The Quick Read: The fee is a flat percentage of the base loan, so it grows in step with the balance and does not change because the loan is “jumbo.” On a VA cash-out refinance it is 2.15% for first use and 3.3% for subsequent use, and it is waived for exempt veterans. The fee can be financed, which raises the note balance, and it comes out of the same equity pool you are borrowing against.
What Is the Funding Fee, and Who Gets It?
The funding fee is a one-time charge paid to the VA, not to the lender. Congress created it to offset the cost of running the program. It is not monthly mortgage insurance, and a VA loan carries no mortgage insurance of any kind. VA News describes it as a one-time payment on VA-guaranteed loans, refinances included, and tells refinancing veterans to check the fee table because refinance percentages differ from purchase percentages.
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.
Two terms matter before the math. “Jumbo” is a market word for a loan above the county conforming limit. It is not a VA category. With full entitlement, there is no VA loan limit, and the wholesale programs Lendmire places VA loans with serve amounts up to $4,000,000.
Key Terms Defined
- Funding fee: a one-time fee paid to VA on a VA-guaranteed loan, calculated as a percentage of the loan.
- First use / subsequent use: whether you have used your VA home loan benefit before. Your Certificate of Eligibility and loan history decide it.
- Full entitlement: your VA benefit has not been reduced by a prior VA loan still in place, so no VA loan limit applies.
- Notice of Value (NOV): the VA appraisal result stating the property’s reasonable value.
- Residual income: the money left each month after your major obligations and living costs, which VA treats as the controlling test.
- Base loan: the loan amount before any financed funding fee is added.
Does the Fee Change Because the Loan Is Jumbo?
No. The percentage is the same at a modest balance and a very large one. What changes is the dollar result, because the VA sets no dollar cap on the fee. Double the base loan and the fee doubles.
The tier is what moves the number. VA Circular 26-23-06, Exhibit B sets the cash-out fee at 2.15% for first use and 3.3% for subsequent use. That gap of 1.15 percentage points looks small on a modest loan. On a large balance it is a meaningful sum of money, which is why confirming your tier before you plan the loan matters more as the balance grows.
| Cash-out fee tier | Fee as % of base loan |
|---|---|
| First use | 2.15% |
| Subsequent use | 3.3% |
| Exempt veteran | Waived |
Older pages still show 2.3% and 3.6%. Those belonged to the prior schedule and are out of date.
Does a Down Payment Lower the Cash-Out Fee?
No. On a purchase, a down payment of 5% or more lowers the fee to 1.5%, and 10% or more lowers it to 1.25%. Those reduced tiers apply only to purchase and construction loans. They do not apply to refinances. A cash-out refinance is priced by your benefit-use history alone.
This catches borrowers who remember a lower fee from their first purchase. The cash-out tier is its own line on the table.
How the Fee Works, Step by Step
Here is how a large cash-out file moves from eligibility to a final balance.
1. Eligibility and tier. Your Certificate of Eligibility decides whether you qualify and whether you are first use or subsequent use. Service requirements are VA’s rules. Across the wholesale programs Lendmire places files with, the decision-score floor starts at 580, and residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap. A higher ratio needs residual income well above the table.
2. Appraisal and the ceiling. The VA cash-out reaches 100% of the appraised value, including the financed fee. The fee cannot push the total past that ceiling. The fee and the equity you can take come from the same pool.
3. Fee calculation. Per Chapter 8 of the VA Lenders Handbook, when the fee is paid from loan proceeds, the percentage is applied to the loan amount without the fee added. The final note balance is the base loan plus the fee.
4. Payment to VA. The lender sends the fee to VA through its Funding Fee Payment System after closing and submits proof of payment, or proof of exemption, with the closed-loan package. You see the fee on your Loan Estimate and Closing Disclosure.
5. Seasoning and benefit. If you are refinancing an existing VA loan, seasoning applies: the later of 210 days from the first payment and the sixth payment. The cash-out also needs a net tangible benefit, which is one of VA’s listed benefits. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL and never apply to a VA cash-out.
Because the fee is calculated on the loan before it is added, there is no circular math to solve. You can work out the fee from the base loan, then add it.
Lendmire’s VA cash-out refinance program page lays out the program overview if you want the broader picture before running your own numbers.
Financing the Fee vs Paying It in Cash
You can roll the fee into the loan, pay it from your own cash, or pay it from cash-out proceeds. Chapter 8 allows all three. It also says that for all types of VA loans, only the funding fee, plus the cost of any energy-efficiency improvements, can be added to increase the loan amount. Other closing costs cannot simply be rolled in. They are paid in cash, from proceeds within the loan-to-value ceiling, or by credits.
The tradeoffs run like this:
| Choice | What it does | Watch for |
|---|---|---|
| Finance the fee | Raises the note balance | Interest accrues on the fee for the whole term |
| Pay from proceeds | Cuts net cash you receive | Fee comes out of the same equity |
| Pay from own cash | Keeps the balance lower | Needs cash at closing |
Financing the fee takes it out of your cash-to-close, which is the appeal. The cost is a slightly higher balance, which means principal and interest rise modestly, and you pay interest on the fee for as long as you hold the loan. On a large balance that carrying cost is real. Whether paying cash beats financing depends on what else that cash could do for you, and on how long you expect to keep the loan.
What the Fee Does to Cash in Your Pocket
The same logic applies at the tier level. A subsequent-use borrower at the ceiling gives up more equity to the fee than a first-use borrower on the same house. If your plan depends on a specific cash amount, such as funding a renovation or paying off other debt, work backward from the ceiling and subtract the fee first.
One more point: the cash-out can refinance any loan type into VA. The existing loan can be conventional, FHA, USDA, or VA. It does not need to be a VA loan.
Where the General Rule Breaks
Several situations change the fee, and a few do not.
Exempt borrowers. Veterans receiving VA compensation for a service-connected disability do not pay the fee, per the VA Home Loan Guaranty Buyer’s Guide. Other exempt groups exist, including certain surviving spouses and Purple Heart recipients. On a large balance, an exemption is worth a great deal. If your status is pending, ask about it before closing so the fee is not collected and refunded later.
IRRRL. The streamline carries a 0.5% fee, but it is VA-to-VA only and cannot give you cash. A jumbo cash-out does not get that percentage.
Partial entitlement. If an earlier VA loan still uses part of your benefit, a large cash-out may need equity or a down payment, and the maximum loan and cash out come down. Speak with a loan officer about your specific entitlement, because county limits and a 25% guaranty test come into play.
Other fee categories. Exhibit B lists separate fees for manufactured homes not permanently affixed, loan assumptions, and the Native American Direct Loan. None of these touch a standard cash-out on a house you live in.
Owner-occupancy. VA is an owner-occupant program. If your plan involves a rental or second home, occupancy decides the leverage, and this program is built around the home you live in.
Schedule changes. The fee table is set by statute and can change. The current schedule applies to loans closed on or after April 7, 2023, and later changes would be announced by VA.
The 100% ceiling. The VA cash-out reaches 100% of the appraised value, including the financed fee, so the fee counts inside that ceiling rather than on top of it. Your loan officer can show how this plays out on your file. A rule of thumb from a web page is no substitute.
Common Mistakes and Misconceptions
- “A bigger down payment cuts my cash-out fee.” There is no down payment on a refinance tier.
- “The fee is a lender charge.” It goes to VA. The lender’s own origination charge is separate and capped at 1%, and that cap is calculated on the principal after the fee is added when the fee is paid from proceeds.
- “Jumbo means a down payment.” Not with full entitlement. The VA loan limit was removed for those borrowers.
- “All closing costs can be rolled in.” Only the fee and energy-efficiency improvements can.
- “The numbers I saw online are current.” Check the date on the page. Superseded schedules are everywhere.
Planning a Large Cash-Out in Practice
Picture a veteran with a large balance and a lot of equity, planning a major renovation. The first questions are: am I first use or subsequent use, and am I exempt? Those two answers move the fee more than anything else on the file. Next comes the appraisal, because the ceiling sets how much equity exists to share between the fee, closing costs, and your cash.
Then decide how the fee gets paid. You can finance it into the loan, which keeps your cash in hand but adds the fee to the balance. If you want the lowest long-run interest cost and have cash available, paying it directly deserves a look. Neither choice is wrong, and they suit different goals.
Finally, remember residual income runs the underwriting. A larger balance with a financed fee means more monthly obligation, so the residual-income test is where a jumbo file gets tight, not the fee itself.
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. Every figure here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
Frequently Asked Questions
Is the VA funding fee bigger on a jumbo loan?
The percentage is identical, but the dollar amount grows with the balance. A larger base loan means a proportionally larger fee, and VA sets no dollar cap. Your tier, first use or subsequent use, drives the percentage, not the loan size.
Can I roll the funding fee into a jumbo cash-out?
Yes. The VA Lenders Handbook allows the fee to be added to the loan amount, paid from proceeds, or paid in cash. It is the only closing cost, besides energy-efficiency improvements, that can be added to the loan. Financing it raises your balance and the interest you pay over time.
How does being exempt change the math?
An exempt veteran is not charged the funding fee, so the full equity pool stays available for cash out or a lower balance. Veterans receiving compensation for a service-connected disability are exempt. Because the fee applies to the loan amount, confirm your status with your Certificate of Eligibility before closing.
Does paying the fee reduce how much cash I can take out?
Yes, when the fee is financed or paid from proceeds. At the 100% ceiling, the fee comes out of the same equity you are borrowing against. Subtract it, along with payoff and closing costs, to estimate your net cash.
Does the fee affect my entitlement for a future home?
It is a cost of the loan, and your remaining entitlement depends on the VA loan you hold afterward. Whether a future purchase needs a down payment depends on that entitlement. Ask a loan officer to review your Certificate of Eligibility before planning the next move.
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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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 News
2. VA Circular 26-23-06, Exhibit B
3. VA Lenders Handbook Pamphlet 26-7, Chapter 8
4. VA Home Loan Guaranty Buyer’s Guide
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: VA Cash-Out vs Jumbo Cash-Out to Buy Out an Ex Who Is on Title · VA Cash-Out vs Entitlement Restoration for a Veteran With a VA Loan · How to Meet VA Jumbo Cash-Out Reserves and Cover the Funding Fee
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.