The Quick Read: A VA cash-out can reach 100% of your home’s appraised value, but the funding fee and closing costs come out of that ceiling. Above 90% loan-to-value (LTV, the loan balance as a share of the home’s value), you lose one easy benefit test and must pass another. Residual income, meaning what’s left of your paycheck after major obligations, decides most high-LTV files. Everything here is subject to lender guidelines and full file review, and nothing is a commitment to lend.
What a VA Cash-Out Refinance Actually Is
A VA cash-out refinance replaces your current mortgage with a new VA-backed loan. You can take cash from your equity, or you can simply use it to move from a non-VA loan into a VA loan. Either way, VA calls it a “cash-out.”
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: 7.24% as of October 29, 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.
VA does not lend the money. VA says private lenders make these loans and VA guarantees a portion. That is why terms and fees vary from lender to lender.
Lendmire’s VA cash-out refinance program page covers the basics. Lendmire is a mortgage broker, so it arranges these loans through wholesale lenders and never lends directly. This article covers the harder question: what changes when you borrow near the top of the allowed range.
The program is for a home you live in. A rental or investment property does not qualify, and that’s the whole answer on that point.
Key Terms Defined
LTV (loan-to-value): The new loan amount divided by the home’s appraised value.
Reasonable value: The value VA’s appraisal assigns to the home. It sets the ceiling for your loan.
Net tangible benefit (NTB): A measurable improvement the refinance must deliver to you. VA lists specific tests.
Residual income: The money left each month after taxes, housing costs, debts, and basic living expenses. VA compares it to a table.
Type I and Type II: Type I means the new loan does not exceed the payoff of the old one. Type II means it does, so you receive cash.
Funding fee: A one-time VA fee that can be financed. Some veterans are exempt.
How High Can the LTV Go?
The ceiling is 100% of reasonable value. The federal regulation says the new loan must not exceed that figure. A VA program notice 26-19-05 confirms VA will not guarantee a refinance above 100% LTV. Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
Many people believe the cap is 90%. That was the old rule. The cap is now 100%, and the 90% figure survives only in a few places, which this article covers below.
The programs Lendmire places VA cash-outs with can reach 100% of the appraised value, including the financed funding fee. Some lenders set a lower cap on their own. The VA rule and a lender’s overlay (its own extra rule) are two different things, so ask which one you’re hitting.
Where the Funding Fee Fits
The funding fee sits inside the 100% ceiling. The regulation allows it to be added to the loan, but any portion that would push you past 100% of value must be paid in cash at closing.
Here is how the fee works across the programs Lendmire places files with:
- Cash-out refinance, first use: 2.15%.
- Cash-out refinance, after first use: 3.3%.
VA also says a refund may be possible if you’re later awarded compensation for a service-connected disability.
Picture a borrower at 100% of value with a first-use fee. The fee uses up room under the ceiling, so either the cash you receive shrinks or the borrower brings money to closing. Closing costs work the same way. The federal consumer-finance regulator notes that on a cash-out refinance, you often have to pay closing costs.
So “100% LTV” never means 100% of your equity in your pocket. Not even close. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
The Net Tangible Benefit Test at High LTV
Every VA cash-out must pass at least one net tangible benefit test. VA’s list includes:
- Eliminating monthly mortgage insurance.
- Shortening the loan term.
- Lowering the monthly principal-and-interest payment.
- Keeping the new loan at 90% of value or less.
- Refinancing an interim construction loan.
- Increasing monthly residual income.
- Moving from an adjustable rate to a fixed rate.
Above 90% LTV, the 90% test is off the table. Your file has to pass a different one, such as a shorter term, a lower payment, or higher residual income. Keep that in mind when you structure the loan, because a payment that rises with a bigger balance can leave you with few options. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
The lender also has to show you a comparison before closing. It covers the new loan against the payoff, the old and new LTV, and the old and new rate. It must also estimate the dollar amount of equity you are removing and explain that this may affect your ability to sell later. Read that disclosure. It is the plain-English version of the risk.
How the Loan Is Underwritten, Step by Step
Cash-out refinances get full underwriting, not the streamlined review some other refinances get. Here is the sequence:
1. Certificate of Eligibility (COE). VA decides eligibility. You can get the COE through your lender, VA.gov, or by mail.
2. Application and first disclosures. The lender gives you the benefit test and the loan comparison.
3. VA appraisal. Every cash-out needs one. The resulting value fixes the 100% ceiling and decides whether the 90% path exists.
4. Credit, income, and asset review. The lender verifies employment, runs your debt-to-income ratio (DTI), and tests residual income.
5. Loan structure. The loan is set up as Type I or Type II.
6. Closing and guaranty. The funding fee is financed up to the ceiling. Anything above is paid in cash, and the lender submits the required disclosures for the guaranty.
On credit, VA itself sets no minimum score. The wholesale programs Lendmire places VA loans with start at a 580 decision score, and some lenders set a higher floor. Your score still affects which lenders will look at your file.
On DTI, 41% is a guideline, not a hard cap. Residual income is the controlling test. A ratio above 41% needs residual income well above VA’s table, and lenders often add their own limits.
Type I vs. Type II at High LTV
The two types differ in purpose and in what they must prove.
| Factor | Type I | Type II |
|---|---|---|
| Loan vs. payoff | Does not exceed payoff | Exceeds payoff |
| Cash to you | Little or none | Yes |
| Typical purpose | Switch loan type or terms | Pull out equity |
| Benefit test | Required | Required |
A Type I loan at high LTV is mostly a restructuring. A Type II loan is where the ceiling and the funding fee collide. The more cash you take, the less room the fee and costs have.
Where the General Rule Breaks
A few cases bend the rules above.
Seasoning applies only to VA-to-VA. When you refinance an existing VA loan, you need to meet the later of 210 days from the first payment and the sixth payment, per the circular. If you’re paying off a non-VA loan, seasoning does not apply. Many people assume it applies to every cash-out. It doesn’t.
You don’t need an existing VA loan. VA says a cash-out can refinance a non-VA loan into a VA-backed one. That’s a common route for veterans carrying a conventional or FHA loan.
Fixed to adjustable. If your old loan is fixed and the new Type I loan is adjustable, VA’s rules can cap the loan at 90% of value depending on how the loan is priced. High-LTV borrowers should expect this structure to be unavailable.
The streamline tests don’t carry over. The rate-reduction and fee-recoupment tests belong to the streamline refinance (IRRRL). They never apply to a VA cash-out, which needs a full appraisal and full underwriting.
Entitlement. Your remaining entitlement, the amount of guaranty VA can still back, and any prior use affect the new guaranty. Check your COE and speak with a loan officer about your situation.
State and lender rules. State law and lender policy can be stricter than VA’s. A cash-out available in one state may be restricted in another.
What Decides the Outcome
Five factors usually decide a high-LTV file:
- The appraised reasonable value.
- Whether the funding fee fits under the 100% ceiling.
- Whether you pass a benefit test without the 90% option.
- Residual income and DTI.
- Any added requirements the lender sets.
The appraisal matters most, and it’s the part you control least. If it comes in low, the ceiling drops with it. You then have three options: take less cash, bring money to closing, or ask the lender whether a value review makes sense.
Many veterans find the structure matters as much as the number. Moving from 100% to a lower LTV may mean passing the 90% test automatically, with fewer conditions to clear. It can also leave a cushion if prices dip.
The Decision in Practice
Weigh the cash against what it costs you. The CFPB’s guidance is blunt: a cash-out refinance is a loan that must be repaid, with a risk of losing your home through foreclosure if you can’t, and it warns against borrowing more than you need.
At 100% LTV you start with almost no equity. A modest price drop could leave you owing more than the home is worth, which makes selling or refinancing harder. Stretching the term can lower the monthly payment, but it can raise the total cost over time. Final terms depend on lender guidelines, property type, leverage, and the borrower’s complete credit picture.
Ask yourself three things:
- What is the cash for, and does it improve your finances or just move debt around?
- Can your budget handle the new balance with room to spare?
- Would a smaller cash-out give you the same result with a safer cushion?
Watch for solicitations that advertise cash-out money as if it were free. It is not free; it is financed, and you repay it through a larger loan balance.
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 VA loan limit on a cash-out refinance?
With full entitlement, there is no VA loan limit. The programs Lendmire places VA loans with serve amounts up to $4,000,000 with full entitlement. If you have used part of your entitlement, a down payment may be required, so speak with a loan officer about your specific numbers.
Can I really borrow 100% of my home’s value?
Yes, VA allows it, and the programs Lendmire places can reach 100% of the appraised value including the financed fee. Some lenders cap it lower. Your actual cash is less than the full equity, because the funding fee and closing costs sit inside the ceiling.
Do I need an existing VA loan to do a cash-out?
No. A VA cash-out can refinance any loan type into a VA-backed loan. Seasoning rules apply only when the loan you’re paying off is a VA loan.
Does a high LTV change the net tangible benefit test?
Yes. Above 90% LTV, you can’t use the 90% test. You’d need another benefit, such as a shorter term, a lower principal-and-interest payment, or higher monthly residual income. A refinance that only increases your balance and payment won’t pass. These specifics are subject to lender guidelines and a full review of property, leverage, and credit.
Does the 41% debt-to-income figure disqualify me?
No. It’s a guideline, not a cap.
For your own numbers, request a scenario review with Lendmire.
About Lendmire
Lendmire — NMLS# 2371349 — is a mortgage broker that arranges FHA, VA, conventional and jumbo home purchase and refinance financing in 16 states through wholesale lenders. Every option is subject to the lender’s guidelines and full underwriting. Scotsman Guide named Lendmire a Top Mortgage Workplace in both 2025 and 2026.
Get Started
Ready to find the right loan for you?
See your offer in seconds. No credit pull, no obligation.
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 – Cash-out refinance loan
4. VA.gov – Funding fee and closing costs
5. CFPB – Ask CFPB: HELOC alternatives
6. CFPB – Using home equity to meet financial needs
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 Requirements for a Roof · VA Cash-Out Refinance Requirements to Fund Your Business · Can You Get Approved for a VA Cash-Out Refinance Under the VA Credit Score Requirements?
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
- Mortgage Loan Originator · NMLS# 1129696 · Verify on NMLS Consumer Access
- North Carolina Real Estate Broker · License# 343312 · Verify on NCREC
- North Carolina Insurance Producer · License# 19053198 · Property, Casualty, Life, Health · Verify on NAIC SBS
- Lendmire LLC · Firm NMLS# 2371349 · Verify firm licensure
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.