Start with value
The VA appraisal sets reasonable value. VA permits a cash-out loan up to 100 percent of that value, plus the funding fee, though lenders may set lower limits.
Payoffs
The first use of the money is paying off your existing mortgage and any other liens that must be cleared, such as a second mortgage or HELOC.
How the VA cash-out loan amount is divided among payoff, costs, funding fee and cash to you.
Closing costs
Lender charges, appraisal, title and recording costs come next. VA limits some fees the veteran can pay.
Funding fee
If financed, the funding fee is added to the loan, not deducted from cash.
Prepaids and escrow
Prepaid interest and a new escrow deposit are usually funded at closing, while your old escrow balance is refunded later by the old servicer.
Cash to you
Whatever remains is paid to you after the three-business-day right of rescission ends on a primary residence.
Use the calculator
The VA cash-out calculator on our sister site lets you test these pieces with your own numbers.
Rescission and timing
The three-business-day right of rescission under Regulation Z applies to refinances of a primary residence, so funds are not disbursed until it ends. Plan for this delay if you are paying off other debts or bills with the proceeds, and do not commit to payments that depend on a same-day closing.
Tax and insurance
Your new loan will usually have its own escrow account for property taxes and homeowners insurance. Confirm your insurance policy lists the new lender.
Sources
Sources checked 10/23/2026. General education only; confirm current rules with official sources and a licensed lender.