The Quick Read: It depends on four numbers: the appraised value, the payoff on your current loan, the funding fee, and the closing costs paid from proceeds. The formula is the new total loan (fee included) minus the payoff, minus closing costs and prepaids paid out of the check. Rolling the fee in does not add cash. It uses up room under the ceiling, so the check is smaller than the gross equity suggests. Subject to lender guidelines and full file review.
What Is the Formula for Net Cash?
Net cash equals the new loan amount, with the financed fee inside it, less the payoff of every loan being retired, less costs and prepaids that come out of proceeds. The appraised value, the payoff and the closing costs are fixed by the house, the old loan and the file. The funding fee is set by the program.
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.
Think of it as a ceiling with things stacked under it. The VA cash-out reaches 100% of the appraised value including the financed fee, per Lendmire’s program knowledge from placing these files. The regulation says the same thing in different words: under 38 CFR 36.4306, the new loan can’t exceed 100 percent of the reasonable value of the home. Reasonable value is what the VA appraisal says. That appraisal is the denominator for every test on the file.
So the order of operations runs like this:
1. Take the appraised value and apply the ceiling (100% under the VA program, lower if the lender sets its own cap).
2. Back out the funding fee. The base loan is the ceiling divided by one plus the fee rate.
3. Subtract the payoff of the old mortgage and any liens being cleared.
4. Subtract closing costs, points and prepaids that are paid from proceeds.
5. What remains is the check.
Here is the part most borrowers miss. The fee is calculated on the whole new loan, not on the cash you take. Taking a small check does not shrink it.
How Does Rolling the Fee In Change the Check?
Financing the fee lowers your cash because the fee sits inside the same ceiling as everything else. The regulation allows the fee to be included in the loan, and any portion that would push the loan over 100 percent of reasonable value has to be paid in cash at closing.
The fee for a non-exempt borrower on a cash-out refinance is 2.15% for first use and 3.3% for subsequent use, per a VA program notice 26-23-06, Exhibit B. The same exhibit says the reduced tiers tied to down payments of 5% or more do not apply to refinances. More equity does not lower the fee.
Run it as a percentage of appraised value. These are modeled arithmetic, not VA figures:
| Scenario | Ceiling | Base loan | Fee |
|---|---|---|---|
| First use, VA ceiling | 100% | about 97.9% | about 2.1% |
| First use, lender cap | 90% | about 88.1% | about 1.9% |
| Subsequent use, lender cap | 90% | about 87.1% | about 2.9% |
| Fee exempt, VA ceiling | 100% | 100% | — |
Subtract your payoff and other costs from the base loan column to estimate cash. Nothing else changes in the math.
A same-house comparison makes it plain. Picture a homeowner whose appraisal supports the ceiling and whose payoff is 60% of value. At a 100% ceiling, first use, the base loan is about 97.9%, so the gross check is about 37.9% of value before costs. Under a 90% lender cap, the base is about 88.1%, so the gross check is about 28.1%. Same house, same payoff, roughly ten points of value apart. The ceiling matters more than the fee. The fee matters most when the ceiling is already tight.
What If the Fee Pushes the Loan Past the Ceiling?
Any piece of the fee that would take the loan above 100 percent of reasonable value must be paid in cash at closing. It can’t be financed. That is the fee-overflow rule, and it shows up when a borrower asks for the largest check the program allows.
Say a borrower wants the maximum. The base loan plus the full fee would exceed the ceiling by a hair. The borrower either brings that sliver to closing from savings or takes a slightly smaller check. Most borrowers in that spot take the smaller check. Either way, the file has to reconcile. The settlement figures need to show where the fee went and who paid it.
A low appraisal does the same thing from the other direction. A lower value shrinks the ceiling, but the payoff doesn’t move. Every dollar of lost value comes out of the check. On a thin-equity file, a modest appraisal miss can erase the check entirely. Ask for the appraised value before you plan around a cash figure. Not after.
Does the Fee Differ for First Use, Subsequent Use, and Exempt Borrowers?
Yes, the fee differs by tier. The fee percentage depends on whether this is first use or subsequent use, per the VA table cited above. Subsequent use means you have used your VA entitlement for a loan before, in the sense VA defines it. The COE and the VA’s rules decide which tier applies.
Exemptions cover veterans receiving VA compensation for a service-connected disability, surviving spouses receiving DIC, and active-duty Purple Heart recipients who can show evidence by closing. Borrowers in any of these categories should read VA’s own description of them directly. The status at closing is what the lender documents. A pending claim isn’t the same as an awarded one, so confirm where yours stands before the file goes in.
For an exempt borrower, the whole ceiling is available as base loan. On the same house, that is the largest check of the three scenarios. It is the clearest case where fee status, not equity, drives the difference.
Key Terms Defined
Financed fee: The VA funding fee added to the new loan balance instead of paid in cash at closing.
Ceiling: The maximum new loan, set as a percentage of the appraised (reasonable) value, with the financed fee counted inside it.
Payoff: The balance owed on the loan or loans being retired by the refinance, including any liens being cleared.
Net cash: The check you actually receive after the payoff and closing costs come out of the new loan.
Type I and Type II cash-out: VA’s lender handbook sorts these by comparing the new loan, fee included, to the payoff. Type I means the new loan doesn’t exceed the payoff. Type II means it does, which is what puts cash in your hands.
Seasoning: The required waiting period before a VA-to-VA refinance is eligible. Across the programs Lendmire places, it is the later of 210 days from the first payment and the sixth payment.
What Else Reduces the Check?
Closing costs and prepaids reduce it. The fee is the only item clearly permitted to be financed. Under the regulation text in the same eCFR subpart, certain lender charges may be paid by the veteran, and some of those charges generally cannot be added to the loan amount. So appraisal, title, lender charges and prepaids typically come out of proceeds or out of pocket. This is how Lendmire reads the rule from working files, and a lender’s handbook guidance governs the specifics.
Five things commonly shrink the check:
- A lower appraisal than expected.
- A larger payoff, including liens being cleared.
- A lender cap below 100% of value.
- Subsequent-use fee status instead of first use.
- Higher closing costs and prepaids.
Many lenders set their own cap below the VA ceiling. Across the wholesale programs Lendmire places VA loans with, the VA cash-out reaches 100% of the appraised value including the financed fee, but a given lender’s overlay can differ, and some set a higher credit floor. Ask which cap applies before running the numbers.
What Does the Larger Balance Cost You Later?
A bigger loan balance means a bigger payment and more interest accruing, and it leaves less equity afterward. The equity you keep is the headroom under the ceiling minus the cash you take. VA’s cash-out loan page tells borrowers to think about how the new loan relates to the home’s value, and that is the right frame.
On a 100% ceiling file, you can end up with essentially no cushion. A later dip in value leaves you owing more than the house is worth. That is a decision for the borrower, not a program defect, but it should be made with the number in front of you.
The VA cash-out also runs through full credit and income underwriting. It is not a streamline. Residual income is the controlling test, and the 41% debt-to-income figure is a guideline rather than a cap. A ratio above it needs residual income well above the table. The wholesale programs Lendmire places start at a 580 decision score.
The refinance also has to show a net tangible benefit, one of VA’s eight listed benefits. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL streamline and don’t apply to the VA cash-out.
Common Mistakes on VA Cash-Out Math
Most bad estimates come from a handful of assumptions.
“The fee sits on top of 100% of my value.” It doesn’t. It sits inside the ceiling, and any excess is paid in cash.
“VA caps cash-out at 90%.” The VA limit is 100% of reasonable value. Ninety percent is usually a lender cap, though 90% shows up as a trigger in specific VA rules.
“All closing costs can be rolled in.” Only the fee is clearly financeable. Points generally can’t be added to the loan.
“More equity lowers the fee.” The reduced tiers apply to purchases with down payments, not refinances.
“Taking no cash means it isn’t a cash-out.” VA treats a refinance of a non-VA loan into a VA loan as a cash-out loan type, even when no cash is taken.
“Cash-back and no-cost offers are free.” The CFPB and VA have warned that offers promising cash back or skipped payments can add thousands to the loan balance. Costs don’t vanish. They move into the balance.
One more on occupancy. You must plan to live in the home you’re refinancing. A second home or rental doesn’t fit this program.
How to Read the Cash-to-Borrower Line
On the Closing Disclosure, the cash-to-borrower figure is what’s left after the payoff and all closing costs come out of the new loan. Tie it back to the formula. Start with the total loan, confirm the fee is inside it, subtract the payoff, and check that the closing costs and prepaids match what you were quoted on the Loan Estimate. If the check is smaller than you planned, the gap is almost always one of the items in the shrink list above.
Reconciliation matters here. The settlement statement should account for every dollar: payoff, fee, costs, and the check. If any line doesn’t make sense, ask before closing.
Cash-Out Versus Staying Put
A cash-out refinance replaces your loan with a larger one. If your current VA loan has terms you like, the cash may cost more than it’s worth. That tradeoff is the real decision. Lendmire’s VA cash-out refinance program page covers how the product fits different files.
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. Reach the team at 828-256-2183 or through Lendmire’s quote request.
Frequently Asked Questions
Does rolling the funding fee into the loan reduce my cash dollar for dollar?
Close to it, yes. The fee takes up room under the ceiling, so each point of value spent on the fee is a point not available as base loan. Under a lender cap below 100%, the effect is larger. Exempt borrowers don’t have the fee, so their full ceiling is available.
Is the fee smaller if I have more equity?
No. The reduced fee tiers apply to purchase loans with down payments of 5% or more, and the VA exhibit says they don’t apply to refinances. The cash-out fee is 2.15% for first use and 3.3% for subsequent use, regardless of equity.
Can I pay the fee in cash instead of financing it?
Yes. Paying it at closing keeps the loan balance lower, but it reduces the cash you walk away with. If the fee would push the loan above 100 percent of reasonable value, the overflow has to be paid in cash anyway.
Can I refinance a non-VA loan with this program?
Yes. VA’s page says a cash-out loan can refinance a non-VA loan into a VA loan, and that counts as a cash-out even if you take no cash. You also must live in the home.
Is there a waiting period before a VA-to-VA cash-out?
Yes. Across the programs Lendmire places, seasoning is the later of 210 days from the first payment and the sixth payment, plus a net tangible benefit. Lender guidelines can add conditions.
About Lendmire
Lendmire, NMLS# 2371349, is a mortgage brokerage with consumer lending licenses in 16 states. FHA, VA, conventional and jumbo purchase and refinance loans are arranged through wholesale lending partners, and each application is reviewed individually by the lender. 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. eCFR — 38 CFR Part 36, Subpart B
2. VA Circular 26-23-06, Exhibit B
3. VA.gov — Cash-out refinance loan
4. CFPB — VA refinancing offers that sound too good to be true
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 With Funding Fee Rolled In · How to Plan and Use a VA Cash-Out Refinance to Go Fixed · VA Cash-Out Refinance vs Conventional Cash-Out When the Cash Is Not Taxable Income
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Important disclosures. Lendmire (NMLS# 2371349) is a licensed mortgage brokerage. Lendmire is not a direct lender, depository institution, or financial advisor. All loan inquiries are subject to lender underwriting; this article does not constitute a commitment to lend. Rates, terms, and program guidelines are subject to change without notice and vary by borrower profile, property type, and state. Information in this article is general in nature and is not financial, legal, or tax advice. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.