The Quick Read: Usually far less than the gap between your home’s value and your mortgage balance. At the top of the program, the new loan can reach 100% of the VA-appraised value, and that figure includes the financed funding fee. Your payoff, the fee, and any closing costs paid from proceeds all come off first. Whatever remains is your cash.
That one-line answer hides a lot of arithmetic. Below, the subtraction is laid out step by step, with the same home run at several LTV levels. LTV means loan-to-value: the new loan balance divided by the home’s appraised value. You will also see why an appraisal that comes in low hurts more than you expect, and what to ask before trusting anyone’s cash estimate.
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.
What Is the Formula for Cash to the Borrower?
Net cash is the new loan amount, minus the payoff of your current mortgage and any other liens being paid, minus the funding fee and closing costs that come out of proceeds. That is arithmetic, not a formula VA publishes. The subtraction itself is simple, though the inputs differ from one file to the next.
Here are the lines, in the order they come off:
1. Start with the appraised value. VA sets the value that counts. Your own estimate and an online estimate do not.
2. Apply the loan ceiling. The program reaches up to 100% of that value, including the financed fee. A given lender may stop lower.
3. Subtract the payoff. The new loan first retires your existing first mortgage, whether it is a VA loan or another type.
4. Subtract the funding fee. If you finance it, it sits inside the loan. It does not sit on top.
5. Subtract closing costs that you choose to pay from proceeds instead of out of pocket.
6. What is left is your cash.
Notice what is missing: a rule that hands you “100% of your equity.” Equity is value minus balance. Cash is equity minus the fee and the costs. The difference is the surprise most borrowers hit at the table.
Who Sets the Ceiling, and Who Makes the Loan?
VA sets the program ceiling, but a private lender makes the loan. According to VA, you get a cash-out loan through a private bank, mortgage company, or credit union, not through VA directly. You also need a Certificate of Eligibility, and a funding fee may be due at closing.
Lendmire’s VA cash-out refinance program page covers the basics. In short, Lendmire is a mortgage broker. It arranges these loans through wholesale lenders, and the lender reviews the file and decides. Every figure here is subject to lender guidelines and full file review. None of it is a commitment to lend.
The ceiling itself is worth a sentence of history. The Federal Register notice that amended the rule says a new cash-out loan cannot exceed 100% of the reasonable value, as VA determines it, of the home that secures it. Before that change, the regulation capped the loan at 90% of reasonable value. Some older articles still repeat the 90% number as if it were a cap. It is not.
A Worked Example at Several LTV Levels
Run the numbers on a home with a modeled assumption: your current mortgage payoff equals 70% of the appraised value. These are illustration inputs, not market facts. You finance the fee. Everything below is shown as a percentage of the appraised value.
| New loan (LTV) | Fee financed | Payoff | Cash before closing costs |
|---|---|---|---|
| 100% | 2.15% | 70% | about 27.9% |
| 95% | about 2.04% | 70% | about 23.0% |
| 90% | about 1.94% | 70% | about 18.1% |
The 100% row first. Equity is 30% of value. The financed fee takes 2.15% of the loan, which is 2.15% of value at that level. That leaves about 27.9%. Closing costs paid from proceeds come off after that.
Now the 90% row. Many lenders set a cap below the full program ceiling, and that cap changes everything. Equity is still 30%, but you can only borrow 90%, so the cash is the 90% loan minus the 70% payoff minus a smaller fee. About 18.1% of value remains before closing costs. Every point of lender cap you lose costs you roughly a point of cash.
Same home. Same payoff. Cash that differs by nearly ten points of value, just from where the lender stops.
How the Funding Fee Sits Inside the Ceiling
The funding fee counts toward the 100% limit when you finance it. If the fee would push the loan past the limit, you pay that portion in cash. The loan does not get to exceed the ceiling.
In practice, the effect is simple. At the top of the range, your loan cannot be “100% plus the fee.” It is 100%, fee included. That means the fee is not an add-on you can borrow around. It is a direct reduction of the cash you receive.
Three variants show how much the fee matters:
- First use, 2.15%. This is the case in the table above.
- Later use, 3.3%. Same home, same 70% payoff, 100% loan. The fee takes 3.3% of value, so cash before closing costs falls to about 26.7%.
- Exempt borrower. Veterans receiving compensation for a service-connected disability are generally exempt, and other exempt groups exist. VA’s funding fee page lists who qualifies.
The fee is a percentage of the whole new loan, not just the cash you take. Borrowers often miss that. A larger loan means a larger fee, even on the part that only pays off your old balance.
What a Low Appraisal Does to Your Cash
A low appraisal cuts your cash nearly dollar for dollar. Because VA’s reasonable value sets the ceiling, a lower value shrinks the loan, while your payoff stays the same.
Take the same example. Say the home appraises 5% below what you expected. The 100% ceiling now applies to a smaller number. The new loan is 95% of your expected value, the fee is slightly smaller, and the payoff has not moved. Cash falls from about 27.9% to about 23.0% of your expected value. A five-point miss in value costs you nearly five points of cash.
This is why a cash estimate built on a guess at value is only a guess. VA’s appraiser page explains how reasonable value is determined.
What Happens When the Payoff Is Bigger or Smaller
The payoff is the biggest swing factor, and it moves one for one. Every point of payoff you remove adds a point of cash. Every point you add takes one away.
Using the same 100% ceiling and the 2.15% fee:
| Payoff (% of value) | Equity | Cash before closing costs |
|---|---|---|
| 50% | 50% | about 47.9% |
| 70% | 30% | about 27.9% |
| 85% | 15% | about 12.9% |
The pattern is simple. The fee takes a flat slice off the top, whatever your equity. When equity is small, that slice is a big share of it. At 15% equity, a 2.15% fee takes about one-seventh of what you have before closing costs even start.
A payoff can also include other liens that the new loan retires. Which liens must be paid depends on your file and the lender, so ask before you assume.
Why Lenders Cap Below the VA Ceiling
The ceiling is VA’s. The cap you meet is the lender’s. VA guarantees the loan, but the lender funds it and carries the risk of selling it, so lenders set their own limits. Some lenders hold the line at 90%. Some stop at 95%. Some reach the full 100%. These are lender overlays, meaning rules added on top of VA’s own.
Across the wholesale programs Lendmire places VA files with, the full-value ceiling is available, along with a 580 decision-score floor. That floor and everything else here remain subject to lender guidelines and full file review. A lender’s own overlay can still be tighter for a given file.
Here is the practical takeaway. Before you plan around a cash number, ask the lender one question: “What is your maximum LTV on my cash-out, and does the funding fee sit inside it?” The answer decides which row of the table you are on.
Is 90% a Cap? (No, and Here Is the Confusion)
No. The 90% figure is a test criterion, not a cap. Every VA cash-out has to pass a net tangible benefit test, meaning the loan must give you a real, listed benefit. Under 38 CFR § 36.4306, landing at or under 90% of reasonable value is one of the ways to pass. Converting an adjustable-rate loan to a fixed rate is another. So are an increase in monthly residual income and refinancing an interim construction loan.
VA’s 2023 lender conference presentation puts it plainly. A cash-out must meet one of the eight listed criteria. A loan above 90% can still pass on another benefit. The same rule text also carries a narrow condition tied to how loan costs are structured, which can pull the loan back to 90% or lower. A lender can walk you through whether it applies.
Two tests that belong to a different loan do not apply here. The half-percent rate-reduction test and the fee-recoupment test are rules for the IRRRL, the streamline refinance of an existing VA loan. They never apply to the VA cash-out.
Type I and Type II Cash-Outs
A Type I cash-out does not put cash in your pocket. A Type II does. In a Type I, the new loan, fee included, does not exceed what it pays off. A common example is turning a non-VA loan into a VA loan with no cash taken. In a Type II, the new loan exceeds the payoff. That excess is your cash.
This article is about Type II, since you are asking how much cash comes out. Cost-recovery treatment differs between the two types. Ask your loan officer which type your file is, because it can change how the costs are handled.
One more gate applies to both: seasoning. Across the programs Lendmire places, seasoning is the later of 210 days from your first payment and your sixth payment. A borrower who just bought will need to wait.
What Else Reduces Your Cash
Closing costs are the other big subtraction after the fee. You can pay them out of pocket or let them come out of proceeds, and either choice is yours to weigh. Costs vary by property, by lender, and by what the home needs. Your Loan Estimate lists them, and the Closing Disclosure shows the final figures.
Ask for the Loan Estimate and compare it line by line before you rely on any cash figure. A quoted “cash to you” number that skips the fee or the costs is not the number you will receive.
Two quieter items also matter:
- Prepaids and escrows. Taxes and insurance set aside at closing are real money out, even though they are not a fee.
- Other liens. A second mortgage or similar lien paid by the new loan reduces cash just like the first mortgage does.
What High-LTV Borrowing Does to You Afterward
Cash in hand is only half the story. Taking cash out lowers your equity and raises your balance. VA’s own report to Congress names stripping equity and raising LTV as a danger. It notes that removing equity can affect a veteran’s ability to sell later. A home with little equity left has little room if prices dip.
The monthly budget moves too. A bigger balance can raise the payment, and a new term can stretch out your payoff. Your lender will test income against residual income, which is the money left each month after your major obligations. That is the controlling test on VA loans. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it needs residual income well above the table.
Many borrowers use cash-out proceeds to pay other debts. CFPB research found this is common. The tradeoff is real. Moving unsecured debt onto your home means a missed payment now puts the house at stake. (And the card balances often creep back, which is the part nobody mentions at the table.)
Last, do not mistake “no mortgage insurance” for “no downside.” The VA cash-out carries no mortgage insurance. Equity still falls, the balance still rises, and the home still secures more debt.
Key Terms Defined
Reasonable value: the value VA sets for your home through its appraisal process. It sets the ceiling on the new loan.
LTV (loan-to-value): the new loan balance divided by the appraised value, shown as a percentage.
Payoff: the balance needed to retire your existing mortgage, plus any other liens the new loan pays.
Funding fee: a one-time VA charge on the new loan amount, financeable, and waived for exempt borrowers.
Net tangible benefit: a real, listed advantage the refinance must give you. A cash-out has to meet one of VA’s eight listed benefits.
Residual income: what is left of your monthly income after taxes, housing, and major obligations. It is the controlling test on a VA loan.
A Pre-Application Checklist
Before you trust a cash estimate, gather these:
- Your current payoff, including any second lien.
- Your Certificate of Eligibility, and whether you qualify for a fee exemption.
- A realistic value range, with room for the appraisal to come in lower.
- The lender’s maximum LTV on cash-out, and whether the fee sits inside it.
- Whether your costs will come out of proceeds or out of pocket.
- Whether this is a first use or a later use of your benefit.
Occupancy matters too. VA cash-out is meant for a home you currently live in as your primary residence. State law can also add limits in some places, so ask your loan officer what applies where you live.
Finally, be careful with unsolicited refinance offers. VA warns veterans to scrutinize them and watch for the signs of a misleading pitch.
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
Does 100% LTV mean I get all of my equity in cash?
No. The fee, any closing costs paid from proceeds, and the payoff come out first. If you finance the funding fee, it sits inside the 100%, so it directly reduces your cash. If the fee would push the loan past the ceiling, you pay the overage in cash. Equity minus the fee and costs is closer to the real number. Final terms depend on the lender’s guidelines, the property type, and the borrower’s complete credit picture.
Can I take less than the maximum?
Yes. The ceiling is a limit, not a requirement. You can borrow a smaller amount, and a smaller loan means a smaller funding fee because the fee is a percentage of the new loan. Borrowers who want cash for one specific purpose often size the loan to that need instead of maxing out the ceiling.
Why did one lender quote me less cash than another?
Most often it comes down to the lender’s LTV cap. VA’s ceiling is 100% of reasonable value, but individual lenders may stop at 90% or 95%. A different assumption about closing costs or whether the fee is financed can also change the figure. Ask each one for the cap, the payoff, the fee, and the costs, then compare those lines.
Does a lower appraisal change my cash dollar for dollar?
Roughly, yes. VA’s reasonable value sets the ceiling, so a lower value shrinks the loan while your payoff stays put. A value 5% lower than expected cuts cash by close to five points of value in the example above. A conservative value estimate is a safer way to plan.
Is a VA cash-out the same as a home equity loan?
No. A VA cash-out replaces your existing mortgage with one new, larger loan. A home equity loan adds a second loan on top of the first. The VA cash-out can also turn a non-VA loan into a VA-backed loan, and it carries no mortgage insurance. Which fits better depends on your current loan, your equity, and your eligibility.
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. VA – Cash-out refinance loan
2. Federal Register – Revisions to VA Cash-Out Refinance Loans
3. VA – Funding fee and closing costs
6. VA Loan Guaranty Conference – Refinancing Loans
7. VA: Report on Document Disclosure and Consumer Education
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 Refinance vs Conventional Cash-Out After a Job Change · How to Qualify and Apply for a VA Cash-Out Refinance When Borrowing at a High LTV · How to Get a VA Cash-Out Refinance With an Unpermitted Addition
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- 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.