Refinance Into a New VA Loan and Access Your Home Equity to Pay Off Debt, Fund Home Improvements, or Achieve Your Financial Goals
A VA cash-out refinance lets you replace your current loan with a new VA-backed loan and take cash out of your home equity. You can use that cash to pay off debt, pay for school, make home improvements, or take care of other needs.
You can refinance a VA loan into a new VA loan, or even refinance a non-VA loan (like a conventional or FHA loan) into a VA-backed loan and access cash at the same time.
Take cash out of your home's equity through refinancing. Amount depends on your loan limits and home value.
Use cash to pay off credit cards, personal loans, and other debt into one low-rate mortgage payment.
Finance home renovations, repairs, upgrades, or other home-related needs with your equity.
Pay for school, cover other expenses, or use the funds for other personal financial needs.
Replace existing VA loans, conventional loans, FHA loans, or other mortgages with a new VA-backed loan.
VA loans never require mortgage insurance, saving you money compared to conventional financing.
To qualify for a VA cash-out refinance loan, you must meet all of the VA's requirements.
You must qualify for a VA-backed home loan COE based on your military service. We can retrieve this electronically in most cases.
The home you're refinancing must be your primary residence—the place where you actually live. Investment properties or vacation homes don't qualify.
You must meet your lender's credit requirements. While the VA doesn't set a minimum credit score, most lenders require 580-620+.
You must meet your lender's income requirements and show the ability to pay the new monthly mortgage payment.
For a cash-out refinance loan with no down payment, you can borrow up to the Fannie Mae/Freddie Mac conforming loan limit in most areas—and potentially more in some high-cost counties. You can borrow more than this amount if you want to make a down payment.
When refinancing a loan, you'll want to keep closing costs in mind as they can add up to thousands of dollars. Make sure you understand how your new loan amount relates to the value of your home. While your lender can advise you on the costs and benefits, make sure you understand what you're getting into before signing.
According to the VA, a cash-out refinance may help you take cash out of your home equity to pay off debt, pay for school, make home improvements, or take care of other needs. Here are some common ways veterans use this benefit:
Pay off high-interest credit cards with a lower-rate mortgage payment and save money over time.
Consolidate vehicle loans into your mortgage at mortgage rates instead of auto loan rates.
Pay off personal loans, medical debt, and other unsecured debt with lower-rate refinancing.
Fund college tuition, vocational training, or professional certifications for yourself or family.
Renovate your kitchen, update bathrooms, replace roofing, or make other home repairs and improvements.
The VA allows flexibility in how you use cash-out proceeds for various personal financial needs.
The VA Funding Fee is a one-time cost that helps the VA program remain sustainable. It can be financed into your loan so you don't pay out of pocket at closing. Here's exactly how it works:
| Loan Type | First-Time Use | Subsequent Use | With 5%+ Down |
|---|---|---|---|
| VA Purchase/Construction | 2.15% | 3.3% | 1.5% |
| VA Cash-Out Refinance | 2.15% | 3.3% | — |
| VA IRRRL (Streamline) | 0.5% | 0.5% | — |
| Disabled Veterans* | $0 - Exempt | $0 - Exempt | $0 - Exempt |
Here's what you'd actually pay based on loan amount:
| Loan Amount | First-Time (2.15%) | Subsequent Use (3.3%) | Monthly Impact* |
|---|---|---|---|
| $250,000 | $5,375 | $8,250 | $24-$37 |
| $350,000 | $7,525 | $11,550 | $34-$52 |
| $450,000 | $9,675 | $14,850 | $44-$67 |
| $550,000 | $11,825 | $18,150 | $53-$82 |
*Monthly impact based on 30-year loan term at 5.5% APR
*Exception Note: Surviving spouses who remarried after age 57 may still qualify for exemption. Check with us for your specific situation.
Most veterans don't pay the funding fee out of pocket—it's financed into the loan amount. This means you spread the cost over 30 years at mortgage rates, which is almost always better than paying cash at closing. We'll show you the exact breakdown for your situation.
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