Two ways veterans use it
Taking cash out. A VA cash-out refinance replaces your current mortgage with a new, larger VA loan, and you receive the difference in cash. The VA allows refinancing up to the full value of the home, though many lenders set their own limit lower, which is one reason shopping lenders matters.
Refinancing into VA. You do not have to take any cash at all. If you bought with an FHA or conventional loan and you are VA eligible, refinancing into a VA loan can remove your monthly mortgage insurance. For a lot of Tampa Bay veterans who did not use their benefit the first time, this is a big monthly savings.
How it differs from the IRRRL
The VA IRRRL is the streamlined option for lowering the rate on a loan that is already VA. A cash-out refinance is a full refinance:
- Appraisal required to confirm the home’s value
- Full income and credit review
- You must live in the home as your primary residence
- Any existing loan type can be refinanced, not just VA loans
The funding fee
The VA funding fee on a cash-out refinance is higher than on an IRRRL, and it is higher again if you have used your VA benefit before. Veterans receiving VA disability compensation for a service-connected disability are generally exempt. You can estimate your funding fee here.
Making sure it makes sense
The VA requires that a refinance gives you a real benefit, and so do I. Before you decide, I will show you your new payment, your costs, how much cash you walk away with and how it compares to keeping your current loan. If a home equity line or a different option fits better, I will tell you that too.
Common questions
Can I refinance my FHA loan into a VA loan?
Yes, if you are eligible for a VA loan and the home is your primary residence. Many veterans do this to get rid of FHA mortgage insurance.
How much cash can I take out?
The VA allows a cash-out refinance up to the full value of the home, but many lenders cap it lower. Your appraisal, credit and the lender's guidelines decide the final number.
Do I have to live in the home?
Yes. A VA cash-out refinance requires that the home be your primary residence. If you have moved out and the home is now a rental, an IRRRL may still be an option if your current loan is VA.
Do I need my Certificate of Eligibility?
Yes. Unlike an IRRRL, a cash-out refinance needs your COE. In most cases I can pull it electronically for you.
All loans subject to credit approval, property eligibility, and underwriting guidelines. Not all borrowers will qualify. Program terms and availability can change without notice. This is not a commitment to lend.