VA Cash-Out Refinance Delaware: 100% LTV, Rules & Fees
CURRENT AS OF SEPTEMBER 2026
VA Cash-Out Refinance Quick Answer: VA guidelines permit an eligible Delaware veteran to refinance up to 100% of a home’s reasonable value and take the difference as cash. A VA appraisal and full underwriting are required, and individual lenders and investors may set lower limits. Current as of September 2026.
The detail behind that answer. The 100% figure includes the funding fee when you finance it, and it is a VA ceiling rather than a guarantee – lenders and investors apply their own maximums beneath it, and any cap below 100% is their rule rather than the VA’s. The funding fee is 2.15% first use or 3.30% subsequent use, waived for veterans receiving VA disability compensation. You can also use this to bring a conventional or FHA loan into the VA program, which removes monthly mortgage insurance. Call John Thomas, NMLS #38783, at 302-703-0727.
The number veterans get wrong on this product is the one in its name. I’m John Thomas, NMLS #38783, Branch Manager and Division Vice President of Sales with the John Thomas Team with AnnieMac Home Mortgage in Newark, Delaware. “100% cash-out” is real – VA guidelines permit refinancing up to 100% of a home’s reasonable value, which is more than conventional, FHA or USDA cash-out programs allow. But the VA sets a ceiling and lenders and investors set their own maximums underneath it, so the honest first question is not “does the VA allow 100%” but “what will actually be available on my file.” I would rather work that out with you up front than have you plan a kitchen renovation around equity you cannot reach. If you are still comparing this against the rest of your benefit, start with my Delaware VA loan guide, which covers how purchase, IRRRL and cash-out financing differ.
Find Out How Much Equity You Can Actually Access
Send me your estimated value, payoff and loan profile and I can help you estimate the cash-out range that may be available before an appraisal is ordered.
Table of Contents
How Much Can You Take Out With a VA Cash-Out Refinance?
The VA allows a cash-out refinance up to 100% of the appraised value, and that figure includes the VA funding fee if you roll it into the loan. There is one VA-level exception: a fixed-to-adjustable Type I refinance carrying more than one discount point is capped at 90%. Every other cap you encounter is a lender or investor rule, not a VA rule – and those caps move. Some investors have withdrawn above-90% Type II cash-out entirely. Ask what today’s cap is rather than relying on a figure you read last year.
| Program | Maximum cash-out LTV |
|---|---|
| VA | Up to 100% of appraised value (VA ceiling; individual lender and investor caps are frequently lower, and some will not go above 90% on a Type II at all) |
| Conventional | Typically 80% |
| FHA | Typically 80% |
| USDA | Cash-out not permitted |
What decides where you land inside that range. Higher LTV leans harder on the rest of the file – credit, stable income, residual income cushion and payment history. What is available on your file depends on the lender and investor guidelines that apply to it, together with your credit, income, debts, residual income, property value and full underwriting review. That is not a judgement about you, it is how risk gets priced when there is no equity buffer left. Send me your numbers and I will tell you your realistic figure before an appraisal is ordered.
One point worth knowing: a VA cash-out can refinance a non-VA loan. If you have a conventional or FHA mortgage and VA eligibility, this is the route that brings you into the VA program – which also drops the monthly mortgage insurance an FHA or low-equity conventional loan is carrying. Veterans often come to this page for the cash and stay for the removed mortgage insurance.
How much cash would you actually receive?
100% LTV does not mean you receive 100% of your home’s value. The loan amount is the ceiling; everything owed comes out of it first. The arithmetic is:
Appraised value x LTV cap
minus first mortgage payoff
minus any second lien or DPA payoff
minus closing costs
minus the VA funding fee, if you are not exempt and you finance it
= cash to you at closing
Worked at 90% on a $300,000 appraisal with a $225,000 payoff, a $7,500 second, $8,000 of closing costs and a funding fee exemption: $270,000 minus $240,500 leaves roughly $29,500. At a 100% cap the same file leaves roughly $59,500. Without the exemption, a 3.30% subsequent-use fee takes about another $8,900 off whichever figure applies. Call 302-703-0727 and we can work through your version of this before anything is ordered.
Type I vs Type II: The Distinction That Changes the Rules
The VA splits cash-out refinances into two types, and which one you are in changes what you have to satisfy. Almost nobody explains this, and it is the reason two veterans get different answers to the same question.
| Type I | Type II | |
|---|---|---|
| What it is | New loan, including the funding fee, is not larger than the payoff on the existing loan | New loan is larger – you are taking equity out as cash |
| Net tangible benefit | Required | Required |
| 36-month recoupment test | Required when paying off a VA loan | Not applicable |
| Rate reduction test | Required when paying off a VA loan | Not applicable |
| Typical use | Rate-and-term refinance, or bringing a non-VA loan into the VA program | Debt consolidation, renovation, cash in hand |
What this means for you: if the new loan is larger than the liens being paid off, you are generally in a Type II. If it is not, you are generally in a Type I. That single distinction decides which additional VA refinance rules attach to your file.
Why this matters in practice. A veteran who says “I just want a better rate, no cash” is usually in Type I, and Type I paying off an existing VA loan has to clear the same 36-month recoupment test as an IRRRL – so the rate has to drop enough to pay for the transaction. A veteran taking $40,000 out is in Type II, where the recoupment test does not apply at all because the benefit is the cash, not the payment. Same product, different rules, and knowing which side you are on before you start saves a wasted application.
What Is the VA Net Tangible Benefit Test?
Every VA cash-out refinance has to deliver at least one net tangible benefit to the veteran – Type I and Type II alike. This is separate from the 36-month recoupment test, and it catches people out because the recoupment test only attaches to Type I loans paying off an existing VA loan, while the net tangible benefit requirement attaches to all of them. A Type II taking cash out is not exempt from proving the loan helps you.
Per the VA, qualifying benefits include:
- Eliminating monthly mortgage insurance – which is why refinancing an FHA loan into a VA loan so often qualifies on its own
- Shortening the loan term
- Reducing the interest rate or the monthly payment
- Bringing the loan to a lower, safer loan-to-value position
- Moving from an adjustable rate to a fixed rate
- Other benefits recognised under current VA guidance
In practice this is rarely the thing that stops a file – most cash-out refinances that make sense for a borrower clear it comfortably. It matters because it is a real requirement your lender has to document, and because a veteran who understands it can see why the FHA-to-VA route is so strong: removing mortgage insurance is a qualifying benefit by itself, before you count the cash.
VA Cash-Out Refinance Requirements
- Certificate of Eligibility. At least one eligible veteran must be on the loan with a valid COE.
- Primary residence. The property must be your primary home – VA cash-out is not available on investment property or second homes.
- VA appraisal. Required on every cash-out, unlike an IRRRL. The appraised value, not a Zestimate or a tax assessment, sets your maximum.
- An existing lien. The VA requires something to pay off. A free-and-clear home cannot be cash-out refinanced – a home equity loan or HELOC is the route there.
- Seasoning, if you are refinancing an existing VA loan. At least 210 days since the first payment due date and at least six monthly payments made.
- First-lien position. The new VA loan must be secured in first-lien position. An existing second mortgage or HELOC does not automatically have to be paid off – that lienholder can agree to subordinate behind the new loan instead, which is worth asking about before you assume the balance has to come out of your proceeds.
- Wood-destroying insect inspection is required on VA transactions in Delaware.
- Credit and residual income. The VA sets no minimum credit score; lenders set their own, and the threshold usually rises as LTV rises. VA residual income requirements apply.
The lien requirement catches people out. Veterans who have paid a home off entirely, or inherited one free and clear, sometimes assume a VA cash-out is available because 100% LTV is. It is not – the VA will not guarantee a loan with nothing to refinance. That is a home equity product instead, and worth knowing before you order an appraisal.
The VA Funding Fee on a Cash-Out Refinance
| Use | Funding fee |
|---|---|
| First use of the VA benefit | 2.15% of the loan amount |
| Subsequent use | 3.30% of the loan amount |
The fee is waived entirely for veterans receiving VA disability compensation at any rating, for those with a proposed or memorandum rating, for surviving spouses receiving Dependency and Indemnity Compensation, and for Purple Heart recipients on active duty. The exemption must appear on your Certificate of Eligibility before closing – if it is not there at that point the fee is charged, and getting it back afterwards is a refund process rather than a correction.
Remember the fee counts against your LTV. If you finance it, it is part of the loan amount the 100% ceiling is measured against – so on a subsequent-use file the 3.30% fee consumes a meaningful slice of the equity you were planning to take out. That is the arithmetic that most often makes the cash figure smaller than a veteran expected, and it is worth running before you commit to a renovation budget.
Closing Costs and How Long It Takes
A VA cash-out carries the same closing costs as a VA purchase – appraisal, title insurance, origination, recording, escrow set-up and prepaid items – and industry guides commonly put the total in the range of 2% to 5% of the loan amount before the funding fee. Your actual figure depends on the loan size, the title company and the lender, and you will see it itemised on your Loan Estimate rather than having to take a percentage on faith.
Those costs come out of your proceeds unless you pay them separately, which is why the formula above subtracts them before arriving at cash to you. The funding fee sits on top, and if you finance it, it also counts toward the loan-to-value the cap is measured against.
Timeline. A cash-out takes longer than an IRRRL because it needs a VA appraisal and full income documentation. Most files run several weeks from application to closing, with the appraisal usually setting the pace. On a primary residence a federal three-business-day right of rescission applies after signing, so the cash is disbursed after that window closes rather than at the table – worth planning around if the money has a deadline attached.
If the appraisal comes in low, your maximum loan amount drops with it, because the cap is a percentage of appraised value rather than of what you believe the home is worth. That is the single most common reason a cash-out delivers less than a veteran planned for, and it is why we estimate conservatively up front instead of after you have paid for the report.
What Delaware Veterans Use a VA Cash-Out For
- Consolidating high-interest consumer debt into one mortgage payment at a fraction of the rate
- Renovating or upgrading the home – kitchens, roofs, HVAC, accessibility modifications
- Paying off a second lien, including a down payment assistance second recorded behind the first
- Removing mortgage insurance by bringing a conventional or FHA loan into the VA program
- Education costs, an emergency fund, or retirement contributions
The debt consolidation case is the strongest one, and also the one that needs the most care. Consolidating higher-interest consumer debt into a mortgage can reduce your monthly debt payments substantially. It also converts unsecured debt into debt secured by your home and can extend repayment over a much longer period, which may increase the total interest paid even while the monthly payment falls. Ask for the total-cost comparison alongside the payment comparison – I will run both.
A Delaware Cash-Out Example
A veteran bought five years ago for $250,000, was exempt from the funding fee, and used a Delaware down payment assistance program contributing 3% ($7,500) toward closing costs, recorded as a zero-interest second mortgage. The home is worth $300,000 today and the kitchen needs $40,000 of work. Both liens have to be paid off to refinance.
| First mortgage payoff | $225,000 |
| Second mortgage (DPA) payoff | $7,500 |
| Closing costs | $8,000 |
| Cash out for the renovation | $40,000 |
| New loan amount | $280,500 |
| Loan-to-value on a $300,000 appraisal | 93.5% |
At 93.5% this veteran still has roughly $19,500 of equity untouched. If the file supports a higher LTV, the loan could go to $300,000 and that remaining $19,500 could go toward consolidating debt or into reserves. Note what the funding fee would have done here: without the exemption, a subsequent-use fee of 3.30% on $280,500 adds about $9,257 to the loan, pushing LTV past 96% and consuming half the remaining headroom. The exemption is worth more than most veterans realise.
How to Apply for a VA Cash-Out Refinance in Delaware
- Call 302-703-0727 or apply online. We start with your estimated value, current payoff and credit profile.
- Confirm the realistic LTV for your file before spending anything on an appraisal.
- Certificate of Eligibility – we pull it, and check whether a funding fee exemption is showing.
- VA appraisal ordered; the appraised value sets your final maximum.
- Underwriting – full income and asset documentation, unlike an IRRRL.
- Close, with the cash disbursed after the federal right-of-rescission period on a primary residence.
Cash-Out vs IRRRL vs a Second Lien
| VA Cash-Out | VA IRRRL | Second lien / HELOC | |
|---|---|---|---|
| Gives you cash | Yes | No | Yes |
| Touches your first mortgage rate | Yes – the whole balance is re-priced | Yes – that is the point | No – the first mortgage is left alone |
| Appraisal | Required | Not required on most files | Varies by lender |
| Income documentation | Full | Not required on a standard file | Varies |
| Existing loan must be VA | No | Yes | No |
| VA funding fee | 2.15% or 3.30% | 0.50% | None |
When a VA Cash-Out Is Not the Right Move
- You only want a lower rate and already have a VA loan. An IRRRL does that with no appraisal and no income documentation – far less cost and hassle.
- Your home is paid off. The VA requires an existing lien. A home equity loan or HELOC is the route.
- The cash does not change anything. If the money is not solving a real problem – clearing high-interest debt, funding a necessary repair, building a reserve – then the closing costs and funding fee bought you nothing.
- You are close to selling. Closing costs and the funding fee do not come back.
What I will not tell you is that a low existing rate settles it. Plenty of advice says never touch a 3% mortgage, and that advice ignores how people actually live. If you are carrying $60,000 of credit cards at 24% and the minimums are eating $1,500 a month, a cash-out that cuts your total monthly outflow by $1,000 can be the right call even though the note rate on the mortgage goes up – because the number that matters is what leaves your account every month, not the rate on one line of it. Giving up a 3% rate to stop drowning is not a mistake, it is the whole point of having equity.
The comparison I actually run is total monthly outflow before and after, alongside what the same money costs as a second lien that leaves your first mortgage untouched. Sometimes the second lien wins, sometimes the cash-out wins outright, and sometimes the cash-out wins on cash flow while costing more over thirty years – which can still be the right trade if it is the difference between breathing and not. You get both sets of numbers and you decide.
Other Delaware VA Loan Options
- Delaware VA Purchase Loans – zero down, no PMI, no VA loan limit with full entitlement.
- VA IRRRL Streamline Refinance – lower your rate with no appraisal and no income documentation.
- VA One-Time Close Construction Loan – build new on VA terms with a single closing.
- VA Renovation Loan – buy and renovate in one VA loan.
- Delaware Conventional Loans – worth pricing alongside if you have substantial equity.
- Delaware FHA Loans – if you are not VA-eligible, or a household member is buying separately.
- Delaware First-Time Home Buyer Guide and Delaware Down Payment Assistance Programs – for the purchase side, including the DSHA seconds that often need paying off in a cash-out.
- Local guides for Dover veterans near Dover Air Force Base and Newark, Delaware homeowners.
Ready to See Your Cash-Out Number?
Give me your estimated value, your payoff and a rough credit range and I can help you estimate the cash-out range that may be available – including what the funding fee does to it – before anything is ordered or paid for.
About the Author – John Thomas, Delaware VA Lender
John Thomas has originated Delaware mortgages for over 20 years and has helped more than 3,000 Delaware families close on a home, including veterans across New Castle, Kent and Sussex Counties and at Dover Air Force Base. The cash-out conversation he has most often is the one about trading a low first-mortgage rate for equity – which is why he prices a second lien alongside every cash-out where that applies.
John is the author of Your Guide to Buying Your First Home in Delaware (ISBN 0557349826). He holds a Bachelor of Science in Physics Education from the University of Delaware and a Master of Science in Curriculum and Instruction from Delaware State University, and is a Certified Mortgage Planner (CMP).
Licensed in 17 states (AL, DC, DE, FL, GA, IN, KS, MD, MN, MO, NC, NJ, OH, PA, SC, TN, VA). NMLS #38783. The license list is a credential, not a service-area claim; day-to-day origination is Delaware and Maryland.
John Thomas Team with AnnieMac Home Mortgage
248 E Chestnut Hill Rd, Newark, DE 19713 | 302-703-0727 | team@johnthomasteam.com
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Delaware VA Cash-Out Refinance FAQ
How much can I take out with a VA cash-out refinance?
The VA permits a cash-out refinance up to 100 percent of your home’s appraised value, including the funding fee if you finance it. That is the VA ceiling – lenders and investors apply their own maximums beneath it, and some will not exceed 90 percent on a cash-out at all. Any cap below 100 percent is a lender rule rather than a VA rule, so the practical question is what your lender will go to on your file. Call 302-703-0727 and we will tell you the realistic figure before an appraisal is ordered.
What is the difference between a Type I and Type II VA cash-out refinance?
A Type I refinance is one where the new loan, including the funding fee, is no larger than the payoff on your existing loan – typically a rate-and-term refinance or bringing a non-VA loan into the VA program. A Type II is larger, meaning you are taking equity out as cash. The distinction matters because a Type I that pays off an existing VA loan must clear a 36-month cost recoupment test and a rate reduction test, while a Type II does not, since the benefit is the cash rather than the payment.
Can I do a VA cash-out refinance on a conventional or FHA loan?
Yes. If you are eligible for VA financing and the property is your primary residence, a VA cash-out refinance can replace a conventional or FHA mortgage with a VA loan. This is one of the most valuable uses of the product, because it removes the monthly mortgage insurance an FHA loan or a low-equity conventional loan is carrying, in addition to allowing access to equity.
What is the VA funding fee on a cash-out refinance?
The funding fee is 2.15 percent of the loan amount for first use of the VA benefit and 3.30 percent for subsequent use. Unlike a purchase, it does not vary by equity. It is waived entirely for veterans receiving VA disability compensation at any rating, those with a proposed or memorandum rating, surviving spouses receiving Dependency and Indemnity Compensation, and Purple Heart recipients on active duty. The exemption must appear on your Certificate of Eligibility before closing.
Do I need an appraisal for a VA cash-out refinance?
Yes. A VA appraisal is required on every cash-out refinance, which is the main difference from a VA IRRRL streamline refinance. The appraised value – not a Zestimate or a tax assessment – determines your maximum loan amount, so it is worth confirming a realistic figure with your loan officer before paying for one.
Can I get a VA cash-out refinance if my home is paid off?
No. The VA requires an existing loan or lien on the property to refinance. If your home is owned free and clear there is nothing to pay off, and the VA will not guarantee the loan. A closed-end second mortgage or a home equity line of credit is the usual route in that situation.
How long do I have to wait before a VA cash-out refinance?
If you are refinancing an existing VA loan, at least 210 days must have passed since the first payment due date and you must have made at least six monthly payments. If you are refinancing a conventional or FHA loan into a VA cash-out, VA seasoning does not apply in the same way, though other requirements still do.
Can I get a VA cash-out refinance with a high debt-to-income ratio?
Possibly. The VA does not evaluate a cash-out refinance on a credit score or a debt-to-income ratio alone. Your lender reviews income, debts, credit history, VA residual income, property value and the rest of the file together, and VA residual income is a genuine part of that decision rather than a formality. A higher DTI does not automatically rule you out, particularly where the cash-out itself is retiring the debts driving the ratio – but approval depends on the complete file. Call 302-703-0727 and we will look at yours.
Should I do a cash-out refinance if my current mortgage rate is very low?
It depends on what the cash does, not on the rate you are giving up. A cash-out refinance does replace your entire balance at today’s rate rather than just the amount you take out, so the blended cost of the mortgage rises. But if you are carrying high-interest consumer debt and the minimums are consuming your income, a cash-out that cuts your total monthly outflow by hundreds or thousands can be the right decision even from a 3 percent mortgage – what matters is what leaves your account each month, not the rate on one line of it. We run total monthly outflow before and after, alongside what the same money costs as a second lien that leaves your first mortgage alone, and you choose from both sets of numbers.
Is there a minimum credit score for a VA cash-out refinance?
The VA sets no minimum credit score. Individual lenders set their own, and on cash-out the threshold generally rises as the loan-to-value rises, because a higher LTV leaves no equity cushion. VA residual income requirements also apply and are a genuine part of the decision rather than a formality. Call 302-703-0727 and we will review your full file rather than treating a score as a cutoff.
Last Updated: September 2026 · John Thomas Team with AnnieMac Home Mortgage · Mortgage content reviewed by John R. Thomas, NMLS #38783.
VA cash-out loan-to-value ceiling, Type I and Type II definitions and seasoning rules per the VA Lender’s Handbook M26-7 Chapter 6 and VA Circular 26-18-30; funding fee rates per the U.S. Department of Veterans Affairs schedule effective April 7, 2023 and still in force in 2026. All verified September 16, 2026. Maximum LTV below the VA ceiling is set by individual lender overlay and varies by file. Figures are program requirements and illustrations, not a quote, not an APR and not a rate lock – call 302-703-0727 for your numbers.
John R. Thomas, NMLS #38783 | AnnieMac Home Mortgage NMLS #338923 | 248 E Chestnut Hill Rd, Newark, DE 19713 | 302-703-0727 | delawaremortgageloans.net
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