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The VA cash-out refinance is a type of mortgage refinancing program specifically for military members, veterans and spouses. A VA cash-refinance lets you tap into your home’s equity and potentially secure a lower rate at the same time. But it’s not free: You still need to pay closing costs and the VA Funding Fee.
Here’s a closer look at how the VA cash-out refinance works, who qualifies and how to apply.
A VA cash-out refinance is a refinancing program that allows you to refinance any type of mortgage — not just VA loans — with a new VA-backed loan for an amount that’s greater than the old loan. The difference between the old and new loan is the “cash out” portion, which can be used for any purpose.
You may qualify for the program if you’re:
To learn more about how VA loans work and if you might qualify, see our guide on VA loans.
VA loans have benefits you won’t find with other types of loans. Along with offering competitive interest rates, VA loans:
With a VA cash-out refinance, you can refinance any type of loan to a VA loan — you don’t need to already have a VA loan to qualify for the program.
As with traditional mortgage refinancing, you’ll pay closing costs and fees with a VA mortgage refinance. You’ll also be on the hook for the VA Funding Fee, which is unique to the VA mortgage program.
Be prepared to pay:
However, if you meet your lender’s loan-to-value requirements, these costs can often be rolled into your mortgage so you don’t need to pay them upfront.
While guidelines vary by lender, here’s a list of the general requirements to get a VA cash-out refinance:
Keep in mind that every lender is different, and you may be asked to provide additional information and documents during the underwriting process.
VA loans are available in 15-year and 30-year terms. As of June 2022, interest rates for VA cash-out refinances are sitting between the low 5% range to the high 6% range, depending on your credit score. Here’s a breakdown of typical mortgage rates by credit score.
Mortgage APRs (June 2022)
| FICO score | APR |
|---|---|
| 760 – 850 | 5.137% |
| 700 – 759 | 5.359% |
| 680 – 699 | 5.536% |
| 660 – 679 | 5.750% |
| 640 – 659 | 6.180% |
| 620-639 | 6.726% |
The VA program doesn’t require a minimum credit score for borrowers, but most lenders like to see a minimum score of at least 620. Some lenders may go lower, but you’ll likely have to prove your financial soundness.
Here are four steps to get a VA cash-out refinance:
Examples of when VA cash-out refinance loan may make good financial sense are when you:
But if you’re just after cash from your equity, a VA cash-out refinance mortgage isn’t necessary for you to achieve this. You can access your home’s equity with a home equity loan, a HELOC or conventional mortgage refinance instead.
Home equity loans and HELOCs can be significantly cheaper than a refinance, since many lenders don’t charge closing costs and only minimal fees. And choosing a conventional refinance over a VA refinance means you don’t have to pay the VA Funding Fee.
Select See rates to view your personalized rates and narrow down your refinancing options.
You may have heard of VA interest rate reduction refinance loan (IRRRL), aka the “VA streamline refinance.” While both the IRRRL and VA cash-out refinance program are both refinancing programs, there are some important differences:
| VA cash-out refinance | IRRRL | |
|---|---|---|
| Best for: | Borrowers who primarily want to get cash out of their home’s equity – and potentially secure a lower rate at the same time. | Borrowers who want to secure a lower interest rate and/or change the terms on their mortgage to reduce monthly payments. |
| Can I get cash out? | Yes. | No. |
| Can I refinance my conventional mortgage? | Yes. You can refinance any type of mortgage with this program. | No. This program is only available to borrowers with an existing VA loan. |
A VA cash-out isn’t the only option to secure a lower rate or access cash for a range of needs, including debt consolidation, home improvements or education. Here are nine alternatives:
A VA cash-out mortgage refinance may make sense if you want to get money out and secure a lower rate at the same time. But it may be more expensive than a conventional mortgage refinance due to the VA Funding Fee. And if you only want to access cash from your equity, a home equity loan or HELOC could be a cheaper alternative.
Learn more about cash-out refinancing and if it’s the right choice for you.
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