The Quick Read: The new loan tops out at 100% of the appraised value, and the funding fee and any financed costs sit inside that ceiling. Net cash is the new loan minus the payoff of the current loan, minus other liens paid, minus the funding fee and costs taken from proceeds. Every dollar financed is a dollar you don’t receive. A “zero cash to close” file still has costs. They come out of your proceeds.
The Net-Cash Formula in Plain Terms
Net cash is a subtraction problem, and the ceiling is fixed. Start with the VA appraised value. The maximum loan is 100% of that value. Take away the balance of the loan being paid off. Take away any other liens that must be cleared. Take away the funding fee if it is financed. Take away closing costs paid from proceeds. What remains is your check.
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.
Written as a line list:
1. Appraised (reasonable) value on the Notice of Value. 2. Times 100%, which gives the maximum loan. 3. Minus the payoff of the current mortgage. 4. Minus other liens paid at closing. 5. Minus the funding fee, if financed. 6. Minus closing costs taken from the proceeds. 7. Equals cash to the borrower.
The 100% cap comes from the regulation at 38 CFR 36.4306. VA Circular 26-19-05 adds the detail that matters on the file: a financed funding fee cannot push the loan above the property’s reasonable value. The circular says VA no longer guarantees refinances above 100% LTV. Follow the circular.
This is the point most people miss. The 100% ceiling is not 100% of your equity in cash. The fee and the costs come out of the same ceiling.
Key Terms Defined
Reasonable value: The value the VA appraiser sets on the Notice of Value. It is the denominator for every LTV calculation on the file.
Payoff: The amount needed to retire the loan being refinanced, plus any other liens that must be cleared at settlement.
Funding fee: A one-time VA charge that can be financed into the loan. Veterans receiving compensation for a service-connected disability, and certain other exempt groups, don’t owe it.
Financed cost: Any fee or charge paid out of the new loan’s proceeds rather than out of pocket. It raises the balance and lowers the cash you receive.
Net tangible benefit: A test the new loan must pass to show it is in the borrower’s financial interest. A cash-out must meet at least one of eight listed criteria.
What Can Be Financed
Closing costs, including the funding fee, may be paid from loan proceeds, as long as the loan stays under the maximum. That is the rule in Chapter 6 of the VA Lenders Handbook. The financeable items are the funding fee and allowable fees and charges. The handbook points to its Chapter 8 for the allowable list.
Taxes and escrow amounts are treated separately from fees in the regulation. That distinction matters in the Type I edge case below.
On a purchase, only the funding fee can be financed. A cash-out follows the Chapter 6 rule. Don’t carry purchase assumptions into a refinance file.
The funding fee on a cash-out refinance is 2.15% for first use and 3.3% for later use, across the wholesale programs Lendmire places VA loans with. Veterans exempt from the fee skip it entirely, which raises net cash. The exemption comes from VA, not the lender, and the certificate of eligibility is where it shows up.
Where Lendmire’s VA Cash-Out Fits
Lendmire’s VA cash-out refinance program page covers the program envelope. The loan reaches up to 100% of the appraised value including the financed fee. It refinances any loan type into a VA loan. It carries seasoning and a net tangible benefit. There is no mortgage insurance. The wholesale programs start at a 580 decision score. Residual income is the controlling underwriting test, and everything remains subject to lender guidelines and full file review. Nothing here is a commitment to lend.
Financed Versus Paid Out of Pocket
Here the choice shows up. Take the same file twice.
| Choice | Effect on cash | Effect on new balance |
|---|---|---|
| Finance fee and costs | Less cash back | Higher |
| Pay them at the table | More cash back | Lower |
| Exempt from fee | More cash back | Lower |
Financing costs can mean you bring nothing to the closing table. The tradeoff is a smaller check and a larger balance repaid over the term. The CFPB’s Closing Disclosure explainer separates closing costs from “Cash to Close.” Cash to Close is the amount actually due at the table. Costs paid from loan proceeds show up as a negative number, so they reduce the cash figure instead of adding to what you bring.
Read it this way: a zero on the “cash to close” line is not a zero-cost loan.
Three Illustrative Files
These are modeled assumptions, not market facts. All three assume the same appraised value and a full-entitlement borrower.
Low payoff. The current loan is a small share of value, say 40%. The ceiling is 100%. After the funding fee and financed costs, most of the remaining gap comes back as cash. Here the fee and costs are a small slice of a large check.
Mid payoff. The payoff sits near 65% of value. The same fee and costs take a bigger bite out of the remaining 35% of room. The check is meaningfully smaller than the equity number suggests.
High payoff. The payoff sits near 90% of value. Only about 10% of room remains before the ceiling. The funding fee alone can consume a large part of it. Add financed costs and the net can approach zero. A small cash request on a high-payoff file often nets almost nothing.
The pattern is simple. Fee and costs are roughly fixed percentages of the loan, so the lower the payoff, the less they matter to the final check.
Working Backward From a Target Check
If you need a specific net amount, run the formula in reverse. Start with the target cash. Add the payoff and other liens. Add the funding fee and any costs you plan to finance. The total must stay at or under 100% of appraised value.
If the total runs over, you have three levers. Pay some costs in cash. Claim a fee exemption if you hold one. Or lower the target. The loan can’t go past the ceiling, and the circular doesn’t allow the excess fee to be financed.
Where the General Rule Breaks
Appraisal comes in low. A lower reasonable value shrinks the ceiling and the cash together. The fee and costs don’t shrink with it. A file that worked at the expected value can net far less at the appraised value.
Fee overflow. If the funding fee would push the loan past 100% of value, the excess can’t be financed. The borrower pays it in cash or the loan amount comes down.
Type I versus Type II. The Lenders Handbook defines a Type I as a loan, including the funding fee, that does not exceed the payoff of the loan being refinanced. A Type II exceeds the payoff. On a Type I where the principal-and-interest payment does not fall, the lender may not charge fees or closing costs, except taxes, escrowed amounts and the funding fee. Fee recoupment on a Type I may not exceed 36 months. The regulation text, in the govinfo copy of 38 CFR 36.4306, carves out the same items. Practical result: a Type I that doesn’t lower the payment can’t carry financed lender fees, and cash back is very limited.
Recoupment on Type II. Under the regulation, a borrower on a loan exceeding the payoff is deemed to have recouped costs if the net tangible benefit requirements are met. The IRRRL’s rate-reduction and fee-recoupment tests are IRRRL rules and don’t apply to a cash-out the way they do to a streamline.
Seasoning. When the loan being paid off is a VA loan, seasoning applies: the later of 210 days from the first payment due date and the sixth payment. A non-VA payoff is where the program shines for borrowers moving into VA.
Lender caps. VA allows up to 100%. Some lenders set a lower cap or their own waiting periods. Those come from lender policy, not from VA.
Occupancy. The home has to be your primary residence. That’s the default for VA loans. Rental properties don’t fit the program.
The Net Tangible Benefit Test
Every cash-out has to pass it, and the lender must hand you the test. Circular 26-18-30 requires the information no later than the third business day after application, and again at closing. The regulation lists criteria such as eliminating monthly mortgage insurance, raising monthly residual income, refinancing an interim construction loan, converting an adjustable rate to fixed, or landing at or below 90% of reasonable value.
The 90% route matters here. A smaller loan, from paying costs in cash or taking less cash back, can open that path with its own benefits.
Reading the Loan Estimate
A short checklist before you sign anything:
1. Find the loan amount and compare it to the appraised value. It should not exceed 100%. 2. Find the funding fee line. Confirm whether it is financed or exempt. 3. Find the payoff figure for your current loan and any other liens. 4. Look at the Calculating Cash to Close table. Costs paid from proceeds appear as negatives. 5. Compare the Loan Estimate to the Closing Disclosure. Any change in the cash figure traces back to a line you can point to.
What the Borrower’s Decision Looks Like
Three questions drive it. How much cash do you need? How much of the fee and costs can you pay outside the loan? And does the loan pass the net tangible benefit test on a path you understand?
A larger payoff makes every financed dollar hurt more. A low appraisal changes everything at once. And every financed dollar is repaid with interest over the term, so financing costs makes the check smaller now and the balance larger later.
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.
Frequently Asked Questions
Does the VA funding fee reduce my cash-out check?
Yes, when it is financed. The fee sits inside the 100% ceiling, so each dollar of fee is a dollar less cash. Veterans exempt from the fee keep that amount. Paying the fee in cash at closing also leaves the check larger, though you bring money to the table.
Can I roll closing costs into a VA cash-out?
Generally yes. Costs and the funding fee can be paid from proceeds, subject to the maximum loan amount and lender guidelines. The tradeoff is less cash back and a higher balance. A Type I loan that doesn’t lower the payment can’t carry financed lender fees.
What happens if the funding fee would push the loan over 100% of value?
The excess can’t be financed. Circular 26-19-05 says a financed fee cannot raise the loan above reasonable value. The borrower pays the difference in cash or the loan amount drops.
Does a lower appraisal change my net cash?
It does, on both ends. The ceiling shrinks and the fee and costs stay put. A modest appraisal miss can cut the check by more than the value gap itself.
Does seasoning apply to every VA cash-out?
No. Seasoning applies when the loan being paid off is a VA loan. A non-VA loan can be refinanced into VA with or without cash, per VA’s cash-out page. Lenders may add waiting periods of their own.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire (NMLS# 2371349) is a mortgage brokerage serving homeowners and home buyers in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending channels; Lendmire brokers the financing and the lender underwrites each application. 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
3. VA Lenders Handbook (VAP 26-7) Ch. 6 Refinancing Loans
4. CFPB Closing Disclosure explainer
5. 38 CFR 36.4306 (govinfo, 2025 CFR)
6. VA.gov Cash-out refinance loan
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 Use VA Cash-Out on a Triplex With No Prior Cash-Out · VA Cash-Out vs Conventional Cash-Out for a Condo in Litigation · Rolling Closing Costs Into a VA Cash-Out vs Paying Them Upfront
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.