VA Cash-Out Refinance: Unlock Equity & Save Big

Right now, more than 3.7 million veterans and service members have VA-backed mortgages, but too many miss out on tapping their home equity. A VA cash-out refinance allows you to replace your existing mortgage with a new VA loan—letting you take out cash from your home’s equity for debt consolidation, renovations, or simply improving your financial outlook.

This guide is your roadmap to VA cash-out refinancing in 2025. We’ll cover the key benefits, eligibility requirements (including Net Tangible Benefit standards), and costs. Use this information to make well-informed decisions and get the most out of your home’s value.

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.

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.

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:

VA loans do not require private mortgage insurance (PMI), unlike most conventional mortgages. This translates into lower monthly payments.

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.

Because the VA backs these loans, they typically come with lower interest rates than conventional cash-out refinancing options.

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.

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.

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.

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.

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.

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 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.

Find the Perfect Mortgage for Your Dream Home with Be My Neighbor

Compare options, calculate payments, and get expert guidance all in one place

Get Pre-approved

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.

Follow these steps for a smooth VA cash-out refinance experience:

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.

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.

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.

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.

Ready to make your equity work harder—without wasting a dime on agent fees?

With reAlpha, you pay zero buyer commission—that’s 3% of the home price right back in your pocket.

Whether you're refinancing or shopping around for your next home, our AI-powered, commission-free platform helps you save more, move faster, and ditch the traditional real estate stress.

Start your zero-commission home journey now—your smarter financial future starts here.

Not sure how soon you can refinance again? Here's how often VA loans allow refinancing.

State specific requirements do exist for Cash out options - make sure to talk to your Loan Office at Be My Neighbor Mortgage to better understand how you will be able to access your homes equity.

There’s no hard limit on the number of times you can refinance a VA loan, but each refinance must meet specific guidelines, including a 210-day waiting period from your last loan’s first payment date.

Yes. This process is sometimes called a VA-to-conventional refinance. You’ll need to meet the credit and income standards for a conventional loan.

For a VA Interest Rate Reduction Refinance Loan (IRRRL), you need to wait at least 210 days and have made six on-time payments on your current VA mortgage.

reAlpha is an AI-driven, commission-free real estate platform that eliminates the typical 3% agent commission, keeping more of your money in your own pocket. It streamlines your entire home-buying process, making it both more affordable and more efficient.

Find the Perfect Mortgage for Your Dream Home with Be My Neighbor

Compare options, calculate payments, and get expert guidance all in one place

Get Pre-approved