A VA cash-out refinance lets eligible veterans, service members and surviving spouses replace their current mortgage — VA, conventional or FHA — with a VA-guaranteed loan and take cash out. It allows a higher loan-to-value than any other cash-out program.
Key VA cash-out rules
- Up to 100% of the home's value. The loan, including any financed funding fee, can't exceed 100% of the VA appraised ("reasonable") value (38 CFR 36.4306).
- Primary residence only. You need to live in the home.
- Any current loan. You can refinance a conventional or FHA loan into a VA cash-out, not just an existing VA loan.
- Eligibility: you need a Certificate of Eligibility (COE) and to meet VA and lender credit and income guidelines.
VA groups cash-outs into two types. A Type I cash-out has a new loan amount (including the funding fee) no higher than your current payoff — it's often used to move from another loan type into VA. A Type II cash-out has a new loan larger than your payoff, which is what most people mean by taking cash out.
VA funding fee on a cash-out
| Situation | Funding fee |
|---|---|
| First use of your VA benefit | 2.15% |
| Used your VA benefit before | 3.3% |
| Exempt (see below) | 0% |
Your down payment doesn't change the cash-out fee. You're exempt if you receive VA compensation for a service-connected disability (or would, but receive retirement or active-duty pay instead), you're a surviving spouse receiving Dependency and Indemnity Compensation, you have a qualifying proposed or memorandum disability rating before closing, or you're an active-duty Purple Heart recipient. Source: va.gov funding fee chart.
Worked example
| First use | Exempt | |
|---|---|---|
| Appraised value | $450,000 | $450,000 |
| Maximum total loan (100%) | $450,000 | $450,000 |
| Funding fee (financed) | $9,471 | $0 |
| Base loan | $440,529 | $450,000 |
| Current payoff | $300,000 | $300,000 |
| Cash before closing costs | $140,529 | $150,000 |
Net tangible benefit
VA requires every cash-out to give you at least one benefit, such as: eliminating monthly mortgage insurance, a shorter term, a lower rate, a lower payment, higher residual income, refinancing a construction loan, ending at 90% or less of the home's value, or moving from an adjustable to a fixed rate. Your lender must give you a comparison of the old and new loans within three business days of applying and again at closing.
Waiting period when refinancing a VA loan
If the loan you're paying off is a VA loan, the new loan can close only after 210 days from the first payment due date and after 6 consecutive monthly payments. Type I VA-to-VA refinances also have rate-drop and 36-month cost-recoupment tests.
VA cash-out vs. VA IRRRL
If you already have a VA loan and just want a lower rate with no cash, the VA Streamline (IRRRL) is usually cheaper and simpler — see VA IRRRL vs. conventional refinance. Choose the cash-out when you need equity or are refinancing out of a non-VA loan.
Local VA guides
- VA cash-out refinance in Colorado
- VA cash-out refinance in Florida
- VA loans in Colorado and VA loans in Florida
Run your numbers with the cash-out calculator — choose VA and your funding-fee status.
VA cash-outs with Tayton Capital
We arrange VA cash-out refinances for veterans, service members and surviving spouses across Colorado and Florida, including refinancing a conventional or FHA loan into VA. Call (970) 708-9624 or request a quote.
Frequently asked questions
Can I get 100% of my home's value with a VA cash-out refinance?+
VA allows the loan, including any financed funding fee, to reach 100% of the home's appraised value. Some lenders set lower limits.
What is the VA funding fee for a cash-out refinance?+
2.15% the first time you use your VA benefit and 3.3% after that. Veterans receiving VA disability compensation and certain others are exempt.
Can I use a VA cash-out to refinance a conventional or FHA loan?+
Yes. A VA cash-out can pay off any type of existing mortgage, as long as you're eligible and live in the home.
How soon can I do a VA cash-out after getting a VA loan?+
The new loan can close after 210 days from the first payment due date on your current VA loan and after you've made six consecutive monthly payments.
Can I do a VA cash-out refinance on a rental?+
No. VA cash-out refinances require you to live in the home as your residence.