The Quick Read: VA is usually the stronger fit when the spouse who served can get a Certificate of Eligibility and wants the most equity at the lowest ongoing cost. FHA is usually the fit when VA eligibility is missing, the veteran can’t be on the loan, or the household wants a simpler file. The VA guaranty is tied to the veteran, and the spouse’s role depends on who is on the loan.
Key Takeaways
- VA cash-out has no monthly mortgage insurance, but a one-time funding fee may apply. FHA cash-out charges an upfront premium and an annual premium.
- FHA cash-out tops out at 80% of the home’s value. VA lenders can generally go higher, depending on the lender.
- FHA does not care about service history. It cares about occupancy, payment history and equity.
- Neither program lends the money directly, so you apply through a private lender.
- A civilian spouse alone generally can’t use the VA route while the veteran is living, so the veteran is part of the VA file.
Side-by-Side
Here is how the two programs compare for a married couple. FHA figures reflect the wholesale programs behind Lendmire’s FHA cash-out refinance program page. VA items are described in general terms because lenders add their own rules on top of the VA’s.
FHA cash-out estimate
Seeded with an example value, a balance to match, and a round cash request; change any field.
Editable benchmark: 7.18% as of November 5, 2026 · Freddie Mac 30-year average via FRED®. A conventional market reference, not an FHA cash-out refinance quote.
Illustrative starting assumptions: a $350,000 home value, a $193,000 current balance, the FHA cap on a principal residence with the upfront premium 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.
An illustration, not a Loan Estimate, an approval, a quote, or a commitment to lend. The rate shown is the weekly Freddie Mac thirty-year conventional benchmark, used as a market reference; an FHA cash-out is priced by the lender at lock, and this is not an FHA cash-out refinance quote. HUD’s cap limits the base loan; the upfront premium is financed on top of the capped base loan; the monthly premium for the first year follows the snapshot’s schedule. Cash available means the base loan the cap permits less the balances retired, before closing costs, which this calculator leaves out. The line figure applies the line program’s combined loan-to-value ceiling to the same value and balance. Taxes and insurance are estimates you can edit. Licensed in sixteen states for consumer mortgages.
| Factor | VA Cash-Out | FHA Cash-Out |
|---|---|---|
| Who qualifies | Veteran with a valid COE | Any qualified owner-occupant |
| Spouse’s role | Spouse can co-borrow with the veteran | Spouse can be on the loan; a non-occupant co-borrower on a cash-out varies by lender |
| Maximum leverage | Higher than FHA, lender-dependent | 80% of the home’s value |
| Credit floor | Set by the lender | 580 decision score at the programs we place with |
| Mortgage insurance | None monthly; one-time funding fee may apply | Upfront 1.75% plus an annual premium |
| Occupancy | Veteran’s, or active-duty spouse’s or dependent’s | Principal residence, owned and occupied 12 months |
| Documentation | Credit, income, COE, appraisal | Credit, income, 12-month history, appraisal |
Two rows deserve a closer look. The leverage row is where the programs differ most. The occupancy row is where couples get surprised. For a cash-out, ask a loan officer how a non-occupant fits, because lenders handle it differently.
How Does a Spouse’s Service Change the Loan?
Service makes the household eligible for VA, but the benefit belongs to the person who served. VA’s cash-out page says you must hold a Certificate of Eligibility, or COE. The COE is the document from VA that proves the veteran can use the benefit.
Eligibility is only the first gate. VA also requires credit, income and occupancy standards from both the agency and the lender, per VA’s eligibility page. Service does not waive those.
The spouse matters in three ways.
- Guaranty. VA’s guaranty is a promise to the lender that VA will cover part of a loss. The VA Home Loan Guaranty Buyer’s Guide says the guaranty can’t cover a non-veteran’s share of a loan unless that person is the veteran’s spouse. That is the spouse exception.
- Underwriting. A spouse on the loan brings credit and income into the file. That can help or hurt, depending on the numbers.
- Occupancy. For an active-duty service member, VA says the home can be occupied by the service member’s spouse or dependent.
A non-spouse co-borrower, such as a parent or sibling, changes things. The guaranty generally covers only the veteran’s share in that case. That is a different file from the one you are asking about.
Which Program Gives You More Cash From the Home?
VA usually reaches more equity. FHA caps a cash-out refinance at 80% of the home’s value. Across the wholesale programs we place files with, FHA also requires that you owned and lived in the home for 12 months before the case number is assigned. The case number is the identifier FHA assigns to a loan file.
VA’s limit is set partly by the lender, so the exact figure varies. We won’t quote a number here because lenders can set their own overlays. Some pick a lower ceiling than VA allows.
Two related points matter for couples.
First, VA’s cash-out label covers more than taking cash. VA says it also covers refinancing a non-VA loan into a VA-backed loan. So a couple with a current FHA loan can use a “VA cash-out” to swap loans, even if they take little or no cash.
Second, your goal decides which program fits. If you only want to pay off the old loan and drop the monthly mortgage insurance, a VA refinance can do that. If you want a large lump sum, how much you can borrow against your home’s value is what matters.
What Does Each Loan Cost to Carry?
The structures differ. VA has no monthly mortgage insurance, and a one-time funding fee may apply, according to VA. The fee can be financed or paid in cash. Some veterans are exempt, such as those receiving service-connected disability compensation. VA.gov has the current exemption list. Check it before you assume the fee applies.
FHA works differently. The programs we place with charge an upfront premium of 1.75% of the base loan, usually financed into the balance. They also charge an annual premium. That annual premium runs between 0.15% and 0.75% of the balance, depending on term, loan amount and LTV (loan-to-value, the loan balance divided by the home’s value).
How long the annual premium lasts depends on leverage. On a 30-year loan above 90% LTV, it lasts the full term. At or below 90%, it ends after eleven years. A cash-out at the 80% cap falls in the shorter group. HUD has trimmed the annual premium in the past, as its FHA INFO bulletin shows. The upfront premium was not part of that change. Treat these as program mechanics, not a price quote. Exact terms depend on the lender’s guidelines, property type, leverage, and a full review of the borrower’s file.
A funding-fee exemption tied to the veteran’s disability compensation can change the picture. The exemption belongs to the veteran’s Certificate of Eligibility, not to the spouse. When it applies to a VA loan the veteran is on, it removes the funding fee and leaves VA with no monthly insurance at all. That pushes the comparison strongly toward VA.
When VA Cash-Out Is the Better Fit
VA is usually the better fit in these situations. Each depends on lender guidelines and a full file review.
The veteran is on title and willing to be on the loan. This is the clean case. The veteran has a valid COE, the spouse is on the loan or the file works without them, and the home is the household’s residence.
You want more equity than FHA’s 80% cap allows. If the plan needs a larger lump sum, VA’s higher ceiling matters. A home renovation or a debt payoff is a common example.
You want to leave FHA mortgage insurance behind. If your current loan is FHA, a VA refinance can replace it. The monthly insurance goes away. A one-time funding fee may apply unless you are exempt.
One spouse is active duty. VA ties occupancy to the service member, the spouse or a dependent. That can fit military households that FHA’s owner-occupancy test doesn’t match well.
Your credit is solid and the household income is clear. VA wants satisfactory credit and enough income to cover the monthly obligations, per VBA. A clean file gives the lender more room.
When FHA Cash-Out Is the Better Fit
FHA is usually the better fit in these situations.
The veteran is not on the loan or can’t be. Suppose the current loan is in the civilian spouse’s name only. The veteran isn’t on title and doesn’t want to be. VA generally can’t work for a civilian spouse alone while the veteran is living. FHA doesn’t ask about service at all.
There is no COE, or eligibility is unclear. The COE can be requested online, through a lender, or on VA Form 26-1880. If eligibility is uncertain, FHA doesn’t wait on that answer.
A non-spouse co-borrower is involved. A parent or adult child helping with the file complicates VA, because the guaranty may cover only the veteran’s share. FHA programs we place with allow a non-occupant co-borrower on purchases.
The credit profile is thinner. FHA’s ratio ranges are flexible. The base pair is 31/43 (housing costs over income, then total debt over income). Documented compensating factors can stretch that to 40/50 at the top tier, and the automated finding governs most files. Across the programs we place with, FHA starts at a 580 decision score. Some VA lenders set a higher floor, so a thinner file sometimes does better here.
The equity ask is modest. If the new loan you need fits comfortably under FHA’s 80% cap, VA’s extra room doesn’t help you.
Couple Scenarios: Who Is on the Loan?
The right choice often turns on a simple question. Whose names are on the current loan and title?
Both spouses on title, veteran eligible. VA can work. The spouse exception lets the guaranty cover a spouse’s share. Either program is on the table. Compare leverage and monthly cost.
Veteran only on title. VA works if the veteran qualifies alone. If you want the spouse’s income to help, add them to the loan, subject to lender review.
Civilian spouse only on the current FHA loan. This is the tricky one. VA generally needs the veteran on the loan. If the veteran isn’t willing to be added, FHA is the realistic path. A lender can tell you whether the veteran can be added.
Active-duty spouse, civilian spouse lives in the home. VA occupancy allows the active-duty member’s spouse to be the occupant. FHA expects a principal residence the borrower occupies. Check the occupancy rules with the lender before applying.
After a death or divorce. The VA guaranty is not a payoff. The VA Buyer’s Guide says a surviving spouse or other co-borrower still has to make the payments. A surviving spouse may qualify for VA in their own right. VA decides that through a separate form. After a divorce, the spouse who keeps the home has to qualify on their own file, and a lender can explain how that review works. Ask your loan officer how it applies to your file.
An FHA cash-out also has a payment-history test. Fewer than six months of history is not eligible. Six to twelve months requires every payment on time. Twelve or more requires the loan to be current.
Key Terms Defined
Certificate of Eligibility (COE): The VA document that proves a veteran qualifies to use the VA home loan benefit.
Guaranty: VA’s promise to cover part of the lender’s loss if the loan goes bad. It is not a payoff of the loan.
Entitlement: The amount of guaranty a veteran can use. A paid-off VA loan may have entitlement restored through the COE process.
Funding fee: The one-time VA charge on most loans. Some veterans are exempt.
Mortgage insurance premium (MIP): FHA’s insurance, paid once upfront and then every year.
LTV: Loan-to-value, the loan balance divided by the home’s value.
A Balanced Verdict
For most couples with a veteran who is willing to be on the loan, VA gives more equity and no monthly insurance. That is a real edge. A funding fee may apply, and a disability exemption could remove it.
FHA wins when VA can’t fit the household. That includes cases where the veteran isn’t on the loan, eligibility isn’t confirmed, or a non-spouse co-borrower is involved. It is also a cleaner choice when the cash you want fits under the 80% cap and the file is a bit thin.
A fair rule is to price the equity you need first. If you need more than FHA’s cap allows, VA is the only one of the two that can reach it. If you don’t, compare monthly cost and file complexity. Both programs are subject to lender guidelines 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.
Frequently Asked Questions
Can my civilian spouse be a co-borrower on a VA cash-out?
Often, yes. The VA guaranty can cover a non-veteran’s share when that person is the veteran’s spouse. Lenders set their own credit and income standards for the spouse, so a loan officer can confirm how your file would be handled.
Can a VA cash-out replace my current FHA loan?
Yes. VA’s cash-out category includes refinancing a non-VA loan into a VA-backed loan. You don’t have to take cash out. The new loan has no monthly mortgage insurance, though a one-time funding fee may apply.
Does FHA ask whether anyone in the household served?
No. FHA looks at occupancy, ownership time, payment history, credit and income. Service history doesn’t change eligibility. It also doesn’t unlock any extra benefit on FHA.
If the veteran dies, does VA pay off the house?
No. The guaranty protects the lender, not the household. A surviving spouse or co-borrower must keep making payments. A surviving spouse may also qualify for VA benefits in their own right.
How much equity can I take out?
It depends on the program. FHA cash-out tops out at 80% of the home’s value. VA usually allows more, but each lender sets its own ceiling. A loan officer can tell you which lender’s limit fits your plan.
For your own numbers, request a scenario review with Lendmire.
For current guidelines and terms, see Lendmire’s FHA loan programs page.
About Lendmire
As a mortgage broker (NMLS# 2371349), Lendmire helps homeowners and home buyers in 16 states with FHA, VA, conventional and jumbo purchase and refinance loans arranged through wholesale lenders. Lendmire is never the lender; program terms are set by the lender and the agency guidelines. 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 — Cash-out refinance loan
2. VA.gov — Eligibility for VA home loan programs
3. VA Home Loan Guaranty Buyer’s Guide
4. Veterans Benefits Administration — VA Home Loans
5. HUD FHA INFO — mortgage insurance premium update
This article is part of Lendmire’s FHA cash-out refinance program — full qualification details, guidelines, and scenarios live on the program page.
Related reading: FHA Cash-Out vs Conventional Cash-Out for a Divorce Buyout · How Much an FHA Cash-Out Lends to Buy Out a Spouse · FHA Cash-Out Refinance vs Conventional Cash-Out to Buy Out an Ex-Spouse
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.