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VA Cash-Out Refinance Guidelines

 

Who Is Eligible for a VA Cash-Out Refinance?

  • Current and former U.S. military servicemembers with qualified credit
  • Homeowners who already have a VA Home Loan, or another conventional loan, including FHA or others, who are interested in converting to a VA mortgage

Using a VA Cash-out Refinance to consolidate debt increases your mortgage debt, reduces equity, and extends the term on shorter-term debt and secures such debts with your home. The relative benefits you receive from debt consolidation will vary depending on your individual circumstances. Debt consolidation may increase the total number of monthly payments and the total amount paid over the term of the loan. To enjoy the benefits of debt consolidation, you should not carry new credit card or high interest rate debt. By refinancing your existing mortgage, your total finance charges may be higher over the life of the loan.

VA Cash-Out Refinance Requirements

VA Cash-Out Refinance requirements are similar to those for a typical VA purchase loan, including proof of income, credit underwriting, and a home appraisal. You must also certify that you currently occupy or intend to occupy the property.

It is important to note that, unlike a VA IRRRL (streamline refinance), you can’t roll the closing costs of the home on top of the refinanced loan. However, you may be able to finance your closing costs into your new loan as long as you still meet the loan-to-value (LTV) guidelines.

As with all VA Home Loans, homeowners must pay the VA funding fee, although there are some circumstances in which the VA funding fee can be waived. You may qualify for exemption if (1) you are a Veteran with a service-connected disability, (2) a servicemember on active duty who received the Purple Heart, or (3) you are the surviving spouse of a Veteran who died in service or from a service-connected disability.

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Refinance Your Mortgage with a VA Cash-Out Refinance

The VA Cash-Out Refinance loan gives Veterans and military servicemembers, with qualified credit, the ability to refinance their current home loan to get a lower rate, while accessing cash from the home's equity.

The VA Cash-Out Refinance is the only VA Home Loan type that includes cash-out refinancing up to 90% of the home’s value. Plus, Veterans and servicemembers can use the VA Cash-Out Refinance even if their current mortgage is not a VA Home Loan — it can be used to convert conventional loans, FHA Home Loans, or any other loan type into a VA mortgage.

Although the name suggests otherwise, homeowners aren’t actually required to take out cash with a VA Cash-Out Refinance. Even if you don’t plan to receive cash at closing, you can still take out a VA Cash-Out Refinance loan to lower your rate, replace a current adjustable-rate loan, or eliminate mortgage insurance paid on your existing mortgage.

There are no restrictions on how you spend the cash from your VA Cash-Out Refinance; however, common uses include:

  • Reducing or paying off debts
  • Financing home improvement projects
  • Paying for college/higher education
  • Paying for emergency expenses

Today's Mortgage Rates

*Primarily for Texas homeowners.

Disclaimer: these are sample rates and terms based on daily pricing that fluctuates and is subject to change and credit approval. Parameters: 720+ FICO, Single-Family Residence, $300,000 loan amount, State = NC, County = Wake, Discount Points range from 0.0% to 2.0% as shown above, Admin Fee = $1149. For VA Cash-Out Refinance, assume the borrower is exempt from the VA Funding Fee.

Common Questions

If you have significant expenses you need to cover in the near future, such as a home improvement project or a child’s college education, a VA Cash-Out Refinance allows you to refinance up to 90% of your home’s value to access cash from your home's equity. You don’t even need to have a current VA-backed loan to qualify. A VA Cash-Out Refinance can be used to convert conventional loans, FHA Home Loans, or any other loan type into a VA mortgage. Check out our VA Mortgage Calculator and Mortgage Refinance Calculator to estimate payments based on different terms.

Note: Refinancing your mortgage may result in higher finance charges over the life of the loan.

To qualify for a VA Cash-Out Refinance loan, you must:

  • Provide all documentation required, similar to requirements for a VA Home Loan to purchase a home, such as recent pay stubs, bank statements, W-2 forms and tax returns Certify that you currently occupy or intend to occupy the home covered by the refinance loan
  • Pay the VA funding fee. There are some circumstances in which the VA funding fee may be waived.

Note: Refinancing your mortgage may result in higher finance charges over the life of the loan.

The first step to securing any loan is to submit your completed loan application. After submission, one of our licensed Military Mortgage Advisors will use your credit and financial information to determine which loan program is best for you. You may be eligible for a VA Cash-Out Loan at up to 90% of your home’s appraised value.

Check out our Home Purchase Calculator to determine the range of loan amounts for which you may qualify.

Ready to apply? Take the next step with a loan application.