The Quick Read: You get a VA cash-out refinance by confirming your eligibility with a Certificate of Eligibility, choosing a lender, and passing full underwriting and an appraisal. The new loan replaces your current mortgage and can reach 100% of the home’s appraised value, including the financed funding fee. The loan must also pass a net tangible benefit test, which means it has to leave you better off in a way VA recognizes. Every figure here is subject to lender guidelines and full file review, and nothing here is a commitment to lend.
What a VA Cash-Out Refinance Actually Is
A VA cash-out refinance is a new mortgage that pays off your current one and, if you want, hands you the leftover equity as cash. VA describes it as a loan that replaces your current loan with a new one on different terms. You can take cash from your equity. You can also move a non-VA loan into a VA-backed loan.
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.
VA does not lend you the money. A private bank, mortgage company, or credit union does, and VA guarantees part of it. That is why terms and fees differ from one lender to the next.
You live in the home. This is a loan for your primary residence, and the lender will confirm occupancy during the file review.
Here is the envelope the loan works inside:
- Financing reaches up to 100% of the appraised value, including the financed funding fee.
- There is no mortgage insurance of any kind.
- There is no VA loan limit if you have full entitlement. With remaining entitlement only, speak with a loan officer about what applies.
- VA sets no minimum credit score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, though individual lenders can set their own floors.
Lendmire’s VA cash-out refinance program page covers the program overview. This article walks through the process itself.
The Step-by-Step Path
The process runs in seven steps. Each one has a job, and skipping the order creates problems later.
Step 1: Confirm eligibility and get your COE. The Certificate of Eligibility (COE) is VA’s proof that you qualify for the benefit. Service requirements are VA’s rules, and the COE decides. No COE, no loan. You can request it through VA, and a loan officer can often help pull it.
Step 2: Choose a lender and compare offers. VA tells borrowers to contact several lenders because terms and fees vary. Ask each one for a Loan Estimate and compare the full terms side by side. A broker like Lendmire arranges the loan through wholesale lenders rather than lending directly, so one conversation can reach several programs.
Step 3: Go through full underwriting. Unlike the streamline refinance, a cash-out gets a full look at your credit and income. Residual income is the controlling test. That is the money left each month after your major obligations and living costs, measured against a VA table. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
Step 4: The appraisal. The appraised value sets how much equity you can reach. Federal regulation caps the new loan at 100% of the home’s reasonable value as VA determines it. A low appraisal shrinks the cash available. It can also shrink the whole deal.
Step 5: The net tangible benefit package. The lender must give you the net tangible benefit (NTB) test, a loan comparison, and a home equity disclosure. A VA program notice 26-19-05 describes the package. The guaranty is not allowed unless the initial and final cash-out disclosures are uploaded. Read them. They are the clearest picture of what you are signing.
Step 6: Seasoning check, VA-to-VA loans only. If the loan being paid off is itself a VA loan, it has to be old enough. We cover this in the edge cases below.
Step 7: Closing and guaranty. The new loan pays off the old lien. Any cash is disbursed to you, and the lender requests the VA guaranty. Because this is a consumer mortgage, you receive a Loan Estimate up front and a Closing Disclosure before you sign. Compare the two line by line.
What Decides the Outcome
Six things control whether the file works:
- Your COE and remaining entitlement.
- Credit, income, and residual income as the lender underwrites them.
- Appraised value measured against the 100% cap.
- A loan that delivers at least one of VA’s listed net tangible benefits.
- Seasoning, if the loan you are paying off is a VA loan.
- Lender overlays, which are a lender’s own rules stacked on top of VA’s.
VA sets no minimum credit score, but lenders do apply their own standards. Have your last couple of pay stubs, bank statements, and mortgage statement ready before you apply.
The Net Tangible Benefit Test, Explained
The net tangible benefit test asks one question: is this new loan in your financial interest? The regulation says the lender must give you the test, and the loan must satisfy it. It is not paperwork you can wave through.
VA lists eight benefits, and the loan has to meet at least one of them. Common examples include:
- Eliminating monthly mortgage or guaranty insurance, as when you move out of an FHA or conventional loan.
- Moving to a shorter loan term.
- Lowering the interest rate.
Your lender can walk you through the rest of the eight for your file.
Here is a point people get wrong. The half-percent rate-reduction test and the fee-recoupment test belong to the streamline refinance (IRRRL). They never apply to the VA cash-out. Your loan only needs to meet one of VA’s eight listed benefits.
Where the Rules Change: Edge Cases
Refinancing a non-VA loan. You do not need an existing VA loan. A cash-out can pay off an FHA, USDA, or conventional mortgage. Seasoning does not apply to these loans, though the NTB test still does. Moving out of a loan with monthly mortgage insurance is a common way these files pass.
Refinancing an existing VA loan. Seasoning applies only here. The standard is the later of 210 days from your first payment and your sixth payment on the loan being paid off, and a loan that has not reached that point does not qualify. If you are close to the line, wait.
Type I and Type II. VA Circular 26-19-05 defines a Type I cash-out as a loan, funding fee included, that does not exceed the payoff of the loan being refinanced. A Type II exceeds the payoff, so you receive cash. Both need a NTB.
Construction loans. The circular covers refinancing a construction-to-permanent loan, regardless of any change in principal.
A paid-off home. Yes, you can do it. With no loan to pay off, the whole new loan is cash to you, up to the 100% cap. The same underwriting, appraisal, and COE apply.
The streamline contrast. The IRRRL refinances an existing VA loan into a different loan, including from adjustable to fixed. It needs no VA appraisal and carries a 0.5% fee unless you are exempt. It does not pull out cash. If you only want to change the terms of an existing VA loan, the IRRRL is the cleaner tool. If you want equity, you need the cash-out.
The Funding Fee: How It Works
The VA funding fee is a one-time charge that helps keep the program running. VA’s funding fee page says you can pay it in cash or finance it. On a cash-out, the program figures are:
| Use | Cash-Out Funding Fee |
|---|---|
| First use | 2.15% |
| Subsequent use | 3.3% |
Veterans receiving compensation for a service-connected disability, and the other exempt groups, do not pay it. A rating that arrives after closing does not remove the fee, so timing matters if you are waiting on a decision.
The fee raises your balance if you finance it, and the 100% cap still bounds the total. A cash-out raises the loan balance by the cash you take plus any financed fee. Look at what you are borrowing, not only what lands in your account.
What the Cash-Out Does to Your Monthly Budget
Three things change when you cash out. Your balance goes up by the cash and the financed fee. Your loan term may reset. And if you are leaving a conventional or FHA loan, monthly mortgage insurance can disappear, which is one of the listed NTB benefits.
CFPB found a case where a lender compared principal and interest on the new loan against a payment that included taxes and insurance on the old one. That made the new loan look cheaper than it was. CFPB’s enforcement page describes the pattern. Check the Loan Estimate to see whether both payments include the same items.
How to Spot a Misleading Offer
Be wary of mail or calls that look official. CFPB and VA jointly warn that unsolicited refinance offers can sound too good to be true. Common promises include very low rates, cash back, skipped payments, no out-of-pocket costs, and no waiting period.
A “no out-of-pocket cost” claim does not mean no cost. The costs get built into your rate or your balance. Escrow refunds can be far smaller than promised. VA also tells borrowers to review the Loan Estimate for every closing cost.
Watch for churning too. That is when a lender pushes a veteran to refinance again and again. If a lender calls you repeatedly, ask what changes for you each time.
Cash-Out Refinance vs. Other Options
| Option | What It Does | Pulls Cash? |
|---|---|---|
| VA cash-out refinance | Replaces your loan, up to 100% of value | Yes |
| VA streamline (IRRRL) | Lowers rate or fixes an adjustable loan | No |
| Conventional cash-out | Replaces your loan, usually with less leverage | Yes |
The VA cash-out reaches higher leverage than most alternatives and carries no mortgage insurance. The tradeoff is the funding fee, unless you are exempt. A home equity loan or line keeps your first mortgage in place and adds a second payment. If your current first mortgage is one you want to keep, that may fit better. If your current loan has mortgage insurance, the VA cash-out can remove it.
Mistakes to Avoid
- Assuming a lower cap. The cap is 100% of reasonable value, so do not plan around a smaller percentage of your home’s value.
- Skipping the disclosures. They are a required part of the file, and they are your best comparison tool.
- Ignoring seasoning. On a VA-to-VA loan, applying too early stalls the guaranty.
- Comparing unlike payments. Make sure both include the same items.
- Waiting on a disability rating after closing. It will not remove a fee you already paid.
Key Terms Defined
Certificate of Eligibility (COE): The document from VA that confirms you qualify for the home loan benefit.
Net tangible benefit (NTB): A test showing the new loan is in your financial interest, using one of VA’s eight listed benefits.
Seasoning: The waiting period a VA loan must be in place before it can be refinanced into a VA cash-out.
Residual income: The money left each month after major obligations and living costs, measured against a VA table.
Entitlement: The amount of VA guaranty you have available for a loan.
Funding fee: A one-time VA charge on the loan, which you can finance or pay in cash.
Frequently Asked Questions
Do I need an existing VA loan to get a VA cash-out refinance?
No. A cash-out can refinance FHA, USDA, or conventional loans into a VA-backed loan. Seasoning applies only when the loan being paid off is a VA loan. The NTB test applies either way.
How much cash can I take out?
The new loan, including the financed funding fee, can reach 100% of the appraised value, subject to lender guidelines. Your cash is what remains after the payoff, closing costs, and any financed fee. A low appraisal reduces it.
Does VA set a minimum credit score?
No. VA says you must meet its standards and your lender’s. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders set a higher floor.
Can the home be a rental or second home?
No. This loan is for the home you live in, and the lender will confirm occupancy during the file review.
Can I refinance if my home is paid off?
Yes. The whole new loan becomes cash to you, up to the 100% cap. The same COE, underwriting, and appraisal apply.
Next Step
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.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire is a mortgage brokerage (NMLS# 2371349) licensed for consumer mortgage lending in 16 states, arranging FHA, VA, conventional and jumbo purchase and refinance loans through a wholesale lending network. Eligibility is determined by the lender on each file. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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.gov: Cash-out refinance loan
4. VA.gov: Funding fee and closing costs
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 Conventional Cash-Out on a Triplex for a Veteran · How to Document Equity for a VA Cash-Out Refinance · VA Cash-Out Refinance vs Conventional Cash-Out After a Job Change
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.