Let’s say that you’re receiving disability and are exempt from having to pay the VA funding fee. Let’s also imagine that you bought a house and after several years the house appreciates 25%. At this point, you want to take cash out of the home. A cash-out loan is a loan where your property is appraised, based on established guidelines, and you are allowed to take a certain amount of money out by funding a new larger loan amount. When receiving VA disability income, again, you are exempt from the VA funding fee. The VA guidelines are such that they’ll allow the lender to do a cash-out loan all the way to 100% of the value of the home!
If you are not exempt, and you are not receiving Disability payments from the VA, then your funding fee is 3.3% of the loan amount. If you apply for a $300,000 loan, the $9,900 gets added to that “base loan amount” for a total loan amount of $309,900, including the funding fee which gets added on top of the loan.