The Quick Read: On a large loan, the closing bill is two layers: the VA funding fee, which is a percentage of the whole new loan, plus ordinary lender and third-party charges. Most veterans do not bring cash to the table. The costs are taken out of the loan or out of the equity you receive. Either way, they shrink your net cash, and a bigger loan makes the percentage-based layer bigger in step.
Key Takeaways
- The funding fee is 2.15% of the new loan on a first-use cash-out and 3.3% on later use, unless you are exempt.
- A VA cash-out can reach 100% of the appraised value, including a financed fee. Anything that pushes past that line has to be paid in cash.
- Financing a cost does not erase it. It raises the balance and lowers the cash you walk away with.
- Large loans change the math mainly through the percentage-based charges, not through a different set of fees.
What Is Actually on the Closing Bill?
The bill has two layers. The first is the VA funding fee. The second is everything else: appraisal, title work, lender charges, and prepaid items like taxes and insurance.
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.
The funding fee is the one that surprises people, because it is set by VA and is tied to loan size. It is also the one most borrowers finance. For a VA cash-out refinance, the two figures that matter are simple: 2.15% for first use and 3.3% for subsequent use. Down payment tiers do not apply to a refinance. VA says refinance fee rates do not change with the amount you put down.
Some veterans owe nothing here. The fee is waived for veterans receiving compensation for a service-connected disability and for a few other exempt groups. Your Certificate of Eligibility, the COE, is the VA document that shows your status. One trap: a disability rating decision that arrives after your closing date does not undo a fee you already owed.
For the program basics, see Lendmire’s VA cash-out refinance program page.
Why a Large Loan Changes the Bill
A large loan does not add new fees. It makes the percentage-based ones larger.
Think of it as a ratio. The funding fee is 2.15% of the loan on first use. Double the loan, and the fee doubles. A veteran borrowing at the high end of what the wholesale programs serve, up to $4,000,000 with full entitlement, pays the same percentage as someone borrowing a fraction of that. The dollar amount just grows with it.
Other charges split into three groups:
- Flat or near-flat charges. An appraisal on a given home tends to cost about the same whether your loan is modest or large.
- Scaling charges. Title insurance and any lender charge expressed as a percentage grow with the loan.
- Charges that follow the home. Prepaid taxes and insurance track the property, not the loan amount.
That is why a large cash-out feels different at closing even though the line items look familiar. Two or three scaling lines carry most of the change.
On loan size itself: with full entitlement, VA sets no loan limit. Underwriting still decides the maximum you can actually borrow. If your entitlement is partial because of a prior VA loan, a down payment may be required, and that is a conversation for a loan officer, not a guess.
The Fee-by-Fee View
| Cost | Who sets it | Scales with loan size? | Can sit inside the loan? |
|---|---|---|---|
| VA funding fee | VA | Yes, by percentage | Yes, within the 100% ceiling |
| Appraisal | Appraiser | Mostly no | Often paid from proceeds |
| Title and settlement | Title company | Partly | Within the ceiling or from proceeds |
| Lender charges | Lender | Often | Within the ceiling or from proceeds |
| Prepaid taxes and insurance | Taxing bodies and insurer | No, follows the home | Typically paid at closing |
Treat this table as a map of where to look. Your Loan Estimate gives the actual numbers, and lender policies differ.
A Worked Example, in Percentages
Suppose your home appraises at a value we will call 100%. You owe 55% of that value on the loan being refinanced. This is a modeled example, not a market fact.
You ask for the maximum, a new loan at 100% of value that includes the financed funding fee. First use puts the fee at 2.15% of the home’s value (it is a percentage of a loan sitting at 100%). Your cash before other costs is 100% minus 55% minus 2.15%, which is 42.85% of the value.
Now repeat it for a veteran on subsequent use. The fee is 3.3%, so the same math leaves 41.7% before other costs. With the same house and the same payoff, the difference in fee tier alone leaves you with 1.15% less of the home’s value in cash.
Then the other costs come off the top. Appraisal, title, and lender charges are not inside that 42.85% figure. If the loan is already at the ceiling, they come out of your proceeds. That is the point many cash-out borrowers miss. The check you receive is smaller than the equity number you had in your head.
Pay From Proceeds or Bring Cash?
Usually you have a couple of ways to handle costs, and the ceiling decides which is available.
Paying from proceeds. The costs are subtracted from the cash you receive. Nothing leaves your bank account, but your net cash drops.
Financing inside the loan. The funding fee, and sometimes other costs, can be added to the loan amount. That works only while the total stays at or under 100% of reasonable value. The rule behind this is 38 CFR 36.4306, and any portion that would push the loan over the ceiling must be paid in cash at closing.
Bringing cash. If your payoff is high and your equity thin, you may owe cash at the table. That happens when the costs plus the payoff reach the ceiling and leave no room.
Financing is not free. A larger balance carries more interest over time, even when the monthly payment looks manageable. On a large loan, that effect grows with the balance. It is worth asking your loan officer to show the net cash both ways before you pick.
How the Loan Gets Underwritten, Step by Step
Costs are only half of the picture. The loan has to be approved first, and a big loan gets a close look.
1. Confirm eligibility. You need a COE, and you need to live in the home you are refinancing. VA describes this on its cash-out page. Investment-property cash-outs are not eligible.
2. Apply through a private lender. VA does not lend directly. Banks, mortgage companies, and credit unions make the loan, and terms vary. A broker such as Lendmire arranges the file with wholesale lenders.
3. Pass the credit screen. VA sets no minimum score. The wholesale programs Lendmire places VA loans with start at a 580 decision score. Some lenders set a higher floor.
4. Pass the income test. Residual income, the money left each month after major obligations and living costs, 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 standard table.
5. Show a net tangible benefit. The refinance has to help you in a way VA recognizes. VA lists eight such benefits. The VA Lenders Handbook covers them, including a new loan at or below a set share of value and a switch from an adjustable loan to a fixed one.
6. Appraise the home. The appraisal sets reasonable value, and reasonable value anchors the 100% ceiling.
7. Close. The final figures land on your Closing Disclosure.
Seasoning applies if you are refinancing an existing VA loan. That is a waiting period tied to your first payments, and it can delay a VA-to-VA cash-out. Paying off a conventional, FHA, or USDA loan does not trigger it.
Where the General Rule Breaks
Rules of thumb are useful until they are not. These cases bend the usual cost picture.
Exempt veterans. If the funding fee is waived, the closing bill loses its largest percentage-based line. The remaining costs behave as usual. Confirm your exemption status on the COE before you count on it.
Subsequent use. The higher tier, 3.3%, applies after your first use of the benefit. On a large loan, the gap between the two tiers is material. It is a good reason to check your use history early.
Partial entitlement. A large loan stretches remaining entitlement. Guaranty math can call for a down payment, and a cash-out structure and lender policy still apply. Speak with a loan officer rather than relying on any quoted figure.
Lender caps below the ceiling. VA allows cash-out up to 100% of value. Some lenders cap lower by their own policy. A lower cap means less cash and a smaller fee, and it changes the example above. Terms depend on the lender’s guidelines, the property type, the leverage, and a full review of the credit profile.
Switching loan structure. Moving from a fixed loan into an adjustable one brings a tighter value limit under the handbook. It is a niche move, but on a large balance it can change how much equity you can reach.
Owner-occupancy. The home has to be your residence. A rental or second home does not qualify for a VA cash-out, and occupancy decides leverage across the programs.
Cash-Out vs. IRRRL vs. Conventional Cash-Out
The costs look very different depending on which door you walk through.
| Factor | VA cash-out | IRRRL | Conventional cash-out |
|---|---|---|---|
| Takes equity out | Yes | No | Yes |
| Funding fee | 2.15% first, 3.3% after | 0.5% unless exempt | None; no VA fee applies |
| Appraisal | Required | Not required | Typically required |
| Loans it can pay off | Any loan type | VA loans only | Conventional |
| Maximum reach | Up to 100% of value | Existing balance | Lender-set, often lower |
The IRRRL, VA’s Interest Rate Reduction Refinance Loan, is a different product. It is for existing VA loans, cannot cash out equity, and carries its own tests, including seasoning and a net tangible benefit. The rate-reduction and fee-recoupment tests belong to the IRRRL and do not apply to the VA cash-out. VA’s loan-types page lays out the split.
Conventional cash-out has no VA funding fee, but it usually reaches a smaller share of your value, and mortgage insurance may come into play depending on the structure.
One more point. VA cash-out carries no monthly mortgage insurance of any kind. That is the structural reason the funding fee is the main cost of the program.
How to Read Your Loan Estimate and Closing Disclosure
You get two documents. The Loan Estimate arrives early. The Closing Disclosure shows the final numbers. Compare them line by line.
Look first at the section listing loan costs, then at the cash-to-close figure. For a cash-out, that figure may show cash to you rather than cash from you. If it shows cash from you, your costs and payoff have reached the ceiling.
Check four things:
- The funding fee line, to confirm your tier or your exemption.
- The loan amount, to see whether the fee is financed inside it.
- Any line you do not recognize. Ask what it covers and who sets it.
- Whether prepaid taxes and insurance match what you expect for the home.
Sellers and lenders can sometimes offset costs in other loan types. On a cash-out refinance there is no seller, so any credit comes from the lender and is built into the loan terms. Treat a “no-cost” offer as a marketing term. The costs have not disappeared. They are folded into the balance or the loan terms.
Common Mistakes on a Large Cash-Out
- Counting the full equity as spendable. Net cash is what is left after payoff, funding fee, and other costs.
- Forgetting the fee tier. Subsequent use is a larger percentage than first use, and a large loan magnifies the gap.
- Assuming the old cap still applies. Congress once capped VA cash-outs below full value. VA’s rule revision moved the ceiling to 100% of reasonable value, though some lenders still apply a lower cap of their own.
- Treating financing as savings. Rolling the fee in removes cash due at closing and raises the balance.
- Mixing up the IRRRL and the cash-out. Their fees, tests, and purposes differ.
- Skipping the final comparison. Match the Closing Disclosure against the Loan Estimate before you sign.
Pre-Closing Checklist
1. Confirm your COE status and whether you are exempt from the funding fee.
2. Ask for net cash both with the fee financed and with it paid from proceeds.
3. Confirm the appraised value and the share of it your loan will reach.
4. Identify which costs scale with loan size and which do not.
5. Check whether seasoning applies to your current loan.
6. Review the final figures against the Loan Estimate.
Key Terms Defined
Funding fee: A one-time VA charge, expressed as a percentage of the loan, that helps keep the program running. It can be financed, and some veterans are exempt.
Certificate of Eligibility (COE): The VA document that confirms your eligibility and shows your funding fee status.
Reasonable value: The value VA’s appraisal sets for the home. The 100% ceiling is measured against it.
Net tangible benefit: A concrete improvement from the refinance that VA recognizes from its list of eight.
Residual income: The money left each month after major obligations and living costs. It is the controlling income test for VA loans.
Seasoning: A waiting period between your existing VA loan’s first payments and a new VA refinance.
IRRRL: VA’s streamlined refinance for existing VA loans. It cannot take cash out.
Frequently Asked Questions
Do I have to bring cash to closing on a VA cash-out?
Usually no. The funding fee can be financed, and other costs can come out of your proceeds. Cash is needed only when the payoff and costs together reach the 100% ceiling, which can happen with thin equity. Ask your loan officer for the cash-to-close figure before you commit.
Is the funding fee different on a large loan?
The percentage is the same. It is 2.15% on first use and 3.3% on later use, unless you are exempt. The dollar amount grows because the fee applies to the whole new loan. That is why a large balance feels more expensive even without extra fee categories.
Can I avoid the funding fee?
Only if you are exempt. Veterans receiving compensation for a service-connected disability, and a few other groups, do not owe it. The fee does not shrink with a larger down payment on a refinance. Check your COE for your status.
Does financing the fee cost me more over time?
Yes. The fee joins the loan balance, so you pay interest on it for as long as you hold the loan. It also lowers the cash you receive, since the loan cannot exceed 100% of reasonable value. Some veterans accept that tradeoff to avoid cash due at closing.
Is a VA cash-out the same as an IRRRL?
No. The IRRRL refinances an existing VA loan, carries a 0.5% fee unless you are exempt, and cannot pull out equity. The VA cash-out can pay off any loan type and take equity, but it needs an appraisal and carries the higher fee.
Next Step
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. Every figure here is 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 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
1. VA.gov – Funding fee and closing costs
2. Federal Register – Revisions to VA guaranteed or insured cash-out home refinance loans
3. VA.gov – Cash-out refinance loan
4. VA
5. VA Lenders Handbook, Chapter 6
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 vs Entitlement Restoration for a Veteran With a VA Loan · How to Qualify and Apply for a VA Cash-Out Refinance as a Type I or Type II Loan · Rolling Closing Costs Into a VA Cash-Out vs Paying Them Upfront
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.