Yes, a VA cash-out refinance can go up to 100% of your home's appraised value. That ceiling comes straight from the VA's own rule. The ceiling and the check you actually walk away with are two different numbers. The funding fee, your closing costs, the appraisal and the lender's own guidelines all sit between them.
Below: how VA cash-out refinance LTV is calculated, what has to fit under the cap, the dollar math on one house, and how to decide whether borrowing to the line makes sense for your household.
What "100% LTV" means on a VA cash-out refinance
LTV stands for loan-to-value. It is the new loan amount divided by the value of the home. On a VA loan, the value used is the "reasonable value" set by a VA-assigned appraiser. Your own sense of what the house would sell for, or an online estimate, does not enter into it.
The VA's regulation on cash-out refinancing, 38 CFR 36.4306, says the new loan cannot exceed 100% of that reasonable value. So on a home appraised at $400,000, the largest VA cash-out loan the rule allows is $400,000.
That is a high ceiling. Most cash-out options leave a required slice of equity untouched. The CFPB's guide to using home equity notes that lenders commonly want you to keep part of your home's value as equity when you borrow against it. The VA benefit is built differently because you earned it through service, and the guaranty the VA attaches to the loan is what makes the higher ceiling possible.
What has to fit under the 100% cap
The 100% figure is a cap on the total new loan, and three things compete for room under it.
Your current mortgage payoff
The first dollars of the new loan go to paying off the mortgage you have now, including any accrued interest through the payoff date. That payoff is fixed. Everything else comes out of what is left.
The VA funding fee
The VA charges a one-time funding fee on most loans, and on a cash-out refinance it is 2.15% of the loan for first use and 3.3% for subsequent use (rates effective April 7, 2023). You can roll the fee into the loan, but the regulation sets a limit: any part of the funding fee that would push the loan past 100% of reasonable value has to be paid in cash at closing.
In plain terms, the fee counts against the cap. If you finance it, it takes up room that would otherwise be cash in your hand.
Veterans who receive VA compensation for a service-connected disability are exempt from the funding fee, along with surviving spouses receiving Dependency and Indemnity Compensation and certain other groups listed on the VA funding fee page. If you are exempt, the full 100% is available for payoff, costs and cash.
Closing costs
Appraisal, title, recording and lender charges are part of every refinance. On a cash-out loan they are usually paid out of the proceeds, which means they also reduce the cash you receive. Your Loan Estimate will itemize them, so you can see the exact figure before you commit.
A worked example: the same house, three borrowers
Say your home appraises at $400,000 and your current mortgage payoff is $280,000. Here is how the math plays out under the 100% cap.
Borrower A is exempt from the funding fee. The new loan can be $400,000. After the $280,000 payoff, $120,000 remains before closing costs.
Borrower B is using the benefit for the first time and finances the fee. The base loan plus the 2.15% fee has to land at or below $400,000. That puts the base loan at about $391,581 and the fee at about $8,419. After the payoff, about $111,581 remains before closing costs.
Borrower C has used the benefit before and also finances the fee. With a 3.3% fee, the base loan comes out to about $387,221 and the fee to about $12,779. After the payoff, about $107,221 remains before closing costs.
Same house, same payoff, and a gap of almost $13,000 between the first and third borrower, all from the funding fee. Then subtract closing costs from each line. This is why "you can borrow up to 100%" is true, and also why the number on your closing statement will be lower than the headline suggests.
Type I and Type II: which one you are doing
The VA splits cash-out refinances into two types, and the label affects which rules apply.
A Type I cash-out refinance is one where the new loan amount, before the funding fee, is equal to or less than the payoff of the loan being refinanced. Veterans often use it to move a conventional or FHA loan into a VA loan without taking cash.
A Type II cash-out refinance is one where the new loan amount is larger than the payoff. If you are asking how close to 100% you can borrow, you are almost certainly talking about a Type II.
Both types run through the same VA regulation and both carry the 100% ceiling. The practical difference is that a Type II puts equity into your hands, so the disclosures about what you are giving up matter more.
The rules that come with a high-LTV VA cash-out
Borrowing near 100% is allowed, but the VA attached protections to make sure it is in the veteran's interest. Smart people miss these every day, because nobody walks you through them unless you ask.
Seasoning
If you are refinancing an existing loan, the new loan cannot be guaranteed until the later of 210 days after your first payment on the current loan and the date your sixth monthly payment was made. Recently bought or recently refinanced? Check that date first.
The net tangible benefit test, and the 90% line
Every VA cash-out refinance has to give you at least one net tangible benefit from a list of eight in 38 CFR 36.4306. Examples include a lower interest rate, a lower monthly payment, a shorter term, removing mortgage insurance, moving from an adjustable rate to a fixed rate, increasing residual income, and refinancing a construction loan.
One of the eight is having a loan-to-value ratio of 90% or less after the refinance. That detail matters for this question. If your new loan stays at or under 90%, you meet the test on that point alone. If you go above 90%, you need to qualify through one of the other seven benefits. A lower payment or higher residual income after paying off credit cards can get you there, but it is a real line inside the rule.
Two comparison disclosures and an equity estimate
The lender has to give you a comparison of your old loan and the proposed new one twice: within three business days of your application and again at closing. That disclosure also has to estimate the dollar amount of home equity being removed and explain how that could affect your ability to sell the home later. Read it. At 100% LTV, that equity figure is all of it.
How lender guidelines and the appraisal shape the final number
The VA sets the outer limit. Whether you reach it depends on three other things.
The first is the appraisal. The VA appraiser's reasonable value is the denominator in the whole calculation. If the home appraises lower than expected, the 100% ceiling drops with it. A $15,000 lower appraisal is $15,000 less room.
The second is underwriting. You still have to qualify on credit, income and the VA's residual income standard, which looks at the money left over each month after major expenses. A larger loan means a larger payment, and the payment has to fit.
The third is the lender's own guidelines. The VA rule is a maximum, and the lender you work with may set a lower cap or add requirements at higher LTVs. Ask directly, early, what maximum LTV applies to your file, so you are planning around a real number.
Should you borrow all the way to 100%?
The right amount comes from your full financial picture.
Know your blended rate before you decide
Many veterans hesitate to refinance because their current mortgage rate is low. That low rate can be the trap. If you have $280,000 on the mortgage at 3% and $45,000 on credit cards at 24%, you are paying about $8,400 a year in mortgage interest and about $10,800 in card interest. Across $325,000 of total debt, that is a blended rate of roughly 5.9%.
So compare the new loan against that 5.9%, and against the total monthly outflow you have today. One payment at a known rate may cost less than the mix you are carrying now, even if it is higher than 3%. Run it with your own balances and rates.
Think about what zero equity means
At 100% LTV you have no equity cushion. If you needed to sell in the next few years, the cost of selling (agent commissions, transfer taxes, repairs) could mean bringing cash to closing. If you expect to move, that matters a lot. If you plan to stay for the long haul, it matters less, but it still means home value swings land directly on your balance sheet.
Borrow for a purpose, with a number attached
The most confident cash-out decisions start with a dollar figure tied to a goal: pay off these four balances, finish this repair, fund this expense. Borrow that, plus a sensible reserve, rather than the maximum because it is available. Staying at or below 90% LTV also keeps you on the most direct path through the net tangible benefit test and leaves you a margin if values soften.
Look at total cost, not only the payment
A cash-out refinance resets your loan, adds a funding fee unless you are exempt, and carries closing costs. Compare the total you will pay over the years you expect to keep the loan. The Loan Estimate and the VA's comparison disclosure give you the figures to do it.
A short checklist before you apply
- Get your current payoff amount from your servicer.
- Confirm your funding fee status. If you have a VA disability rating, your Certificate of Eligibility should show the exemption.
- Check seasoning: 210 days since your first payment and six payments made.
- List the balances you want to pay off and the cash you actually need.
- Calculate your blended rate today, using your own balances and rates.
- Ask your loan officer what maximum LTV applies to your file and what your estimated cash is after the funding fee and closing costs.
Talk it through with GoodLoan
A VA cash-out refinance is a benefit you earned. Using it well comes down to knowing your real numbers. GoodLoan is a VA-approved lender licensed through the NMLS (OM Mortgage, LLC, NMLS #1972491), and we say no a lot when a refinance does not improve someone's position. A GoodLoan loan officer can run your payoff, appraisal estimate, funding fee and goals through the math and show you what borrowing at 80%, 90% or 100% would look like side by side. The first conversation costs nothing and commits you to nothing.
Frequently asked questions
Can you really get a VA cash-out refinance at 100% LTV?
Yes. The VA's regulation allows the new loan to equal up to 100% of the home's reasonable value as set by a VA appraiser. Whether a specific borrower reaches 100% depends on the appraisal, underwriting and the lender's own guidelines.
Does the VA funding fee count toward the 100% limit?
Yes. You can finance the funding fee, but any part of it that would push the loan above 100% of reasonable value must be paid in cash at closing. In practice, a financed fee reduces the cash you receive.
Who is exempt from the VA funding fee on a cash-out refinance?
Veterans receiving VA compensation for a service-connected disability are exempt, as are surviving spouses receiving Dependency and Indemnity Compensation, along with other groups listed by the VA. If you are exempt, the full 100% of value is available for payoff, costs and cash.
What changes if my VA cash-out loan is above 90% LTV?
The VA requires every cash-out refinance to provide a net tangible benefit. Ending at 90% LTV or lower is one of the eight qualifying benefits. Above 90%, you need to meet one of the others, such as a lower payment, a lower rate or higher residual income.
Can I use a VA cash-out refinance if my current loan is not a VA loan?
Yes. A VA cash-out refinance can replace a conventional, FHA or other loan, as long as you are eligible for the VA benefit, live in the home and meet credit and income standards. The same 100% ceiling applies.
How soon after buying can I do a VA cash-out refinance?
If you are refinancing an existing mortgage, the VA requires the later of 210 days after your first payment and six monthly payments made before the new loan can be guaranteed.
