Arizona VA Cash-OutRefinance
Replace your current loan with a bigger one and take the difference in cash — up to 100% of your home's value, with no monthly mortgage insurance. A refinance benefit earned through service.
What Is a VA Cash-Out Refinance?
Mortgage explanations and FAQs by Michael George.
A VA cash-out refinance replaces your current mortgage with a bigger one and hands you the difference in cash — up to 100% of your home's value.
Here's what that means in practice. You already own a home, and you've been paying it down while its value climbed. A VA-backed cash-out refinance lets you replace your current loan with a new one under different terms and take a slice of that equity out as cash at closing. It may be the most flexible refinance program available to Arizona Veterans, and it exists because you served.
It does two jobs at once. VA lists two main reasons Veterans use this loan: taking cash from your equity to pay off debt, pay for school, make home improvements, or take care of other needs — and refinancing a non-VA loan into a VA-backed one. You can do both in a single closing: leave the loan with monthly mortgage insurance behind and walk away with cash.
The headline number is 100%. Federal rule caps VA refinancing loans at 100% of your home's reasonable value under 38 CFR 36.4306 — compare that with conventional cash-out loans, which generally stop near 80% of the home's value. Those extra points of equity access are often the difference between solving the problem and almost solving it. Your lender confirms what you qualify for using the appraisal, your credit, and your income.
And there's no monthly mortgage insurance to budget for, at any loan amount. VA-backed loans don't carry PMI — instead there's a one-time VA funding fee: 2.15% of the loan amount on a first use, 3.3% afterward, and you can finance it into the loan rather than pay it in cash. The section below shows the full math.
Now the honest fine print. You'll need a valid Certificate of Eligibility. You'll meet VA's and your lender's standards for credit and income — in practice, your lender sets the score requirement. And you'll live in the home you're refinancing; this is a primary-residence benefit. VA also reminds borrowers that closing costs "can add up to thousands of dollars," so run the whole math before you sign, not just the new payment.
Curious what your equity could do? Call us at (480) 613-8040 or keep reading below — we'll run your numbers with you, no pressure. We'd rather you take our math to another lender than take a loan that's wrong for you.
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The funding fee, in detail. A cash-out refinance costs 2.15% of the loan amount on your first use of the benefit and 3.3% after that — and unlike purchase loans, the rate doesn't change with your down payment. On a $300,000 loan, a first-use fee works out to $6,450, paid in cash or rolled into the loan amount. Some Veterans pay none at all. You're exempt if you receive VA compensation for a service-connected disability (or you're eligible for it but receive retirement or active-duty pay instead), if you're a surviving spouse receiving Dependency and Indemnity Compensation, if you have a proposed or memorandum rating before closing, or — for active-duty members — if you provide Purple Heart evidence on or before your closing date. Awarded compensation later? If its effective date is retroactive to before your closing, you can request a refund of the fee.
Sellers and closing costs. VA lets sellers or builders credit some or all of your closing costs, and it doesn't cap those closing-cost credits. It does cap other seller concessions — anything of value added to the deal, like paying your funding fee or paying off your debts — at 4% of the home's reasonable value, the number the VA Notice of Value establishes after the appraisal.
What the process looks like. You'll apply through a private lender — VA guarantees the loan, it doesn't lend the money. You can borrow up to the Fannie Mae/Freddie Mac conforming loan limit on a no-down-payment loan in most areas (more in some high-cost counties, and more still if you make a down payment). You'll show your Certificate of Eligibility, hand over 30 days of paycheck stubs and two years of W-2s (many lenders also want two years of tax returns), and the lender orders an appraisal. Plan on several weeks from application to funding.
Already have a VA loan? Compare before you commit. The VA Streamline (IRRRL) refinances a VA loan you already have into a lower rate with a lighter process and a 0.5% funding fee — but it can't take cash out. If you want cash and a better rate, the cash-out refinance is the tool; if you only want a better rate, the IRRRL is usually the cheaper path. Our VA Streamline guide walks through it.
One warning worth repeating. VA itself cautions Veterans about refinance offers that promise skipped payments or rates that sound too good to be true — those can be signs of a misleading offer. A legitimate lender shows you the full picture: new rate, new term, new balance, all fees, and how long the savings take to cover the costs. If someone won't put those numbers in writing, walk away.
The Power of Your VA Entitlement
A VA cash-out refinance does things other cash-out loans can't.
Up to 100% of Value
Federal rule lets VA refinancing reach 100% of your home's reasonable value — while conventional cash-out loans generally stop near 80%. That gap is real equity you can actually use.
No Monthly PMI
VA loans don't require monthly mortgage insurance — at any loan amount. A conventional cash-out above 80% LTV typically adds PMI on top of the bigger balance; VA replaces it with a one-time funding fee.
Refinance a Non-VA Loan
You don't need a VA loan today. The cash-out program exists partly to move conventional and FHA loans into VA-backed terms — one closing for the loan change and the cash.
One Funding Fee. No Monthly PMI.
The VA funding fee keeps the program running for taxpayers — here's exactly what it costs on a cash-out.
| VA Cash-Out Funding Fee | Rate |
|---|---|
| First use of the benefit | 2.15% |
| After first use | 3.3% |
Refinancing rates don't change based on down payment. The fee is one-time and can be financed into the loan. Source: va.gov funding fee tables
Example: the fee in dollars
On a $300,000 loan, a first-use funding fee of 2.15% is $6,450 — paid in cash at closing or rolled into the loan amount.
This is arithmetic on VA's published rate, shown as an example — your fee depends on your actual loan amount and benefit history.
Who Pays $0
- Receiving VA compensation for a service-connected disability
- Eligible for compensation but receiving retirement or active-duty pay instead
- Surviving spouse receiving Dependency and Indemnity Compensation (DIC)
- Proposed or memorandum rating before the loan closing date
- Active-duty member providing Purple Heart evidence by closing
Awarded compensation later with an effective date before your closing? The fee can be refunded. Details on VA's funding fee page.
VA Cash-Out Refinance FAQ
How much cash can I take out with a VA cash-out refinance?
Federal rule caps VA refinancing loans at 100% of your home's reasonable value — the appraised value the VA Notice of Value establishes (38 CFR 36.4306). That leads the market: conventional cash-out loans generally stop near 80% of the home's value. How much you can actually take depends on your equity, the appraisal, and your lender's credit and income standards.
What is the VA funding fee for a cash-out refinance?
The funding fee on a VA cash-out refinance is 2.15% of the loan amount on your first use and 3.3% after that — and unlike purchase loans, the rate doesn't change based on your down payment. It's a one-time fee, and you can pay it in cash or finance it into the loan. VA's funding fee page has the current tables.
Who is exempt from the VA funding fee?
You pay no funding fee if any of these is true for you: you receive VA compensation for a service-connected disability; you're eligible for compensation but receive retirement or active-duty pay instead; you're a surviving spouse receiving Dependency and Indemnity Compensation (DIC); you have a proposed or memorandum rating before your loan closing date; or you're an active-duty service member who provides Purple Heart evidence on or before closing. The full list is on VA's funding fee page.
Can I get the funding fee refunded later?
Yes. If you're later awarded VA compensation for a service-connected disability and the effective date of that compensation is retroactive to before your loan closing date, you can request a refund of the funding fee through your VA regional loan center. A rating that arrives only after closing doesn't qualify. VA explains funding fee refunds here.
How is a VA cash-out refinance different from the VA Streamline (IRRRL)?
They do different jobs. The cash-out refinance replaces your current loan — VA or non-VA — with a bigger one and gives you the difference in cash. The VA Streamline (IRRRL) only refinances a VA loan you already have into a lower rate or a different term; it can't take cash out, but it carries a lighter process and a 0.5% funding fee. Details on VA's IRRRL page.
Can I refinance a conventional or FHA loan into a VA loan?
Yes — refinancing a non-VA loan into a VA-backed loan is one of the two main uses VA lists for the cash-out program. Homeowners use it to leave loans with monthly mortgage insurance behind. You'll need a Certificate of Eligibility and will need to meet VA's and your lender's credit and income standards. VA's cash-out page lists the requirements.
What can I use the cash for?
Anything. VA lists paying off debt, paying for school, making home improvements, and taking care of other needs — the money is yours once the loan funds. The honest caveat: you're borrowing against your home, so the uses that age best are the ones that outlast the loan, like high-interest debt, lasting improvements, or education. VA's cash-out page.
What do I need to qualify?
Three things, straight from VA: you qualify for a VA home loan Certificate of Eligibility; you meet VA's and your lender's standards for credit, income, and any other requirements (in practice, your lender sets the credit score); and you'll live in the home you're refinancing. VA's eligibility list.
Will I pay monthly mortgage insurance?
No. VA-backed loans don't require monthly mortgage insurance at any loan-to-value — that's a core part of the benefit. Instead there's the one-time VA funding fee (2.15% on a first-use cash-out), which helps keep the program affordable for taxpayers and can be financed into the loan. VA's funding fee page.
Can the seller pay my closing costs on a cash-out refinance?
VA doesn't limit credits that cover a loan's closing costs, so a seller or builder can offer to cover some or all of them. VA does cap other seller concessions — anything of value added to the transaction, such as paying your funding fee or paying off debts — at 4% of the home's reasonable value. VA's closing costs section.
How do I spot a misleading refinance offer?
VA warns Veterans directly: be careful with offers claiming you can skip payments or lock rates that sound too good to be true — those can be signs of a misleading offer. A legitimate lender puts the full picture in writing: rate, term, new balance, fees, and how long savings take to cover costs. Start with VA and CFPB's refinancing warning, and compare several lenders.
Ready to Put Your Equity to Work?
Our VA lending specialists will run your numbers, explain the funding fee, and compare the cash-out against your IRRRL options — fast, simple, and respectful of your service.