VA Cash-Out Refinancing Loans: Rates, Eligibility, and How it Works

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To support active-duty military and veterans who have served our country, these men and women that have served us have the option of using VA Loan when purchasing a home. VA loans offer some unique benefits that no other loan type can offer–and that includes VA Cash-out Refi Loans.

VA Cash-out Refinancing Loans allow homeowners to replace their current loan for better terms, cash out any equity that they have in the home, or change from a conventional loan to a VA loan. How do they work? Let’s see. 

What are VA Cash-out Refinancing Loans?

Many people don’t know that the VA Loans are eligible for a Cash-Out Refinance. VA Cash-Out Refinancing Loans are just like a standard Cash-Out Refi, but for a VA Loan. 

Cash Out Refinance Loans for VA Loans are a new mortgage loan that replaces your previous one. It allows you to negotiate new (and better) terms with a lower interest rate. You can then cash out the equity that you have built up in the property already to use for anything you need from home improvements to paying off higher-interest debt.

How do Cash-out Refinance VA Loans work?

Lenders that offer cash-out refinance loans will assess the borrower’s credit, the current loan terms, and the value of the home. The lender will then issue a loan that is more than what the borrower owes on their home. The extra money will be in the form of cash for the borrower to use however they please.

What is the maximum LTV for a VA Cash-out Refinance?

With a typical cash-out refinance loan the maximum loan-to-value (LTV) is 80%. This means that only 80% of the equity in the home can be paid out.

But with a VA cash-out refinance loan, the maximum LTV is 100%–another benefit of VA Loans. So any equity that exists can be paid out in full. This does depend on the lender so you should be sure to ask about this when looking for a lender.

VA Cash-out Refinance Funding Fee

Any VA Loan requires a funding fee whether it is an original mortgage loan or you are refinancing. The funding fee helps to lower the cost of the loan for U.S. taxpayers since the VA loan program does not require a down payment or monthly mortgage insurance (PMI). 

The funding fee is a percentage of the loan amount. For a cash-out refinance the percentage is lower for the first time refinancing. After the first time, it is around double that percentage. The rates are variable so be sure to check them before refinancing.

VA Cash-out Refinance vs. VA Streamline Refinance vs. Standard Cash-out Refinance

There are some notable differences between a VA cash-out refinance, a VA streamline refinance, and a standard cash-out refinance loan. These all have their pros and cons to consider.

VA Cash-Out Refinance Loans:

  • Cash paid up to 100% LTV
  • Higher interest rates than a VA streamline refinance loan
  • Non-VA loans are eligible

VA Streamline Refinance Loans:

  • Also known as an interest rate reduction loan (IRRL)
  • Only VA loans are eligible
  • Can change from an adjustable rate to a fixed-rate or vice versa

Standard Cash-Out Refinance Loans:

  • Cash paid up to 80% LTV
  • Higher interest rates, closing costs, and fees than any other refinance option
  • Anyone with a current mortgage loan can be eligible

Am I Eligible for a VA Cash-out Refinance Loan?

If you have or can obtain a certificate of eligibility for a VA loan, then you can be eligible for a VA cash-out refinance loan. VA Home Loan eligibility requirements include: 

  • Current duty status
  • Length of service
  • Manner of discharge

For those who are still active-duty members, their service history should include:

  • At least a 2-year enlistment term for regular members
  • At least a 6-year enlistment term if you are a National Guard or Reserve member
  • 90 days of active duty during wartime
  • 181 days of active duty during peacetime

Other considerations are whether you have a service-related disability, as it may affect the final decision on your VA Loan. Additionally, you must have or meet the following:

  • Certificate of Eligibility (COE): Proof that you meet the VA’s requirements for a loan based on your service record. Surviving spouses must still apply for one should they be looking to secure a loan on their own. 
  • Lending Requirements: While it will vary per individual and lender, a good credit score would be 620 and above. Additionally, aim to have a debt-to-income ratio (DTI) of around 41% to have the best odds.

Your current loan can be standard or a VA loan and you are still eligible. You do have to meet the lender’s requirements as for credit and income, as well as must live in the home that is being refinanced.

What Credit Score is Needed for a VA Cash-out Refinance?

Every lender has its own requirements as far as credit scores are concerned. Most lenders require a credit score of at least 620. The loan amount may also influence the lender’s credit score requirement.

Current VA Cash-out Refinance Rates

The current national average interest rate for VA cash-out refinance loans is 4.650%

How to Get a VA Cash-out Refinance Loan

In order to apply for a cash-out refinance loan, you must first obtain a certificate of eligibility. This is the same certificate needed to apply for any VA loan. If you already have a VA loan that means that you had to get a certificate of eligibility then. You cannot use the same certificate unless you meet certain criteria. You can reach out to the regional VA loan in your state for entitlement restoration information.

Do you have to take out cash for a VA Cash-out Refinance Loan? 

You do not have to take out cash for a VA cash-out refinance loan, but that is one of the benefits: access to cash so you can pay off some other expense. If you don’t need cash, you could use a VA Streamline Refinance loan if you already have a VA loan and you are looking to refinance. 

However, if you currently have a standard loan and you would like to refinance with a VA Loan but not take any money out, the VA cash-out refinance loan is your best option.

Can you do a 100% VA Cash-out Refinance Loan?

One of the most unique features of the VA cash-out refinance loan is that you can take out 100% of the equity in your home. A standard refinance loan only allows you to take up to 80% of the equity in your home.

Best VA Cash-out Refinance Lenders

Hero Loan

Hero Loan–one of the fastest growing lending platforms in the country–serves active- duty military, veterans, and their families. Their mission is to provide fast, personalized service while supporting Veteran-Owned businesses and events. 

As a direct-endorsed VA Lender, Hero Loan can close VA Loans in as little as 14 days–compared to most lenders that take up to 60 days. They underwrite all VA Loans in house, meaning lower mortgage rates and no upfront or out of pocket costs—that includes the appraisal. 

How It Works: 

Hero Loan has an enticing roster of loans and services that they offer. Apart from the standard VA Loan, some of these also include: 

  • VA Streamline Refinancing
  • Conventional Loan Refinancing
  • VA Cash-Out Refinancing 
  • FHA Loans

After you’ve made your choice, you can use their website to fill out a few preliminary details and apply for the loan or service that you have chosen. From there, a loan officer will be assigned to you who will take you through the minutiae and explain the details of the loan that you are about to borrow.

In addition, they will also help you get the all-important VA Loan Certificate of Eligibility and fill out all the VA paperwork for you. After you’ve sorted out the necessary details, all that remains for you to do is wait till the loan is closed. But don’t worry–with Hero Loan that takes as little as 14 days (compared to the standard two months)!


  • Complete all VA paperwork for clients 
  • Underwrite all VA Loans in-house
  • Can close VA Loans in as little as 14 days
  • No appraisal fees or out-of-pocket fees


  • Services are for active-duty military, veterans, and their families only

Veterans United Home Loans

Veterans United Home Loans is a prime direct mortgage lender which specializes in VA mortgages, but also offers FHA, USDA, conforming, and jumbo mortgages. You can choose between a:

  • VA IRRRL (Interest Rate Reduction Refinancing Loan), which is used to convert an ARM to an FRM, or to reduce the interest of the borrower
  • Cash-Out Refinance

Unlike many other lenders, Veterans United Home Loans allows you to apply for mortgage credit data, which is not your primary credit data. For instance, you could potentially show proof that you usually take care of your bills on time. This makes this particular lender a good option if you have a lower than optimum credit score.


  • Convenient application online or at a brick and mortar location
  • Has other loan options apart from VA Home Loans 
  • Can use alternative forms of credit (like utility bills) because you have a low or no credit score


  • No common loan types like the home equity loan, home equity line of credit loan, or construction loan
  • Customized rates are not available online


Amerisave Mortgage Corporation is a direct mortgage lender serving all of the United States with the exception of New York. Their rates are very competitive. They offer several different types of loans including:

  • Fixed-rate
  • FHA
  • VA
  • USDA
  • Adjustable-rate
  • Cash-out refinance

Overall, Amerisave is a solid option for both service members and civilians. In order to complete an application for a mortgage loan or a refinance loan you will have to approve a soft credit inquiry. For this reason, you want to be sure you are ready to make a move on the loan.


  • A wide variety of loan types and products offered
  • Easy application process
  • Mobile-friendly


  • Higher origination fees
  • Does not offer home equity loans or lines of credit

Conclusion: is a VA Cash-out Refinance Loan a Good Idea?

Refinancing can be one of the most beneficial things you can do financially, but it’s important to know as much as possible about all of your options. There is no one-size-fits-all option when it comes to refinancing. That’s why Hero Loan offers VA cash-out, IRRL, and standard loans. We make the process simple and stress-free. 
As veterans and active-duty military members, you should not have to worry about getting a bad deal when it comes to financing your home. Hero Loan will ensure that you are taken care of from start to finish. If you’re ready to start taking control of your finances, reach out to the team at Hero Loan today by getting started with a 5-Minute Loan Approval* application.