VA Cash-Out Refinance
VA Cash-Out refinancing allows prospective homeowners to take equity out of their home in the form of cash.
VA Cash-Out refinancing allows prospective homeowners to take equity out of their home in the form of cash, or refinance a non-VA loan into a VA loan.
When cashing in on equity, you essentially replace your existing mortgage with a new loan that is for more than you currently owe on your home.
Homeowners utilizing a VA Cash-Out often spend the cash on home improvements or other debt obligations.
What is a VA Cash-Out Refinance?
The VA's Cash-Out refinance uses a home’s equity to replace the existing mortgage with a VA loan. A VA Cash-Out refinance gives borrowers the opportunity to extract cash from their home’s equity while lowering their mortgage rate.
Today's VA Loan Rates
Mortgage rates come from our lender, Veterans United Home Loans. VA loan rates change daily based on market conditions. See current VA loan rates for each VA loan type below.
| VA Loan Type | Interest Rate | APR | Points |
|---|---|---|---|
| 30-Year Fixed VA Purchase | 6.500% | 6.960% | 1.6880 ($4979.60) |
| 30-Year Fixed VA Jumbo Purchase (Based on a $750,000 loan amount) | 6.875% | 7.280% | 1.0000 ($7665.51) |
| 30-Year VA Cash-Out Refinance | 7.125% | 7.585% | 1.5000 ($4425.00) |
| 30-Year VA Cash-Out Jumbo Refinance (Based on a $750,000 loan amount) | 7.125% | 7.524% | 0.8750 ($6707.32) |
| 30-Year Streamline (IRRRL) Refinance | 6.625% | 6.938% | 1.7500 ($5162.50) |
| 30-Year Streamline (IRRRL) Jumbo Refinance (Based on a $750,000 loan amount) | 6.990% | 7.298% | 1.6250 ($12456.45) |
How Does Cash-Out Refinancing Work?
VA Cash-Out refinancing works very similarly to a VA purchase loan.
Unlike the VA streamline refinance (IRRRL), prospective borrowers must follow standard credit and underwriting procedures. Standard underwriting means a complete look at credit, debt-to-income, income verification, and even a new VA appraisal.
Additionally, borrowers may be required to pay the VA funding fee. The VA funding fee is either 2.15% or 3.3% on a Cash-Out refinance, depending on if you've used the VA loan once or multiple times.
How Long Does a VA Cash-Out Refinance Take To Close?
A VA Cash-Out refinance typically takes 45 to 60 days to close. Be sure to talk to a VA loan expert to get an accurate estimate on the time-to-close.
How Long Do You Have To Pay a Mortgage Before a VA Refinance With Cash-Out?
Borrowers are eligible for a VA Cash-Out refinance 240 days after the original loan’s first monthly payment.
What is the VA Funding Fee for a Cash-Out Refinance?
The VA funding fee on a Cash-Out refinance is 2.15 percent for first-time borrowers and 3.3 percent for subsequent use. The funding fee amount is the same for non-VA loan borrowers using the VA Cash-Out refinance.
Some borrowers who receive compensation for a service-connected disability and eligible surviving spouses are exempt from paying the VA funding fee.
What is the Maximum LTV Ratio with VA Cash-Out Refinance?
You can cash out up to 100 percent of the home’s appraisal value with a VA Cash-Out refinance, which includes the VA funding fee. The maximum loan-to-value ratio may vary depending on the lender.
VA Cash-Out Requirements for 2024
To be eligible for a VA Cash-Out refinance, you must meet the VA's basic eligibility requirements and the lender's credit and underwriting requirements.
Basic eligibility requirements typically mean being on active-duty or discharged with anything other than dishonorable while meeting the following service requirements:
- 90 days during wartime, or
- 181 days during peacetime, or
- 6 years in the National Guard or Reserves, or
- You are a surviving spouse
To check your eligibility for a Cash-Out refinance, speak with a home loan specialist. You can also learn more about VA loan eligibility here.
Cashing Out Isn't For Everyone
Those wishing to utilize a Cash-Out refinance should know it costs a significant amount to use this option. Expect closing costs and fees to range from 3-5 percent of the loan amount - in addition to the funding fee.
You can roll these costs into the loan amount if it meets the lender's requirements; however, keep in mind that this is still thousands of dollars. A reputable loan specialist can walk you through refinancing to help determine if it's the best option for you.
Why Use a Cash-Out Refinance?
Cash-Out refinancing can cost borrowers thousands of dollars. However, they can also help save thousands, depending on the individual situation.
The VA doesn't restrict what you can use your cash on. Many homebuyers utilize this refinancing method to consolidate high rate debuts, such as credit cards and student loans, into a single monthly payment with a lower rate.
If you're interested in seeing what a Cash-Out refinance can do for you, get started to see what you qualify for today.