How Does VA Eligibility Affect Cash-Out Refinance LTV Limits and Funding Fees?
Veterans using a VA cash-out refinance can typically borrow up to 90% to 100% of their home's value, well above the roughly 80% cap on conventional cash-out loans, and a qualifying VA disability rating of 10% or higher waives the VA funding fee entirely. These rules only apply to an existing VA-eligible loan on a primary residence with a mortgage already in place; paid-off homes, Texas homestead properties, and second homes or investment properties each face separate restrictions covered below.
Last updated July 22, 2026How much can veterans borrow with a VA cash-out refinance, and how does the funding fee work?
VA cash-out refinances allow loan-to-value (LTV) ratios up to roughly 90% to 100%, depending on the lender, compared with about 80% for a typical non-veteran (conventional) cash-out refinance. This higher ceiling is one of the main advantages of VA eligibility.
The VA also charges a funding fee on most VA loans, but that fee is waived entirely for veterans with a qualifying service-connected disability rating of 10% or higher. There is no minimum dollar floor tied to the waiver; any qualifying disability rating removes the fee regardless of loan amount.
Credit score matters too, and not just for rate. Lenders in our network commonly reduce the maximum available cash-out LTV well below the standard 90% to 100% ceiling, sometimes down to around 65% to 70%, when a borrower's credit score is low (for example, in the 500 range). A lower score can limit how much cash you can actually access, even if you technically qualify for a VA cash-out refinance.
Can I get a VA cash-out refinance on a paid-off home, or if my property is in Texas?
Not on a free-and-clear home. VA cash-out refinancing requires an existing lien on the property. If your home has no mortgage at all, it is not eligible for a VA cash-out refinance; you would need to use conventional or FHA cash-out financing instead to access equity.
Texas adds a separate restriction. Article XVI, Section 50(a)(6) of the Texas Constitution prohibits VA (and, in practice, FHA) cash-out refinances on homestead property in Texas. A non-VA (conventional) cash-out refinance is generally the available path for Texas homeowners instead.
Does VA financing apply to a second home or investment property?
No. VA loans, whether for a purchase or a refinance (including cash-out), require the property to be the borrower's primary residence. A secondary home or investment property is not eligible for VA financing or VA-specific pricing under any circumstance, so a different loan program would be needed for that kind of property.
It depends on your situation
- If you have an existing VA-eligible mortgage on your primary home with equity available, you can typically pursue a VA cash-out refinance up to around 90% to 100% LTV, depending on the lender.
- If your home is paid off with no mortgage, a VA cash-out refinance is not an option; ask about conventional or FHA cash-out programs instead.
- If your property is in Texas, state homestead law generally blocks VA cash-out refinancing; a conventional cash-out loan is usually the route available.
- If the property is a second home or investment property, VA financing does not apply at all, cash-out or otherwise; a conventional (non-VA) loan program would be needed.
- If your credit score is on the lower end, expect the maximum cash-out LTV to be capped well below the standard ceiling, sometimes near 65% to 70%, rather than the full 90% to 100%.
- If you have a qualifying VA disability rating of 10% or higher, the funding fee is waived regardless of your loan amount or how large your cash-out is.
| Primary residence, existing VA-eligible mortgage | Yes |
|---|---|
| Home paid off free and clear | No |
| Texas homestead property | No |
| Second home or investment property | No |
| Disability rating of 10% or higher | Not applicable |
| Low credit score (e.g., around 500) | Yes, but limited |
Related questions
- what's the Difference Between an FHA Loan and a Conventional Loan
- how Do DD-214 Status, an Early or Incomplete Discharge, or Being a Veteran's Dependent Affect VA Loan Eligibility
- does an FHA Streamline Refinance Require an Appraisal or Income Verification
- what Are FHA and Conforming Loan Limits, and When Do You Need a Jumbo Loan
- minimum credit score to qualify
Sources
- https://www.ecfr.gov/current/title-38/chapter-I/part-36/subpart-B/section-36.4306
- https://www.veteransunited.com/refinance/cashout
- https://benefits.va.gov/benefits/derivative_sc.asp
- https://www.mortgagelaw.com/insights/texas-home-equity-lending-and-prohibited-additional-collateral-part-two-va-guaranties-and-fha-mortgage-insurance
- https://selling-guide.fanniemae.com/sel/b5-4.1-01/texas-section-50a6-loans
- https://www.bankrate.com/mortgages/va-cash-out-refinance
- https://www.veteransunited.com/valoans/va-loan-for-investment-property
Educational information only, not individualized financial or legal advice. Program details and rates change; verify current terms with a licensed loan officer before making a decision.