VA Cash-Out Refinance
VA Cash-Out Refinance
Pull equity from your primary residence using your VA benefit. Up to 90% LTV at most lenders; some allow 100% LTV under specific overlay rules.
Quick answer
VA cash-out lets veterans refinance their primary home and pull cash from equity. Up to 90% LTV at most lenders (some allow 100% LTV but with lender overlays). Uses VA entitlement. Funding fee applies.
What VA cash-out allows
- Refinance any existing first mortgage (VA or non-VA) into a VA loan, with or without cash out.
- Pull cash up to a typical 90% LTV ceiling. Some lenders allow 100% LTV per VA program minimums; we work with the most permissive available.
- Use the cash for any purpose: debt consolidation, home improvement, investment, education, business capital. The use of proceeds affects tax deductibility but does not affect VA loan eligibility.
- Convert a non-VA loan (conventional, FHA, USDA, jumbo) TO VA to drop PMI/MIP or to get VA loan terms even without taking cash out.
VA cash-out vs VA IRRRL
- Cash-out: pulls equity, full underwriting, full appraisal, full income documentation, can refinance any first mortgage into VA.
- IRRRL (streamline): no income docs, typically no appraisal, no cash out, requires an existing VA loan being refinanced to a lower rate or better term. See our VA IRRRL rates page.
- Use IRRRL when you already have a VA loan and just want a better rate. Use cash-out when you need equity or are refinancing a non-VA loan into VA.
Funding fee for VA cash-out
- First-time use: 2.15% of loan amount.
- Subsequent use: 3.3% of loan amount.
- With 5%+ equity: 1.50% / 1.50%.
- With 10%+ equity: 1.25% / 1.25%.
- Disability waiver. Veterans with a service-connected disability rating (or eligible to receive disability compensation) are exempt from the funding fee. Surviving spouses receiving DIC are also exempt.
- Financeable. The funding fee can be added to the loan amount; you do not have to pay it in cash at closing.
Why veterans use VA cash-out
- Debt consolidation. Pay off higher-rate credit card or personal loan balances using lower-rate mortgage debt.
- Home improvement. Finance a major remodel using equity rather than a separate HELOC. Interest may be deductible if used for substantial home improvements.
- Investment property down payment. Pull equity from the primary to fund the down payment on a rental property purchase.
- Refinance a non-VA loan TO VA. Drop PMI on a conventional loan or MIP on an FHA loan by converting to VA. Even without taking additional cash, the savings on monthly MI can be substantial.
- Education or business capital. College tuition, graduate program, or business startup funding at mortgage-equivalent rates.
Net Tangible Benefit rule
- Federal law requires VA cash-out refinances to provide a Net Tangible Benefit (NTB) to the borrower. Lenders document NTB on every VA cash-out file.
- Qualifying benefits include: lower payment, shorter term, conversion from ARM to fixed, going from a non-VA loan to VA, accessing equity for a documented need, eliminating PMI/MIP.
- Recoupment requirement. Closing costs must be recouped within 36 months through reduced payments, unless the loan meets specific exception categories (such as a cash-out where the proceeds are used for a documented purpose).
- Documentation. The NTB certification is a specific form the borrower signs at closing.
Tax considerations
- Mortgage interest deductibility on a cash-out refinance depends on the use of the proceeds under TCJA.
- Cash-out used to "buy, build, or substantially improve" the home that secures the loan: interest generally deductible (subject to overall mortgage debt limits).
- Cash-out used for other purposes (debt consolidation, education, business, investment): interest generally NOT deductible as mortgage interest under current TCJA rules. Some uses may be deductible under other categories (business expense, investment interest), subject to tracing rules.
- Not tax advice. Consult a CPA before relying on any specific tax outcome.
Frequently asked questions
How much equity can I pull with a VA cash-out?+
Up to 90% LTV at most lenders. Some lenders offer 100% LTV cash-out under specific overlay conditions, though it is rarer than it used to be. The exact ceiling depends on the lender, the borrower's credit profile, and the property type. We work with lenders going to program minimums where allowed.
Can I refinance a non-VA loan into a VA cash-out?+
Yes. VA cash-out allows refinancing of any existing first mortgage (conventional, FHA, USDA, jumbo) into a VA loan, with or without cash out. Veterans frequently use this path to convert away from PMI on a conventional loan or away from MIP on an FHA loan, since VA carries no monthly mortgage insurance.
What is the difference between VA cash-out and VA IRRRL?+
VA cash-out is a full refinance with pull-out of equity; it requires standard income docs, full underwriting, and a full appraisal. VA IRRRL (Interest Rate Reduction Refinance Loan, the "VA streamline") refinances an existing VA loan to a lower rate or different term with no income docs, no appraisal in most cases, and no cash out. Use IRRRL when you already have a VA loan and just want a better rate. Use cash-out when you need equity or are refinancing a non-VA loan into VA.
What is the VA funding fee on cash-out?+
First-time use is 2.15% of the loan amount; subsequent use is 3.3%. Lower with 5%+ "down" (here, equity left in the property: 1.50% / 1.50%) and lower still with 10%+ equity (1.25% / 1.25%). Veterans with a service-connected disability rating are exempt. The fee is financeable into the loan amount.
What is the Net Tangible Benefit rule?+
Federal law requires that VA cash-out refinances provide a "Net Tangible Benefit" to the borrower: a lower payment, a shorter term, conversion from ARM to fixed, going from non-VA to VA, or another defined benefit. Lenders document the NTB on every VA cash-out file. There is also a recoupment requirement: the borrower must recoup the closing costs within 36 months through reduced payments, unless the loan meets specific exception categories.
Is VA cash-out interest tax-deductible?+
Under TCJA, mortgage interest is deductible on up to $750,000 of acquisition debt used to "buy, build, or substantially improve" the home that secures the loan. The portion of a cash-out refinance attributable to substantial home improvements may be deductible; the portion used for other purposes (debt consolidation, business, education) generally is not. Not tax advice. Consult a CPA.
How long does a VA cash-out take to close?+
Typically 30-45 days. The VA appraisal can add a few days versus a conventional appraisal because of the VA appraiser-roster process and the Minimum Property Requirements review. There is also a federal 3-day right of rescission after closing on cash-out refinances of owner-occupied primary residences.
Price a VA cash-out
Send us your existing loan type and balance, current home value, and target cash-out amount. We will price VA cash-out across the wholesale market and find the lender going to the most permissive LTV available for your scenario.
Eligibility, rates, and program guidelines vary by lender and are subject to change. This page is general educational information and is not a commitment to lend or an offer of credit. Equal Housing Opportunity.