VA cash-out refinance requirements: 100% LTV, 210 days, Type I vs II

8 min read · LenderMatch Learn

A VA cash-out refinance lets you borrow up to 100% of your home's appraised value, as long as you are eligible for a VA loan, live in the home and pass the lender's credit and income review. If the loan you are replacing is a VA loan, it must be at least 210 days old with six monthly payments made. Every VA cash-out must also show a "net tangible benefit," and most borrowers pay a funding fee of 2.15% or 3.3% unless they are exempt.

VA splits these loans into two types. A Type I refinance doesn't increase what you owe, and a Type II refinance is the one that puts cash in your hand. The rules below come from VA.gov, the VA Lenders Handbook (M26-7) and 38 CFR 36.4306. VA sets the ceiling, but each lender sets its own rates, fees and credit minimums, so comparing VA lenders shows what you actually qualify for.

What are the requirements for a VA cash-out refinance?

VA.gov lists three requirements. You must qualify for a VA home loan Certificate of Eligibility, meet VA's and your lender's standards for credit and income, and live in the home you are refinancing. The VA Lenders Handbook (Chapter 6, Topic 3, updated October 30, 2024) adds:

• There must be a loan to refinance. Refinancing loans "made on properties without an existing mortgage or lien of record are not eligible" for VA's guaranty. The lien can be a first mortgage, a second mortgage, a HELOC or another recorded lien.
• The new loan must be in first position. Any lien that isn't paid off must subordinate to the new VA loan.
• Full credit underwriting is required for every cash-out refinance.
• VA doesn't limit how you use the cash and doesn't ask for a letter explaining it.

What is the max LTV on a VA cash-out refinance?

The new loan can't exceed 100% of the reasonable value VA sets through its appraisal (38 CFR 36.4306(a)(1)). That includes the funding fee: any part of the fee that would push the loan past 100% must be paid in cash at closing. One exception: a Type I refinance from a fixed-rate VA loan into an adjustable rate with more than one discount point is capped at 90%. Individual lenders may also set lower limits.

Worked example: a $400,000 home

Say the VA appraisal comes in at $400,000 and you owe $250,000. At 100% loan-to-value, the total loan, funding fee included, can be $400,000. Here is how much cash that leaves before closing costs, depending on your funding fee:

The 3.3% row: $387,222 × 1.033 = $400,000, so the base loan tops out at $387,222. Minus the $250,000 payoff, that leaves $137,222, less any closing costs paid from the loan. The home equity calculator runs similar math for other ways to borrow.

VA cash-out refinance Type 1 vs Type 2

VA created the two types after a 2018 law set different rules based on the payoff of the loan being refinanced:

• Type I: the new loan amount, including the VA funding fee, does not exceed the payoff of the loan being refinanced. No equity comes out. One use is moving a conventional or FHA loan into a VA loan, for example to remove mortgage insurance.
• Type II: the new loan amount, including the funding fee, exceeds the payoff. This is the version that lets you take equity out as cash.

Source: VA Lenders Handbook, Chapter 6, Table 6.

VA cash-out refinance seasoning requirements

Seasoning is how old your current VA loan must be. VA can't guarantee the new loan until the later of 210 days from your first monthly payment and your sixth monthly payment (38 CFR 36.4306). The Handbook splits it by type:

• Type I: the first payment due date must be 210 days or more before the new loan's note date, and you must have made six consecutive monthly payments, each paid in full in the month it was due.
• Type II: the date you made your first payment must be 210 days or more before closing, and you must have made six monthly payments, which don't have to be consecutive.

Example: if your first payment was due February 1, 2026 and you paid every month on time, a Type I refinance could close on or after August 30, 2026. The rule applies only when you are paying off a VA loan. Refinancing a conventional or FHA loan has no VA seasoning requirement, though a lender may set its own.

The net tangible benefit test

Every VA cash-out refinance, Type I or Type II, must be "in the financial interest of the borrower" (38 CFR 36.4306(a)(3)). The new loan has to meet at least one of these:

• It removes monthly mortgage insurance or guaranty insurance.
• Its term is shorter than the loan being refinanced.
• Its interest rate is lower.
• Its principal and interest payment is lower.
• It increases your monthly residual income.
• It refinances an interim loan to build, alter or repair your home.
• The new loan is 90% or less of the home's value.
• It moves an adjustable-rate loan to a fixed rate.

Above 90% of value, the loan has to qualify another way, such as a lower rate, lower payment or higher residual income. The lender must also give you a side-by-side comparison of the old and new loans, plus the amount of equity being removed, within 3 business days of applying and again at closing.

Recoupment and rate rules for Type I (VA to VA)

Two extra rules apply only when a Type I loan refinances a VA loan:

• 36-month recoupment. Fees and closing costs divided by the drop in your monthly principal and interest can't exceed 36 months. $4,500 in costs with a $150 monthly saving takes 30 months and passes; a $120 saving takes 37.5 months and fails. The funding fee, escrow and prepaid items don't count.
• A required rate drop: at least 0.5 percentage points fixed to fixed, or 2 points fixed to adjustable.

VA cash-out refinance funding fee

The funding fee is a one-time charge that VA says helps lower the cost of the loan for taxpayers. For a cash-out refinance it depends only on prior use. Rates effective since April 7, 2023 (VA.gov, updated October 5, 2026), shown on a $400,000 loan:

The rate depends on whether this is your first time using a VA-backed or VA direct home loan. If you already used the benefit, for example to buy the home you're refinancing, plan on 3.3%.

Who is exempt. VA.gov lists: veterans receiving VA compensation for a service-connected disability (or eligible for it but receiving retirement or active-duty pay instead); surviving spouses receiving Dependency and Indemnity Compensation; service members with a pre-discharge proposed or memorandum rating issued before closing; and active-duty members with evidence of a Purple Heart. If you are later awarded compensation effective before your closing date, you may be eligible for a refund.

Other closing costs. You also pay normal refinance costs such as the appraisal and title. Under 38 CFR 36.4313, a lender may charge a flat origination fee of up to 1% of the loan in place of itemized origination charges. Closing costs and the funding fee can be paid from the loan, as long as it stays within 100% of value.

VA cash-out refinance credit score requirements

VA does not set a minimum credit score. Its underwriting rule (38 CFR 36.4340) looks at your credit history, a 41% debt-to-income benchmark and residual income, the money left each month after your mortgage, debts and living costs. A ratio above 41% doesn't automatically disqualify you.

Lenders set the score minimums. One large bank, for example, says VA "doesn't dictate a minimum credit score" and requires 620 for its own VA loans, while some lenders go lower. So the same credit profile can get different answers from different lenders. Our guide on whether rate shopping hurts your credit explains how to compare offers. LenderMatch never pulls your credit; a lender you choose may check it, with your permission, when you apply.

Is a VA cash-out refinance a good idea?

It depends mostly on your current rate. A cash-out refinance moves your whole balance to today's rate. If your VA rate is well below today's, a HELOC may cost less, because only the new money is borrowed at today's rate; VA cash-out refinance vs HELOC works through a $60,000 example. The cash-out fits better when you want one fixed payment, need more than a HELOC allows, are exempt from the funding fee, or your rate is already close to today's. The refinance calculator shows the break-even math.

Frequently asked questions

How soon can I do a VA cash-out refinance?

If you are paying off a VA loan, wait until 210 days after its first monthly payment and six monthly payments. If your current loan is not a VA loan, VA's seasoning rule does not apply, though a lender may have its own.

What credit score do I need for a VA cash-out refinance?

VA does not set one. Lenders set their own minimums: one large bank, for example, requires 620 for its VA loans, and some lenders go lower.

Can I do a VA cash-out refinance on a paid-off house?

No. VA only guarantees a refinance when the home has an existing mortgage or other lien of record. With a paid-off home, a HELOC or home equity loan is the usual route.

Can I refinance a conventional or FHA loan into a VA cash-out?

Yes, if you are eligible for a VA loan and live in the home. If your current loan has mortgage insurance, removing it counts as a net tangible benefit.

Do disabled veterans pay the VA funding fee on a cash-out refinance?

Not if they receive VA compensation for a service-connected disability, or are eligible for it but receive retirement or active-duty pay instead. The full list of exemptions is in the funding fee section above.

See what VA lenders could offer on your equity →