Can VA Loans Be Used to Refinance an Existing Conventional or FHA Loan?

 

Did you know you don’t have to already have a VA loan in order to take advantage of VA refinancing? That’s right — if you currently have a Conventional or FHA loan, you may be able to refinance into a VA loan and enjoy the powerful benefits the VA program offers.

Why Refinance Into a VA Loan?

  • No Monthly Private Mortgage Insurance (NO PMI)
    FHA loans come with monthly mortgage insurance (MIP), and Conventional loans often require PMI if you put less than 20% down. VA loans have no monthly mortgage insurance, which can save you hundreds of dollars per month.

  • Competitive Interest Rates
    VA loans are backed by the Department of Veterans Affairs, which allows lenders to offer some of the most competitive rates in the market. Refinancing could lower your monthly payment or shorten your loan term.

  • Cash-Out Options
    VA allows cash-out refinancing up to 100% of your home’s value in some cases (lender overlays may apply). This means you can consolidate debt, make home improvements, or free up funds while still securing the benefits of a VA loan.

  • Flexible Credit & Income Guidelines
    Compared to Conventional programs, VA underwriting is often more forgiving when it comes to credit scores and debt-to-income ratios.

Two Main Refinance Paths

  1. VA Cash-Out Refinance

    • Works even if your current loan is FHA, Conventional, or USDA.

    • Can be used to pay off your existing mortgage and replace it with a VA loan.

    • Option to pull out equity if needed.

  2. VA IRRRL (Streamline Refinance)

    • This option is only available if you already have a VA loan.

    • Designed for lowering interest rates and payments with minimal paperwork.

So — if you’re sitting on a Conventional or FHA mortgage and you qualify for VA benefits, the VA Cash-Out Refinance is the path that allows you to switch into the VA program.

Key Considerations

  • Funding Fee: Unless you have a service-connected disability rating that grants a waiver, a VA funding fee will apply.

  • Occupancy Requirement: You must certify that you will occupy the property as your primary residence (investment and vacation homes do not qualify).

  • Closing Costs: VA allows sellers or lenders to cover certain costs, but you’ll still want a lender who knows how to structure the deal to keep your out-of-pocket low.

Bottom Line

If you’re eligible for VA benefits and currently have a Conventional or FHA loan, refinancing into a VA loan could save you money, eliminate mortgage insurance, and unlock better long-term flexibility.

The best way to know if this move is right for you is to talk with a VA-savvy lender who can run the numbers for your specific situation.


About Between Two Doors

Between Two Doors is a podcast where I talk with Realtors about their journey, aiming to connect home buyers and sellers with agents on a more personal level. I ask "right brain" questions that go beyond transactions, focusing on the experiences, values, and passions that make these professionals great at what they do.

Listen to more episodes at: https://www.betweentwodoors.com

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Premier Lending, Inc.
https://www.natecarver.com

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