If you are a current or retired military member, you may have a VA loan. The guaranteed VA mortgage loans are backed by the Veterans Administration and offer veterans lower rates down payments, among other benefits. If you’ve had a VA loan in recent years, you may have built up considerable equity in your home.

Now could be the perfect time to do a VA cash-out refinance. The RefiGuide published this article to help military homeowners leverage their properties and benefit from VA-cash out opportunities. Learn about cash-out refinancing requirements for VA loans in 2026 so you can get shop lenders. If you have questions, the network of banks and lenders at RefiGuide can answer the cash out refinance rules, as well as get you qualified.

VA Cash Out Refinance Requirements

va cash-out refinance

Qualifying for a VA cash-out refinance requires you to be active duty in the military or retired.

Many surviving spouses of deceased military members may also qualify.

Beyond that, the requirements for a VA cash out refi vary by the lender, but you can expect the following:

  • Have a certificate of eligibility or COE to show you qualify for a VA loan
  • Meet the minimum credit score requirements for a VA cash out refinance. This is usually at least a 620-credit score, but the requirement can vary by lender.
  • Meet your lender’s debt-to-income or DTI requirements, usually no higher than 41%. This means your total debt payments per month are no more than 41% of your gross income, including your mortgage.
  • Show proof of income with pay stubs or other documentation,
  • LTV requirements for a VA cash out refinance are usually 90%, but some lenders may allow you to borrow 100% of your equity. This is more than with conventional refinances.

These are the typical VA cash-out refinance rules, but check with your specific lender for their requirements.

What Are Loan-to-Value Requirements on Cash Out Refinancing with VA

The VA permits eligible Veterans to refinance with a loan-to-value (LTV) ratio of up to 100%. However, in many instances, lenders tend to cap the LTV at 90%. This ceiling also encompasses the VA Funding Fee, if it applies.

VA Cash Out Refinance Rules and Perspective

A cash-out refinance allows a homeowner to replace their mortgage with a new one with a higher balance. You can take some of your equity in cash when you refinance and pay for things you need. Whether you have credit card debt, medical bills, or want to do home repairs, a cash-out refinance can be the answer to your cash needs.

There are several differences between a regular cash-out refi and a VA cash-out refi. First, VA lenders offer lower rates to military veterans because the loans are backed by the Veterans Affairs. VA loans also have less stringent credit and down payment requirements. Learn more about the VA refinance rules from the VA Dept.

A VA cash out refinance allows you to borrow 90% or even 100% of your home’s value, minus what is owed on the first mortgage. For example, if you have a $300,000 mortgage and owe $200,000, you have $100,000 in equity. A VA lender may allow you to borrow $90,000 or $100,000 of what you owe. Different lenders have varying LTVs, so check with your mortgage provider.

Another option is a VA streamline refinance. This option allows you to switch into a new loan at a lower rate. You don’t pull out cash with a streamline VA refinance. This loan is easier to qualify for than a cash-out refi because you are not increasing the size of the loan.

7 Key Points on the VA Cash-Out Refinance Rules in 2026

In 2026, the VA cash-out refinance remains a powerful tool for veterans, active-duty service members, and eligible spouses to tap home equity while potentially lowering rates. Amid stabilizing mortgage rates (averaging 6.25% for VA loans) and home values up 3.3% year-over-year, this program allows refinancing an existing mortgage—VA or non-VA—into a new VA loan, pulling out cash for debt consolidation, renovations, or investments. Unlike the IRRRL (streamline refinance), cash-out offers up to 100% of the home’s value, with no PMI and competitive terms. However, rules emphasize borrower protections, limiting fees and requiring appraisals. Below are seven essential points, followed by two case studies illustrating real-world application.

1. Eligibility: Service-Based Access

To qualify, you need a Certificate of Eligibility (COE) confirming sufficient entitlement, based on 90 days active duty or 6 years Reserves/National Guard. Surviving spouses of deceased veterans qualify if unremarried. Unlike purchases, cash-out can refinance non-VA loans (e.g., FHA) into VA terms, restoring full entitlement post-payoff. In 2026, over 100,000 veterans are projected to use this for equity access, per VA estimates.

2. Loan Limits: Conforming and Jumbo Options

VA cash-out adheres to 2026 conforming limits: $832,750 in most counties (up 3.3% from 2025), with higher caps in high-cost areas like San Francisco ($1,249,125). Jumbos exceed this but require manual underwriting and stronger credit (680+ FICO). The new loan can’t surpass appraised value, ensuring prudent borrowing amid 2026’s 3-4% appreciation forecasts.

3. VA Cash-Out Amount: Up to 100% LTV

Borrowers can extract cash up to 100% of the home’s appraised value, minus the existing mortgage payoff and fees—far more generous than conventional cash-out (80% LTV max). For a $400,000 home with $200,000 owed, you could refinance for $400,000, pocketing $180,000 after fees. Type I (no cash-out, just rate/term) is limited; Type II (cash-out) dominates, but net tangible benefit rules require the new rate to be 0.5% lower or payments reduced by $5+.

4. Funding Fee: Scaled and Financeable

The VA funding fee—2.3% for first-time cash-out (3.3% subsequent)—funds the program and can be financed into the loan. Exemptions apply for disabled vets (10%+ rating) or Purple Heart recipients. In 2026, unchanged from 2025, it adds $9,200 to a $400,000 loan but is offset by no PMI (saving $100-200/month).

5. Credit and Income Guidelines: Flexible Yet Firm

Minimum FICO: 620 for automated approval, with manual options down to 580 if compensating factors like reserves (6 months PITI) exist. DTI caps at 41% front-end, 50% back-end—stretchable to 60% with strong credit (740+). Income verification via pay stubs, W-2s, and tax returns ensures stability; self-employed need two years’ returns.

6. Appraisal and Property Requirements: Value-Driven Safeguards

A VA appraisal (MIRV) confirms the home’s condition and value, mandatory for cash-out to prevent over-lending. Properties must meet Minimum Property Requirements (MPRs)—no safety hazards—and be primary residences (investment properties ineligible). In 2026, appraisal waivers (up to 80% LTV) speed closings by 5-7 days for low-risk refis.

7. Net Tangible Benefit and Recoupment: Borrower Protections

The VA mandates a “net tangible benefit”—e.g., rate drop of 0.5% or payment reduction—plus recoupment of costs within 36 months via lower payments. No prepayment penalties, and seasoning requires 210 days on the current loan (90 if rates drop 2%). These rules curb predatory refis, ensuring long-term savings.

Case Study 1: Texas Veteran Takes Out a VA Cash Out Refinance for Debt Consolidation

Army veteran Carlos Ruiz, 42, in San Antonio, carried $80,000 in credit card debt at 22% APR alongside a $250,000 VA mortgage at 4.5%. In March 2026, with home value at $380,000 (appraised), he pursued cash-out via Navy Federal.

Eligibility confirmed via COE; 680 FICO and 35% DTI qualified. Refinanced to $350,000 at 6.0% (0.5% below market), netting $85,000 cash after $15,000 payoff and 2.3% funding fee ($8,050 financed). Benefits: Consolidated debt, dropping payments $400/month; no PMI saved $150. Recoupment: Costs recouped in 24 months. “It wiped my high-interest nightmare,” Carlos says. Equity: $30,000 post-3% appreciation.

Case Study 2: Florida Widow Uses VA Cash Out Refinancing to Fund Home Improvements

Surviving spouse Linda Hayes, 58, in Tampa, inherited a $320,000 home with $180,000 owed at 3.875%. Seeking $50,000 for accessibility upgrades, she applied through Veterans United in July 2026.

Exempt from funding fee (spouse eligibility); 720 FICO, 28% DTI. Cash-out to $280,000 at 5.75%, pulling $80,000 after payoff—$50,000 for renos, rest for reserves. Net benefit: Rate up but payments $100 lower via term extension. “VA let me age in place affordably,” Linda notes. Closing: 28 days; value rose 4% ($12,800 equity).

VA cash-out refinces in 2026 blend flexibility with safeguards, unlocking $100 billion+ in equity for veterans. From 100% LTV to fee exemptions, it’s a service-earned edge—consult va.gov for your COE and shop lenders. With rates low, now’s prime time to refinance responsibly.

What Does a Cash-Out Refinance Cost?

A VA cash out refinance can help you reduce your rate and get cash you need, but there are costs. You will need to pay closing costs that can be between 3% and 5% of the loan amount. Also, you will need to pay the VA cash-out refinance funding fee. This will be 2.15% of the loan amount if you have never had a VA loan before. If you used your VA benefits before, such as if this is a refinance, the fee is 3.3%. You can pay your VA funding fee in cash at closing or roll it into the loan.

Can Closing Costs Be Rolled into VA Refinance?

What is the VA Funding Fee? It’s a charge to veteran borrowers designed to help cover the expenses of the home loan program. It’s the sole closing cost that can be included in your VA Loan. If you’re eligible to receive VA compensation, you might be exempt from this fee.

VA Cash-Out Refinance Interest Rates

Interest rates are higher than three or four years ago, but VA interest rates are below market rates. As of May 2024, you may be able to get a VA cash out refinance rate below 7%. Keep in mind that cash-out rates are a bit higher than no-cash out rates. Generally, you will pay about .25% higher than a typical VA rate. You also may save up to .5% on your rate compared to conventional, non-VA loans.

What Are VA Cash-Out Refinance Loan Limits?

As of January 2020, there aren’t any limits on VA loans. You can potentially borrow 100% of the value of your home without a down payment. This is the case with VA purchase and refi loans. So, if you qualify, you could potentially pull out 100% of your home’s value in equity. This is minus your closing costs. It would have been difficult before 2020 to get a 100% financing VA loan. However, this new policy doesn’t mean you can always pull out 100%; lenders have different rules. You also will need to meet your lender’s DTI, income, and credit guidelines.

Get Rid Of Mortgage Insurance With a Cash-Out Refinance From VA

Do you currently have a conventional mortgage or FHA mortgage? If you qualify for a VA loan, you may want to take advantage! A big benefit of doing a VA cash-out refinance is that you don’t have to pay for mortgage insurance. For instance, most FHA loans require the borrower to pay mortgage insurance. But if you are a veteran or active military member, you could possibly do a cash-out refinance with the VA and get rid of mortgage insurance.

Can You Save Money With a VA Cash-Out Refinance?

Possibly. If you can refinance your current home loan with a lower rate, you could save on your monthly payment and long-term interest paid. You also may take out a cash-out refinance from the VA to pay off credit card debt, which can save you thousands in interest.

However, not every cash-out refinance will result in savings, so you need to run the numbers. If the new interest rate is less than .5% lower than your current rate, refinancing may not make sense. If the new rate is 1% lower or more, refinancing often is smart. But you should remain in the home as least as long as it takes for you to break even on your closing costs.

How Long Does a VA Cash-Out Refinance Take?

A VA cash-out refinance takes about the same amount of time as other refinances. The data shows that you can usually close your loan between 40 and 55 days after filling out an application.

If you only want to lower your rate, the streamline VA refinance could be a good choice. You don’t need a current appraisal when you don’t take out cash, so this process is even faster than a standard cash-out with the VA.

Can I only Get Cash Out with a VA Loan on a Primary Residence?

Most VA lenders will only offer cash out refinancing on owner-occupied primary residences. However, the VA does allow cash-out refinancing on investment properties in some cases.. The rules an requirements are different so make sure you are speaking with an experienced VA mortgage lender.

What If You Own Your Home Outright?

You probably cannot get a VA cash-out refi if you own your home free and clear. The VA will probably require the refinance to be of a current loan on the property. However, the good news is there are not many requirements for the type of loan you have today. You don not have to have a VA loan today to qualify for a VA refinance. You also do not have to be current on your current home loan to get a VA cash out refinance. You also may be able to refinance even if you have a tax lien or a judgment lien on the property.

Summary on Cash Out Refinancing with VA in 2026

A VA cash-out refinance can be a wise financial choice. A retired or current military member may qualify for a cash-out refinance with the VA to get the cash they need fast. You also may be able to do so at 100% LTV in many cases, while other lenders only allow 90%. If you have questions about a VA cash-out refinance, contact us at RefiGuide.org today! We will analyze your housing financing needs and offer competitive cash-out refinance loan options.

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