VA Cash Out Refinance GuidelinesMax McCoy
The VA cash out refinance guidelines are similar to that required for a VA home purchase loan.
To review, the VA cash out refinance program allows eligible veterans to tap into their home equity and receive cash back for any purpose.
The VA cash out loan is the only refinance available today that permits cash to the borrower with a loan-to-value of 100%.
Most noteworthy, this loan could be the best way for veterans to put home equity to work to complete long-standing financial goals.
General VA Cash Out Refinance Guidelines and Qualifications
To meet the qualifications of a VA cash out refinance, an applicant must first meet VA home loan eligibility requirements. These include:
- Veterans with an Honorable Discharge (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)
- Unmarried surviving spouses
- Commissioned officers of the Public Health and National Oceanic and Atmospheric Administration
- All veterans must have been discharged under conditions other than dishonorable
VA-approved lenders can check eligibility, often within minutes, via direct online requests to VA. So if you have any U.S. military experience whatsoever, it’s in your best interest to check your eligibility for a VA loan.
VA Cash Out Requirements
Again, VA cash out loans require similar documentation as an initial VA home purchase loan.
A new appraisal is required to establish current value of your home. In addition, a verification of income will be required to ensure it is enough to pay the new VA loan payment.
Furthermore, some important questions you should determine with a mortgage professional include:
- 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.)
VA Cash Out Refinance Loan Limits
The VA cash out program follows the same maximum lending limits as the VA loan to purchase a home.
The standard limit is $424,000 for most areas in the country. The limit goes up to $721,050 in high-cost counties in Hawaii, California, Alaska, and other states.
However, most homeowners don’t require VA loans over the local limit.
VA Home Loan Rates
According to mortgage software company Ellie Mae, VA rates in general run about 0.25% lower than rates for conventional loans. Lenders charge about the same rates for VA cash out loans as for VA home purchase loans.
Because of these VA cash out refinance guidelines, you should be comfortable knowing where you stand. With low rates and approval easier than for standard cash-out programs, it’s a great time to compare rates.
Allow trusted lenders to compete for your great deal, and find your best rate today!