The Quick Read: The two VA refinances share a name and little else. The IRRRL swaps an existing VA loan for a better one, with no VA appraisal and no cash back. The cash-out reaches up to 100% of the appraised value, refinances any loan type into VA, and goes through full underwriting. Pick by goal: a lower rate or a safer loan type points to the IRRRL, and equity or a non-VA payoff points to the cash-out.
The Short Version: Which One Fits Your Goal?
If you already have a VA loan and want a lower rate or a move from adjustable to fixed, the IRRRL is built for that. If you want cash, or you hold a conventional or FHA loan and want it converted to VA, the cash-out is the product. VA’s own page states that on an IRRRL you may not receive any cash from the loan proceeds.
Key takeaways:
- The IRRRL is VA-to-VA only. The cash-out takes any loan type.
- The IRRRL generally skips the VA appraisal and a full credit package. The cash-out requires both.
- Both need a net tangible benefit and a seasoning period on VA-to-VA files.
- The funding fee is 0.5% on an IRRRL and 2.15% on a first-use cash-out (3.3% after), unless you are exempt.
- Occupancy is looser on the IRRRL than on the cash-out.
The rest of this page lays the requirements out row by row, then covers documents, process, edge cases and how to choose. The mechanics here come from the wholesale VA programs Lendmire works with every week. The agency rules are cited to VA.
Requirements Side by Side
Program rules are VA’s. Lender overlays sit on top of them and differ by lender. The figures in the table reflect the wholesale programs Lendmire places VA loans with, subject to lender guidelines and full file review.
| Requirement | IRRRL | VA Cash-Out |
|---|---|---|
| Loan being replaced | Existing VA loan only | Any loan type |
| Cash to borrower | None | Yes, up to the ceiling |
| Occupancy | Live there now or lived there before | Must be your residence |
| Appraisal | No VA appraisal | Full appraisal required |
| Maximum value | Not tested | 100% of appraised value, fee included |
| Net tangible benefit | Required | Required |
| Seasoning (VA-to-VA) | Later of 210 days or 6th payment | Same |
| Credit and income | No new VA underwriting package | Full credit, income, residual income |
| Funding fee | 0.5% unless exempt | 2.15% first use, 3.3% after |
| Lender credit floor | Lender-set | Wholesale floor starts at a 580 decision score |
VA sets no minimum credit score. The 580 figure is where the wholesale programs begin, and some lenders set a higher floor.
What Is Each Product, Exactly?
The IRRRL is a VA-to-VA loan. VA describes it as a refinance that can only be done if you already have a VA-guaranteed loan on the property. It reuses the entitlement you already spent, and it must be secured by the same home. The regulation, 38 CFR 36.4307, also limits the new amount to the balance being refinanced, plus authorized closing costs and a discount of no more than 2 percent.
The cash-out is an equity or conversion loan. VA lets you take equity as cash to pay off debt, fund school or improve the home. It also lets you refinance a non-VA loan into a VA loan. That second use is the one people overlook.
VA sorts cash-outs into two types. Type I is a refinance where the new amount, including the funding fee, does not exceed the payoff of the old loan. Type II exceeds the payoff, which means real cash out. VA’s system decides the type and confirms at least one net tangible benefit.
How Is Each Loan Underwritten, Step by Step?
The IRRRL path
1. Confirm the old loan is VA-guaranteed and on the same home. No other debt can be paid from the proceeds. A second-lien holder has to subordinate so the new VA loan sits in first position.
2. Certify occupancy. You can live there now. Or you can certify that you lived there before. That is why an IRRRL works on a home you have moved out of.
3. Meet seasoning. Seasoning is the later of 210 days from the first payment or the 6th payment. The lender certifies it.
4. Pass the benefit test. The regulation requires a lower principal-and-interest payment, a shorter term, or a fixed-rate loan replacing a VA adjustable. VA also sets a minimum rate reduction, and it is larger when moving from fixed to adjustable.
5. Show fees pay back. The lender certifies that closing costs recoup within 36 months of the first payment due date, counting costs paid in the loan and outside closing.
6. Skip the appraisal. VA says no appraisal or credit underwriting package is required for an IRRRL. Individual lenders can add their own requirements.
The cash-out path
1. Get your certificate of eligibility. Credit, income and a valid COE all decide eligibility.
2. Order the appraisal. The borrower pays for it. The appraiser’s reasonable value becomes the ceiling, and 100% of it is the most the loan can reach.
3. Go through full underwriting. Residual income 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 table.
4. Receive the cash-out disclosures. VA’s process includes an initial and a final cash-out compliance disclosure.
5. Meet seasoning and recoupment on VA-to-VA files. Seasoning is the same as the IRRRL. Type I VA-to-VA loans also need fee recoupment.
6. Occupy the home. It must be your residence. For active-duty borrowers, a spouse or dependent occupying it counts.
Because the cash-out is a consumer mortgage, the standard Loan Estimate and Closing Disclosure apply to it.
The Net Tangible Benefit Test
A cash-out must pass at least one of eight benefit tests. The list sits in 38 CFR 36.4306. The new loan is reviewed if it:
- eliminates monthly mortgage or guaranty insurance,
- shortens the term,
- lowers the interest rate,
- lowers the payment,
- increases residual income,
- refinances an interim construction, alteration or repair loan,
- comes in at 90% or less of reasonable value, or converts an adjustable loan to a fixed one.
The 90% prong has a history. In 1989 Congress set a 90 percent loan-to-value limit on cash-outs. VA’s 2018 interim final rule folded that limit into the benefit test. So 90% is now one path, and 100% is the ceiling. Many borrowers still hear “90% cap.” That is out of date.
The 100% ceiling counts the funding fee. VA’s circular says the loan amount, including the fee, is divided by the appraiser’s reasonable value. A financed fee cannot push the loan above that value.
Where Do the Rules Break? Edge Cases That Change the Answer
Converting a non-VA loan. An IRRRL cannot do it. A cash-out can. A Type I cash-out of a non-VA loan is exempt from recoupment, and it still needs at least one benefit.
A delinquent loan. On an IRRRL, a payment more than 30 days past due makes the loan delinquent. VA must approve the new loan in advance, find the cause cured, and the borrower must meet VA credit standards.
Second liens. An IRRRL cannot pay off other debts, and the new loan must be a first lien. A cash-out can pay off other liens.
Negative equity. The IRRRL has no appraisal, so equity is not tested. The cash-out cannot exceed 100% of appraised value, so an underwater home does not work.
Rental after you moved out. Prior occupancy is enough for an IRRRL. A cash-out needs the home to be your residence.
Adjustable to fixed. VA warns the rate may rise when you refinance from an ARM to a fixed loan. The cash-out counts that conversion as a benefit. The IRRRL treats it as one of its payment-test routes.
Construction-to-permanent. The cash-out rules cover refinancing a construction loan, whether or not the principal changes.
Energy-efficient improvements. The regulation allows financing them into an IRRRL. The cap is a lender-level detail to confirm.
Entitlement. An IRRRL reuses the entitlement already spent. Restoration has its own conditions. Ask the loan officer before assuming it comes back.
Territories. These programs work in the U.S. and its territories, including Puerto Rico and the Northern Mariana Islands.
Delinquent-looking marketing. Some ads promise cash back or skipped payments on a streamline. VA prohibits lenders from advertising skipped payments as a way to get cash. Any refund you see comes from what remains in escrow at closing.
Documents You Will Actually Be Asked For
The IRRRL is the lighter file. Expect:
- your prior COE, or the lender’s confirmation of your earlier entitlement use,
- your current mortgage statement and payment history,
- identification and occupancy certification,
- the borrower’s signed acknowledgment of how the refinance changes payment and rate.
The cash-out is the full file. Expect:
- a valid COE,
- recent pay stubs, W-2s and traditional personal-income documentation, or other income evidence,
- bank statements and a debt list for residual income,
- the homeowner’s insurance details,
- appraisal access to the home,
- payoff information on every loan being replaced.
Files stall on the same things. A missing payment month breaks seasoning. An unsubordinated second lien blocks an IRRRL. An appraisal that comes in under the hoped-for value shrinks the cash-out.
What Does the Decision Look Like in Practice?
Picture a veteran with a VA adjustable loan and no need for cash. The IRRRL fits, because the benefit test is met by moving to a fixed loan, and the file stays light. Now picture a homeowner with a conventional loan and a large credit card balance. The IRRRL is closed to that borrower. Only the cash-out can convert the loan to VA and pay the debt.
Run one more case. A veteran has a VA loan and wants a lower payment plus some home repairs. Taking cash through the IRRRL is not allowed. The cash-out would do both, but it raises the balance and the interest paid over the loan’s life. VA News notes the cash-out amount is typically added to the refinanced loan. Whether the trade is worth it depends on the benefit test and your residual income. This one is a toss-up for many borrowers, and the answer lives in the file, not the headline.
Costs shift too. Funding fees differ between the two refinance types, and some veterans may be exempt depending on their circumstances. Reduced funding fee rates for down payments do not apply to refinances. Borrowers should also expect an appraisal charge on the cash-out. For a longer comparison, see Lendmire’s piece VA IRRRL vs VA Cash-Out: Choosing the Right VA Refinance.
Lendmire is a mortgage broker, not the lender. Its team arranges the VA cash-out refinance program through wholesale lenders, and the full details are on the VA cash-out refinance program page. No lender has to offer an IRRRL, so comparing more than one is sensible.
Key Terms Defined
IRRRL: The Interest Rate Reduction Refinance Loan, VA’s streamline refinance for borrowers who already have a VA loan.
Net tangible benefit: A test showing the new loan is in the borrower’s financial interest, such as a lower payment or a fixed rate.
Seasoning: The waiting period of on-time payments before a VA-to-VA refinance qualifies.
Recoupment: The time it takes the savings to repay the refinance costs, capped at 36 months on VA-to-VA files.
Residual income: The money left each month after debts and living costs, which is the controlling VA underwriting test.
Certificate of eligibility (COE): VA’s document confirming your entitlement.
Frequently Asked Questions
Can I take cash out with a VA streamline?
No. VA states that no cash may come out of an IRRRL. Any cash promise on a streamline is a red flag. Cash needs the cash-out refinance.
Do I need an existing VA loan for a cash-out?
No. The loan being replaced can be conventional, FHA or any other type. That is a main reason borrowers choose the cash-out over the IRRRL.
Is an appraisal required for each loan?
The IRRRL generally needs no VA appraisal. The cash-out always does, and you pay for it. The appraised value sets the 100% ceiling.
Does VA set a minimum credit score?
VA does not. Lenders set their own floors. The wholesale programs Lendmire places VA loans with begin at a 580 decision score, and lenders may ask for more.
Can I refinance a VA loan on a home I moved out of?
With an IRRRL, yes, if you certify you lived there before. A cash-out requires the home to be your residence. Tax treatment can depend on your situation; borrowers should speak with a qualified tax professional before relying on any deduction or credit.
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 on this page is a commitment to lend.
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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References
3. Cornell LII – 38 CFR 36.4307
5. Federal Register – VA cash-out rule (83 FR 64459)
6. VA News – Refinance article
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: VA IRRRL Vs VA Cash-out: Choosing The Right VA Refinance · VA Cash-out Refinance To Pay Off A Non-va Loan: Type I Vs Type II Explained · VA Cash-out Refinance: How The 100 Percent Ceiling Really Works
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.