If you own a home and have served in the military, you may be sitting on a financial resource some people overlook: home equity. The NewDay 100 VA Cash Out Loan lets eligible Veterans borrow up to 100% of their home's appraised value, converting that equity into cash they can use for virtually any purpose. For Veterans carrying high-interest debt, facing large expenses, or simply looking to strengthen their financial position, this loan is one of the most powerful tools the VA benefit makes possible.
What Is a VA Cash Out Refinance?
A VA cash out refinance replaces your existing mortgage with a new, larger VA-backed loan. The difference between what you owe and your home's current value becomes cash in your hands at closing. According to the VA's official cash-out refinance page, borrowers can use the funds to pay off debt, cover education costs, make home improvements, or address other financial needs.
What makes the VA version of this loan stand out is the loan-to-value limit. Most lenders cap cash out refinances well below a home's full value. The VA program allows eligible borrowers to refinance up to 100% of their home's appraised value, and NewDay USA's NewDay 100 loan is built specifically around that ceiling.
The VA also does not restrict how borrowers use the proceeds. Once the existing mortgage is paid off, the remaining cash is yours to use without a letter of explanation or usage restrictions.
Who Qualifies for the NewDay 100 VA Cash Out Loan?
To be eligible, borrowers must meet the standard requirements for a VA-backed loan. According to the VA's eligibility guidelines, that means meeting minimum service requirements based on your period and type of service, which vary for active duty, Veterans, National Guard members, and Reservists.
The loan also follows credit underwriting standards. That includes:
- A valid Certificate of Eligibility (COE) showing entitlement
- Satisfactory credit
- Stable, verifiable income sufficient to support repayment
- Acceptable debt-to-income ratio, with residual income evaluated against VA regional benchmarks
- Occupancy in the home being refinanced
You do not need an existing VA loan to qualify. The VA cash out refinance is available to Veterans refinancing out of conventional, FHA, or any other loan type, as well as those already in a VA loan.
The 100% LTV Advantage
Most cash out refinance programs stop at 80% or 90% of a home's value. On a home worth $350,000 with $200,000 still owed, an 80% Loan-to-Value (LTV) cap would limit the new loan to $280,000, leaving only $80,000 available before costs. At 100% LTV, that same borrower could access up to $150,000 before costs.
For Veterans who have built equity through years of mortgage payments or home appreciation, that difference is meaningful. The NewDay 100 is designed for borrowers who want to put all of that equity to work.
One important detail: closing costs, including the VA funding fee if financed, are included in the loan amount. Per VA cash-out refinance guidelines, the combined total may not exceed 100% of the appraised value.
The VA Funding Fee
Most VA borrowers are required to pay a one-time VA funding fee at closing, though it can be rolled into the loan. For a cash out refinance, the VA sets the fee at 2.15% of the loan amount for first-time VA loan users and 3.3% for those who have used the benefit before.
Some Veterans are completely exempt from the funding fee. Exemptions apply to Veterans receiving compensation for a service-connected disability, surviving spouses receiving Dependency and Indemnity Compensation, and active-duty service members who have received a Purple Heart. If you believe you may be exempt, this is worth confirming before your loan closes, as the exemption represents real savings.
The funding fee does not apply to private mortgage insurance and does not recur monthly. It is a one-time cost, and for Veterans who qualify for the exemption, it disappears entirely.
Net Tangible Benefit Requirement
The VA does not allow lenders to originate a cash out refinance that does not provide clear financial value to the borrower. Per VA refinancing loan guidelines, every VA cash out refinance must meet a net tangible benefit test. That requirement is satisfied when the new loan accomplishes at least one of the following:
- Eliminates private mortgage insurance
- Reduces the loan term
- Lowers the interest rate
- Reduces the monthly principal and interest payment
- Increases the Veteran's residual income
- New Loan is less than 90% LTV
- Refinance an Adjustable Rate Mortgage (ARM)
This rule exists to protect Veterans from being steered into refinances that cost more than they save. It is a built-in consumer protection, and one of the reasons working with a lender that deeply understands VA guidelines matters.
What Veterans Use the Cash For
Because the VA places no restrictions on how cash out proceeds are used, Veterans have wide flexibility in how they put the funds to work. Common uses include:
- Paying off high-interest credit card debt or personal loans
- Consolidating auto loans into a lower-rate mortgage
- Funding home renovations or major repairs
- Covering education expenses for themselves or family members
- Building an emergency fund or cash reserve
It is worth noting that consolidating shorter-term debt into a mortgage extends the repayment period, which can increase the total amount paid over time even when the monthly payment drops. A qualified financial advisor can help assess whether that tradeoff makes sense for your situation.
The Appraisal Requirement
A new home appraisal is required for all VA cash out refinances. This is how the lender and the VA establish the current market value of the property, which determines how much you can borrow. NewDay USA covers the appraisal cost upfront, meaning there is no out-of-pocket expense to apply.
The appraisal also serves as a check on the loan amount. Because the VA's maximum loan-to-value is tied to appraised value rather than purchase price or tax assessment, a strong appraisal directly expands what you can access. In markets where home values have risen significantly since purchase, many Veterans find they have more equity than they expected.
Loan Seasoning for VA-to-VA Refinances
If you are currently in a VA loan and want to refinance into a new VA cash out loan, there is a seasoning requirement to be aware of. The existing VA loan must have been open long enough to satisfy the minimum seasoning period before the new loan can close. This requirement does not apply if you are refinancing out of a non-VA loan into a VA cash out loan for the first time.
Documents You Will Need
Gathering paperwork before you apply keeps the process moving. Most borrowers will need:
- Certificate of Eligibility (NewDay USA can pull this directly in most cases)
- Two years of W-2s or federal tax returns
- Recent pay stubs or, for active duty, a current Leave and Earnings Statement
- Bank statements for asset verification
- VA disability award letter, if applicable for funding fee exemption
The cleaner and more complete the file, the faster underwriting can move.
FAQs
Can I use a VA cash out refinance if I currently have a conventional loan?
Yes. The VA cash out refinance is available to eligible Veterans regardless of what type of loan is currently on the property. Refinancing from a conventional or FHA loan into a VA cash out loan is one of the most common use cases, and it eliminates the need for private mortgage insurance going forward.
Does borrowing 100% of my home's value affect my VA entitlement?
Yes. A cash out refinance ties up a portion of your VA entitlement, specifically the VA guaranty on the new loan, which can affect your ability to use the VA loan benefit for a future home purchase without a down payment. If you plan to buy another home with a VA loan in the future, discuss the entitlement implications with your loan specialist before closing.
What is the funding fee for a VA cash out refinance, and can it be waived?
The fee is 2.15% for first-time VA loan users and 3.3% for those who have previously used the benefit. It can be rolled into the loan so there is no out-of-pocket cost at closing. Veterans receiving compensation for a service-connected disability are fully exempt from the fee. Surviving spouses receiving DIC and certain active-duty Purple Heart recipients are also exempt.
Is there a minimum credit score required for the NewDay 100?
The VA does not set a minimum credit score for cash out refinances. NewDay USA evaluates each application holistically, including credit history, income stability, residual income, and overall financial picture. Credit challenges do not automatically disqualify an applicant.
How long does the process take from application to closing?
Timelines vary based on file complexity and appraisal scheduling, but purchase and cash out loans typically close within 30 to 45 days. Submitting a complete document package at the start helps avoid delays.
