VA Refinancing Options: A Complete Review
If you are a current military service member, Veteran, or surviving spouse, you may be eligible for mortgage refinancing through the Department of Veterans Affairs (VA). Here’s how it works and how to know if VA refinancing is right for you.
What Is VA Refinancing?
VA refinancing is a special program designed for individuals who have served in the military and certain spouses. VA refinancing is:
A replacement for your current mortgage
VA refinancing allows borrowers to replace their existing mortgage with a new loan from the Department of Veterans Affairs. This may provide more flexible repayment options compared to their current mortgage.
A way to reduce your interest or access home equity
Depending on your financial goals, you may be able to use the Interest Rate Reduction Refinance Loan (IRRRL) to make monthly payments more manageable or cash-out refinancing to tap into your home equity with a new VA mortgage.
Exclusive to Veterans, service members, and spouses
This includes but is not limited to Veterans, active duty service members, certain Army Reserves and National Guard members, and some surviving spouses of disabled or deceased Veterans.
VA Refinancing Options
Two common types of VA refinances are streamline refinancing and cash-out refinancing. Here’s how they compare.
VA Streamline Refinance (IRRRL)
The Interest Rate Reduction Refinance Loan (IRRRL) offers a simplified way to refinance with minimal paperwork. This limits out-of-pocket costs but doesn’t offer cash back to the borrower.
Cash-Out Refinance
Alternatively, cash-out refinancing lets borrowers access their home equity in a lump sum payment. However, this program typically requires a full appraisal and credit check, while IRRRLs generally don’t.
Pros
- Attractive interest rates
- Flexible credit score requirements
- Minimal upfront expenses
- No monthly mortgage insurance
- May be reused as long as the borrower is eligible and VA entitlement has been reinstated
Cons
- Must meet specific eligibility criteria
- Refinancing may extend the length of your repayment period
- May need to finance a VA funding fee if not eligible for a waiver
Talk to our mortgage experts today about finding the right loan for you.
Alternatives to VA Refinancing
- May require private mortgage insurance (PMI)
- Conventional refinancing is not government-backed
- Offers competitive interest rates to qualified buyers
- Can restore your VA entitlement for a future home
- FHA refinancing is backed by the Federal Housing Administration (FHA)
- Has more flexible qualification criteria compared to VA loans
- Requires both upfront mortgage insurance and monthly mortgage insurance
- A HELOC works like a credit card
- Gives borrowers access to a revolving line of credit during a specified time period based on home equity
- Does not replace an existing mortgage, but instead adds a 2nd mortgage lien to your home
Who Is Eligible for VA Refinancing?
Veterans
Veterans must meet active-duty service requirements based on the time period during which they served.
Reserve and National Guard Members
Members of the Army Reserve and National Guard may be eligible if they served >90 days of active duty from August 2, 1990 to present day; or > 90 days of non-active-duty; or 6 years in the Selected Reserve.
Active Duty Service Members
Active duty service members must have served for at least 90 consecutive days during any time period, without a break.
Some Surviving Spouses
Spouses of veterans who died while in service or from a service-connected disability may also be eligible for VA refinancing.
*Not a complete list of program requirements. Other eligibility criteria may apply.
When Is the Best Time to Refinance with a VA Loan?
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FAQ
How soon can I refinance an original VA loan?
Before you can refinance an original VA loan, you must wait at least 210 days after your first payment due date.
Can I refinance a non-VA loan with a VA loan?
Can I refinance my VA loan if I no longer live in the home?
Yes, you can use a VA IRRRL (Interest Rate Reduction Refinance Loan) on a home that you’ve converted to an investment property. One of the key benefits of the VA IRRRL is that it allows refinancing even if the property is no longer your primary residence.
Will I have to pay closing costs with VA refinancing?
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