VA Cash Out Refinance Requirements: How It Works and What It Costs

Short answer: A VA cash-out refinance replaces your current mortgage with a new VA-backed loan and lets you take cash from your home equity. VA lists three requirements: you have a Certificate of Eligibility (COE), you meet VA's and your lender's standards for credit, income, and anything else the lender requires, and you will live in the home you are refinancing. It can also move a conventional or FHA loan into a VA loan. The VA funding fee is 2.15% the first time you use your benefit and 3.3% after that, unless you are exempt.

Jennifer Rodriguez is a Realtor® and Military Relocation Professional (MRP®) in Northwest Las Vegas helping military families buy, keep, and sell homes with a VA loan.

Most people hear "cash-out" and think only about getting money back. There is more to it, and the rules are different from VA's other refinance. Let's make this simple.

What is a VA cash-out refinance?

It is a new VA-backed loan that pays off the mortgage you have now. VA describes two ways people use it:

• To take cash out of your home equity to pay off debt, pay for school, make home improvements, or cover other needs.
• To refinance a loan that is not a VA loan into a VA-backed loan.

That second use surprises a lot of people. If you bought with a conventional or FHA loan before you knew about your benefit, this is one way to move into a VA loan later.

What are the VA cash out refinance requirements?

VA.gov lists the VA cash out refinance requirements in three parts:

1. You have a Certificate of Eligibility. The COE shows your lender that you qualify for the VA home loan benefit.
2. You meet VA's and your lender's standards. VA names credit, income, and any other requirements your lender sets. Lenders can set their own standards on top of VA's, so two lenders may answer differently.
3. You will live in the home you are refinancing. This is an occupancy requirement, and it matters for military families who have moved.

VA also says the lender will order an appraisal, which is an expert assessment of what your home is worth. How much cash you can take out depends on that value, your loan balance, and your lender's limits. Ask each lender to show you the numbers on your home.

Can you do a VA cash-out refinance on a home you moved out of?

Based on VA's wording, the cash-out refinance is for a home you will live in. VA's requirement is that you plan to occupy the home being refinanced.

That is different from VA's Interest Rate Reduction Refinance Loan (IRRRL). For an IRRRL, VA lets you certify that you live in the home now or used to live in it. So a family that kept their Las Vegas house as a rental after PCS orders would look at the IRRRL rules, not the cash-out rules, for that house. Your lender will confirm what fits your situation.

How much is the VA funding fee on a cash-out refinance?

VA lists the funding fee for a cash-out refinance at:

• 2.15% if this is your first time using your VA loan benefit.
• 3.3% if you have used it before.

On a $400,000 cash-out refinance, that works out to $8,600 at 2.15% or $13,200 at 3.3%. That is an example of the math, not a quote.

You pay no funding fee if you receive VA compensation for a service-connected disability, along with a few other groups VA lists. The full list is here: What is the VA funding fee in 2026, and who is exempt?

What do you need to apply for a VA cash-out refinance?

You apply through a private lender, not through VA. VA outlines the steps:

1. Find a lender and compare offers.
2. Request your Certificate of Eligibility, or ask the lender to get it for you.
3. Give the lender the documents they ask for, such as pay stubs, W-2s, and tax returns.
4. Complete the lender's process, including the appraisal, and close.

Common mistakes with a VA cash-out refinance

• Thinking it only works on a VA loan. VA says it can also refinance a non-VA loan into a VA-backed loan.
• Using it on a home you no longer live in. The cash-out refinance is for a home you will occupy. Look at the IRRRL rules for a former home.
• Forgetting the funding fee. At 2.15% or 3.3%, it is a big line item unless you are exempt. Tell your lender up front if you receive VA disability compensation.
• Treating equity like free money. Cash you take out becomes part of your loan balance, and you pay interest on it for years. Have a clear use for it.
• Getting only one quote. Lender standards and fees vary. Compare at least two.

Thinking about using your benefit again on your next home instead? Start here: Can you use your VA loan again while you still own a home?

Frequently asked questions

What are the VA cash out refinance requirements?

VA lists three: a Certificate of Eligibility, meeting VA's and your lender's standards for credit, income, and other requirements, and living in the home you are refinancing.

Can I refinance a conventional loan into a VA loan?

Yes. VA says a cash-out refinance can be used to refinance a non-VA loan into a VA-backed loan.

How much is the funding fee on a VA cash-out refinance?

VA lists 2.15% for first-time use and 3.3% after first use. Borrowers who receive VA disability compensation, and a few other groups, are exempt.

Does a VA cash-out refinance need an appraisal?

Yes. VA says the lender will order a home appraisal to assess your home's value.

Do I have to live in the home for a VA cash-out refinance?

VA's requirement is that you plan to live in the home you are refinancing. For a home you used to live in, ask your lender about an IRRRL instead.

Weighing whether to refinance, sell, or move up in Northwest Las Vegas? Send me what you are thinking and I will help you lay out the options before you talk to a lender. You can find me at homesbyjrod.com.

The VA rules and fees in this article come from VA.gov and were checked on October 3, 2026. Rules can change, so confirm current details with your lender. This is general education, not financial or legal advice.