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Active duty and veterans who have served their country and used VA home loan to purchase a home may still find themselves struggling to afford their mortgage or other costly expenses.

But eligible homeowners who have a VA home loan could have the answer to their financial struggles right in front of them—VA cash-out refinance.

We’ll answer the top five questions commonly asked about VA cash-out refinances, so you feel confident to apply, save on your monthly mortgage, or fund a big expense.

What are the basics of a VA cash-out refinance?

A VA cash-out refinance allows eligible homeowners to refinance their existing mortgage and receive a lump-sum cash payout from their home’s equity.

Eligible service members who currently hold a VA mortgage, such as veterans, active-duty, National Guard, Reserve, and qualifying spouses, can refinance their home for up to 100% of the appraised value.

To qualify for a VA cash-out refinance, veterans must have served at least 90 days during wartime or 181 days during peacetime or have six years of service in the National Guard or Reserves.

Your lender or the Department of Veterans Affairs (VA) can confirm your eligibility with a Certificate of Eligibility (also referred to as COE).

A COE will determine eligibility for VA home loan benefits. To simplify the process, your lender can typically request a COE on your behalf.

You’ll also need to have enough equity in your home to support the cash you want to borrow. The VA typically allows you to borrow up to 100% of your home’s appraised value minus your current mortgage balance.

For example, if your home is appraised at $300,000, and your existing mortgage balance is $150,000, you could access up to $150,000 in cash.

What are the requirements for a VA cash-out refinance?

On top of meeting the VA requirements for a cash-out refinance, you’ll also have to complete your lender-specified requirements. This can include meeting their credit score, income, and DTI requirements.

VA loans tend to offer more flexible credit requirements compared to conventional loans. While there is no minimum credit score requirements for VA loans, a higher score increases a lender’s confidence that you will make payments on time and may help you qualify for a lower mortgage interest rate.

Your DTI will be assessed to ensure you can take on this loan. Lenders will look at your monthly gross income and how much of your income is going towards your current monthly debt payments.

It’s essential to consider your financial situation and goals when pursuing a VA Cash-Out refinance. Make sure to work with a VA-approved lender to help you make an informed decision.

What can you use the cash for?

If approved for a VA cash-out refinance, you can receive the cash once you sign all necessary paperwork and close on your refinanced mortgage.

Common things a VA cash out can help with include (but aren’t limited to):

  • Debt consolidation
  • Home improvements
  • Savings

Utilizing your cash for these scenarios can be a smart approach to elevate your current financial situation and cushion yourself for any unexpected financial challenges.

Typically, you’ll want to have enough in your emergency savings to cover three to six months of expenses. If you don’t have emergency savings, you can use the cash-out funds to start one.

Making home improvements with the cash from a VA cash-out refinance can help to add value to your home. You could update and remodel a room, finish a basement, or update a kitchen, for example.

How you utilize your cash-out funds is entirely up to you. However, it would be best to understand how much cash is needed so you know how much you’ll need to take out.

How much cash can you access?

How much equity that you’re approved to cash out for depends on several factors, including the current appraised value of your home, your existing mortgage balance, and your lender’s guidelines.

The value of your home will depend on the current market, any renovations or improvements, and the economy.

One way to find out the value of your home is by speaking with a local appraiser. They’ll assess your home’s condition, location, and other homes nearby to determine your home’s market value.

You could also meet with a real estate agent to discuss what your home would sell for and how much comparable homes are going for.

Real estate websites make it easy to see what the homes in your area are selling for and how much your home may be worth. However, it’s important to note that these are just estimates, and the numbers may vary during the loan process.

Is a VA cash-out refinance a good idea?

Whether you should get a VA cash-out refinance depends on your financial goals, circumstances, and needs.

Determine why you want to refinance and ensure your goals align with the benefits of a cash-out refinance.

Consider what the funds will be for and compare it to your current mortgage. Make sure that the cash helps improve your financial stability in the long run rather than costing more.

Use a refinance calculator to estimate how much you could save on your payments with a refinance and when you can expect to see those savings come to fruition.

You should also assess your current home mortgage and how much equity you have. Ask yourself if you have enough equity to meet your cash-out needs, and if so, how much of your home equity do you want to use?

Review interest rates for a VA cash-out refinance with a qualifying lender and compare it to your current home mortgage. If the interest rate is lower than what you’re currently paying, refinancing may be a good decision because you will save more money on your monthly mortgage payments with lower rates.

The Federal Savings Bank can serve you best with a VA refinance

Adapting in a rising interest rate market can be tricky – especially when it comes to navigating your finances for unforeseen expenses. Consider applying for a VA cash-out refinance to make your monthly mortgage payments more manageable.

Homeownership can get pricey but cashing out your hard-earned equity could be the answer you’ve needed.

Work with one of our Veteran Lending Specialists who understand the VA loan process and can advise you in making the right decision.

The Federal Savings Bank is veteran-owned and operated and we understand the financial burdens that many veterans face. We pride ourselves on helping fellow service members achieve their homeownership and financial goals.

For great rates and even better service, apply for a VA cash-out refinance today with The Federal Savings Bank.


Subject to credit approval. Terms and conditions may apply. Subject to VA eligibility requirements. Property insurance is required on all loans secured by property.

This information is intended for educational purposes only. Products and interest rates subject to change without notice. Loan products are subject to credit approval and include terms and conditions, fees and other costs. Terms and conditions may apply. Property insurance is required on all loans secured by property. VA loan products are subject to VA eligibility requirements. Adjustable Rate Mortgage (ARM) interest rates and monthly payment are subject to adjustment. Upon submission of a full application, a mortgage banker will review and provide you with the terms, conditions, disclosures, and additional details on the interest rates that apply to you individual situation.