in your financial interest.
6. Entitlement and seasoning. These matter when you refinance an existing VA loan.
Across the wholesale programs Lendmire places VA files with, the decision-score floor starts at 580, and those programs serve amounts up to $4,000,000 with full entitlement. Here is the catch, though. VA itself sets no minimum credit score. The floor comes from the lender, so two lenders can give different answers on the same borrower. Some set a higher floor than others. All of this is subject to lender guidelines and full file review.
How Much Equity Can You Take Out?
A VA cash-out can reach 100% of the home’s appraised value, including the financed funding fee. That cap comes from 38 CFR 36.4306, which limits the new loan to 100 percent of the reasonable value VA determines. An older 90% limit has been removed.
Full entitlement also means no VA loan limit, though the lender still sets its own maximum. With remaining entitlement rather than full, a down payment may be required. Speak with a loan officer about your situation.
Because the cap includes the financed fee, closing costs and the fee come out of what you can borrow. Any amount above 100% has to be paid in cash. Financing the fee also raises your loan balance, which is worth weighing against the cash you need.
Net Tangible Benefit: The Test Most People Miss
Every VA cash-out must pass a net tangible benefit test. The same federal rule requires the new loan to be in the borrower’s financial interest, and the lender must give you the test and satisfy it. The regulation lists eight ways to pass. You must meet at least one.
The first benefit on the list is eliminating monthly mortgage insurance or monthly guaranty insurance. That is why refinancing a conventional or FHA loan carrying monthly insurance into a VA loan often passes. VA loans carry no monthly mortgage insurance.
Congress required this test in 2018, and VA’s rule took effect for applications taken on or after February 15, 2019, per VA Circular 26-19-05. Lenders must also give you the benefit information by the third business day after application, and again at closing.
The test applies to every VA cash-out refinance. It is not a hurdle you can skip because you have good credit.
Two Types of VA Cash-Out
VA sorts cash-outs into two types, and the difference surprises people.
- Type I: the new loan, including fees, does not exceed the payoff of the old one. You get no cash, but it is still called a cash-out.
- Type II: the new loan exceeds the payoff, so you receive cash.
Even a Type I loan is a new, fully underwritten VA refinance with an appraisal. It is not a streamline. That distinction trips up borrowers who expect the lighter process of an interest rate reduction loan.
Cash-Out vs. IRRRL: Don’t Mix Them Up
The interest rate reduction refinance loan (IRRRL) is a different product. It only works VA to VA, meaning you need an existing VA-guaranteed loan on the property. It can be used to move from an adjustable loan to a fixed one, with no VA appraisal and a 0.5% funding fee unless you’re exempt.
The cash-out is broader. It refinances any loan type into VA and reaches up to 100% of value. A new COE is not required for an IRRRL, but one is required for a cash-out.
The half-percent rate-reduction test and the fee-recoupment test are IRRRL rules. They do not apply to the VA cash-out when you refinance a non-VA loan, and the program parameters Lendmire works with do not apply them to the cash-out at all. If a lender tells you otherwise, ask which rule they are applying. Some lenders add overlays beyond VA’s own rules, and those are the lender’s preference, not VA’s.
Seasoning: How Soon Can You Refinance?
Seasoning is the waiting period after your last loan began. In the programs Lendmire places files with, the cash-out carries seasoning of the later of 210 days from the first payment and the sixth payment. That matters when you are refinancing an existing VA loan. If your current loan is conventional or FHA, the VA seasoning clock is not the main constraint, though the net tangible benefit test still applies.
The practical read: a recent VA loan can block a cash-out for a while. If you are close to the line, waiting it out may be the better choice than applying early and getting turned down.
How the Funding Fee Works
The VA funding fee helps offset program costs and is what allows loans with no down payment and no monthly mortgage insurance. It can be financed into the loan, which is why it counts toward the 100% cap.
On a cash-out refinance, the fee is 2.15% for first use and 3.3% for subsequent use. Reduced fees for larger down payments apply to purchases, not refinances. Per VA News, the fee is waived for some borrowers, including veterans receiving VA disability compensation for a service-connected disability.
That exemption is one of the biggest cost levers in the program. If you receive disability compensation, make sure your lender applies it. It affects what you owe and what you net.
How Underwriters Decide
Underwriters weigh credit, income, debt, and equity together, and residual income is the controlling test. Residual income is what’s left each month after your major obligations and living costs. A 41% debt-to-income ratio is a guideline, not a cap. A borrower above it needs residual income well above the standard table.
That is good news for some borrowers, since a higher debt load can still work if cash flow is strong. A borrower with solid residual income and a modest credit score can sometimes fare better than the credit score alone would suggest.
Picture a veteran with a long-held VA loan, a sizable amount of equity, and monthly obligations that look heavy on paper. If their residual income comfortably clears the table, the debt-to-income ratio alone will not sink the file. Now flip it. A borrower with a low ratio but thin residual income can run into trouble. Approval is a decision about the whole picture, not any one number. It is always subject to lender guidelines, credit approval, and property review.
Why Files Stall or Get Denied
Most stalls trace back to a short list of causes. Each has a fix.
| Problem | Typical fix |
|---|---|
| COE not yet issued | Request it through the lender or VA.gov |
| Recent VA loan (seasoning) | Wait out the period |
| Credit below the lender’s floor | Improve credit or try another lender |
| Appraisal below needed value | Reduce the cash taken or the balance |
| Net tangible benefit not met | Restructure or reconsider the refinance |
| Occupancy conflict | Confirm primary-residence status |
If one lender says no, a different lender may say yes, because overlays vary. That is a reason to compare, not a loophole.
Active-Duty Specifics
Active-duty borrowers face a few extra questions. You do not have to be the occupant yourself, since a spouse or dependent can occupy the home. Deployment and permanent change of station (PCS) situations should still be confirmed with the lender before you apply, because documentation expectations vary.
Income is documented from current pay and duty status. Veterans may instead document employment, retirement, or VA benefits. A paid-off home is another case to check directly.
Protect Yourself From Bad Offers
Some VA refinance marketing is misleading.
The CFPB’s order against NewDay USA for $2.25 million described a payment comparison that looked cheaper than it was. The lender compared a principal-and-interest-only payment on the new loan against an old payment that included taxes and insurance. Always compare like with like.
Watch for repeated refinancing too. A cash-out also resets your loan term and can raise total interest. Turning equity into debt is a real tradeoff, and it deserves a clear purpose.
Key Terms Defined
Certificate of Eligibility (COE): the VA document that confirms you qualify for the program.
Entitlement: the amount of VA guaranty available to you, which affects loan size and whether a down payment is needed.
Net tangible benefit: a test showing the new loan is in your financial interest.
Residual income: the money left each month after major obligations and living costs.
Seasoning: the waiting period after an existing loan begins before you can refinance.
Frequently Asked Questions
Is there a minimum credit score for a VA cash-out refinance?
VA sets none, so the lender sets the floor. The wholesale programs Lendmire places VA loans with start at a 580 decision score. Some lenders require more, which is why shopping several can change the answer. Everything remains subject to lender guidelines and full file review.
Can I do a VA cash-out if my current loan isn’t a VA loan?
Yes. Refinancing a conventional or FHA loan into a VA loan is one of the program’s two stated purposes. The net tangible benefit test still applies, but the VA seasoning clock is a VA-to-VA concern.
Do I need a new Certificate of Eligibility?
Yes, a COE is required for a cash-out refinance. You can request it through your lender, VA.gov, or by mail. An IRRRL is the product that does not need a new one.
Can my spouse live in the home if I’m on active duty?
Yes, for active-duty borrowers a spouse or dependent can be the occupant. Deployment or PCS situations should still be confirmed with the lender before applying, since lenders document these cases differently.
Is the funding fee ever waived?
Yes. It is waived for veterans receiving compensation for a service-connected disability and for other exempt groups. Otherwise, the cash-out fee is 2.15% for first use and 3.3% after, and it can be financed into the 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. Questions can go to 828-256-2183, or you can start with a quote request.
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
6. CFPB’s order against NewDay USA
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: Can You Get Approved for a VA Cash-Out Refinance Under the VA Credit Score Requirements? · Can You Get Approved for a VA Cash-Out Refinance While on Active Duty Overseas? · Can You Get Approved for a VA Cash-Out Refinance Under VA Type 1 and Type 2 Rules?
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.