Leverage, reserves, and pricing vary by lender and program; the final terms follow the full file review.
The Quick Read: It depends on whether you hold a VA certificate of eligibility and how much equity you need to reach. A 700 score is a solid middle tier under both programs and does not decide the choice by itself. VA generally reaches more of the home’s value with no mortgage insurance, but it carries a funding fee unless you are exempt. A VA cash-out uses entitlement, the amount of guaranty VA provides on your loan, while a conventional loan leaves it alone, so conventional can make sense when you need only a modest amount of cash.
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.
Here is the honest sorting. VA cash-out is for eligible veterans, service members and others with a COE who live in the home and want the most equity access with no monthly mortgage insurance. Conventional cash-out is for borrowers without a COE, or for those who want to leave VA entitlement alone and are fine keeping more equity in the house. At 700, credit is rarely the deciding variable. Leverage, mortgage insurance, the funding fee and your income picture usually are.
Side-by-Side
| Factor | VA Cash-Out | Conventional Cash-Out |
|---|---|---|
| Who can use it | COE holders | Any qualified borrower |
| Maximum leverage | Up to 100% of appraised value, financed fee included | Lower than VA’s |
| Mortgage insurance | None | Often required at higher leverage |
| Upfront government fee | VA funding fee, waived if exempt | None |
| Credit floor | VA sets none; wholesale programs start at 580 | Set by lender and program |
| Occupancy | You must live in the home | Primary, second home, rental possible |
| Income test | Residual income controls | Debt-to-income drives it |
| Non-VA loan payoff | Yes, any loan type | Yes |
Two cells deserve a note. The 580 figure is the decision-score floor across the wholesale programs Lendmire places VA loans with, and individual lenders can set a higher one. The conventional leverage cap is lower than VA’s, and the exact number depends on occupancy and the lender’s matrix.
What Does a 700 Score Actually Change?
A 700 score is a good, not exceptional, tier. It clears the VA wholesale floor with room to spare and sits in a workable range for conventional cash-out. It does not unlock a different set of rules under either program.
VA’s own eligibility page says you must meet credit, income and occupancy requirements from both VA and your lender. VA publishes no single minimum score. So the practical credit line is a lender decision, and score mostly shapes how much overlay a lender applies. Any pricing question belongs on your Loan Estimate, where the terms for your specific file appear.
What carries more weight on a VA file is residual income. Across the wholesale programs we place files with, residual income is the controlling test. The 41% debt-to-income figure is a guideline, not a cap. A ratio above it simply needs residual income well above the VA table. A 700 borrower with thin residual income can stall, while a 700 borrower with strong residual income often has room.
Conventional leans harder on debt-to-income and the equity you leave behind. There the score and the leverage interact more directly, because a higher score and lower leverage together tend to land in the better tiers.
When a VA Cash-Out Refinance Is the Better Fit
Choose VA when you need deep equity access and want to avoid monthly mortgage insurance. This is the strongest case for the program.
VA’s cash-out page describes the loan as replacing your current mortgage with a new one on different terms. It can take cash from equity, or move a non-VA loan into a VA-backed loan. Lendmire’s VA cash-out refinance program page covers how that works in the wholesale network.
VA tends to win in these situations:
- You need a large share of your equity. The VA cash-out reaches 100% of appraised value, financed fee included. VA Circular 26-19-05 states that VA will not guarantee a refinance above 100% loan-to-value, and a financed funding fee counts toward that limit. Many individual lenders set lower limits, so the ceiling on paper and the ceiling on your file can differ.
- You want no mortgage insurance. The VA program carries none. A conventional loan at higher leverage generally does.
- You are exempt from the funding fee. Veterans receiving compensation for a service-connected disability, and the other exempt groups, skip it. That removes VA’s main cost disadvantage.
- Your current loan is not VA. A non-VA loan of any type can be refinanced into VA.
- Your credit is middle-tier but your residual income is strong. VA’s income test can be more forgiving than a pure debt-to-income screen.
The trade-offs are real. The cash-out funding fee is 2.15% on first use and 3.3% after that, unless exempt. It can be financed, which raises the balance. You must live in the home. And the loan needs a net tangible benefit, meaning one of VA’s eight listed benefits. The regulation at 38 CFR 36.4306 lists them, including eliminating monthly mortgage insurance, converting an adjustable loan to a fixed one, and a new loan at or below 90% of reasonable value.
That last number trips people up. Ninety percent is one net tangible benefit criterion, not VA’s cap. The Federal Register notice explains that Congress set a 90% limit in 1989 and VA later folded that figure into the benefit test as one option among several. The half-percent rate-reduction and fee-recoupment tests belong to the IRRRL, not the cash-out.
Seasoning applies too. It is the later of 210 days from the first payment and the sixth payment, so a recent loan may not be eligible.
When a Conventional Cash-Out Is the Better Fit
Choose conventional when you do not have a COE, need modest cash, or want to protect VA entitlement for a later purchase. Those are the cases where the VA structure gives you less than it costs.
Conventional tends to win here:
- No COE. Without one, VA is off the table. Conventional is the straightforward path.
- Small cash need at moderate leverage. If you are pulling out a modest slice of equity and staying well under the leverage where mortgage insurance applies, conventional avoids the funding fee entirely. For a fee-paying borrower, that can matter.
- Entitlement planning. A VA cash-out uses entitlement. Someone who plans another VA purchase may prefer to keep it clear. Entitlement rules are VA’s, and a loan officer should walk through your specific position.
- Occupancy flexibility. VA requires you to live in the property. Conventional programs vary on second homes. If the home is not your residence, occupancy decides the leverage and VA is not the tool.
- Straight debt-to-income file. If your income is easy to document and your ratios are clean, the lack of a residual income test is not a burden.
The cost side runs the other way. Conventional cash-out generally leaves you with more equity in the house because the leverage ceiling is lower. The CFPB’s home equity guide notes lenders typically want you to keep at least 10% to 20% of your home’s value as equity on cash-out refinances, home equity loans and HELOCs. VA lets you go past that.
Equity, Cash Needs, and the Question of Why
Match the loan to the purpose. Cash for a renovation that adds value is a different decision than cash to pay off cards.
Using a cash-out to pay down unsecured debt like credit cards, or short-term secured debt like car loans, deserves caution. You are swapping short-term debt for a long-term, home-secured one. The CFPB guide adds that cash-out can lengthen payoff time. Whatever program you pick, a larger balance means a longer road.
Consider a borrower with a 700 score who needs cash for a roof and a kitchen. Equity is ample, the home is the primary residence, and the borrower holds a COE with a service-connected disability rating. Funding fee exempt, no mortgage insurance, residual income comfortable. VA is the cleaner structure. Now flip it: a borrower with no COE, a small cash need, and a lot of equity. Conventional fits without extra layers.
The close calls sit in between. A fee-paying veteran with a small cash need and a plan to buy again with VA is a genuine toss-up. The funding fee argues against VA. Entitlement preservation argues for conventional. The better answer depends on the balance, the appraised value and what the lender’s matrix allows.
How Each File Gets Reviewed
Both files run through credit, income, appraisal and equity checks. The appraisal is where cash-out files lose room.
On VA, leverage is measured against reasonable value, which is the value on the Notice of Value. A low appraisal shrinks the usable equity directly. VA Circular 26-18-30 also requires the lender to give a side-by-side comparison of the existing and new loan, including the new loan amount against the payoff. Expect that disclosure. It is how the net tangible benefit gets documented.
Documentation friction tends to land in a few spots:
1. COE. Get it early. The lender, VA.gov or mail can all produce one.
2. Residual income. Gather the household and debt details the VA table needs.
3. Occupancy. VA requires that you live in the home, so be ready to show it.
4. Payoff clarity. The existing loan payoff, any liens and the funding fee treatment all feed the final balance.
5. Appraisal. Check that value supports the loan amount you want, including a financed fee.
Because this is a consumer mortgage, the Loan Estimate and Closing Disclosure apply. Compare both programs on those documents, side by side, before you commit.
The Balanced Verdict
For a 700 score, pick on structure, not the number. VA generally fits when you hold a COE, live in the home, need deep equity access, and want no mortgage insurance, especially if you are fee-exempt. Conventional generally fits when you have no COE, need a modest amount of cash, want to keep entitlement clear, or the property is not your residence.
Neither is better in every case. Both are subject to lender guidelines, appraisal results and full file review, and neither is a commitment to lend. 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. For a deeper look at the VA side of the comparison, see Lendmire’s piece VA Cash-Out Refinance vs. Conventional Cash-Out Under VA Type 1 and Type 2 Refinance Rules.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that confirms you qualify for a VA-backed loan.
Net tangible benefit: A VA test requiring the new loan to be in your financial interest, met through one of eight listed benefits.
Residual income: The money left each month after taxes, debts and living costs, which is VA’s controlling income test.
Funding fee: A VA charge on most loans, financeable and waived for exempt borrowers.
Reasonable value: The appraised value on the VA Notice of Value, against which leverage is measured.
Entitlement: The amount of guaranty VA provides on your loan, which a cash-out uses.
Frequently Asked Questions
Does VA require a 700 credit score for a cash-out refinance?
No. VA 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. A 700 clears that comfortably, and approval still depends on residual income, appraisal, equity and the lender’s overlays. Terms vary by lender guidelines, property type, leverage, credit profile, and full file review.
Can I refinance a non-VA loan into a VA cash-out loan?
Yes. VA treats a refinance of a non-VA loan into a VA-backed loan as a cash-out refinance, even when you take no cash. You still need a COE, you must live in the home, and the loan must pass the net tangible benefit test.
Does a VA cash-out have mortgage insurance?
No. The VA program carries no monthly mortgage insurance. It does have a funding fee, 2.15% on first use and 3.3% after for a cash-out, waived for exempt borrowers and financeable into the loan. Conventional loans at higher leverage often carry mortgage insurance.
Is 90% the VA cash-out limit?
No. VA’s cash-out reaches 100% of appraised value, financed fee included. Ninety percent is one net tangible benefit criterion, and some lenders use it as their own cap. Check the limit on your specific file.
Can I use VA cash-out on a home I rent out?
Not on a rental. VA requires you to live in the home you are refinancing. Where the property is not your residence, occupancy decides the leverage and conventional programs may be the route to ask about.
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 — Eligibility for VA home loan programs
2. VA — Cash-out refinance loan
5. Federal Register — Revisions to VA cash-out refinance loans
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 Lenders Underwrite a VA Cash-Out Refinance Driven by Credit Score and Debt-to-Income · How to Qualify and Apply for a VA Cash-Out Refinance as a Veteran
Brandon Miller
Founder & CEO, Mortgage Loan Originator, Lendmire LLC
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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.