The Quick Read: It depends on three numbers: the value VA sets for the home, what you owe now, and what the loan costs. The new loan can reach 100% of VA’s reasonable value, and the financed funding fee sits inside that ceiling. Cash to you is the ceiling minus the payoff, the fee, and any closing costs you roll in. With full entitlement, entitlement does not cap the cash. It only matters when it is partial.
The Formula in Plain Terms
Start with the appraised (reasonable) value VA assigns. The new loan can be at most 100% of it. 38 CFR 36.4306 sets that cap and says the funding fee may be financed, but any piece that would push the loan above 100% must be paid in cash at closing.
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.
So the working formula is:
1. Take 100% of the VA-set value. 2. Subtract the payoff of every lien being cleared (first mortgage, and any second lien you pay off). 3. Subtract the funding fee, if financed. 4. Subtract closing costs and prepaids you choose to roll in. 5. What remains is cash to you.
That formula is a synthesis for planning, not a quoted VA rule. Lenders review every file in full, and nothing here is a commitment to lend.
Run it in percentages. Say the VA value is the benchmark at 100%, and your payoff is 60% of it. Before fees and costs, 40% of value is the room. The funding fee and rolled-in costs come out of that 40%. Equity is not cash, and costs eat into it first.
Key Terms Defined
Entitlement: VA’s promise to repay a lender part of the loan if the borrower defaults. It is not cash you receive.
Certificate of Eligibility (COE): The document from VA that shows your eligibility and the entitlement you have used.
Reasonable value: The value VA sets through its appraisal. It fixes the 100% ceiling.
Funding fee: A one-time VA charge, financeable, waived for exempt borrowers such as veterans receiving compensation for a service-connected disability.
Net tangible benefit (NTB): A test showing the new loan serves your financial interest.
Does Entitlement Limit the Cash?
Not with full entitlement. VA’s entitlement and limits page says full-entitlement borrowers have no VA loan limit, provided they can afford the loan and the appraisal supports the value. The wholesale programs Lendmire places VA files with serve amounts up to $4,000,000 with full entitlement, subject to lender guidelines.
Partial entitlement is where it bites. VA says remaining bonus entitlement comes from the county loan limit where the property sits, minus entitlement already used. Lenders generally want the guaranty plus any equity or down payment to cover about 25% of the loan. VA’s page states that rule for purchases. How a lender counts retained equity on a cash-out is lender-specific, so ask the loan officer before you assume a number. For a partial-entitlement borrower, speak with a loan officer about what remains on your COE. County figures change, and this article does not quote them.
What a Cash-Out Does to Your Entitlement
Two cases come up. If you pay off an existing VA loan, the new loan uses entitlement again, and the old loan’s entitlement is tied up until it is restored. If you pay off an FHA, USDA, or conventional loan, you are moving into VA for the first time or reusing available entitlement. Either way, the new VA loan can reduce what is left for a later purchase. Check the COE before you sign.
The Funding Fee Inside the Ceiling
On a cash-out refinance the fee is 2.15% for first use and 3.3% for subsequent use, per VA Circular 26-23-06 Exhibit B. Veterans receiving service-connected disability compensation, and other exempt groups, owe none. The same circular says reduced fee tiers do not apply to refinances, so putting equity in does not lower a cash-out fee. That differs from a purchase, where 5% or 10% down lowers the fee tier. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
The fee is financed inside 100%. That is why many borrowers see the fee as a straight reduction of cash, not an extra line on top of the loan.
Worked Scenarios (Illustrative, Percentages Only)
These use round percentages of the VA-set value of the home. They are examples, not quotes. In each row the fee is figured on the new loan amount, which in these examples is 100% of value, so the fee percentage and the share of value come out the same.
| Scenario | VA value | Payoff | Fee | Cash result |
|---|---|---|---|---|
| Full entitlement, first use | 100% | 50% | 2.15% | About 47.85% before costs |
| Subsequent use | 100% | 50% | 3.3% | About 46.7% before costs |
| Low appraisal | Lower than hoped | Same | Same | Ceiling shrinks, cash drops |
| Non-VA payoff | 100% | 70% | 2.15% | About 27.85% before costs |
The arithmetic in the first, second and fourth rows is exact for those round inputs, though real files add closing costs. The Loan Estimate your lender issues shows the actual figures for your loan. In the low-appraisal row, the payoff stays the same while the ceiling falls. Every point the appraisal misses comes straight out of your cash.
Why the Quote May Land Below 100%
VA’s rule says 100%. Lenders can set tighter limits. Some cap VA cash-out below the ceiling, and some set higher credit floors. Across the wholesale programs Lendmire places VA files with, the VA cash-out reaches 100% of the appraised value including the financed fee, with a 580 decision-score floor. Lenders may differ. Your result is the lender’s cap, not VA’s.
What Has to Clear First
A cash-out is full underwriting. Residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap, but a ratio above it needs residual income well above the table. Credit, income documents, and the appraisal all come into play.
Then the net tangible benefit test applies. 38 CFR 36.4306 lists the criteria, and the lender must give you the test. The 90% figure often repeated online is just one NTB criterion, not a cap on cash. The half-percent rate-reduction and fee-recoupment tests are IRRRL rules and do not apply to a cash-out.
If you are paying off a VA loan, seasoning applies: the later of 210 days from the first payment and the sixth payment. A non-VA payoff does not face that VA seasoning test, but ask the lender to confirm how it treats your loan.
The loan is also for a home you occupy. Rentals and second homes follow different leverage rules.
Type I and Type II
The Federal Register distinguishes cash-outs where the new principal is higher than the payoff from those where it is equal or lower. Only the first puts cash in your hands. The second covers things like moving a non-VA loan into VA with no cash out. If your goal is cash, you want the first.
What You Give Up
Borrowing to 100% leaves almost no cushion. If prices fall, you could owe more than the home is worth. The new balance is larger, and the term may restart, so the monthly payment usually changes. The CFPB’s closing disclosure page notes that rolling costs into the loan lowers upfront costs but adds to total cost through interest. You also replace the loan you have. If your current loan has features you value, weigh that before you proceed.
You do not have to take the maximum. Borrowing less keeps more equity and may keep the fee lower, since the fee follows the loan amount.
Getting Your Own Numbers
Lendmire’s VA cash-out refinance program page outlines how these files are arranged. Before you talk to anyone, gather:
1. Your COE, showing entitlement used and remaining.
2. A current payoff statement for each lien.
3. Your funding fee status: exempt or not, first use or subsequent.
4. Your income and debt documents, since residual income drives the decision.
Lendmire is a mortgage broker licensed for consumer lending in 16 states. It arranges loans through wholesale lenders and does not lend itself. State law can also add limits on cash-out amounts. VA warns about misleading refinance offers on its cash-out loan page, and it notes the loan comes from a private lender, not VA.
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
Is there a dollar cap on cash from a VA cash-out?
Not with full entitlement. VA sets no loan limit for full-entitlement borrowers, so the cash is set by value, payoff, fee, costs, and the lender’s own cap. With partial entitlement, the county-based remaining entitlement and the lender’s 25% expectation can limit the loan.
Does the funding fee reduce my cash?
Yes, when it is financed. The fee sits inside the 100% ceiling, so it comes out of the room you would otherwise have. Any amount that would push the loan over 100% must be paid in cash.
Can a VA cash-out pay off a non-VA loan?
Yes. A VA cash-out can refinance any loan type into VA. VA’s seasoning test applies when you are paying off an existing VA loan.
What if the appraisal comes in low?
The ceiling drops with the value, and the payoff does not. Cash falls by the full shortfall. Some borrowers borrow less or wait. Ask the lender about the options available for an appraisal reconsideration.
Does a cash-out use up my entitlement?
The new VA loan uses entitlement, which can limit what is left for a later purchase. Check your COE for the remaining amount, and ask the lender how it would change before you proceed.
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
1. 38 CFR 36.4306, Cornell LII
2. VA.gov: Entitlement and loan limits
3. VA Circular 26-23-06 Exhibit B
4. Federal Register: Revisions to VA cash-out refinance loans
5. CFPB’s closing disclosure page
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 Qualify and Apply for a VA Cash-Out Refinance as Retired Military Using Entitlement · VA Cash-Out Refinance vs Conventional Cash-Out When the Cash Is Not Taxable Income · How to Plan and Use a VA Cash-Out Refinance to Buy Out a Co-Owner
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.