The Quick Read: Underwriting starts with a seasoning check when the loan being paid off is a VA loan. Both tests must be met on the closing date: 210 days or more since the first payment due date, and six consecutive monthly payments made. Whichever test finishes later controls. After that, the deal works through the appraisal, credit, residual income, and a net tangible benefit test.
This is the mechanical walk-through. It covers what the seasoning rule is, the order a file moves in, the structures, and the places the general rule breaks. Program figures are subject to lender guidelines and full file review. Nothing here is a commitment to lend.
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.
Key Terms Defined
Seasoning: The waiting period a VA loan must age before it can be refinanced into a VA cash-out.
First payment due date: The date the first monthly payment came due on the loan being paid off. It is not the closing date and not the date you actually paid.
Note date: The date the borrower signs the new loan. Lenders need this date to clear the seasoning test, so it drives scheduling.
Residual income: The money left each month after taxes, debts, and a set living allowance for the household size and region. It is the controlling VA test.
Net tangible benefit: A measurable improvement for the borrower that the new loan must show. VA lists the qualifying benefits.
Certificate of Eligibility (COE): The VA document that confirms the borrower’s eligibility and entitlement.
What Is a VA Cash-Out Refinance?
A VA cash-out refinance replaces your current mortgage with a new VA-backed loan on new terms. You can take cash from your equity, or you can refinance a non-VA loan into a VA loan. VA describes it as a loan from a private bank, mortgage company, or credit union, not from VA directly. You need a COE.
Across the wholesale programs Lendmire places VA files with, the cash-out reaches up to 100% of the appraised value, including the financed funding fee. It can pay off any loan type. Lendmire’s VA cash-out refinance program page lays out how the program fits a homeowner’s equity goals. Lendmire is a mortgage broker. It arranges the loan through wholesale lenders and does not lend.
Two structures exist. VA Circular 26-19-05 defines them:
| Structure | New loan vs. payoff | Cash to borrower |
|---|---|---|
| Type I | At or below payoff, fee included | None |
| Type II | Above payoff, fee included | Yes |
Both sit under the same 100% ceiling. A financed funding fee cannot push the loan above it.
What Does the Seasoning Rule Actually Test?
It tests two things at once, and the closing date is the test date. The first payment due date on the loan being refinanced must be 210 days or more before closing. Six consecutive monthly payments must also have been made on that loan. The circular describes this wording as applying to VA-to-VA cash-outs, and the rule traces to 38 U.S.C. 3709, as VA’s rulemaking notice explains. The wholesale programs used here apply the same rule: the later of 210 days from the first payment and the sixth payment.
Three points trip people up.
- The count runs from the first payment due date, not from closing.
- Paying ahead does not shorten the 210 days.
- Six payments alone do not satisfy the rule. A loan with a first payment due early can reach six payments around the same time or before day 210, but a late first payment can push the sixth payment past day 210.
Confirm the exact counting against the current Lenders Handbook before you plan a date. Those details are the first thing a reviewer checks.
How Is a File Underwritten, Step by Step?
The order matters. Seasoning is checked early because a file that fails it cannot move on.
1. Identify the payoff. If the loan being paid off is VA-backed, the seasoning clock applies. If it is FHA, USDA, conventional, or another lien, VA’s seasoning rule does not apply. The net tangible benefit test, COE, and occupancy still do.
2. Run the clock. Take the first payment due date, add 210 days, and confirm six consecutive payments in the payment history. The later date controls. Because the loan needs time to process, the note date may need to clear day 210, so the lock and signing dates have to be planned around it.
3. Certify seasoning. On VA-to-VA refinances the lender certifies seasoning to VA. For Type I loans, 38 CFR 36.4306 also requires the lender to certify the fee recoupment period, with all fees and costs scheduled to be recouped within 36 months.
4. Order the appraisal. A cash-out requires an appraisal, unlike the IRRRL. The appraised value, with the financed fee included, sets the 100% ceiling.
5. Run full credit underwriting. The VA Lenders Handbook, Chapter 6 requires full underwriting on every cash-out type. The underwriter confirms satisfactory credit and stable, reliable income. VA sets no minimum credit score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders set a higher floor.
6. Test residual income. Residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
7. Apply the net tangible benefit test. The loan must satisfy at least one of VA’s eight listed benefits. Examples in the regulation include eliminating monthly mortgage or guaranty insurance, a shorter term, or an increase in monthly residual income. The lender must also give a loan comparison disclosure, as VA Circular 26-18-30 requires.
8. Price the funding fee. The cash-out fee is 2.15% for first use and 3.3% after. It can be financed inside the 100% ceiling. It is waived for veterans receiving compensation for a service-connected disability and the other exempt groups. The reduced down-payment tiers do not apply to refinances.
9. Close on Loan Estimate and Closing Disclosure terms. This is a consumer mortgage, so TRID disclosures apply.
What Does Payment History Look Like in Different Scenarios?
Picture three borrowers with the same old loan.
On-time payer. This borrower made every payment in its due month, counting from the first payment due date. Two dates matter: day 210 after that first payment date, and the date of the sixth monthly payment. Whichever of the two falls later is the earliest closing date, and both tests must be met on the closing date itself.
Payer who paid ahead. Extra principal or early payments do not move the first payment due date. The 210 days still count the same. Paying ahead does not shorten the wait.
Payer with a late month. A missed or late payment can break the “consecutive” test. Plan around due dates, not closing dates, and expect the underwriter to read the payment history line by line.
A file that lands on day 209 has not met the 210-day test. Such a file gets moved to a later date rather than approved.
Where Does the Rule Break?
The general rule has named edge cases.
- Non-VA payoff. VA seasoning does not apply when refinancing FHA, USDA, or conventional into VA. Lenders and investors may add their own waiting periods, called overlays, so a given program may ask for more than VA does.
- IRRRL versus cash-out. The IRRRL lowers the rate on an existing VA loan, or moves it from adjustable to fixed. It needs no VA appraisal and carries a 0.5% fee unless exempt. It cannot return equity as cash. Taking equity makes it a cash-out under 36.4306. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL, and they do not apply to the VA cash-out as a program test.
- Type I versus Type II counting. Some sources claim Type II counts differently. The primary sources do not confirm that. Verify the counting against the current Handbook rather than assume.
- Construction-to-permanent. The circular states the cash-out rules include refinancing of construction loans, whether or not the principal changes.
- Manufactured homes. Section 36.4306 has special entitlement treatment for refinancing a purchase-money manufactured home loan.
- Prepayment penalties. A refinancing loan may include contractual prepayment penalties due on the old loan. Ask for the payoff terms of the existing loan early, since any such penalty becomes part of what the new loan must cover.
- Occupancy. The regulation refers to a dwelling owned and occupied. A VA cash-out is for the home you live in.
- Entitlement. The refinanced portion is treated as obtained with the entitlement used on the old loan. That matters if you plan another VA purchase. Speak with a loan officer about remaining entitlement.
Common Misconceptions
“Six payments is enough.” Both tests must pass.
“The 210 days start at closing.” They start at the first payment due date of the loan being paid off.
“Every VA cash-out has to season.” It applies VA-to-VA only.
“A VA cash-out is a streamline.” It needs an appraisal, full underwriting, and a net tangible benefit.
“Skip a payment and take cash.” VA and the CFPB have warned about offers that advertise skipped payments. VA also says it never mails or emails refinance solicitations and advises comparing multiple lenders, per VA News.
What Should You Do Before Day 210?
The decision is practical. Work through a short list.
- Pull the first payment due date from your original note or first statement.
- Print the payment history and confirm six consecutive entries.
- Order your COE if you do not have the current one.
- Decide whether you want Type I (no cash) or Type II (cash), and what the cash is for.
- Confirm which net tangible benefit you expect to pass.
- Compare what you give up. A cash-out replaces the whole mortgage, so the term, balance, and payment all reset. A Type II loan raises the balance, and a financed funding fee adds to it.
- Ask each option’s lender about their own overlays.
A broker that shops multiple wholesale lenders can match the scenario to the program. The best program for your situation depends on your payoff type, credit profile, equity, and documentation. The lenders that write this loan differ in their overlays.
Frequently Asked Questions
Do early payments shorten the 210 days?
No. The 210 days count from the first payment due date of the loan being paid off. Extra or early payments do not move that date. Both tests must be met on the closing date.
Does seasoning apply if I am refinancing a non-VA loan into VA?
No, VA’s seasoning rule applies only to VA-to-VA cash-outs. The net tangible benefit test, COE, appraisal, and occupancy still apply. A lender may add its own waiting period.
Is an appraisal required on a VA cash-out?
Yes. Unlike the IRRRL, the cash-out requires one. The appraised value, including the financed funding fee, sets the 100% ceiling.
What does VA look at besides seasoning?
Full credit underwriting, with residual income as the controlling test, plus the appraisal and a net tangible benefit. A debt-to-income ratio above 41% needs residual income well above the table.
Can I use a VA cash-out to take equity and also lower my rate?
A lower rate or different term is part of how a refinance works, but the half-percent rate-reduction test is an IRRRL rule and does not apply to the cash-out. The cash-out must show at least one net tangible benefit from VA’s list.
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.
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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
2. VA.gov: Cash-out refinance loan
3. Federal Register / VA rulemaking notice
5. VA Lenders Handbook, Chapter 6
8. VA News
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 a Co-Borrower Buyout Works on a VA Cash-Out Refinance · VA Cash-Out Refinance Requirements on a Home You Own · How Lenders Underwrite a VA Cash-Out Refinance With a Loss on Your Return
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Disclosures. The information presented in this article is general market commentary, not financial, legal, or tax advice. Lendmire is a mortgage brokerage (NMLS# 2371349) — not a direct lender or depository institution — and loan placement is subject to lender underwriting. Nothing in this content represents a commitment to lend. Loan terms, pricing, and program availability vary based on borrower qualifications, property characteristics, and state of subject property, and are subject to change at any time. Lendmire complies with Equal Housing Opportunity requirements. Consumer access: nmlsconsumeraccess.org.