The Quick Read: Your cash equals the VA ceiling, minus your payoff, minus the funding fee, minus closing costs. The ceiling is 100% of the appraised value, and the financed funding fee sits inside it. Equity above what you owe does not all come out as cash. Fees and costs take their share first, and whatever you do not pull out stays in the house.
Key Takeaways
- The VA cash-out reaches 100% of the appraised value, including any financed funding fee.
- Net cash is the ceiling minus the old loan payoff, any other liens, the fee and closing costs.
- At the full ceiling, almost no equity cushion is left in the home.
- The appraisal sets the ceiling. A lower number cuts your cash dollar for dollar.
- A lender’s own policy, state law, or the refinance type can lower the cash you receive.
What Does the “Full-Value Cap” Actually Mean?
The full-value cap is the most the new loan can be, measured against what VA says the home is worth. That limit is 100% of the appraised value. It is not 100% of your equity, and it is not a number the lender picks.
Here is the plain-English version. Say your home appraises at 100 units of value, and you owe 40 units. The cap lets the new loan reach 100 units. But the cap is a ceiling, not a check. The 60-unit gap between the loan and the old balance is the room you have. Fees and costs come out of that room before you see a dollar.
Why does “high equity” matter? A home with a small payoff leaves a wide gap, so the fee and costs barely dent your cash. A home with a large payoff leaves a narrow gap, and the same fee and costs can wipe it out. The cap is the same in both cases. What changes is how much room you have under it.
This lane is for owners refinancing the home they live in. If you are buying instead, the purchase side works differently. It allows 100% financing with no down payment, as long as the price is not above the appraised value. Lendmire’s VA loan programs cover both sides, and the cash-out is the one where the cap shows up in your check.
One more point on size. With full entitlement, VA sets no loan limit. The wholesale programs Lendmire places VA files with serve amounts up to $4,000,000 with full entitlement. If you have remaining entitlement from an earlier VA loan, a down payment may apply on a purchase. Speak with a loan officer about your own entitlement.
The Cash Formula, Step by Step
Cash is a subtraction problem. Run it in this order:
1. Start with the appraised value. VA’s appraisal produces the “reasonable value.” Every other number runs from it.
2. Apply the ceiling. Multiply the value by 100%. That is the largest loan allowed.
3. Subtract the payoff of your current first mortgage. This is what you owe, including accrued interest at closing.
4. Subtract any other liens being paid off. A second mortgage or similar lien must clear too. A VA cash-out must end up as a first lien.
5. Subtract the funding fee, if you finance it. The fee is 2.15% on a first use of the benefit and 3.3% after that. Exempt borrowers pay none.
6. Subtract closing costs paid from proceeds. Whatever is taken from the loan amount is not cash to you.
7. What remains is your net cash.
Each dollar of financed fee or cost lowers your cash by a dollar. There is no discount for rolling a cost into the loan. It only moves the bill from your wallet to the balance.
Across the wholesale programs Lendmire places VA files with, the cash-out refinances any loan type into VA. The old loan does not need to be a VA loan. Some borrowers carry a conventional or FHA loan and want out of it. Others already hold a VA loan.
A Worked Example on a High-Equity Home
Think in percentages of value. Set the appraised value at 100%. The ceiling is 100%. The fee is a first-use cash-out fee of 2.15%. For closing costs, this example uses a placeholder of 2% of value. That is a modeling assumption to make the arithmetic visible, not a typical or quoted figure.
| Payoff (% of value) | Ceiling | Fee | Costs | Net cash |
|---|---|---|---|---|
| 20% | 100% | 2.15% | 2% | 75.9% |
| 40% | 100% | 2.15% | 2% | 55.9% |
| 60% | 100% | 2.15% | 2% | 35.9% |
| 80% | 100% | 2.15% | 2% | 15.9% |
| 40%, appraisal 10% low | 90% | 1.9% | 2% | 46.1% |
Read the first row. With a 20% payoff, you pull about three-quarters of the home’s value out as cash. Read the fourth row. With an 80% payoff, you pull about 16%. The cap did not change. The room under it did.
Subsequent use matters too. At the 3.3% fee, the 40% payoff row nets about 54.7% instead of 55.9%. That is more than a full percentage point of value gone. An exempt borrower, such as a veteran receiving compensation for a service-connected disability, keeps the full 2.15% that others pay. The exempt groups are VA’s call, so confirm yours at va.gov.
The last row shows the appraisal effect. The payoff did not move, but the ceiling dropped by 10 points of expected value. Net cash fell by nearly the same amount.
When the Fee Fits Under the Ceiling, and When It Doesn’t
The financed fee counts against the 100%. That is the rule that trips people up. Here are two side-by-side cases, again in percentages of value.
Case one, it fits. You owe 70% of the value. The new loan runs to 100%, including the fee. After the payoff, the 2.15% fee, and 2% in costs, you receive about 25.9% of value in cash.
Case two, it does not fit. You owe 99% of the value. Add a fee of roughly 2.1% on that balance, and the total is about 101.1% of value. That is over the ceiling. The excess, roughly 1% of value, must be paid in cash at closing. You get no cash back. You bring money instead.
Older VA handbook language described the fee as sitting on top of 100%. You may still see it on older web pages. The current rule in 38 CFR 36.4306 caps the new loan at 100% of reasonable value. It also says any part of the financed fee above that cap is paid in cash at closing.
Why Not 90%? A Short History
Many people still say VA cash-outs cap at 90%. That was true once. Congress set a 90% limit on cash-out loans in 1989. The Federal Register notice on the later rule change explains that the statute requires only that the loan not exceed 100% of reasonable value. VA moved the limit to match.
So where does the 90% you hear about today come from? Usually it is a lender’s own policy, not VA’s.
Where the General Rule Breaks
The 100% ceiling is the program’s limit. Your actual cash can land well below it. Here are the named edge cases.
Lender caps. VA allows 100%, but some lenders set a lower cap of their own. The wholesale programs Lendmire places VA files with reach 100% of the appraised value, including the financed fee. Ask any lender you talk to for its cap in writing.
State law. Some states limit how much equity you can borrow against under state law. State law can impose a lower ceiling than VA’s. This is more common with homestead-style protections.
Refinance type. The Type I versus Type II split matters. A loan that does not exceed the payoff is the no-cash case. A loan that exceeds the payoff puts cash in your hands. Under the regulation, the no-cash type must recoup its costs through lower regular payments within 36 months.
Seasoning. When you refinance a VA loan, the new loan cannot come too soon. The test is the later of 210 days after your first payment or your sixth payment. It applies only when the loan you are paying off is itself VA-guaranteed.
Net tangible benefit. The refinance has to help you in a measurable way, such as a shorter term, a lower payment, or the removal of monthly mortgage insurance. A cash-out is judged under the same umbrella. The full list of tests is in the regulation.
Fixed-to-adjustable swaps. Some refinances that move a fixed loan into an adjustable one face a lower leverage limit. Treat this as a narrow case and ask your loan officer.
Occupancy. You must live in the home as your primary residence. If the home is a rental or second home, the occupancy rule decides the leverage, and a VA cash-out is not the product for it.
Residual income. Underwriting runs on residual income, the money left each month after your debts and household costs. The 41% debt-to-income figure is a guideline, not a hard cap. A ratio above it needs residual income well above the table. A bigger new balance can raise your payment, and that can pinch this test even when equity is plentiful.
Credit. VA sets no minimum credit score. The wholesale programs Lendmire works with start at a 580 decision score. Some lenders set a higher floor.
Entitlement. Old guaranty formulas in the regulations, such as the $36,000 figure, are not a loan-size cap for full-entitlement borrowers. Ignore them when sizing a cash-out.
All of these figures are subject to lender guidelines and a full file review. None is a commitment to lend.
Should You Take All of It?
Maybe not. The cap shows what you are allowed to borrow, not what you should.
| Choice | What you gain | What you give up |
|---|---|---|
| Take the full ceiling | Most cash available | No equity cushion left |
| Take part of it | Reserve equity stays | Less cash in hand |
| Skip the cash-out | Balance stays lower | No lump sum |
A bigger balance usually means a bigger payment. It can also mean giving up a lower-cost loan you already have. The Consumer Financial Protection Bureau’s research on cash-out refinances notes that the benefit of pulling equity depends on your circumstances, and that a cash-out can replace a lower-rate mortgage with a higher-rate one.
Equity is also your safety margin. If values dip after you pull to the ceiling, you can owe more than the home is worth.
A practical test: what is the cash for? Paying off high-cost debt or funding a repair that protects the home can make sense. Spending it on something that loses value is a harder case. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
What About a HELOC or a Conventional Cash-Out?
You have other ways to tap equity. A home equity line or a conventional cash-out refinance can also release cash. Conventional programs generally allow less leverage than the VA cash-out, so the same home releases less cash. A home equity line leaves your first mortgage alone. That can be a plus if you have a loan you want to keep, though the line is a second lien with its own terms.
The VA cash-out replaces your first mortgage and can reach the full ceiling. That is useful when your current loan is not worth keeping. It is a poor fit when the loan you hold is worth keeping. Compare the whole picture, not only the cash.
How to Verify the Number
Do not trust any estimate until the paperwork says so. Once you apply, the Loan Estimate shows the proposed loan. The Closing Disclosure shows the final numbers. Look for these lines:
- The new loan amount and whether the funding fee is financed.
- The payoff amounts for each lien being cleared.
- The closing costs, and which are paid from proceeds.
- The cash to you, or any cash you must bring.
If cash to you is lower than your math suggested, the usual causes are a lower appraisal, a lender cap below 100%, or a fee or cost you did not count. Ask your loan officer to walk through each line. The funding fee schedule is VA’s, so confirm the current figure at va.gov before relying on any number you read online.
Next Step
If you are buying a home and want to see whether a VA loan fits your file, Lendmire can help you compare the options and what each one asks of the file. Owners with a high-equity home can ask the same question about a cash-out and see where the ceiling lands.
Key Terms Defined
Reasonable value: The value VA’s appraisal assigns to the home. It is the base for the 100% ceiling.
Funding fee: A one-time VA fee, which can be financed into the loan, that is waived for exempt veterans and other exempt groups.
Seasoning: A waiting period before a VA-to-VA refinance, set at the later of 210 days after the first payment or the sixth payment.
Net tangible benefit: A measurable gain from the refinance, such as a lower payment or shorter term.
Residual income: The money left each month after major debts and household costs. It is the controlling underwriting test for VA loans.
Payoff: The balance, plus accrued interest, needed to clear an existing loan at closing.
Frequently Asked Questions
Can I roll the funding fee into the loan?
Yes, the fee can be financed, subject to lender guidelines. It counts inside the 100% ceiling, so every financed dollar lowers your cash by a dollar. If the fee would push the loan above 100% of value, you pay the excess in cash at closing.
Does a low appraisal lower the cash I get?
Yes, directly. The ceiling is 100% of the appraised value, so a lower value lowers the maximum loan. Your payoff and costs stay the same. The difference comes out of your cash.
Can I refinance a non-VA loan into a VA cash-out?
Yes. The VA cash-out refinances any loan type into VA, subject to lender guidelines and a full file review. Seasoning applies only when the loan being paid off is a VA loan. A net tangible benefit is still required.
Will I get a check at all?
Not always. A large payoff can leave little or no room once the fee and costs come out. Lender caps and state law can lower the number too. Run the subtraction before you apply, and confirm it on the Closing Disclosure.
Is the cap 90% or 100%?
The VA program ceiling is 100% of reasonable value. The old 90% limit was replaced. If someone quotes 90% today, it is usually that lender’s own policy.
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.
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References
1. eCFR, 38 CFR 36.4306: Refinancing loans
2. Federal Register: Revisions to VA-Guaranteed or Insured Cash-Out Home Refinance Loans
3. GovInfo: 38 CFR 36.4306 (print edition)
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: Can a Veteran With Thin Credit Get a VA Cash-Out at Full Value? · How Much a VA Cash-Out Can Clear at Full Value on a $400K Home · How Much Entitlement Remains After a VA Cash-Out at Full Value
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.