VA Cash-Out Refinance: How I Accessed 100% LTV with Zero Down Payment History

As a Navy veteran who bought my home in 2019 with a VA loan and zero down payment, I always knew the VA loan benefit was valuable. What I didn’t realize was that the VA cash-out refinance program would let me access up to 90-100% of my home’s value—even though I never put a penny down originally.

Last year, I used VA cash-out refinance to pull out $68,000 at 90% LTV to pay off high-interest debt and fund home improvements. Here’s exactly how it works and why it’s one of the best-kept secrets in the veteran community.

My Starting Position

Home Purchase (2019):

• Purchase price: $285,000
• Down payment: $0 (100% VA financing)
• Original VA loan amount: $285,000
• Original interest rate: 3.5%
• Monthly payment: $1,280 (PITI)

Current Situation (2024):

• Home value: $365,000 (28% appreciation over 5 years)
• Current loan balance: $262,000
• Available equity: $103,000
• Credit score: 698 middle score
• High-interest debt: $42,000 (credit cards, car loan)

I had built substantial equity through appreciation and five years of principal payments, despite starting with zero down payment. But I was struggling with $1,340/month in high-interest debt payments on top of my mortgage.

VA Cash-Out Refinance Basics

The VA cash-out refinance program allows eligible veterans, active-duty service members, and surviving spouses to refinance their home and take cash out up to:

Maximum LTV Ratios:

• 90% LTV is most common and widely available
• 100% LTV available with some lenders (rare, stricter requirements)
• Compare to conventional cash-out: typically 80% LTV maximum

Key Benefits:

1. No private mortgage insurance (PMI) required even at high LTV
2. Competitive interest rates
3. Can refinance any type of existing loan (VA, conventional, FHA) into VA cash-out
4. Flexible credit requirements (620-640 minimum typically)
5. Can include funding fee in loan amount

The Catch:

• VA funding fee: 2.3% for first-time VA cash-out refinance use, 3.6% for subsequent use
• Must be for primary residence only
• Must meet VA occupancy and income requirements
• Cannot exceed 90% LTV with most lenders (100% LTV is rare)

My VA Cash-Out Refinance Numbers

I worked with loan officers at Browse Lenders who specialize in VA financing:

My VA Cash-Out Refinance Details:

• Home appraised value: $365,000
• Target LTV: 90%
• Maximum loan amount: $328,500 (90% of $365,000)
• Existing VA loan payoff: $262,000
• Funding fee (2.3%): $7,555
• Closing costs: $4,200
• Cash to me: $54,745

Wait—I thought I would get $68,000 cash out?

Let me break down the math:

• New loan amount: $328,500
• Minus existing loan payoff: -$262,000
• Minus closing costs: -$4,200
• Minus funding fee: -$7,555
• Net cash to me: $54,745

I decided to roll the funding fee into the loan amount to preserve cash:

Final Loan Structure:

• Base loan amount: $320,945 (payoff + closing costs + cash to me)
• Plus funding fee: $7,555
• Final new loan amount: $328,500
• New interest rate: 6.75%
• Term: 30 years
• New monthly payment: $2,131 (PITI)
• Monthly payment increase: $851

How I Used the $54,745 Cash

Debt Consolidation:

• Credit card balances: $28,500 at 22% average APR → Paid off
• Auto loan balance: $13,500 at 8.9% → Paid off
• Total debt eliminated: $42,000
• Old monthly payments: $1,340
• New monthly payments: $0
• Monthly savings: $1,340

Home Improvements:

• Kitchen renovation: $8,000
• Bathroom update: $3,200
• Total improvements: $11,200

Emergency fund:

• Remaining cash: $1,545 (added to savings)

The Monthly Cash Flow Impact

Before VA Cash-Out Refinance:

• Mortgage payment: $1,280/month
• Debt payments: $1,340/month
• Total monthly obligations: $2,620/month

After VA Cash-Out Refinance:

• New mortgage payment: $2,131/month
• Debt payments: $0/month
• Total monthly obligations: $2,131/month
• Monthly savings: $489/month

Even though my mortgage payment increased $851/month, I eliminated $1,340/month in debt payments, resulting in $489/month net monthly savings.

Over 12 months, that’s $5,868 in improved cash flow—money I can now save or invest.

The Interest Savings Calculation

Let me show you the long-term interest savings from consolidating high-interest debt:

Credit Card Debt ($28,500 at 22% APR):

• Minimum payments: $855/month
• Time to pay off: 58 months (making minimum payments)
• Total interest paid: $20,890
• Total paid: $49,390

Auto Loan ($13,500 at 8.9%):

• Monthly payment: $485/month
• Remaining term: 32 months
• Total remaining interest: $2,020
• Total remaining payments: $15,520

Total if I hadn’t consolidated:

• Time to pay off: 58 months (credit cards longest)
• Total interest: $22,910
• Total paid: $64,910 for $42,000 in debt

After consolidating into VA cash-out refinance at 6.75%:

• Loan amount: $328,500 (includes the $42,000 debt consolidation)
• Interest rate: 6.75%
• Portion of payment allocated to consolidated debt: Approximately $283/month interest on $42,000 at 6.75%
• Over 58 months (matching original payoff timeline): $16,414 total interest on the $42,000 portion

Interest savings: $6,496 over the original debt payoff timeline, plus I have the flexibility of 30-year amortization if needed.

VA Funding Fee: Worth It or Not?

The VA funding fee of $7,555 (2.3% of loan amount) is the biggest cost of VA cash-out refinance. Was it worth it?

Funding Fee Analysis:

• One-time cost: $7,555
• Monthly interest savings: $489
• Months to recover funding fee: 15.4 months
• After 15.4 months: pure savings of $489/month

Plus I got immediate benefits:

1. $42,000 debt eliminated immediately
2. Credit score improved from 698 to 735 within 6 months (lower credit utilization)
3. Simplified finances: one payment instead of multiple debts
4. Home improvements increased home value approximately $9,000

Bottom line: The funding fee was recovered in 15 months through monthly savings alone, and I gained additional value through home improvements and credit score improvement.

VA vs. Conventional Cash-Out Refinance

I compared VA cash-out refinance to conventional cash-out refinance:

VA Cash-Out (What I Did):

• Maximum LTV: 90%
• Cash accessed: $54,745
• Interest rate: 6.75%
• PMI: None required
• Funding fee: $7,555 (2.3%)
• Credit score impact: Minimal (VA is flexible)

Conventional Cash-Out Alternative:

• Maximum LTV: 80%
• Cash available: $29,800 ($365k × 80% = $292k loan - $262k payoff = $30k cash)
• Interest rate: 7.125% (higher for 80% LTV cash-out)
• PMI: None (below 80% LTV)
• No funding fee
• Credit score requirement: 700+ for best rates

Key differences:

1. VA gave me $24,945 MORE cash (90% LTV vs 80% LTV)
2. VA rate was 0.375% LOWER despite higher LTV
3. VA funding fee ($7,555) was one-time cost vs conventional’s higher rate over life of loan
4. With only $29,800 from conventional, I couldn’t have paid off all $42,000 in debt

For my situation, VA cash-out refinance was clearly superior.

Credit Score Considerations

My 698 middle credit score was acceptable for VA cash-out refinance, but I learned that credit score impacts rates:

VA Cash-Out Refinance Rate Tiers (2024 rates):

• 740+ credit score: 6.375-6.5%
• 700-739 credit score: 6.5-6.75%
• 660-699 credit score: 6.75-7.0%
• 620-659 credit score: 7.0-7.5%

My 698 score got me 6.75%. If I had waited to improve my score to 720+, I might have gotten 6.5%—saving approximately $68/month or $816/year.

However, waiting 6-12 months to improve credit would have cost me:

• 6-12 more months of high-interest debt payments: $8,040-$16,080
• 6-12 more months of interest on credit cards: $2,500-$5,000

Conclusion: Moving forward at 698 credit score was the right decision despite slightly higher rate.

Understanding your middle credit score is critical for VA cash-out refinance rate qualification—VA lenders use middle score of three bureaus, so knowing your qualifying score helps you time your application optimally.

Who Benefits Most from VA Cash-Out Refinance

VA cash-out refinance is especially powerful for:

1. Veterans with high-interest debt (credit cards, personal loans, auto loans above 7%)
2. Service members who bought with zero down and have built equity through appreciation
3. Homeowners who need significant cash and want to maximize LTV above 80%
4. Veterans with good credit (680+) who qualify for competitive rates
5. Those planning home improvements that increase property value

Who Should Consider Alternatives

VA cash-out refinance may not be best for:

1. Veterans with very low current rates (below 4%—you’d be increasing your rate significantly)
2. Service members planning to move within 3-5 years (funding fee and closing costs take time to recover)
3. Those who can’t afford increased payment even with debt elimination
4. Veterans with poor credit (below 620) who might need to improve credit first

For those with low existing rates, consider alternatives like home equity loans or HELOCs that don’t replace your low-rate first mortgage.

6-Month Update: Results

Six months after my VA cash-out refinance:

Financial improvements:

• Credit score: 698 → 735 (37-point increase from lower credit utilization)
• Monthly cash flow: +$489/month saved
• Emergency fund: Built to $8,500 (from monthly savings)
• Debt: $0 credit card or auto loan debt
• Home value: $373,000 (additional appreciation)
• New loan balance: $324,800 (principal paydown)

Quality of life improvements:

• Reduced financial stress (one payment vs multiple debts)
• Updated kitchen and bathroom
• Improved credit score opened better credit card offers
• Peace of mind with emergency fund

Was it worth it? Absolutely. The VA cash-out refinance eliminated high-interest debt, improved my monthly cash flow by $489, increased my credit score 37 points, and funded home improvements that added value.

The Bottom Line

The VA cash-out refinance benefit is one of the most underutilized veteran benefits. If you served, you earned this:

✓ Access up to 90% of your home’s value in cash
✓ No PMI required even at high LTV
✓ Competitive rates even with lower credit scores
✓ Consolidate high-interest debt effectively
✓ Fund home improvements or other financial goals

For me, VA cash-out refinance at 90% LTV provided $54,745 in cash, eliminated $42,000 in high-interest debt, and improved my monthly cash flow by $489—despite the 2.3% funding fee.

If you’re a veteran sitting on home equity while carrying high-interest debt, explore VA cash-out refinance with specialists at Browse Lenders. You’ve earned this benefit through your service.

You served. Now let your home equity serve you.

Editor’s Note: This article reflects one veteran’s experience with VA cash-out refinance. Individual results vary based on credit scores, home values, debt levels, and current rates. VA loan benefits are available to eligible veterans, active-duty service members, National Guard and Reserve members, and surviving spouses. Consult with VA-approved lenders and financial advisors before making refinancing decisions. Learn more about cash-out refinance options at Cash-Out Refinance®.