The VA Cash-Out Funding Fee Is Priced on Your Whole Loan, Not Your Cash

The VA cash-out refinance funding fee in 2026 runs 2.15% on first use and 3.3% on subsequent use, and here is the part that changes the conversation: the VA charges it on your entire new loan amount, not on the cash you take out. You are skimming, so here is the number that matters. On a $300,000 subsequent-use refinance, that fee is $9,900, even if the cash you actually wanted was only $40,000.

VA cash-out refinance funding fee 2026: the rates

The schedule is short. It comes from the VA funding fee chart effective April 7, 2023, still in force in 2026:

Use	Fee	On a $300,000 loan
First use of the VA benefit	2.15%	$6,450
Subsequent use	3.30%	$9,900

Unlike purchase loans, there is no down-payment tier for cash-out refis. The fee is the fee, whether you have 5% equity or 50%. And the streamline IRRRL sits off to the side at a flat 0.5% for both first and subsequent use, which is why the two refinance types are barely in the same conversation. Our guide to the IRRRL funding fee walks through the cheaper option if you do not actually need cash.

The arithmetic that shrinks your cash figure

Most veterans run the cash-out math backwards. They start with the cash they want, say $40,000 for a renovation, and add the fee on top of that. The lender does the opposite. The new loan is the payoff of the old loan plus the cash plus closing costs, and the funding fee multiplies the whole thing.

Worked example. You owe $220,000 on your mortgage and want $40,000 cash. The new loan is $260,000 before the fee. Subsequent use at 3.3% adds $8,580 in funding fee, bringing the loan to $268,580. The $40,000 of cash you wanted cost you $8,580 in fee alone, before regular closing costs. That is the figure most veterans never see until the Loan Estimate arrives.

Then the LTV ceiling does its part. A VA cash-out can go to 100% of the appraised value, but the financed fee counts against that ceiling. If the fee pushes the loan above 100% of value, the excess comes out of your pocket at closing. On a subsequent-use loan where the fee alone is 3.3% of the loan, that ceiling takes a real bite out of the equity you were counting on. Run the numbers before you commit the renovation budget: financing the fee into the loan is free of out-of-pocket pain but never free.

Who skips the fee entirely

The exemption list does not change for cash-out refis, and it is worth checking against because it is the single biggest swing in this whole calculation. You pay no funding fee if any of these apply:

You receive VA compensation for a service-connected disability.
You are entitled to VA compensation but receive retirement or active-duty pay instead.
You are a surviving spouse receiving Dependency and Indemnity Compensation (DIC).
You are a service member with a proposed or memorandum disability rating dated before your loan closing.
You are an active-duty service member who provides evidence of a Purple Heart on or before the closing date.

The exemption has to appear on your Certificate of Eligibility before closing. If it is not there at that point, the fee gets charged, and getting it back afterwards is a refund process, not a correction. A claim still pending is the classic version of this: tell your lender, because a rating finalized before closing can waive the fee, and a rating that arrives after closing with a retroactive effective date opens the refund path.

Opinion, stated plainly

For veterans without an exemption, the cash-out VA refinance is an expensive way to borrow equity. I ran the $40,000 example above at subsequent use and the fee alone is $8,580, which is 21% of the cash you are taking. A home equity loan or HELOC carries no VA funding fee at all. The VA cash-out makes sense in one main scenario: you are refinancing a non-VA loan into a VA loan, or you have an exemption that zeroes the fee. If you already have a VA loan and just want cash, price a home equity product against the fee before you sign. The repeat-use rate of 3.3% is the detail that kills most cash-out plans, and our second-use rates guide has the full table.

Frequently Asked Questions

What is the VA funding fee on a cash-out refinance in 2026?

2.15% of the loan amount on first use of the VA benefit, and 3.3% on subsequent use. These rates come from the VA funding fee schedule effective April 7, 2023, which is still in force in 2026. The fee does not change with your down payment or equity, unlike purchase-loan rates.

Is the cash-out funding fee charged on the cash I take or the whole loan?

The whole loan. The VA calculates the funding fee on the entire new loan amount, not just the cash you pull out. On a $300,000 subsequent-use refinance, the 3.3% fee is $9,900 even if you only wanted $40,000 in cash.

Can I roll the funding fee into a VA cash-out refinance?

Yes, but the fee counts against your 100% LTV ceiling. If the financed fee pushes the loan above 100% of the appraised value, the excess has to be paid in cash at closing. On a subsequent-use loan where the fee alone is 3.3%, that ceiling eats a meaningful slice of the equity you planned to take out.

Who is exempt from the VA cash-out funding fee?

Veterans receiving VA compensation for a service-connected disability, veterans entitled to compensation but receiving retirement or active-duty pay instead, surviving spouses receiving DIC, service members with a proposed or memorandum disability rating dated before closing, and active-duty service members who provide Purple Heart evidence on or before the closing date. The exemption must show on your Certificate of Eligibility before closing.

How does the cash-out fee compare to an IRRRL streamline refinance?

An IRRRL carries a flat 0.5% funding fee for first and subsequent use, which is why it is the cheapest VA refinance. The cash-out runs 2.15% or 3.3%. If you are refinancing only to lower your rate and do not need cash, the IRRRL fee is dramatically cheaper.

Price Your Exact Fee

Enter your loan amount and first vs subsequent use to see your 2026 funding fee, then compare cash-out against an IRRRL before you commit.

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