VA Cash-Out Refinance (2026): Rates, Rules & Net Proceeds
February 2, 2026
6 minutes
Need cash from your home equity but don’t want sky-high rates or PMI?
A VA Cash-Out Refinance lets veterans and service members replace their existing mortgage with a new VA loan - and take cash out in the process. Whether you’re dealing with debt, eyeing renovations, or just want breathing room in your finances, this powerful tool can unlock up to 100% of your home’s value.
- No private mortgage insurance (PMI)
- Cash out equity even with lower credit scores
- Refinance to better VA loan rates in 2025
In this ultimate 2025 guide, you’ll learn how a VA cash-out refinance works, what it costs, how to qualify, and why thousands of veterans are turning equity into financial freedom. We also answer the top questions like:
- What are VA cash-out refinance requirements?
- What are the current VA cash-out refinance rates?
- Can I refinance a VA loan to a conventional loan later?
Let’s get your money working for you.
VA Cash-Out Refinance Rates vs. Standard VA Rates (2025 Sample)
| Loan Type | Example Rate (Est.) | Max LTV | PMI Required | Funding Fee |
|---|---|---|---|---|
VA Cash-Out Refinance | 6.49% | 100% | ❌ No | 2.15%–3.3% |
Standard VA Refinance | 6.25% | 100% | ❌ No | 0.5%–2.3% |
| Conventional Cash-Out | 7.15% | 80% | ✅ Yes | N/A |
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What Is a VA Cash-Out Refinance Loan and How Does It Work in 2025?
A VA Cash-Out Refinance loan is a specialized mortgage program for veterans and active-duty service members. It lets qualified borrowers refinance their existing mortgage and pull cash from their home’s equity.
This differs from a typical refinance because it replaces your current loan with a larger one - up to 100% of the home’s appraised value - which can be more than what you presently owe on the house.
What Does Cash-Out Mean in a VA Loan?
When you hear “cash-out” in relation to a VA loan, it means you’re refinancing for an amount bigger than your remaining mortgage balance, and the extra comes to you in cash.
For instance, suppose your home’s appraised at $300,000 but you still owe $200,000 on the mortgage. A VA cash-out refinance could potentially grant you a new loan of up to $300,000 - freeing up $100,000 of equity for other uses, depending on your lender’s specific policies.
Why Choose a VA Cash-Out Refinance Over Other Options?
Here are a few standout reasons to consider a VA cash-out refinance instead of going with a conventional refinance or a home equity loan:
1. No Mortgage Insurance:
VA loans do not require private mortgage insurance (PMI), unlike most conventional mortgages. This translates into lower monthly payments.
2. High Loan-to-Value Ratio:
With the VA cash-out refinance, you can borrow up to 100% of your home’s appraised value-higher than the 80% cap standard in other loan types.
3. Lower Interest Rates:
Because the VA backs these loans, they typically come with lower interest rates than conventional cash-out refinancing options.
4. Flexible Fund Usage:
The money you receive is yours to use as you see fit—pay off high-interest debt, invest in home improvements, or cover unexpected expenses.
VA Cash-Out Refinance Requirements (2025): Who Qualifies and What You Need
To qualify for a VA cash-out refinance in 2025, you’ll have to meet both VA and lender guidelines. These include service-related criteria, having a valid Certificate of Eligibility (COE), and demonstrating a Net Tangible Benefit.
Service Requirements for VA Cash-Out Refinance
Veterans and active-duty service members who meet length-of-service requirements typically qualify. National Guard and Reserve members may also be eligible, provided they fulfill the necessary duty or service standards. Certain surviving spouses can qualify under specific conditions.
Understanding the Certificate of Eligibility (COE)
The Certificate of Eligibility confirms you meet VA service requirements. You can obtain your COE:
- Online: Through the VA’s eBenefits portal
- Through Your Lender: Most VA-approved lenders can help secure it
- By Mail: Send a completed VA Form 26-1880 to the VA
Having your COE early in the process simplifies paperwork and speeds up the approval.
What Is the Net Tangible Benefit Rule for VA Cash-Out Refinancing?
Beyond service eligibility, the VA requires that a cash-out refinance must provide the borrower with a Net Tangible Benefit. Essentially, the new loan should offer a clear financial advantage, such as:
- A reduced interest rate or monthly payment
- A shift from an adjustable-rate mortgage (ARM) to a fixed-rate loan
- Lower total loan costs over the life of the loan
- Debt consolidation that improves your overall financial position
This ensures that you’re not just refinancing for the sake of refinancing, but actually improving your financial situation in the long run.
If you’re looking for alternate ways to reduce monthly payments without refinancing, explore how a mortgage recast works.
VA Cash-Out Refinance Rates in 2025: What You’ll Really Pay (vs. Conventional)
Before you decide, it’s essential to know what a VA cash-out refinance might cost, including your interest rate and associated fees.
VA Cash-Out Rates Compared to Standard VA Rates
VA cash-out refinance rates can be slightly higher than standard VA purchase or streamline refinance rates-often by around 0.125% to 0.25%. Your credit score, loan-to-value ratio, and other factors also play a role. Despite this bump, these loans usually carry lower interest rates than their conventional cash-out counterparts thanks to the VA’s backing.
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VA Funding Fee: How Much Will You Pay?
The VA funding fee for a cash-out refinance depends on whether you’re using your VA benefits for the first time or have used them before:
- First-time use: 2.15% of the loan amount
- Subsequent use: 3.3% of the loan amount
On a $300,000 refinance, a first-timer would pay $6,450, while a repeat borrower would owe $9,900. Be sure to factor this cost into your overall budgeting.
VA Cash-Out Refinance Process Step-by-Step: From COE to Closing Costs
Follow these steps for a smooth VA cash-out refinance experience:
Step 1: Finding the Right Lender for Your VA Loan
Understanding pre-approval is key if you're also considering a home purchase while tapping into your equity
Begin by comparing VA-approved lenders. Rates, fees, and customer service vary, so shop around to ensure you’re getting the best deal.
Step 2: Requesting Your Certificate of Eligibility (COE)
Obtain your COE directly from the VA or let your chosen lender handle it. This is a crucial step in verifying your eligibility for VA financing.
Step 3: Preparing Documentation for the Loan Process
Gather the documents you’ll need:
- Income Proof: Recent pay stubs, W-2s, or tax returns
- Credit Information: Lenders will run a credit check, but be prepared to clarify any issues
- Asset Statements: Bank and investment accounts
Having these ready upfront helps expedite underwriting.
Step 4: Closing the Loan: What to Expect and What Costs are Involved?
Closing is where you sign all final paperwork and pay any outstanding fees. Typical closing costs hover around 3% to 5% of the loan amount and might include appraisal fees, title insurance, and the VA funding fee. Some fees can be negotiated or offset by lender credits.
VA Cash-Out Refinance vs Conventional Cash-Out: Which Is Better?
| Feature | VA Cash-Out | Conventional Cash-Out |
|---|---|---|
Max LTV | 100% | 80% |
PMI | ❌ None | ✅ Yes (unless 20% down) |
Funding Fee | ✅ 2.15%–3.3% | ❌ None |
Occupancy | Must live in home | Can be investment property |
| Credit Flexibility | Easier (580–620 ok) | Stricter (680+ typical) |
- Choose VA if you want to maximize equity access and avoid PMI.
- Choose Conventional if you’re refinancing an investment property or already have 20% equity.
Should You Do a VA Cash-Out Refinance in 2025? Pros, Cons, & Equity Rules
Is a VA Cash-Out Refinance a Good Idea in 2025?
Only if you’re ready to turn your home equity into serious financial freedom.
Whether you want to pay off high-interest debt, renovate without personal loans, or qualify for a better loan structure, a VA cash-out refinance in 2025 could be your smartest move - especially since you can unlock up to 100% LTV with no PMI.
Ready to unlock your home equity with a VA Cash-Out Refi?
Our partners at reAlpha Mortgage will help you:
- Refinance up to 100% of your home’s value
- Get the best VA cash-out rates in 2025
- Avoid PMI and save thousands
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FAQs
1. How Often Can You Refinance a VA Loan in 2025?
You can refinance a VA loan as many times as you qualify, but the VA requires a 210-day seasoning period and six consecutive on-time payments before you’re eligible to refinance again.
Example: If you used a VA cash-out refinance last year, you’ll need to wait 210 days and show payment history before you can refinance again in 2025.
2. Can You Refinance a VA Loan to a Conventional Loan?
Yes. This is called a VA-to-Conventional Refinance, and it’s common when:
- You want to remove the VA loan entitlement
- You plan to buy another home with VA benefits
- You want to drop the VA funding fee permanently
To qualify, you’ll need a good credit score (typically 620+), stable income, and 20% equity to avoid PMI.
Learn more: Refinancing from VA to Conventional - Is It Worth It?
3. How Long Do You Have to Wait to Refinance a VA Loan?
Most VA refinance types, including cash-out refinance and IRRRL (Interest Rate Reduction Refinance Loan), require a minimum of 210 days from your first mortgage payment and six consecutive monthly payments.
This rule protects borrowers from predatory refinancing and ensures real financial benefit (Net Tangible Benefit).
4. What Credit Score Do You Need for a VA Cash-Out Refinance in 2025?
Most VA lenders require a minimum credit score of 620 for a cash-out refinance loan. However, some allow scores as low as 580 depending on LTV ratio, debt-to-income ratio, and lender flexibility.
Pro Tip: A higher credit score = better VA cash-out refinance rates and lower funding fees.
5. Is a VA Cash-Out Refinance a Good Idea in 2025?
It can be - if you:
- Need cash for debt consolidation or home upgrades
- Want to avoid high-interest personal loans
- Prefer a low-rate mortgage backed by the VA
However, if you’re planning to move soon or can’t meet Net Tangible Benefit requirements, it may not be ideal.
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As a great communicator with excellent negotiation skills, I focus more on establishing unbreakable ties between my clients, as opposed to just helping them achieve their real estate dreams. As a representative of both buyers and sellers, I understand how to lead a transaction process to ensure that the needs of both are met. My track record speaks for itself. Since I ventured into the industry in 2013 as a realtor, I have not only helped many buyers land perfect homes, but I have also assisted tons of owners and investors build wealth.