A VA cash-out refinance replaces your current mortgage with a new VA loan and hands you the difference in cash. You can borrow up to 100% of your home's appraised value, and at 90% of value or below there are no restrictions on how you use the money.
This guide walks through the real rules, with VA requirements and lender overlays clearly separated so you always know which is which. If you only want a better rate on an existing VA loan and no cash, my IRRRL guide is the better starting point.
On this page
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Short answer: the ceiling is 100% of the home's VA reasonable value, and the new loan, including any financed funding fee, cannot exceed it. If the funding fee would push the loan over 100%, the excess has to be paid in cash at closing. That is a VA rule, not a lender preference (38 CFR 36.4306).
Here is what the math looks like. Say your home appraises at $400,000 and you owe $200,000. At 90% of value, the new loan is $360,000, which leaves about $160,000 in cash before closing costs and the funding fee. At the full 100%, the new loan is $400,000, which leaves about $200,000 before costs.
One overlay to know: VA allows 100%, but most lenders cap cash-out loans at 90% of value as their own program rule. If a lender tells you 90% is the VA limit, that is an overlay, not a VA requirement.
People use the cash for all kinds of things: paying off high interest credit cards and personal loans, home improvement projects, converting a conventional loan to VA, or a major purchase. Whether it is a refinance worth doing depends on the numbers, not the headline rate.
Short answer: VA requires every cash-out refinance to leave you measurably better off. Your lender has to show it twice, in a loan comparison disclosure within three business days of your application and again at closing, comparing the old and new loans side by side.
VA Handbook Excerpt
“The lender must provide the Veteran a NTB test demonstrating how the Veteran will benefit from the refinance.”
NTB means net tangible benefit. The new loan only has to meet one of the eight tests below, and most cash-outs pass on the 90% test alone.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 6: Refinancing Loans, Topic 3
The new loan passes if it meets any one of these eight criteria:
One honest caveat: passing the legal test does not automatically make the refinance a good deal. A longer term lowers your payment but raises the total interest you pay over time, so the test is a floor, not a recommendation.
Short answer: the funding fee on a VA cash-out refinance is 2.15% of the loan amount on first use and 3.3% on subsequent use. That schedule has been in effect since April 7, 2023 (VA.gov, VA funding fee and loan closing costs).
The fee is charged on the entire new loan amount, not just the cash you take out. On a $300,000 first-use cash-out, that is $6,450. On a subsequent use, it is $9,900. That is why the fee matters most when you are pulling a smaller amount of cash: a $40,000 cash-out on a $300,000 loan still carries the full $6,450 fee.
You can finance the fee into the loan instead of paying it at closing, but the financed loan still cannot exceed 100% of the home's reasonable value. Any excess is paid in cash at closing.
You pay no funding fee at all if you receive VA compensation for a service-connected disability, if you are a surviving spouse receiving Dependency and Indemnity Compensation (DIC), or if you are an active-duty service member who provides evidence of a Purple Heart on or before closing. Your Certificate of Eligibility shows whether the exemption applies to you. Rates, exemptions and refund rules are covered in detail in my VA funding fee guide.
The IRRRL, the VA's streamline refinance, carries a 0.5% funding fee instead. It is a different program with different rules, covered below. There is also a bill in Congress that would change the IRRRL fee: here is what that proposal would do to VA refinances.
See what your cash-out could look like. Take the 30 second mortgage quiz
Short answer: you need a valid Certificate of Eligibility, and you must intend to personally occupy the home. The occupancy rule comes from Chapter 3 of the VA Lender's Handbook, which Chapter 6 points to for cash-outs.
Eligible borrowers include veterans, active-duty service members, National Guard and Reserve members who meet the service requirements, and some surviving spouses. The COE confirms your eligibility and whether you are exempt from the funding fee.
The occupancy rule for a cash-out is stricter than the IRRRL, where prior occupancy can be enough.
And the part many borrowers miss: a VA cash-out can refinance any existing mortgage or other debt secured by a recorded lien. Conventional, FHA, USDA, it does not matter. That is how a veteran with a conventional loan and mortgage insurance gets rid of the MI and moves into a VA loan in one step.
VA Handbook Excerpt
“Refinancing loans made on properties without an existing mortgage or lien of record are not eligible for guarantee by VA.”
In plain English: there has to be a recorded lien to pay off. A home you own free and clear does not qualify for a VA cash-out.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 6: Refinancing Loans, Topic 3
Short answer: if you are refinancing an existing VA loan into a new VA cash-out, at least 210 days must pass from the first payment due date on the old loan, and at least six monthly payments must have been made on it (38 U.S.C. 3709).
VA Handbook Excerpt
“For VA purposes, the loan seasoning requirement does not apply to cash-out refinancing loans made to refinance non-VA guaranteed loans and/or other indebtedness secured by liens of record.”
If you are refinancing a conventional, FHA, or USDA loan into a VA cash-out, VA itself imposes no seasoning requirement. Many lenders apply the same 210-day standard as their own overlay because their investors require it, so expect the question even though it is not a VA rule.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 6: Refinancing Loans, Topic 3
Short answer: the number a lender quotes you is the lender's own overlay, not a VA rule.
VA Handbook Excerpt
“VA does not have a minimum credit score requirement.”
That sentence is from Chapter 4. Any score floor you are quoted is a business decision by that lender.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 4: Credit Underwriting
VA Handbook Excerpt
“Full credit underwriting is required for all cash-out refinancing loan types.”
So your credit history does get a real review on a cash-out, unlike an IRRRL. In practice, most lenders want to see roughly a 620 score for an automated approval. That is a common overlay, not a VA mandate.
Source:
VA Lender’s Handbook (VA Pamphlet 26-7) – Chapter 6: Refinancing Loans, Topic 3
If your score is below the overlays, the file can go to manual underwriting, where a human underwriter reviews the whole picture instead of a score. Not every lender offers manual underwriting, which is why the lender you pick matters as much as the score you have. More on that in how to get a VA home loan with bad credit.
Short answer: take cash out when you need money; take the IRRRL when you only want a lower rate.
A VA cash-out refinance replaces any loan type, puts cash in your hand, requires a VA appraisal and full credit underwriting, and carries the 2.15% / 3.3% funding fee.
An IRRRL (Interest Rate Reduction Refinance Loan) only refinances an existing VA loan, lowers your rate or changes your term, takes no cash out, carries a 0.5% funding fee, and generally requires no appraisal and no credit underwriting from VA. See my IRRRL post for the details.
If your goal is a lower rate rather than cash, run the numbers on my VA IRRRL recoup calculator first. It shows whether the fees pay back inside the 36 months VA requires for an IRRRL. If you want cash, the rest of this page is your program.
Short answer: every VA cash-out requires a VA appraisal, and the appraised value sets your 100% ceiling.
The appraisal establishes the home's reasonable value. That number is the anchor for everything: the 100% maximum loan, the 90% automatic-pass threshold, and how much cash is left after the payoff, liens, closing costs, and funding fee. The property also has to meet VA's minimum property requirements.
Before you pull cash out, put your numbers into my VA cash-out savings calculator to see what consolidating debt actually saves each month once the new rate and the funding fee are included.
You have a lot of choices when deciding which loan officer to use for your VA cash-out refinance. Here are a few reasons to consider me:
The VA cash-out refinance is a great way for veterans to use their home equity to pay off bills and live a better life. If you have questions about this program, do not hesitate to reach out at 937-572-3713.
If you have a service-connected disability rating, do not overlook the property tax side either. My Disabled Veteran Property Tax Exemption Guide covers what each state takes off the bill and how to claim it.
Yes, up to 100% of the home's VA reasonable value, including any financed funding fee. Most lenders cap their own programs at 90% as an overlay, so a 100% cash-out needs a lender whose program allows it.
Yes. 2.15% of the loan amount on first use and 3.3% on subsequent use, unless you are exempt through a service-connected disability rating, DIC as a surviving spouse, or a Purple Heart on or before closing while on active duty.
Yes. A VA cash-out can replace any recorded lien, including conventional, FHA, and USDA loans. It requires full credit underwriting, a VA appraisal, and a current Certificate of Eligibility.
At least 210 days from the first payment due date on the existing VA loan, with at least six monthly payments made. Refinancing a non-VA loan has no VA-imposed waiting period, though many lenders apply one as an overlay.
Ready to find out what you qualify for?
VA rules on this page were checked against Chapters 4 and 6 of the VA Lender’s Handbook, 38 CFR 36.4306 and the VA.gov funding fee schedule. Last reviewed: October 18, 2026.
If your VA loan situation involves multiple challenges at once, see how we handle complex VA loan cases.
Debt-to-income first, credit history second, incomplete files third. And the withdrawn applications that denials alone miss. This study was prepared November 1, 2026, from 2025
VA Circular 26-23-19, dated October 2, 2023, explains who is exempt from the VA funding fee, why that status must be confirmed before closing, and how refunds work when a fee was paid in error.
Yes, in many cases you can get a VA loan with a new job, and in many cases you can qualify with a job offer
Take the 30 second mortgage quiz to see if you qualify
