Convert home equity to cash — and refinance a non-VA loan into a VA loan
The VA Cash-Out Refinance replaces your current mortgage with a new VA loan for more than you owe, and you take the difference in cash. It is also the only way to move a conventional, FHA or USDA loan into a VA loan and drop mortgage insurance for good. The VA permits up to 100% of the appraised value; most lenders cap it at 90%.
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Quick answer
How does a VA Cash-Out refinance work?
A VA Cash-Out refinance lets you tap home equity or refinance a non-VA loan into a VA loan, up to 100% of appraised value by VA rule (most lenders cap near 90%). It requires a full appraisal and income documentation, and carries a 2.15% funding fee for first use, 3.30% for subsequent use.
VA allows up to 100% LTV; most lenders cap cash-out near 90%
Can refinance a non-VA loan (FHA, conventional) into a VA loan
Full appraisal and full income/credit documentation required
Funding fee: 2.15% first use, 3.30% subsequent use
Type I (loan amount at or below payoff) and Type II (loan amount exceeds payoff) both exist
What this means for your mortgage
If you need funds from your equity or want out of an FHA or conventional loan, a VA Cash-Out refinance can do both in one transaction.
Reviewed by the licensed mortgage team at Simply Approved Mortgages · Last verified August 31, 2026 against the VA Lenders Handbook (M26-7)
Up to 100% of appraised value permitted by the VA; most lenders allow 90%
Refinances conventional, FHA, USDA or existing VA loans
Type I (loan amount at or below payoff) and Type II (above payoff)
No mortgage insurance on the new VA loan
Cash can be used for any legal purpose
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Live VA pricing — VA Cash-Out
Enter your scenario to see live wholesale VA pricing available to Simply Approved Mortgages for Florida and Colorado primary residences. Every figure shown comes from our pricing provider for the scenario you enter — nothing is estimated.
Pricing shown is based on the scenario entered and wholesale pricing available at the time of the search. It is not a rate lock, loan approval, commitment to lend, or guarantee of terms. Rates and pricing change frequently and expire. Your actual rate, APR, payment, and costs depend on a complete application, verified credit and income, property and appraisal review, and lender underwriting approval. Binding figures appear on your Loan Estimate.
Simply Approved Mortgages LLC is not affiliated with, acting on behalf of, or endorsed by the U.S. Department of Veterans Affairs (VA) or any other government agency.
Simply Approved Mortgages LLC | NMLS #2620881 is a mortgage broker and is not a direct lender. Equal Housing Opportunity.
Scenarios this tool does not price
VA construction and Native American Direct Loan pricing.
Joint VA loans with a non-veteran, non-spouse co-borrower.
Adjustable-rate VA pricing (the tool prices fixed-rate terms only).
What is the VA Cash-Out loan?
A VA Cash-Out Refinance replaces your current mortgage with a new, larger VA loan and gives you the difference in cash. It's also the only way to move a conventional, FHA, or USDA loan into a VA loan and drop mortgage insurance permanently. The VA permits financing up to 100% of the appraised value; most lenders cap it at 90% for risk-management reasons (VA Lenders Handbook M26-7).
There are two structures: Type I, where the new loan amount is at or below the current payoff, and Type II, where it's above the payoff and includes new cash or a non-VA loan being refinanced in. Either way, this is a full-documentation transaction — a full VA appraisal, income verification, and credit review, plus a net tangible benefit test and a VA loan comparison disclosure at both application and closing.
The funding fee is 2.15% on a first use and 3.30% on a subsequent use, unless you're exempt. Because there's no mortgage insurance on the resulting loan, veterans consolidating high-rate debt or refinancing out of FHA MIP or conventional PMI often come out ahead even after the funding fee.
VA Cash-Out key features and benefits
Up to 100% of appraised value permitted by the VA; most lenders allow 90%
Refinances conventional, FHA, USDA or existing VA loans
Type I (loan amount at or below payoff) and Type II (above payoff)
No mortgage insurance on the new VA loan
Cash can be used for any legal purpose
Is a VA cash-out refinance the right choice for you?
Choose VA Cash-Out if…
You have meaningful home equity and need a lump sum
You want to move a conventional, FHA, or USDA loan into a VA loan and drop mortgage insurance for good
You're consolidating high-rate credit card or personal loan debt
You need a fixed rate rather than a variable HELOC payment
Look at another option if…
You only need a small amount — a HELOC or home equity loan may cost less
You already have a low VA rate you'd have to give up
The property is a rental or second home
You can't clear the lender's full-documentation underwriting requirements
Cash-out is a full-documentation refinance. Expect the same package as a purchase, plus your existing mortgage's payment history.
Identity & service
Government-issued photo ID for every veteran on the loan
Social Security number documentation
Certificate of Eligibility (COE), or the underlying DD-214, Statement of Service, or NGB-22 needed to obtain one
Income
Most recent Leave and Earnings Statement (LES) for active duty, or the last 30 days of pay stubs
W-2s for the past two years
Two years of federal tax returns if self-employed, commissioned, or a 25%+ business owner
Award letters for VA disability compensation, Social Security, pension, or child support income
Assets
Two months of full bank statements (all pages)
Most recent retirement or brokerage statement if using those funds for closing costs
Property & credit
Current mortgage statement and 12-month payment history
Homeowners insurance declarations page and property tax bill
HOA statement and master insurance if applicable
Authorization for a tri-merge credit report
Letters of explanation for credit events
Cash-out specific
Statement of purpose for the cash if paying off debt
Payoff statements for any debts being cleared at closing
VA loan comparison disclosure, signed at application and again at closing
Who an VA Cash-Out loan is best for
Veterans with equity who want to consolidate debt, fund a renovation, or convert a non-VA mortgage into a VA loan with no mortgage insurance.
VA Cash-Out requirements in 2026
Valid COE and sufficient remaining entitlement
Full VA appraisal, income documentation and credit review
Lender credit overlay, commonly 620 for cash-out
Occupy the property as your primary residence
Net tangible benefit test plus the VA loan comparison disclosure at application and closing
VA Cash-Out pros and cons
What we like
Highest LTV of any mainstream cash-out program
Kills conventional PMI or FHA MIP permanently
Consolidates high-rate debt at mortgage rates
Residual income underwriting is more forgiving than conventional
Trade-offs to know
Funding fee of 2.15% first use, 3.30% subsequent use, unless exempt
Full appraisal, full documentation, longer timeline than an IRRRL
Resets your amortization and can increase lifetime interest
Turning unsecured debt into mortgage debt puts your home at risk
How a VA cash-out refinance works, step by step
1
Confirm equity and entitlement
The VA allows up to 100% of appraised value; check whether your lender applies the common 90% cap before you count on a specific cash figure.
2
VA appraisal
A full VA appraisal establishes the property's current value — this is not waived the way it is on an IRRRL.
3
Full income, asset, and credit documentation
Unlike an IRRRL, a cash-out refinance is fully underwritten, including a lender credit overlay commonly around 620.
4
Net tangible benefit test and disclosures
VA requires a documented benefit and a VA loan comparison disclosure at both application and closing.
5
Structure the cash
Proceeds can pay off debt, fund a renovation, or stay liquid; paying off high-rate revolving debt can also improve your qualifying ratios.
6
Close and finance the funding fee
The 2.15% (first use) or 3.30% (subsequent use) funding fee is typically financed into the new loan unless you're exempt.
Cash-out math on a $500,000 home at a 90% lender cap
Illustrative only; the VA's own ceiling is 100% LTV, but this example uses the common 90% lender overlay.
Appraised value
$500,000
Lender-cap loan amount (90%)
$450,000
Existing mortgage payoff
$300,000
Estimated closing costs
$8,000
Funding fee (2.15%, first use, financed)
$9,675
Approximate cash to veteran
~$132,000
Before final costs and prorations
How an VA Cash-Out loan helps real borrowers
Illustrative examples built from published VA rules to show how the math works. They are not customer stories, rate quotes, or guarantees — your numbers depend on credit, county limits, and pricing at the time you lock.
Cash-out at 90% LTV to consolidate high-rate debt
The situation: A veteran with a $420,000 home and a $250,000 mortgage balance is carrying $38,000 in credit cards and a personal loan at rates above 20%.
How the loan helps: The VA permits cash-out financing up to 100% of appraised value, but this lender applies its typical 90% cap. The new VA loan pays off the existing mortgage and the debt, with the 2.15% first-use funding fee financed in (VA.gov — Funding Fee and Closing Costs; VA Lenders Handbook M26-7).
Appraised value
$420,000
90% lender-cap loan amount
$378,000
Existing mortgage payoff
$250,000
Funding fee (2.15%, financed)
$8,127
Approximate cash available
~$120,000 (before costs)
The outcome: Consumer debt is replaced with one secured, amortizing VA payment with no mortgage insurance — though the balance is now tied to the home, so the trade-off deserves a careful look.
Edit the fields to see how a new rate and cash-out amount change your payment. Uses the 2.15%/3.30% VA cash-out funding fee — there's no monthly mortgage insurance.
100% LTV maximum loan (VA); most lenders cap at 90%$420,000
New base loan$350,000
Financed VA funding fee (2.15%)$7,525
Total new loan$357,525
Current principal & interest$2,141.09
New principal & interest$2,201.34
Monthly mortgage insurance$0 — VA loans never have any
Estimates only. Nothing here is an application, pre-qualification, pre-approval, rate quote, rate lock or commitment to lend. You can keep using this tool without giving us anything.
Estimates only — not a loan offer, rate lock, or commitment to lend. Taxes, insurance, and rates vary by county and credit profile.
Veteran benefits with this program
A cash-out refinance doesn't involve a down payment, so assistance programs don't apply. If you're pulling cash out to help a family member buy, point them to the VA Purchase Loan for their own $0-down purchase instead.
The VA permits financing up to 100% of the appraised value, though most lenders cap cash-out refinances at 90% (VA Lenders Handbook M26-7).
Do I need an existing VA loan to use this program?
No. Conventional, FHA, USDA, and free-and-clear homeowners can all refinance into a VA cash-out loan, which is one of the few ways to move out of FHA MIP or conventional PMI entirely.
What's the difference between Type I and Type II cash-out?
Type I is a new loan amount at or below your current payoff. Type II is above the payoff, including new cash or refinancing in a non-VA loan.
What is the VA cash-out funding fee?
2.15% on a first use and 3.30% on a subsequent use, unless you're exempt due to a service-connected disability rating or another exemption category.
Is an appraisal required?
Yes, a full VA appraisal is required, along with full income, asset, and credit documentation.
Can I use VA cash-out on an investment property?
No. VA cash-out refinances are limited to owner-occupied primary residences.
VA Cash-Out where we're licensed: Florida and Colorado
We arrange residential mortgage loans only in Florida and Colorado. Each state guide runs the VA Cash-Out against that state's county limits, median prices, taxes and insurance, then breaks down to city-level guides.
Florida · Licensed
VA Cash-Out in Florida
A VA cash-out refinance in Florida replaces your current mortgage with a new VA loan and takes equity out in cash, subject to a full appraisal, full underwriting and the VA's net tangible benefit rules. It can also move a conventional or FHA loan into VA financing and eliminate monthly mortgage insurance.
A VA cash-out refinance in Colorado replaces your existing mortgage with a new VA loan and returns equity as cash, with a full appraisal and full underwriting. It can also refinance a conventional or FHA loan into VA financing and eliminate monthly mortgage insurance.
The VA won't let you refinance into an IRRRL just to lower your rate slightly — the fees have to pay for themselves within 36 months. Here's exactly how that math works.
The VA funding fee schedule sets the one-time cost that replaces mortgage insurance on every VA loan. Here's the current chart, who's exempt, and how it's financed.
Verified against VA Lenders Handbook M26-7, Change 6 — August 12, 2026. Simply Approved Mortgages is not affiliated with or endorsed by HUD, VA, or any government agency.
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