The Quick Read: On a VA cash-out refinance, the county records your new mortgage, and you may be asked to pay the recording fee and any recordation tax. VA lets the veteran pay these charges. It does not exempt you from them. On a refinance, they can usually be financed into the loan, as long as the total stays within the loan’s value limit.
Key Takeaways
- A recording fee and a recordation tax are different charges. One is a flat government fee per document. The other, where it exists, is a tax tied to the loan amount.
- Local law sets the amounts. VA sets who may pay them.
- On a refinance, allowable costs can go into the loan balance. On a purchase, only the funding fee can.
- Financed costs raise your balance and shrink your net cash. A tax that scales with the loan hits harder on bigger loans.
- Several states have a Montgomery County. Your own county recorder and closing agent have the final numbers.
Which Montgomery County Are We Talking About?
Several states have a Montgomery County, and each sets its own recording charges. This article is national. It uses “your county” as the stand-in and does not quote any local rate or tax figure. Those numbers change, and the wrong county’s numbers would mislead you.
What carries over from place to place is the structure. Every county records documents. Some also tax the debt a mortgage secures. VA’s rules sit on top of that and say who can be charged.
What Gets Charged: Fee, Tax, and Transfer Tax
A recording fee pays the county to file and index your documents. A recordation tax, in places that have one, is a percentage-based tax on the debt being recorded. A transfer tax is charged when ownership changes hands, which a refinance usually does not do.
| Charge | What triggers it | What it is based on |
|---|---|---|
| Recording fee | Filing a document | Page count, document type |
| Recordation tax | Recording a mortgage | Debt secured (where it exists) |
| Transfer tax | Change of ownership | Sale price (usually a purchase) |
Local law sometimes calls both of the first two “recordation.” Your Loan Estimate does not care what the county calls it. A flat, per-document charge and a loan-amount-based charge appear in different places on the form.
How a VA Cash-Out Moves Through the Recording Step
Across the wholesale programs Lendmire works with, a VA cash-out follows the same path. Each step touches the recording question.
1. Eligibility. Your certificate of eligibility from VA decides whether you qualify. A cash-out also needs enough entitlement.
2. Occupancy and appraisal. The home is your residence. A VA appraisal sets the value, and the value sets the ceiling on the loan.
3. Underwriting. Residual income is the controlling test. It measures what is left each month after your debts and living costs. The 41% debt-to-income figure is a guideline, not a cap. The wholesale programs start at a 580 decision score, subject to lender guidelines and full file review.
4. Loan Estimate. Government fees appear in a dedicated section. Recording fees and any recordation tax show up there as estimates.
5. Closing. The title or closing agent collects the recording charges and passes them to the county.
6. Recording. The new mortgage or deed of trust gets filed in the county land records. The old loan is paid off.
The VA cash-out reaches 100% of the appraised value, including the financed funding fee. It refinances any loan type into VA. It carries seasoning (the waiting period since your current loan began): the later of 210 days from the first payment and the sixth payment. It also requires a net tangible benefit, meaning the refinance has to help you in a real way. Details on the VA cash-out refinance program sit on Lendmire’s program page.
Who May Pay the Recording Charges?
You may. VA’s own rule lists the charges a veteran can pay, and it names recording fees and recording taxes or other charges incident to recordation. The rule is in 38 CFR 36.4313. The same section allows other itemized costs, such as title work, a credit report, flood determination and the VA appraisal fee. Each must be reasonable and customary.
Two limits protect you. First, the lender’s flat 1% charge is its own origination charge. Government charges are separate itemized costs, not part of that 1%. Second, a lender cannot bill you more than the actual cost. VA Circular 26-24-19 says lenders must support the amount charged with an invoice or other document that clearly identifies the transaction. Its example is a recorded deed showing the recordation cost.
So a “recording” line with a markup is a flag. Ask for the invoice or the recorded-document evidence behind it.
Financing the Costs on a Cash-Out
On a refinance, allowable fees can be included in the loan. VA’s Buyer’s Guide says only refinancing loans may include other allowable fees and certain loan charges. A purchase loan can include only the funding fee. Check that the guide is still current before you lean on it, since it carries an older edition date.
Financing has a cost. Every dollar of fees you roll in becomes balance you repay, and it eats into the ceiling. The VA cash-out tops out at 100% of the appraised value including the financed funding fee. The funding fee is 2.15% on first use and 3.3% after, and veterans who receive compensation for a service-connected disability, along with the other exempt groups, owe none. When the funding fee and the recording charges all sit inside that ceiling, each one reduces the cash you take out.
Lendmire’s piece VA Cash-Out Cap Rules When Your Home Is Worth Far More Than the Loan covers how the value ceiling works when equity is large.
A picture helps. Say you have lots of equity and want a cash-out near the top of the allowed value. The funding fee, title charges, and recording charges all come out of the same room under the ceiling. Your net cash is what remains. Where a recordation tax scales with the debt secured, a bigger loan means a bigger tax, which shrinks that net cash again.
Where the General Rule Breaks
The headline rule is simple: you may pay it, and on a refinance you can finance it. Real files bend that in a few places.
“VA exempts me” is false. Nothing in VA’s rule waives state or local recording taxes. It only decides who may be charged. Some counties offer their own relief, such as reduced rates for certain buyers. Those programs often do not carry over to a refinance. Ask the title agent or county recorder. Do not assume.
Fee versus tax confusion. The CFPB’s rule on the Loan Estimate treats the recording fee as a government charge to record and index your documents, and it depends on document type or page count, not on price or loan size. See Regulation Z § 1026.37. A charge based on the loan amount is classed differently on the form, whatever the local name. This is why one county’s “recordation” line can sit in an unexpected spot.
The taxable base differs by place. Where a recordation tax exists, it is typically based on the debt the mortgage secures. Whether a refinance is taxed on the full new loan or only on the increase depends on local law and sometimes on how the transaction is structured. Because the rule varies, get the answer from the county or your closing agent in writing.
Cash-out versus IRRRL. An IRRRL (interest rate reduction refinance loan) refinances an existing VA loan only. It has no VA appraisal and no cash out, and its funding fee is 0.5% unless you are exempt. A cash-out can pay off any loan type and put equity in your hand. Recording still happens on both. What differs is how much new debt gets recorded.
Paying off a non-VA loan. If you are refinancing a conventional or FHA loan into VA, the new VA mortgage is a fresh recorded instrument. Treat it as a new recording, and ask the closing agent how your county measures the base.
Lender and state overlays. Some lenders set cash-out limits below VA’s ceiling, and some states have their own caps on cash-out. Those are policy and state law, not VA rules. They change how much cash you net, which changes how much the recording costs matter.
Reading Your Loan Estimate and Closing Disclosure
The government-fees section of both forms is where recording charges live. The CFPB’s Closing Disclosure explainer describes it as the cost of transferring the property and registering your mortgage with the county records office. It also tells you to compare the Closing Disclosure against your Loan Estimate.
Here is what to check:
- Fee line versus tax line. Know which is the flat filing fee and which, if any, scales with the loan.
- Deed versus mortgage. On a refinance with no ownership change, you should expect mortgage recording, not a deed transfer.
- Changes between the two forms. Recording charges can still move between estimate and closing. Ask what changed and why.
- Loan amount. If the balance rose, find out whether financed costs account for it.
What the Decision Looks Like in Practice
Picture a veteran with a paid-down home who wants cash for a renovation. The VA cash-out can reach 100% of value, so the question is not “can I?” but “how much of that ceiling do I want to spend on costs?”
Compare two paths. In the first, you pay the recording charges at closing from your own funds, keeping the loan balance lower. In the second, you finance them and take less cash home. Neither is wrong. The first costs you cash now. The second costs you a larger balance for as long as you hold the loan.
If your current loan already works for you, a cash-out has to earn its place against that loan. The net tangible benefit test exists for this reason. Ask your loan officer to show what each option reaches in equity and what stays in your balance. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
Key Terms Defined
Recording fee: a flat government charge to file and index a document in the county land records.
Recordation tax: a tax some counties or states charge when a mortgage is recorded, typically based on the debt it secures.
Transfer tax: a tax charged when ownership of a property changes hands.
Entitlement: the amount of VA guaranty a veteran has available to use on a home loan.
Funding fee: a one-time VA charge that can be financed into the loan and is waived for exempt veterans.
Seasoning: the waiting period between your current loan’s start and a new refinance.
Residual income: the money left each month after your debts and living costs, which is VA’s controlling test.
Frequently Asked Questions
Does a VA cash-out trigger a recordation tax?
It depends on your county and state. The refinance records a new mortgage, which always involves a recording fee. A tax based on the debt secured exists only where local law imposes one. VA neither creates nor removes it.
Can I roll recording costs into the loan?
Usually yes, on a refinance. VA lets refinancing loans include other allowable fees, not just the funding fee. The total must stay within the loan’s value ceiling and the lender’s guidelines. Every financed dollar raises your balance and reduces your net cash.
Is the tax on the whole loan or just the new money?
That is set locally. Some places tax the full new debt secured, and others give reduced treatment when principal does not increase. Ask the county recorder or your closing agent for the rule in writing before you assume either answer.
Can the lender charge me more than the actual recording cost?
No. VA’s circular says a lender may not charge the veteran more than the actual amount for the service. The lender must also back the charge with an invoice or recorded-document evidence. Ask for it if the line looks high.
Does the rule change if I refinance a non-VA loan into VA?
VA’s rule about who may pay does not change. The new mortgage is recorded either way. How your county measures any tax can differ depending on the old loan and the structure, so confirm that before closing.
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. Program figures are subject to lender guidelines and full file review, and nothing here is a commitment to lend.
For your own numbers, request a scenario review with Lendmire.
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.
For the program’s current guidelines, see VA loan programs.
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References
1. 38 CFR 36.4313, Charges and fees (eCFR)
4. CFPB Regulation Z § 1026.37
5. CFPB Closing Disclosure explainer
This article is part of Lendmire’s VA Loans series — every loan program’s qualification details, guidelines, and scenarios live on the loan options page.
Related reading: Is VA Cash-Out Better Than Conventional on a 2-4 Unit Primary Home? · How to Get a VA Cash-Out on a Home Still in the Estate · VA Cash-Out Occupancy Rules for a Surviving Spouse
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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Legal disclosures. Lendmire (NMLS# 2371349) is a state-licensed mortgage brokerage that arranges financing through wholesale lender relationships. Lendmire is not a direct lender, depository institution, or registered financial advisor. The discussion above is general informational content about real estate financing — it is not financial, legal, or tax advice, and readers should consult licensed professionals for guidance on their individual circumstances. Loan inquiries are subject to lender underwriting; this article does not represent a commitment to lend. Loan terms, rates, and qualification standards vary by borrower, property, and state, and are subject to change at any time. Equal Housing Opportunity. NMLS Consumer Access: nmlsconsumeraccess.org.