How to refinance into a VA loan

You’re not locked into your mortgage forever. If you qualify for a VA loan, it may make sense to refinance into a VA loan. We will walk you through VA loan eligibility and help you weigh your options on the type of VA loan to get. 

Who is eligible for a VA loan?

VA loans are for veterans and active-duty military service members. Here are a few standards you must meet in order to qualify for a VA loan:

• You served in the military as an active-duty service member for at least 90 days.
• You are a veteran who meets the service requirements of either 90 or 181 days. 
• You completed six years of creditable service in the Reserve or National Guard.
• You are the spouse of a veteran who has died while in service or from a disability. 
• If your spouse is considered missing or a prisoner of war, you can also qualify.

You may still be eligible if you don’t fit exactly into one of the above categories. Check with VA to be sure. 

Benefits of refinancing into a VA loan

There are numerous benefits of refinancing into a VA loan for those who qualify.

No down payment required

It can be difficult to scrape together a down payment for a mortgage. But the VA loan is one of the few options that doesn’t require a down payment. You may have to pay either 5% to 20% for a down payment with other loans. 

No PMI or mortgage insurance required

For most loans, if you can’t put 20% down you are required to pay private mortgage insurance (PMI). The purpose of PMI is to protect the lender if you can’t pay your loan and you have to go into foreclosure. Mortgage insurance gets lumped into your monthly payment, so you do pay more each month. You are not required to have PMI with a VA loan.

Backed by the U.S. government with a guarantee

The VA loans have such good terms, that it can feel too good to be true. Such favorable terms exist because the U.S. government backs the loans. This means that the government agrees to repay your loan if you can’t. This gives lenders more peace of mind. 

You can shop around for rates on VA loans

VA loans do not come from the VA. Different U.S. banks offer VA loans, so this means you can shop around for the best rates, just like a traditional loan. Each VA loan is different, and you can pick the one that has the most benefits for you. 

Options for refinancing into a VA loan

You have options when you refinance to a VA loan. VA loan refinancing options can be different to achieve different goals. Here are your options. 

VA streamline refinancing 

Often referred to as an IRRRL loan or interest rate reduction refinance loan. A VA streamline refinancing loan is for changing VA loans so that you can have a more favorable rate. You may find that rates have changed, and a VA streamline refinancing loan can get you better rates. So by refinancing, you can pay less each month. 

VA cash-out refinancing

Sometimes, you may need some cash for a significant expense or a home improvement project. A VA cash-out refinancing loan may be the answer. You can refinance your VA mortgage for a larger amount so that you can access more cash. 

Conventional to VA Refinance

Maybe you want to take advantage of the perks of a VA loan, but you initially purchased your home with a conventional mortgage. You can refinance into a VA loan. This may be advantageous to getting better rates, eliminating PMI, or you married someone who qualifies for a VA loan. 

Streamline refinancing vs cash-out

Can’t decide on streamlined financing or cash-out financing? Use our comparison chart to determine which VA refinance loan is right for you. 

VA streamline refinance	VA cash-out refinance
You don’t have to report your income or your credit score. You also don’t have to get an appraisal.	You do have to report income, credit score, and get an appraisal. These factors must be approved.
You have to refinance from a VA loan.	You can refinance a non-VA loan.
You can include closing costs into the loan.	No restriction on how you use cash-out funds.
You can borrow up to your home’s value on the market.	You have to earn equity before you cash out.

Are there fees with VA loans?

Refinancing with VA loans comes with the same fees as traditional refinancing. There is one additional fee called the VA funding fee. The VA funding fee will vary based on how much down payment you put down on your VA loan. The fee ranges from 1.4% to 2.3% on average. You can pay the VA funding fee upfront or roll it into your refinance. 

How soon can I refinance into a VA loan?

If you want to refinance into a VA loan, you will have to wait 210 days. This is from your first payment on your original mortgage to the closing date of your VA mortgage refinance. 

Refinance into a VA loan today

Just because a mortgage feels like a big commitment, doesn’t mean you’re locked into it for the duration of the loan. You have options. You can refinance today into a VA loan. Just shop around for the best mortgage rate and terms for your situation.

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