Military VA Loan

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VA Cashout Refinance Process and Limits


VA cash-out refinancing is a common refinance option for eligible veterans who are interested in taking advantage of historically low interest rates and at the same time, tap into the equity in their home.

VA Cash-out Refinance

Qualified veterans can use this cash to make home upgrades, pay down high interest credit cards, or take a vacation. Low interest rates and flexible payment terms make it a great time to invest in your home and use equity to pay off other expenses.

To speak with a mortgage lender about your cash-out refinance options, call 888-516-9990 or let us connect you today.

How the Cash-out Refinance Works

A VA cash-out refinance loan allows a qualified veteran to one or both of two things. 1) Open a loan that is larger than their current loan, and receive a check for the difference, after closing costs, when the loan closes, or; 2) pay off a loan that is not currently a VA loan.

So, if you have an FHA loan or conventional loan, but don’t have the equity to refinance with the same type of loan, you could possibly refinance with a VA cash-out loan. In some cases, you the lender will allow you to refinance up to 100% of the value of your home (100% LTV) with a VA cash-out. For more information, contact us today.

General Cash-out Qualifications and Requirements

Before you look for a lender who can provide you with a cash-out refinance, it is important to check to make sure that you qualify for the general requirements. In order to be eligible, you must be a member of the US Armed Forces or be an honorably released veteran. Those who may qualify include:

  • Veterans (includes veterans of the Reserve and National Guard who have served in active duty)
  • Active duty service members
  • Current Reserve and members of the National Guard (typically 6 years of service is required)
  • Surviving spouses of deceased combat veterans who have not remarried
  • Commissioned officers of the Public Health and National Oceanic and Atmospheric Administration
  • All veterans must have been discharged under conditions other than dishonorable

Not all members of the Armed Forces are guaranteed to qualify, and those who have not served for a set amount of time will be required to submit additional paperwork. In addition, all applicants will be required to submit a valid Certificate of Eligibility (COE) which your lender can obtain for you if you provide them a valid DD-214. If you are uncertain if you qualify, call 888-516-9990 to speak with a licensed lender who can answer your questions and help you apply. Or, contact us here.

The Application Process and Next Steps

The application process is easy. To get started call 888-516-9990 to speak with a knowledgable mortgage professional. Or, simply fill out the form here. From there, your licensed VA loan expert will guide you through the process.

Here are a few things your mortgage professional will help you determine:

  • Do I have enough income to meet my monthly mortgage payments, maintain my home, pay my monthly debts and other financial obligations, and still have enough left to pay for food and other living expenses?
  • Does the refinance apply to the mortgage on the home I am currently living in?
  • Do I have at least fair credit history?
  • Do I have my DD-214? (If not, your lender can help you obtain it. This document is needed for your lender to obtain your Certificate of Eligibility.)

Contact us today to get started with your VA cash-out application.

VA Cash-out compared to VA Streamline Refinance

A VA cash-out refinance is different than the VA streamline refinance. Compare the differences with this chart:

VA Streamline Refinance VA Cash-out Refinance
Cash-out Allowed No Yes
Can Combine 1st and 2nd Mortgage No Yes
Maximum Loan to Value (LTV) No Maximum/Not Verified 100% in some cases
Maximum Loan Amount $417,000 $417,000
VA Funding Fee .5% (unless exempt) 2.15-3.3% (unless exempt)
Mortgage Lates Allowed In Last 12 Months 1 (30 days) 0
Property Must Be Owner Occupied No Yes

Perhaps the most notable difference between these two programs is that the VA cash-out loan has a maximum loan-to-value of 100%, but there is no maximum VA streamline refinance LTV. This is because no appraisal is required for a VA streamline refinance, therefore no value to compare the loan amount to. But, with a cash-out refinance, an appraisal is required.

Contact a VA loan officer for more questions about VA cash-out and streamline refinances.

Additional benefits of the VA cash-out refinance include:

  • Finance up to 100% loan-to-value (LTV)
  • Loan can be structured with no out-of-pocket costs
  • Applicants need to verify their income to qualify
  • Low 2.15 – 3.3% funding fee (unless exempt)
  • A VA cash-out loan can pay off any type of home loan

The amount of money that you can receive from your loan depends on your current home value and specific lender. When working with one of our qualified lenders, they will make sure that they are able to provide the services you require and answer your questions quickly in regards to how much cash you can receive.

Call us today at 888-516-9990 or contact us here to get a free quote on a VA cash-out refinance.

If you are interested in saving money with a VA home loan refinance but aren’t interested in the cash-out option, visit our VA Streamline Refinance page for more information on the other types of loan refinances that are available.

Source: VA Handbook