VA Cash-Out Refinance Rates 2026: What to Expect
VA cash-out refinance rates run higher than purchase rates, and the gap widens as LTV increases. On top of the rate, the VA funding fee adds 2.15% for first-use borrowers and 3.3% for subsequent use, rolled directly into the loan balance. Credit score, LTV tier, and lender overlays drive the actual rate more than any national average. Borrowers with a lower credit score should review how lender overlays affect a bad-credit VA cash-out refinance before requesting quotes.
Next step:Check Your VA Loan Eligibility
Cash-Out Funding Fee Tiers
- Borrowers whose VA benefit use qualifies as first use owe a 2.15% funding fee on the loan amount, which can be financed into the new balance. [VA.gov]
- Borrowers whose VA benefit use qualifies as subsequent use pay 3.3% in funding fees, nearly a full percentage point above the first-use tier. [VA.gov]
- Veterans who meet VA’s exemption criteria—including those receiving service-connected disability compensation, eligible surviving spouses, and qualifying active-duty Purple Heart recipients—are exempt from the funding fee. [VA.gov]
First-Use vs. Subsequent-Use Costs
- A first-time cash-out refinance carries a 2.15% funding fee, which most borrowers finance into the new loan balance. [VA.gov]
- Subsequent-use borrowers pay 3.3% instead, so a second cash-out refinance costs noticeably more before rate pricing even enters the picture. [VA.gov]
- No private mortgage insurance on a VA cash-out refinance lowers the monthly payment compared to conventional alternatives, helping offset the upfront funding fee over time. [VA.gov]
Funding Fee Exemptions
- A borrower who meets VA’s exemption criteria skips the entire funding fee regardless of first- or subsequent-use status, keeping that equity available at closing instead of rolling it into the loan. [VA.gov]
- Subsequent-use borrowers face a 3.3% fee without the exemption, so the waiver matters even more on a second or later refi. [VA.gov]
- The exemption must appear on the Certificate of Eligibility before the loan closes, so Veterans should confirm their disability rating is reflected well before funding. [VA.gov]
Real-World Cash-Out Refinance Costs
- VA cash-out refinance loan amounts depend on the borrower’s entitlement, property value, and lender limits. The conforming loan limit affects guaranty calculations, but it is not a simple maximum loan amount. A full-entitlement borrower may finance up to 100% of VA reasonable value subject to lender and program requirements. [VA.gov]
Top questions before you dig in
Is a VA cash-out refinance a good idea?
It depends on what you need the cash for. VA cash-out loans carry no private mortgage insurance, which is a real advantage. However, the 2.15% funding fee on first use adds to closing costs, so the refinance only pencils out when rate savings or debt consolidation gains outweigh what you pay to close.
What VA cash-out refinance rates are lenders offering right now?
VA cash-out refinance rates move daily and price higher than purchase or rate-and-term refinance rates because lenders account for the increased risk of a larger loan balance. Credit score, loan-to-value ratio, and the lender itself all affect pricing, so comparing quotes from multiple lenders the same week gives the clearest picture.
How much higher are VA cash-out refinance rates compared to regular VA purchase rates?
VA cash-out refinance rates run higher than purchase rates because lenders price added risk into equity withdrawals. The gap depends on credit score, loan-to-value ratio, and each lender’s pricing model, so requesting quotes from multiple lenders on the same day is the clearest way to measure the actual spread.
The Bottom Line Up Front
VA cash-out refinance rates sit above purchase and streamline rates because lenders price the added risk of equity extraction into the spread. The rate alone does not tell the full story. The funding fee at 2.15% on first use, credit-score-driven pricing tiers, and the gap between a cash-out rate and a no-cost IRRRL determine whether pulling equity out of the property makes financial sense.
Every lender prices cash-out refinances differently, and the spread above a rate-and-term refinance shifts based on credit score, loan-to-value ratio, and loan size. That funding fee climbs to 3.3% on subsequent use, so repeat borrowers face a steeper upfront cost before the first payment is due. Veterans who meet VA’s exemption criteria pay no funding fee at all, which shifts the break-even math by thousands of dollars. Exempt categories include Veterans receiving service-connected disability compensation, eligible DIC surviving spouses, qualifying pre-discharge ratings, and active-duty Purple Heart recipients. The fee, the lender spread, and the borrower’s credit profile all shape whether the refinance pencils out.
- Cash-out refinance rates carry a higher spread than rate-and-term or IRRRL rates from the same lender.
- The VA funding fee is 2.15% on first use and 3.3% on subsequent use for cash-out loans.
- Credit score, loan-to-value ratio, and loan size all affect the rate spread a lender applies.
- Veterans who meet VA’s exemption criteria are exempt from the funding fee. Qualifying categories include Veterans receiving service-connected disability compensation, certain Veterans entitled to but receiving retirement or active-duty pay, eligible DIC surviving spouses, and active-duty Purple Heart recipients.
- VA cash-out refinances carry no private mortgage insurance regardless of the loan-to-value ratio.
What VA Cash-Out Refinance Rates Look Like Right Now
Note: No verified live VA cash-out refinance rate table is available on this page. The factors below affect your quoted rate. Compare at least three lender offers for the same loan amount, term, and lock period to find your actual rate.
VA cash-out refinance rates run higher than purchase rates quoted on the same day from the same lender. Cash-out carries a premium. Lenders price in additional risk when a borrower pulls equity out of the home and increases the outstanding loan balance. The size of that spread moves based on credit score, loan-to-value ratio, whether the VA entitlement has been used before, and the occupancy type of the property.
| Pricing Factor | Direction | Borrower Impact |
|---|---|---|
| Credit score | Lower score = wider spread | Loan-level pricing adjustments raise the rate when the mid score drops below top-tier bands |
| Loan-to-value ratio | Higher LTV = wider spread | Pulling more equity increases lender exposure and pushes the quoted rate higher |
| First use vs subsequent use of VA benefit | Subsequent = higher cost | “First use” refers to prior VA home loan benefit use, not first cash-out transaction. A borrower refinancing an existing VA purchase loan typically qualifies as subsequent use (3.3% unless exempt). Ask the lender to verify benefit-use status |
| Occupancy type | Non-primary = steeper adjustment | Primary-residence cash-outs get the tightest pricing, while investment properties face the widest gaps |
| Discount points vs lender credits | Borrower choice | Buying points lowers the note rate in exchange for upfront cost, and lender credits work in reverse |
| Market conditions | Varies daily | Treasury yields and secondary-market demand shift all cash-out rates alongside the broader mortgage market |
The only reliable way to know where a cash-out rate falls on a given day is to pull a Loan Estimate from more than one lender and compare the APR rather than just the note rate. APR folds in the funding fee and other finance charges, so it reflects the true annual cost of the loan. Two lenders quoting identical note rates can deliver meaningfully different APRs once discount points and origination fees enter the picture. Rate-lock timing matters too, since mortgage pricing moves with Treasury yields and can shift between application and closing.
How Cash-Out Rates Compare to Purchase Rates
Multiple pricing layers separate a cash-out refinance rate from a purchase rate, and each one moves independently. Loan-to-value ratio, credit tier, occupancy type, and the total loan amount all shift the spread in their own direction, so two borrowers pulling different amounts of equity from the same property get meaningfully different pricing. The quoted rate is just the start.
| Pricing Layer | Purchase Loan | Cash-Out Refinance |
|---|---|---|
| Base rate | Market acquisition rate | Higher starting point, reflecting equity withdrawal risk |
| LTV adjustment | Improves with larger down payment | Worsens as more equity is withdrawn |
| Funding fee | Scales with down payment tier | Flat, no reduction for equity retained |
| Closing costs | Seller concessions can offset | Borrower absorbs or finances into the new balance |
| Credit score impact | Standard tiered pricing | Same tiers applied on a higher base |
Strong credit and a conservative equity withdrawal keep the spread over purchase pricing narrow. At a lower credit tier with more equity pulled out, every layer in the table widens and the costs compound. The funding fee does not shrink with equity retained. Closing costs financed into the new balance increase both the loan amount and the monthly payment. The accurate comparison measures the new total monthly obligation against the existing payment plus whatever the cash proceeds would otherwise cost to borrow.
What Drives Your Cash-Out Refinance Rate
Four pricing layers control the cash-out refinance rate a lender quotes: credit score band, loan-to-value ratio, loan amount relative to the Fannie Mae/Freddie Mac conforming loan limit, and occupancy type. Debt-to-income ratio functions as a fifth factor some lenders price through overlays. Each layer triggers its own adjustment, and the adjustments stack. Two borrowers refinancing the same day with the same lender can receive different quoted rates.
| Rate Driver | Impact on Pricing | What You Can Do |
|---|---|---|
| Credit Score Band | Higher scores earn best-tier pricing. Lower bands trigger loan-level adjustments that widen the spread. | Pull reports early, resolve errors, reduce card balances before applying |
| Loan-to-Value Ratio | Borrowing less equity means smaller risk adjustments. Approaching maximum LTV adds pricing at each tier. | Take only the cash you need rather than tapping full appraised value |
| Loan Size | Amounts within the conforming loan limit carry standard pricing. Amounts above may trigger jumbo overlays. | Confirm whether your refinance amount stays inside the current limit |
| Occupancy | VA cash-out refinancing requires owner occupancy of the property being refinanced. | Verify occupancy eligibility with your lender. |
| Debt-to-Income Ratio | Higher DTI signals repayment risk and may trigger additional lender overlays on the rate. | Pay down revolving balances before submitting the application |
Lenders start with a base rate tied to the current market, then layer adjustments for each of these drivers. The adjustments follow lender-specific pricing grids, and the grids differ between institutions. One lender may run tighter on credit score tiers while another loads pricing more heavily at higher LTV levels. Asking any lender quoting a rate to itemize which adjustments apply and what each one adds to the base reveals where the pricing flexibility sits and which factors are worth addressing before application.
Credit Score and Its Impact on Your Rate
Credit score is the single biggest borrower-controlled factor in your cash-out refinance rate. Every point matters. The VA sets no minimum, but every lender applies its own floor and assigns rate adjustments by score band. Higher scores qualify for better pricing, while lower scores trigger adjustments that raise both the rate and closing costs.
- Score band tiers: Lenders group mid scores into defined bands and assign rate adjustments at each level. Dropping from one tier to the next adds a pricing hit that compounds with the separate cash-out adjustment already built into your quote, so each band step carries real weight on a refinance.
- Lender floors vary: The VA has no official minimum credit score. Each lender draws its own cutoff and applies stricter pricing below that line. Two lenders quoting the same borrower on the same day can return different rates, which is why shopping multiple originators matters more on a cash-out than on a purchase.
- LLPAs compound: Loan-level pricing adjusters for credit score stack with the separate adjuster lenders apply for cash-out transactions. A borrower in a lower score band absorbs both hits, which can push the effective rate well above what the same file would carry on a purchase loan.
- Improve before applying: Paying down revolving balances and correcting bureau reporting errors before the lender pulls credit can shift a mid score into a better pricing tier. Even a small move across a band boundary changes the rate and the monthly payment that comes with it.
How to Check Today’s VA Cash-Out Refinance Rates
Three quotes, same day. That is the fastest way to see where VA cash-out refinance rates sit right now, because rates shift daily based on mortgage-backed security pricing and lender margin adjustments stack on top of those movements. Request a Loan Estimate from each lender with the same loan amount, loan-to-value ratio, and lock period so the numbers actually line up side by side. A quote pulled Tuesday and another pulled Thursday are not comparable, even from the same company, because the underlying pricing changed in between and you cannot isolate the lender’s own markup.
When comparing quotes, read the APR column, not just the note rate. The note rate is the interest charge alone. APR folds in the funding fee, origination charges, discount points, and third-party closing costs. Two lenders quoting the same note rate can land hundreds of dollars apart in actual annual cost once fees are included. The Loan Estimate breaks this out on page one. If a lender will not provide one before you commit, that tells you something.
Lock period matters. A shorter lock costs less upfront, but if the appraisal report or title work runs past the expiration date, the rate re-prices at whatever the market gives you that day and the savings disappear. Cash-out refinances require a full appraisal and equity verification, and both steps can push the timeline well past a tight lock window. Before locking, ask your lender what turn time their cash-out pipeline is running. If the queue stretches past the lock you chose, the cost of extending or re-locking wipes out the upfront discount. Get the turn time first.
Comparing Rates Across VA Lenders
Rate quotes on a VA cash-out refinance can look very different from one lender to the next, even when the borrower profile, credit band, LTV, and loan amount are all identical. The gap comes from each lender applying its own overlays, margin targets, and risk pricing to the same base mortgage-backed securities price. The differences add up.
- Retail banks and credit unions: These lenders set their own VA cash-out overlays, including minimum credit score floors, maximum LTV caps, and reserve requirements that go beyond what VA itself requires. A credit union may quote a competitive rate but bundle higher origination charges into the transaction, so total loan cost across the full term matters more than the rate number alone.
- Mortgage brokers: Brokers shop wholesale lenders on the borrower’s behalf, which can surface pricing a retail applicant would not see. That access has a cost. Ask for a breakdown showing the wholesale rate, the broker’s compensation, and the combined total against any retail quote.
- Online lenders: Lenders without branch networks can pass overhead savings to borrowers through lower rates or reduced origination charges on the cash-out refinance. Underwriting timelines, hands-on loan officer support, and responsiveness during the VA appraisal process vary by company. Ask about their VA-specific workflow and average closing timeline before locking in.
- Loan Estimate comparison: Request a Loan Estimate from each lender on the same day and compare Section A origination charges alongside the rate and any discount points. A lower quoted rate paired with higher upfront fees can cost more over the full loan term. The form is standardized, making side-by-side review straightforward.
When Cash-Out Rates Make the Refinance Worth It
A cash-out refinance only pencils out when the total cost of the new loan is justified by what the borrower accomplishes with the proceeds. The rate is one variable. The funding fee, closing costs, and the spread between the current mortgage rate and the new cash-out rate all factor into whether the overall deal creates or destroys value over time.
- Rate-to-rate spread: If the new cash-out rate lands at or below the borrower’s current mortgage rate, the refinance adds liquidity without a meaningful jump in the monthly payment, and the funding fee becomes the main cost to weigh rather than a rate penalty stacking on top of the existing obligation.
- Break-even timeline: Divide total refinance costs by the monthly savings or monthly value the cash proceeds generate. If the borrower plans to stay in the home past that break-even point, the numbers work. If the break-even stretches beyond the expected ownership horizon, a second-lien product may fit better.
- Property improvement offset: Cash directed at upgrades that raise the home’s appraised value can recover some of the equity spent on the refinance. Lock the project scope and contractor bids before closing so the projected return holds up against the new loan balance and funding fee.
How to Lock In Your Rate
A rate lock freezes your interest rate for a set number of days while the loan moves through underwriting and closing. Lock too short and fees pile up. Lock too long and you pay for days you never needed.
- Float-down option: Ask whether the lender offers a one-time float-down clause that lets you take a lower rate if the market moves after you lock. This feature adds cost to the lock itself, and some lenders cap how far the rate can adjust downward, so weigh the added expense against the potential savings.
- Extension fees: If closing runs past the lock expiration, the lender charges a fee to extend. A second extension on the same file can push total lock expense past what a longer initial lock would have cost. Ask your loan officer what the extension fee is before committing to a shorter window.
- Written confirmation: Get the lock terms in writing before you proceed. The locked rate, expiration date, any discount points or lender credits, and whether a float-down is included should all be documented. A verbal rate quote is not a rate lock and creates no obligation from the lender.
The Bottom Line
VA cash-out refinance rates carry a premium over purchase rates, and the spread varies by lender. Four pricing layers control the quote: credit score band, loan-to-value ratio, loan amount relative to the conforming limit, and occupancy type. Credit score is the single biggest borrower-controlled variable, and every point in the score band shifts what lenders offer. Three quotes on the same day from different lenders remain the fastest way to see where rates actually sit.
The rate alone does not determine whether the refinance pencils out. The funding fee, at 2.15% for first use or 3.3% for subsequent use, closing costs, and what the borrower accomplishes with the proceeds all factor into that calculation. A lower rate means nothing if the total cost of the new loan outweighs the benefit of the cash out.
Frequently Asked Questions
What is the VA funding fee on a cash-out refinance?
The funding fee on a VA cash-out refinance is 2.15% of the loan amount for first use and 3.3% for subsequent use. It can be paid at closing or financed into the loan balance. Veterans who meet VA’s exemption criteria are exempt from the fee entirely. Whether the fee is paid upfront or financed, it adds to the total loan cost. Borrowers who finance the fee pay interest on it over the life of the loan, so exemption-eligible Veterans should verify their status with the VA before closing.
Does the VA limit how much equity a borrower can access through a cash-out refinance?
VA regulations allow a cash-out refinance up to 100% of the property’s VA-established reasonable value, including any financed VA funding fee. This does not mean 100% of equity is available in cash—the existing mortgage must be repaid and closing costs satisfied first. Individual lenders may set lower LTV limits. A full VA appraisal determines the property value used in this calculation.
How do VA home loan rates compare to conventional refinance rates?
VA-backed mortgages carry a government guaranty that reduces lender risk, which allows lenders to offer lower rates relative to conventional loans for comparable borrower profiles. On a cash-out refinance, lenders add a risk premium for the equity withdrawal, which narrows the VA advantage compared to a purchase or rate-and-term refinance. The VA program carries no private mortgage insurance at any loan-to-value level, while conventional loans add PMI above certain equity thresholds. When comparing the two, the monthly cost after insurance should be the benchmark, not the rate alone. The spread between VA and conventional pricing shifts with the broader market.
When does a VA IRRRL make more sense than a cash-out refinance?
The VA Interest Rate Reduction Refinance Loan is built for one purpose: lowering the rate or converting from an adjustable-rate to a fixed-rate VA mortgage. It does not provide cash proceeds. The IRRRL skips the full appraisal and requires less documentation than a cash-out refinance, making it faster and cheaper to close. A cash-out refinance requires a full appraisal, complete income and asset verification, and carries the VA funding fee of 2.15% on first use. If the borrower’s only goal is a lower payment with no need for cash from equity, the IRRRL is the right tool. Cash-out is the path when the borrower needs proceeds.
How can a borrower find the lowest VA cash-out refinance rate?
The two biggest rate drivers on a VA cash-out refinance are credit score and loan-to-value ratio. A stronger credit profile and lower LTV get better pricing. The spread between lenders on the same file can be significant, so comparing quotes from at least three lenders before locking matters. The VA program carries no private mortgage insurance regardless of LTV, which reduces the total monthly cost even when the nominal rate is close to a conventional alternative. Having a complete application ready before requesting quotes allows locking quickly when favorable pricing appears. Rate locks expire, so ask each lender about lock duration and extension costs upfront.
Can I do a VA cash-out refinance on a Texas homestead?
Texas has special constitutional home-equity rules. A 2018 Texas Attorney General opinion concluded that a VA-guaranteed home-equity cash-out loan conflicted with those rules. VA’s national cash-out eligibility guidance does not by itself establish that a particular Texas transaction is permitted. A Texas-licensed lender and qualified counsel should review the exact loan structure; options may include a different type of refinance or a separate home-equity loan.
How does a VA cash-out refinance calculator estimate costs?
A cash-out refinance calculator takes the home’s estimated value, the current mortgage balance, a projected interest rate, and the loan term to estimate the new monthly payment and net cash proceeds. The VA funding fee should be factored in at 2.15% for first use or 3.3% for subsequent use, plus estimated closing costs. Veterans who qualify for a VA funding fee exemption should adjust the calculator inputs to reflect that exemption. Any result is an estimate, not a commitment. Final numbers depend on the appraisal, lender pricing at lock, and the borrower’s credit profile at the time of application.