Purchase a HomeRefinance My Home

A VA Cash-Out Refinance offers a powerful way for eligible veterans and service members to convert their home equity into usable cash. Whether you’re paying off high-interest debt, funding a renovation, or simply improving your financial position, this loan can be a flexible tool—especially when paired with the unique benefits of a VA loan.

At Miranda Mortgage in Denver, we are proud to help those who have served unlock financial opportunities through homeownership. If you’re wondering how VA cash-out refinancing works and whether it’s the right fit for your situation, this guide will walk you through the essentials.

Understanding VA Cash-Out Refinance

A VA Cash-Out Refinance allows homeowners to refinance their existing mortgage—whether it’s a VA or non-VA loan—and take out cash from their home’s equity. This is different from a VA IRRRL (Interest Rate Reduction Refinance Loan), which is designed only for reducing interest rates and does not involve accessing equity.

This loan option requires a new appraisal to assess current property value, which helps determine how much equity is available to borrow against. While the process is more involved than a streamline refinance, the ability to access cash can provide real financial relief or flexibility.

Types of VA Cash-Out Refinance Loans

There are two main types of VA cash-out refinances:

Type 1: No Cash Back

In a Type 1 refinance, the new loan amount does not exceed the existing mortgage payoff. Borrowers may still roll in closing costs, but they do not receive cash at closing. This option is sometimes used to consolidate debt or change loan terms without pulling out equity.

Type 2: Cash Back at Closing

More commonly, borrowers use a Type 2 refinance to receive cash at closing. The new loan amount exceeds the balance of the current loan, allowing homeowners to tap into their home’s equity for various financial needs.

Who Is Eligible?

Eligibility for a VA Cash-Out Refinance is based on several key factors:

• You must be eligible for a VA loan, which includes most veterans, active-duty service members, and some members of the National Guard and Reserves.
• You must meet loan seasoning requirements, including at least 210 days from your first mortgage payment and six consecutive on-time monthly payments.
• Your home must appraise for enough value to support the new loan amount.
• You must meet the VA’s net tangible benefit requirement—there must be a clear financial reason for the refinance.

Additionally, a recoupment test is often applied. This test calculates how long it will take to recoup closing costs through monthly savings. The goal is to ensure that the refinance makes financial sense within a 36-month timeframe.

Benefits of a VA Cash-Out Refinance

The VA Cash-Out Refinance provides a range of potential benefits:

• Convert home equity into cash for renovations, education costs, medical expenses, or debt consolidation.
• Refinance a conventional loan into a VA loan, potentially eliminating private mortgage insurance (PMI).
• Take advantage of competitive interest rates backed by the Department of Veterans Affairs.
• Consolidate high-interest credit cards or personal loans into one manageable monthly payment.

For many borrowers, the biggest advantage is improved financial flexibility without needing to sell the home.

Things to Consider Before Refinancing

Before moving forward with a VA Cash-Out Refinance, it’s essential to fully understand the loan terms and costs. Here are some important points to review:

• The VA requires lenders to demonstrate a net tangible benefit, meaning the refinance must improve your financial situation.
• You’ll receive a Net Benefit Worksheet that outlines the before-and-after impact of the refinance. Pay attention to this document—it’s your first line of defense against misleading loan offers.
• Be sure to examine your Loan Estimate, especially Section A lender fees, title charges, and any transfer taxes applicable in your state.
• Some lenders may push aggressive refinancing tactics, sometimes called equity stripping, where your loan balance increases repeatedly without a clear benefit. Always ask questions if something feels off.

Loan-to-Value Limits and VA Funding Fee

When refinancing with a VA Cash-Out loan, the total loan amount (including any financed fees) must generally stay within 100% of the appraised value. That means you may not be able to borrow more than your home is worth.

Borrowers who are not exempt due to service-connected disabilities will also need to pay a VA funding fee, typically around 3.33% of the loan amount. This can be rolled into the new mortgage balance but will affect your loan-to-value ratio.

How Miranda Mortgage Makes It Easy

At Miranda Mortgage, we take pride in helping veterans understand every step of the refinancing process. Our approach is education-first, ensuring you know exactly what to expect before making a decision.

Here’s how we help:

• We review your current loan and goals to identify the best refinancing strategy.
• We arrange for a home appraisal and walk you through the results.
• We provide a clear breakdown of estimated costs and benefits.
• We help you compare options, so you feel confident and empowered.

Our mission is to make refinancing a home in Denver—or anywhere you’re stationed—simple, supportive, and beneficial.

Frequently Asked Questions

How much cash can I take out?
This depends on your home’s current appraised value and how much equity you have. You can typically borrow up to 100% of the home’s value, minus any outstanding loan balance.

What if my appraisal comes in lower than expected?
A lower appraisal may limit how much cash you can take out or affect whether the loan is even viable. We can help review alternatives if this happens.

Can I refinance a non-VA loan into a VA loan?
Yes. A VA Cash-Out Refinance allows you to replace a non-VA loan and access the benefits of VA lending, including no PMI.

Are there upfront costs?
Yes, refinancing typically includes lender fees, title costs, and other third-party expenses. These can often be rolled into the new loan.

Ready to Access Your Equity?

If you’re considering a VA Cash-Out Refinance, let us help you explore your options. Our experienced team at Miranda Mortgage is here to make the process clear, personalized, and financially smart.

Call us at 303.520.1786 or email Naiely@BarrettFinancial.com to schedule a consultation and learn more about how a VA Cash-Out Refinance could work for you.