HomeAbout UsNewDay USA HubVA Cash-Out Refinance: How to Turn Your Home Equity Into Cash

VA Cash-Out Refinance: How to Turn Your Home Equity Into Cash

Of the ways Veterans can refinance a home, only one lets you draw cash from the equity you've built.

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By clicking “Submit” below, you provide your electronic signature and expressly consent to receive telephonic sales and marketing calls, texts, and emails from or on behalf of NewDay USA—including calls and texts made using an autodialer, an automated system for the selection or dialing of telephone numbers, or an artificial or prerecorded voice—to the number/address you provided above. Your consent is not required to obtain a mortgage or do business with us.

By clicking “Submit”, you also agree to our Privacy Policy and Terms with an Arbitration Agreement and Class Action Waiver.

If you do not wish to receive automated marketing calls or texts, please do not submit this form and instead call us at 800-405-4187 to start or complete your loan request.

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Written by: Jorgen Kendrick

VP of Underwriting|NMLS 1956178

A VA cash-out refinance replaces your current mortgage, VA or otherwise, with a new VA-backed loan for more than you currently owe, and puts the difference in your pocket as cash. Unlike a VA Interest Rate Reduction Refinance Loan (IRRRL), which can only lower your rate or switch your loan type, a cash-out refinance is the one VA option built specifically to put your home's equity to work.

If a lower rate on an existing VA loan is the goal, learn more about h ow to refinance your VA loan.

Who Is Eligible for a VA Cash-Out Refinance

Eligibility follows the same service requirements as a standard VA purchase loan: generally at least 90 continuous days of active duty during wartime, 181 days during peacetime, or six years of qualifying service in the National Guard or Reserve, along with occupying the home as a primary residence. There's no requirement to already have a VA loan.

Veterans currently in a conventional, FHA, or USDA mortgage can refinance directly into a VA cash-out loan, provided they meet the service and property requirements. Each lender layers its own credit and income standards on top of the VA's rules, so a decline from one lender doesn't mean every lender will say no.

How the Process Differs From an IRRRL

A cash-out refinance is fully underwritten. That means a new VA appraisal, a review of income and credit, and a Net Tangible Benefit test confirming the refinance genuinely improves the borrower's financial position, whether through a lower rate, a shorter term, or the equity being accessed. None of that paperwork is optional the way it often is for a rate-reduction refinance, so the timeline typically runs longer than a Streamline refinance would take.

How Much You Can Access

VA program rules allow a cash-out refinance up to 100% of a home's appraised value. Many individual lenders still cap their own cash-out loans at 90% to 95% loan-to-value as a risk overlay, even though the VA itself doesn't require it.

What the Money Can Be Used For

There's no restriction on how the cash gets spent. Common uses include home improvements, covering education costs, building an emergency fund, or consolidating higher-interest debt like credit cards and auto loans. However, rolling unsecured debt into a mortgage can lower the monthly payment, but it stretches that debt out over the life of the home loan and secures it against the house instead of leaving it unsecured.

Talk it through with a financial advisor before treating a cash-out refinance as a debt consolidation shortcut.

Where NewDay USA Fits In

NewDay USA is a nationwide lender built specifically around VA loans, including VA cash-out refinances, for Veterans, active-duty service members, and their families. VA lending is the core of what the company does rather than one product line among several, and loan officers here work daily with details specific to VA cash-out files, entitlement history, disability compensation counted as income, or a prior VA loan assumption.

FAQs

Do I need to already have a VA loan to get a VA cash-out refinance?

No. A conventional, FHA, or USDA mortgage can be refinanced directly into a VA cash-out loan as long as the standard VA service and occupancy requirements are met.

Is a VA cash-out refinance available in every state?

In most states, yes. Texas is the notable exception, since state constitutional restrictions on cash-out refinancing apply there regardless of loan type, including VA loans.

What's the difference between a VA cash-out refinance and an IRRRL?

An IRRRL can only lower the rate or convert an adjustable rate to a fixed one, and it skips the new appraisal and income verification most refinances require. A cash-out refinance is fully underwritten and is the only VA refinance option that allows drawing actual cash from home equity.

Will a VA cash-out refinance change my monthly payment?

It depends on the new rate, term, and how much cash is taken out. Borrowing more against the same home while extending the loan term can lower the monthly payment even with a larger balance, but it will generally increase the total interest paid over the life of the loan.

About The AuthorJorgen Kendrick